Tech ties prove costly for Twin Cities school districts

A group of metro area school districts could face a big cost to dissolve a decades-old technology collaborative that's accumulated millions of dollars in debt as schools looked elsewhere to meet their changing technology needs.

The member districts find out Wednesday what it could cost to pay the debts and exit the Technology and Information Educational Services cooperative, known as TIES.

The group was formed in 1967 when computers were massive, centrally located beasts summoned by a rotary phone and districts needed help with technology products, training and tech support.

But while TIES products have evolved, many districts don't buy as much from TIES as they used to. That, combined with financial mismanagement found in a 2014 audit, ran up the collaborative's accumulated debt to $13.6 million.

The group's joint ownership means that all 48 member districts are jointly responsible for TIES' finances.

"As owners, we are responsible for our share of the liability that TIES owes," said Ivar Nelson, technology director for the Hopkins schools. "We can't just walk away from that and leave that burden on the remaining membership."

Hopkins only gets one product through TIES now and pays membership dues of $12 per student this year, or about $82,000, he added.

Hopkins was one of TIES' original members. Nelson, though, believes its time is over.

Twelve districts did put in their notice to leave TIES effective at the end of June.

That includes New Prague. Human resources and business services director Sandy Linn says New Prague only gets two products through TIES and is too far away from its headquarters in St. Paul to take advantage of training.

So Linn says it doesn't make sense to keep paying for membership. But the cost to leave is also hard to swallow.

At the time it put in notice, TIES executives calculated New Prague's estimated share of the debt at $49 per student, or just under $200,000.

"We could certainly use that money on something else," Linn said.

The struggling budget and departing districts have pushed TIES members to a decision point. On Wednesday, they'll hear updated costs of disbanding. They plan to meet Jan. 24 to decide whether to disband or continue the organization.

TIES' current executive director Mark Wolak took over three years ago after the mismanagement found in the 2014 audit. Wolak says in that time overall debt has decreased by about $3.2 million. And he's gotten details on product expenses and revenue to offer school districts.

"We now understand that very, very well and by product we can tell you what it costs to operate that product, what we're making in terms of a margin on the sale of that product," Wolak said. "We would not have been in a position to do that even two years ago."

With changes to the organization's offerings, TIES could achieve a balanced budget by 2021, Wolak said, although the budget projection didn't include the departure of the 12 districts that have given notice.

TIES could sell cybersecurity services and focus on support for products developed elsewhere rather than selling its own software, he added.

An exit decision may not be a straightforward one for some districts.

The Osseo school district, for instance, uses nine TIES products and services, according to a recent report.

Osseo set aside money in its budget to cover possible costs if TIES disbands, said technology director Anthony Padrnos. The district might need more tech support staff, and employees would have to learn to use new products.

"It's going to be a lot of work," he said. "Either way the vote goes, we're going to be poised and ready to continue our organization the best we can."