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Minnesota school districts pay up to leave tech collaborative

ST. PAUL—Unwinding a half-century-old school technology collaborative will cost its members millions — at least in the short term.

The 48 districts that own the Technology and Information Educational Services, or TIES, collaborative expect to pay as much as $20 per student to cover the organization's liabilities as it transitions to a new operator. Those districts enroll roughly 300,000 students and together will pay about $6 million on the transition.

Jeffrey Solomon, finance director for the Rosemount-Apple Valley-Eagan districts says the money the district saves on purchasing from another provider will cover the transition costs after three years. Other districts have said they expect to have similar savings.

The move will have a far-reaching impact.

When TIES's other customers are added in, about half a million students and their families across Minnesota count on the organization's software to monitor academic progress and communicate with teachers. Many districts also use TIES tools to manage employee data and account for how they spend taxpayer dollars.

Every year, Minnesota spends about $9 billion on public schools.

A coming transition

The services TIES provides are not going way. Another state-run collaborative, Sourcewell, which was formerly called the National Joint Power Alliance, has agreed to take over governance of the organization.

Mark Wolak, TIES's executive director, says Sourcewell stepping in gives member districts and other customers the flexibility of choosing new vendors or continuing with the organization.

"We couldn't have a better ending to the circumstances we were facing," Wolak said.

Sourcewell leaders say they're putting the finishing touches on their business model, but they plan to offer education technology services similar to what TIES does now. The 40-year-old government agency facilitated $3 billion in cooperative government purchasing last year.

"We see a need for schools in the technology space and we hope we can be part of that solution," said Travis Baultz, marketing director. "We have a lot of experience working with public schools and understanding what members are looking for."

A tough but unanimous choice

When TIES started in 1967, specialized educational software was a rarity. But not anymore.

As the technology market has grown exponentially, a relatively small organization like TIES has struggled to keep up.

Last year, the organization's board of directors decided it needed to increase membership fees by 67 percent to keep its $43 million annual budget balanced. The move led to the quickening of an exodus of member districts, with more than a quarter signaling they planned to leave.

Board members then began serious deliberations over the organization's future. Executive director Wolak says it was a difficult balance; about half of TIES members were dependent on the organization's products while others wanted to move elsewhere.

"Failure was not an option," Wolak said.

In January, 47 of TIES's 48 member owners voted to end their joint ownership, with Bloomington schools abstaining from the vote. Sourcewell was waiting in the wings.

The organization signed a letter of intent to explore taking over governance of TIES in January. The transition became official July 2 but may take a month or so to be completed.

Sourcewell will team up with the Metropolitan Educational Cooperative Service Unit in Arden Hills to provide products and services to schools. With Sourcewell taking over governance, TIES members who rely on the organization shouldn't see any disruption in service.

Past strengths and struggles

TIES has come a long way since 1967 when it was created to fill a void in the school technology market. The organization now provides software and other services to more than 200 school districts in Minnesota and across the Upper Midwest.

The organization also became a leader in technology training for teachers. Last December, more than 3,000 educators attended the TIES annual conference.

The organization has seen controversy, too. A 2014 audit found widespread financial mismanagement under its former longtime leader Betty Schweizer, who retired from the organization unexpectedly.

The inquiry rocked the organization and new leadership was brought in, but TIES's reputation never recovered.

The TIES story is a cautionary tale of what happens when government steps in to meet a need the independent market hasn't. Wolak says that despite TIES's challenges, the story has a positive conclusion.

"The lesson here is you can reinvent government," he said.