Hard times ahead: developing a crisis budget

AAPS district officials began their public meetings about next year’s school budget at Huron High School last Thursday night. It’s a sign of the times that despite the slick, snow-covered streets, more than 100 parents, staff and interested citizens showed up to talk about school budget cuts.

A detailed list of the proposed cuts, as of the 7 January meeting, follows the article.

Superintendent Todd Roberts and district chief financial officer Robert Allen gave a tour of district spending and revenue, including funding projections that are only a bit better than last month’s worst case scenario. The district is preparing to close a combined budget deficit of around $20 million for this school year and next. Then officials laid out the district’s draft plan to cut $16.2 million from the 2010-11 school budget, and try for some $1.2 million in additional revenue.

Bad news from Lansing

While news from the state economic officials has improved modestly, the message is still bad. Michigan’s FY2010 school aid budget implements a $165 cut in per pupil allowances. Governor Jennifer Granholm vetoed other funding that goes to about 40 higher-spending, “hold harmless” districts (called “20j funding” after the section of the school code), costing Ann Arbor schools a further $233 per pupil. The governor’s veto of 20j funding was a gambit to force the Republican majority in the state Senate to consider increasing revenues, but it failed to spur the Senate to action.

Together, these measures represent direct cuts from the state of $398 per pupil, or about $6.5 million removed from the school budget in the middle of this school year. The governor rescinded a further cut of $127 per pupil, but it’s possible that a further cut may be necessary yet this year. The state cuts have been driven by a collapse in revenues from the sales tax and the income tax over the last two years. Those two taxes are the largest contributors to the state School Aid Fund, and other taxes earmarked for schools have come up short as well. The state government is prohibited from running a deficit and therefore must make cuts whenever revenues fall. The revenue declines are worse than the cuts indicate — about half ($600 million) of the Federal ARRA stimulus funds were spent to avoid shortfalls in the last (2008-09) school year, and a further $450 million is being used to prevent even larger cuts this year. Only $184 million in Federal stimulus money will be available to support the 2010-11 school aid budget.

As a result, for the 2010-11 budget year, state agencies are predicting a further cut in state per pupil funding of between $200 and $300; the Senate Fiscal Agency, in its forecast, projects a $215 per pupil reduction, while the House Fiscal Agency’s projections work out to a cut of about $325 per pupil. AAPS officials are being cautious, and planning for a $300 per pupil cut that would cost the district $4.9 million next year, in addition to the regular pressure of increasing energy and health care costs. That “structural deficit,” which also includes higher mandatory contributions to the state pension system as well as step raises for a minority of AAPS teachers, has added up to about $6 million each year for AAPS.

Proposed budget cuts for Ann Arbor

Dr. Roberts and Mr. Allen unveiled a list of proposed cuts and efforts to increase revenue that would together close some $17.4 million of the deficit. The district leaders said that their top priority was to keep cuts away from the classroom and to minimize the impact on student’s education. They also worked to keep the variety of choices available to students, Dr. Roberts said, because that is a hallmark of the district and something that makes it attractive to families.

As a result, some of the heaviest cuts come in non-instructional areas. Here are some of the “big ticket” items:

  • $5 million in savings from an across-the-board 4% cut in pay and benefits for all employee groups
  • $2.5 million in savings (about 20%) from custodial and maintenance services, which may require privatization
  • $1.5 million in savings (about 20%) from transportation services, which could involve lower service levels, consolidation with other districts or the entire WISD, and/or privatization
  • $960,000 in savings from “K-12 staffing efficiencies,” which would include changes to reduce teacher travel between buildings and also increasing class sizes at some levels and involve the elimination of 12 FTE positions
  • $920,000 in savings from central administration and high school administration staff, along with corresponding clerical staff, a 9% cut (5 central admin positions and two HS class principals, leaving two at each building)
  • $900,000 in savings from a 10% cut in building discretionary budgets, which mostly goes to supplies and materials (PTOs already pick up many of these costs)
  • $1.05 million in new revenue from opening up 100 spaces in grades K-1 and 6 to students from outside the district (Schools of Choice) at buildings which have excess capacity, and 50 spaces at the alternative programs at Stone and Clemente.

(A complete list follows the article.)

The cuts were discussed by groups of parents, citizens and staff in small breakout groups, each with a district facilitator. When these groups reported back, there was general support for the list of cuts. Proposals to privatize custodial and transportation services garnered the most concern and skepticism, and increased class sizes worried many. There was general agreement that the district was right to avoid closing buildings at this point, but rather focus on bringing new students into the district at facilities which have space. Attendees also expressed concern that the cuts be structured so that lower income families did not bear a heavier burden.

The district is holding three more such meetings, all of which begin at 6:30pm:

  • Tues., January 12, Skyline HS commons
  • Thurs., January 14, Scarlett MS cafeteria
  • Tues., January 19, Pioneer HS cafeteria

For more information, a copy of the presentation in PDF format, and an opportunity to make your suggestions to the district with an online survey, visit this AAPS web site: http://www.a2schools.org/budget/home

District budget reduction options as of 7 January 2010

Item affected Grade level
Estimated FTE impact

Dollar impact Description
Instructional
K-12 staffing efficiency K-12
12
$960,000
Cut teacher travel between buildings, increase class size in some areas (mostly select HS courses)
Restructure elementary specials Elementary
8
$640,000
Mostly in reductions in time for media specialists at smaller schools and/or having them take over from computer teachers; cover "open media time" (book borrowing) with clerks or volunteers
More online classes HS
5
$400,000
Gives students greater scheduling flexibility and cuts some staff
Redesign alternative HS programs HS
$400,000
Change programs at Stone and Clemente to meet current needs for graduation requirements; possibly consolidate the programs to make use of capacity and reduce transportation costs to Clemente
Restructure MS "planning center" MS
5
$360,000
This "in-school suspension" program is staffed by a teacher; elimination requires alternative discipline option
Restructure ESL K-12
4
$320,000
Reduce staff to match caseload, change delivery model
Cut substitute teacher cost K-12  
$200,000
Reduce professional development days that require substitute; 10% cut
Textbook budget K-12  
$200,000
Reduce textbook purchases (29% cut)
Summer school K-12  
$100,000
Cut transportation costs and some services (21% cut)
Subtotal
   
$3,580,000
 
Non-instructional
Cut custodial & maintenance costs All  
$2,500,000
23% cut from service reductions, pay and benefit cuts and/or privatization
Cut transportation costs All  
$1,500,000
Consolidate with county; reduce services (cut shuttles to Community, eliminate mid-day Kindergarten buses, extend HS walk zones, consolidate stops, combine HS and MS bus routes), possible privatization
Cut overtime costs    
$700,000
Custodial overtime for activities held on weekends and other times when custodians are not normally in the buildings must be covered by the activity (mostly sports events)
Cut athletic costs HS, MS  
$500,000
Pay for play at HS ($150) and MS ($50), with scholarships; cut transport for weekend in-county events; reduce MS admin costs; cut 2 freshman games; other savings and rental income
Energy cost savings All  
$400,000
Implement energy eduction and monitoring program, net savings guaranteed by consultant (6.2% savings)
Eliminate HS noon hour supervisors HS  
$50,000
Admin staff and community assistants to take over cafeteria supervision
Subtotal
   
$5,650,000
 
District-wide
Salary & benefit cuts All  
$5,000,000
Across-the-board 4% cut for all employee groups, with some combination of pay and benefit reductions
Reduce discretionary budgets All  
$900,000
10% cuts in building funds for supplies and materials at schools
Cut admin staff Central & HS
7
$600,000
Eliminate 5 central admin positions and one HS class principal at Pioneer and Huron (leaving 2 in each comprehensive HS); 9% cut
Cut clerical staffing Central & HS
8
$320,000
Eliminate 6 clerical staff in central admin and 2 at HS level to correspond with admin cuts above (7% cut)
Limit conference attendance All  
$150,000
Restrict attendance at conferences that require travel or overnight stays unless paid from outside sources. 70% cut
Subtotal
   
$6,970,000
 
GRAND TOTAL
   
$16,200,000
 
         
New Revenue
Targeted schools of choice K-1, 6
150
$1,050,000
Where space is available, open 100 spots for students coming from other districts; open 50 spots at Stone and Clemente
Increase options magnet enrollment HS
20
$180,000
Open more spots for students living in AAPS who do not attend AAPS (mostly added online course options for homeschooled students) – state gives AAPS credit for this attendance
New revenue total
   
$1,230,000
 
Overall budget impact
   
$17,430,000
 
 #

School aid estimates get worse

At the time of the AAPS budget meeting, the three key state economic agencies had not met to make their estimates of state tax revenue and budget balances for this year and next. That semi-annual Revenue Estimation Conference determines the estimates of tax revenue that the Legislature must use in constructing a balanced budget.

In a memo released by the Senate Fiscal Agency at the same time as the consensus revenue estimates, the non-partisan agency revised upward their estimates of the school aid budget deficit for 2011. The consensus estimate for School Aid Fund revenue was lower than the earlier Senate Fiscal Agency estimate, largely reflecting the more pessimistic estimates of the House Fiscal Agency. (The Treasury Department’s estimates were generally the most optimistic.)

Using the new consensus revenue estimate, and the SFA’s estimates of school aid spending for FY2011 if current spending levels are maintained, the SFA predicts a deficit of $422 million or $267 per pupil. These estimates assume that no tax changes are made which would increase revenue, and that current spending per pupil was continued (adjusted for changing numbers of students and other factors).

These new estimates give weight to the AAPS’s working assumption that Ann Arbor schools will have to absorb a further $300 per pupil cut in FY2011.