Students outnumbered parents at Tuesday night’s budget forum for the Ann Arbor Public Schools, but only (we suspect) because it fulfilled a civics class requirement. At any rate, the 20 or so people who showed up at the Scarlett Middle School media center all got a lesson in the intricacies of public school funding, and a look at how AAPS plans to deal with an anticipated $6 million deficit in its next fiscal year, with the deficit projected to grow to $12 million by 2011-12.
Approaches include possibly floating a countywide millage as early as this fall, increasing student enrollment through online offerings, and lobbying state legislators for additional dollars and to reform the way schools are funded.
Superintendent Todd Roberts and Robert Allen, deputy superintendent of operations, laid out the challenges they face, not the least of which is the convoluted way in which the state funds K-12 education. Let’s just say the slide they showed to illustrate the various funding mechanisms looked Rube Goldberg-ian.
The bulk of funding for public schools in Michigan is allocated by the state on a per-pupil basis. For the current fiscal year, AAPS receives $9,723 per student, and has roughly 16,500 students system-wide. Its general fund budget was $182.7 million for 2007-08. The administration will be presenting an update on its current fiscal year budget at the district’s March 11 board meeting.
Revenue that the state relies on for K-12 funding includes local property taxes, sales taxes and state lottery revenue, among other sources – and many of these sources are showing declines because of the state’s overall economy, Allen said. These revenues are pooled into the state’s School Aid Fund, from which each district’s “foundation allowance” (per-pupil funding) is distributed. It’s a variable amount, set annually by the state legislature, that can increase or decrease each year. [An exponentially greater level of detail about school funding in Michigan is explained in the book "A Michigan School Money Primer," by Ryan Olson and Michael LaFaive.]
The current system was put in place after the 1994 passage of Proposal A, which aimed to create more equitable funding across all districts and to keep property taxes in check. (Districts can still seek local millages to pay for repairs or building construction and maintenance, such as the fairly recent construction of Skyline High School.)
Several other factors are at play. Ann Arbor is one of only 52 districts statewide that are classified as “hold-harmless” districts. These districts, at the time when Prop A took effect, were receiving revenues higher than the $6,500 per-pupil level set by the state under Prop A. Rather than have their funding lowered, they were allowed to levy additional funds to make up the gap. For Ann Arbor, that amount is 4.27 mills for 2007-08, or $1,234 per pupil (depending on property values, the tax varies in order to generate the $1,234 per pupil, which is a fixed amount).
Because of their special status, hold-harmless districts sometimes receive lower per-pupil funding increases from the state. For fiscal 2008-09, for example, Ann Arbor and other hold-harmless districts received an increase of $56 per pupil, compared to $112 received by other districts.
This year there’s yet another twist: The budget could be positively affected by federal stimulus dollars, though that’s not yet clear, Roberts said. They should have more information about that within the next month.
On the expense side, salaries and benefits account for 85% of the AAPS budget, primarily for teachers (71%) and other instructional support (14.1%). School officials are projecting incremental increases in these areas based on previously negotiated raises and increases to fringe benefits like health and life insurance, among other things. School board member Susan Baskett, who attended the Scarlett budget forum, also noted that contract negotiations are currently underway, so the outcome of that deal will have an impact on upcoming budgets as well.
Budget deficits for AAPS are nothing new, Roberts noted – they’ve dealt with deficits for the past three years, and have cut more than $14 million in expenses over that period. He also noted that this year they’ll likely need to use $2 million from their fund equity balance, also known as the “rainy day” fund, to cover expenses. They have about $28 million in the fund at this point.
Allen said that the more they are required to cut, the less attractive the district will become, which in turn would cause parents to seek other options, like private or charter schools. That, in turn, would reduce enrollment, which would cause additional revenue declines based on the state’s per-pupil funding model. It’s a snowball effect that would just keep growing unless other strategies are found to deal with these funding challenges.
What can be done?
Roberts outlined several approaches that AAPS was pursuing, or might pursue, to address the projected deficits. Those options include lobbying state legislators and the governor, increasing student enrollment, raising more funds through private donations, and passing a countywide educational “enhancement” tax.
Lobby the state legislature. Roberts said that legislators are more inclined to listen to parents and others who don’t work for the public schools, and he urged people at Tuesday’s meeting to contact the governor and state legislators, asking them to give local communities more control over school funding. He then introduced Steve Norton of the advocacy groups Ann Arbor Parents for Schools and Michigan Parents for Schools.
“The system that’s been in place since 1994 is not working,” Norton said, adding that under the current state funding model, there aren’t many options. Legislators need to hear from citizens that it’s important to invest in education, he said. Donating to organizations like the AAPS Educational Foundation is another option, as is a possible “enhancement” millage which would provide additional funding for all districts in Washtenaw County.
The important thing, Norton said, is to become engaged in these efforts now, at meetings like these, “where you can have your voice at the beginning of the process, rather than the end.”
Increase student enrollment. As long as the state funds districts based on a head count, then increasing enrollment is one sure way of getting additional revenue. Roberts estimated there are 1,200 students within the AAPS district who don’t attend public schools. They are either home-schooled or attend private or charter schools.
One way to attract new students countywide is through online course offerings, Roberts said. Children who are home-schooled, for example, might want to take some AAPS courses this way. This year AAPS brought in 19 students through its online courses with very little effort, he said. Officials are projecting they’ll add 50 students in the next fiscal year through online courses and other efforts, and with additional marketing.
Increase private donations. The Ann Arbor Public Schools Educational Foundation works to raise money that’s used to fund programs within the schools. Wendy Correll, the group’s executive director, attended Tuesday’s meeting and described the foundation’s efforts.
For the current academic year, the foundation is providing about $7.50 in funding per student – an increase from $2 per pupil provided a couple of years ago. Yet in some communities, she said, foundations raise as much as $800 per pupil. “Are we there yet? Certainly not.” To cover the $6 million projected deficit, they’d have to raise about $350 per pupil. As much as they can, the foundation is trying to provide a safety net for the district’s programs, she said.
During the current year, those programs include a web-based writing literacy program called My Access, music tutoring for talented but economically disadvantaged middle school students, funding for “Plan and Explore” tests for all 8th and 10th grade students to help in post-high school planning, among other efforts. The foundation also awarded $37,000 in various grants to teachers this year.
Pass a countywide millage. Roberts said that leaders of all Washtenaw County school districts have been discussing the option of putting an education millage on the Nov. 9, 2009 ballot. It would be distributed based on the number of students in the district, and could provide about $4.5 million in additional funding for AAPS. He said a decision about that will likely be reached by the end of this school year.
Roberts and Allen will be holding a second budget forum on Thursday, March 5 from 7-9 p.m. at Forsythe Middle School, 1655 Newport Road. [confirm date] The event is open to the public. Early next week, they plan to post their presentation online, with a place for people to post comments. As the district fields questions and comments, they’ll be forming a FAQ (Frequently Asked Questions), which will also be posted on the district’s website.
They’ve been developing a draft budget and will be briefing the board of education on it, starting later this month. Public hearings will be held in May, with the budget likely being voted on at the board’s June 10 meeting.