School Board Mulls Millage, Proposal A

Ann Arbor Public Schools board of education committee of the whole meeting (Oct. 3, 2012): Trustees focused their committee meeting on the possibility of changing the district’s overall structural financial picture. They took care to contrast that effort with a different kind of discussion – about the budget. The topic of improving larger financial picture had been identified as one of the two goals for trustees at their August retreat. The other top goal was strengthening trust and building relationships among the board members.

The board’s committee discussion centered on four main topics: vision; revenue enhancement; action needed by the state legislature; and communication.

Discussion of revenue enhancement was highlighted by the possibility of asking voters to approve an enhancement millage through the Washtenaw Intermediate School District – which would entail a countywide vote. Voters in 2009 rejected such a proposal, which would have resulted in a 2 mill tax for five years, starting in 2010. It was projected to raise $30 million annually, to be divided among the 10 school districts in Washtenaw County. The AAPS share would have been a bit over $11 million. Board discussion at the Oct. 3 committee meeting acknowledged the need to generate support for such a proposal in other districts in the county besides AAPS.

Discussion of possible lobbying efforts directed at the state legislature was highlighted by the possibility of amending Proposal A, passed in 1994, which limits the ability of local communities to levy increased taxes to support schools.

Preliminaries: Outlining the Conversation

Board president Deb Mexicotte began the committee of the whole (COTW) meeting by outlining the objectives for the evening’s discussion. She acknowledged the board has a large number of responsibilities over the course of the year, which include labor negotiations, the budget, student achievement, maintaining buildings and facilities, and strategic planning. She characterized the board’s work as “ongoing, omnipresent, and focused on getting the best outcomes for students.”

The evening’s COTW objective was to focus on an additional goal of working to create opportunities for additional financial support for the district. That goal was adopted by the board, based on discussion at a retreat held in August. Mexicotte asked trustees to think about the work they might do on that issue, what tasks it might give to the administration, and how that might be distributed over the course of the year.

Andy Thomas clarified that the discussion was separate from, and in addition to, any discussion about the annaul budget and how the budget will be structured in the upcoming year. Mexicotte concurred with Thomas, saying it was in no way a budget conversation.

Mexicotte opened up the floor for initial thoughts. As four headings to think through, she offered: legislation, revenue enhancement, communication, and policy. Christine Stead asked that vision and advocacy be added. The board ultimately focused its conversation on four areas: vision, revenue enhancement, legislative action [including advocacy], and communication.

Vision

Stead pushed for talking about a vision first, saying that it was a good way to get everyone on the same page. She wanted to focus on identifying something specific so they could use that to frame everything else they did.

Vision: General Discussion

Irene Patalan said that for many citizens, education is the reason why they come to Ann Arbor She cited many of the “best of” lists that Ann Arbor lands on, saying that people make the choice to live here – and that it means the district is on the right track.

When Glenn Nelson asked how the strategic plan fit into the overall vision, Stead identified Strategic Plan Goal #8: “We will ensure adequate resources to accomplish our mission and goal” as possibly being enough to encompass the vision statement. Mexicotte wondered if that statement was aspirational enough. She then highlighted the word “adequate” in the goal and asked if the district’s resources are adequate. Several trustees said no.

Nelson cited recent reports on the Achievement Gap Elimination Plan, discipline gap reports, and emotional and social learning, saying that the district is tightly constricted by resources. He said that it was hard to treat students as individuals in the context of larger class sizes.

Stead said she would like to flesh out exactly what “adequate” or “inadequate” means – based on a cost analysis. Mexicotte replied that the meeting was the board’s session and the goals was the board’s goal. If the trustees believed the district didn’t have the resources, then that was what they believed, Mexicotte said. She focused the board’s attention on the question of what it would take to conclude that the district has adequate resources. She said that at some point, trustees had decided that the district has crossed a threshold – that makes them believe the district doesn’t have adequate resources.

Patalan mentioned that class size could be a focus. Class sizes are bigger than they feel comfortable with, she said. Mexicotte replied that if the board agreed that one of the sticking points is class size, then direction needs to be given to the administration to increase hiring, or the board needs to decide what else might be done.

While Nelson said he agreed with Patalan that class size is important, he also didn’t think that should be the main focus. To him, building a world class education should be first and foremost. He compared the tuition of Greenhills School [$19,290 for middle school; $19,680 for high school] to the AAPS foundation allowance of $9,020 per student. While he was careful to say that the difference between the numbers should not be the focus, he said the magnitude of the issue was not just an additional $1,000 per student.

Simone Lightfoot advocated for thinking “outside the box” when talking about “what it takes.” Restoring positions was one approach, but there were other innovative ways of dealing with large class sizes – or increasing test scores, no matter the class size. She wanted to think “radically different” and go to the teachers, students, and principals to ask them how to tackle the issue of class size.

The trustees talked over some of the districts that could serve as benchmarks. Mexicotte said there were some comparable districts in Illinois and New York that receive $16,000 to $17,000 per student. Nelson said he believed that benchmarking the district to other excellent districts around the nation, such as Brookline Public Schools in Massachusetts, might be useful – to give the community a better idea of what can be done, instead of appealing to the abstraction of “we need another $9,000 to do a good job.”

About district achievement, Mexicotte said, AAPS scores were better than other Michigan districts that receive the same or a greater amount of money. If the district could somehow get an additional $7,000 per student, that would “feel great,” and the district could do amazing things. Even with strangled funding, the district was maintaining high excellence, she said.

Stead offered her Christmas list: target classroom sizes set by grade level; increased time in school for all students; and a globally competitive curriculum. For Stead, a globally competitive curriculum means a robust arts program, IT and business courses, as well as rigorous math, language, and science courses. She would also like to see adequate counseling and behavioral support, adequate professional development time for staff, and rewards for top performers.

Mexicotte’s frequent rejoinder was “What would it take?” She asked trustees to identify the steps they needed to implement, if they identified a list similar to Stead’s. Mexicotte listed several options: hiring a consultant to do a cost-based analysis; tasking deputy superintendent for operations Robert Allen with an analysis; or choosing a trustee to lead the work.

Nelson argued for a more incremental approach. He cautioned against suggesting too big of an increase per pupil – so that the public doesn’t think the board is being unrealistic. If board members defined two or three things they identified as the highest priorities, then it would give them more focus, he said.

Mexicotte reaffirmed that the key was to think aspirationally. She noted that they had asked the administration to support a zero-based budget, to work from the ground up. She said that would give the opportunity to shake the budget out and have the aspirational goals meet the budget on top. Quiet through the discussion, Susan Baskett said she would like to get past the vision discussion. Mexicotte replied that, to her, vision was the “silken cord.”

Vision: Next Steps

Trustees determined that strategic goal #8 would suffice as a vision statement. To help them better define what “adequate” means for student education, the trustees asked that the administration analyze the cost associated with target class sizes. They also determined they would direct the administration to ask for feedback from staff on class size and resources.

Revenue Enhancement

The second area of focus was on revenue enhancement. Mexicotte led the discussion, asking for ideas to increase revenue. Several possibilities were identified: passing a countywide educational millage; increasing and maintaining enrollment by focusing on schools of choice; competing with charter schools; emphasizing customer service; renewing the sinking fund set to expire in 2014; and exploring the district’s real estate assets.

Revenue Enhancement: Countywide Millage

In terms of dollars, a countywide educational millage would impact the district most, Stead said. She noted that if the previous countywide 2-mill tax increase had been approved by voters in November 2009, over $11 million would have been generated for the district. She acknowledged that because an enhancement millage had to be approved by voters countywide, generating support of the other communities in the county would be essential. She estimated that it would take more than a year to create a compelling enough story – a story that drew upon benefits to the economy, increased property values, and better educational attainment for the community – to garner enough support throughout the county. Anything short of that would not be successful, Stead said.

Thomas said that they could expect some opposition to a countywide effort. Based on the outcome of the millage vote in 2009, he said, it’s apparent that a plurality in Ann Arbor is not sufficient to carry a countywide millage. So the district would need to start making contact with the surrounding school districts. He suggested reaching out to the boards, PTAs and PTOs, and area chambers of commerce to “tip the balance a little bit.”

Mexicotte followed up on the remarks made by Thomas, saying that it sounded to her that he was recommending the board take some kind of leadership role in doing advocacy outreach to neighboring communities. The trustees agreed that was something they wanted to do. To spread out that work, Mexicotte suggested the board could start by approaching the stakeholders in the county to help build a consortium. Nelson said they should craft a clear position piece that explains in detail why it was a good thing for all communities involved.

Revenue Enhancement: Increasing and Maintaining Enrollment

Thomas said that if the district could enroll 50 students who live in the district but currently attend charter schools, an additional $450,000 in revenue would come to AAPS. Baskett added that they have to remember the surest way to get more revenue is to bring in more students. While acknowledging AAPS was not losing as many students as other area school districts, Baskett said she didn’t believe AAPS is doing an adequate job of keeping the students it already has.

Continuing that thought, Nelson said that customer service needed to be a real focus. Parents and students need to know the district really wants them to come to AAPS. He gave school tours as an example, saying that prospective students need to feel welcomed into a school by all staff. Patalan supported Nelson’s focus on customer service. She suggested asking principals for reasons families have cited for their decision to leave the district. While their evidence may be anecdotal, principals could still provide some insight into the issue. Superintendent Patricia Green also said that principals could be a good source of information about this problem.

Concerned that focusing solely on principal input would be too unreliable, Baskett wanted to know if there was an adequate exit survey for families leaving the district. An exit survey could give an analysis of loss of students in the district, she said. Thomas agreed, adding that he wanted to understand why a family might attend AAPS for the first three years of school, then leave the district. He referenced previous data from Jane Landefeld, director of student accounting and research services, that had indicated a loss of 50 to 60 students per grade cohort. Mexicotte acknowledged that churn of students could be worth targeting.

Echoing the call for feedback from departing families, Lightfoot said that they needed to talk more with the customer – that is, students and families. Although there is currently a climate survey that gathers some of that information, Lightfoot said that with additional questions, they could get better insight into what’s happening in the schools.

Saying she was less interested in a comprehensive entrance and exit survey, Stead wanted to focus on forward-looking initiatives. She contended that AAPS needs to be more competitive to keep students in the district. As some specific actions that could have significant results, Stead suggested: timing the district’s marketing efforts to match other schools in the area; holding more open houses; and communicating district achievements better.

Revenue Enhancement: Sinking-fund Millage

Nelson identified the 1.00 mill sinking-fund millage – set to expire December 2014 – as a source of additional revenue. [A sinking-fund is a limited property tax for addressing building remodeling projects. State law allows a district to levy up to five mills, for no longer than 20 years.] A sinking fund millage is important enough that it can be ignored until just before it expires, Nelson argued. He wanted to focus on providing information to citizens by the fall of 2013.

Revenue Enhancement: Real Estate

Lightfoot suggested looking at all real estate owned by AAPS as possible revenue generators – either through lease or sale. Mexicotte agreed that getting a list of all the district’s property holdings could be useful. She also observed that if the district were to sell off property, it would be a one-time only deal.

Revenue Enhancement: Next Steps

The trustees identified several next steps for revenue enhancement. Nelson and Stead will spearhead the effort to make a case for a countywide education millage, putting together a cohesive description of the case and consequences for other districts in the county. Nelson will also work towards identifying needs for highlighting a renewal of the sinking fund millage in 2014.

To work towards maintaining and increasing enrollment, Baskett will explore timing the district’s marketing to be competitive with other area schools. While Stead said they already knew when schools such as Greenhills were placing advertising inserts into the New York Times, Baskett will formalize that knowledge. Patalan and the administration were tasked with working on an exit survey for students.

AAPS administration will give trustees a comprehensive list of real estate assets and an estimate of their value. The list will be included in the enrollment and demographic information presentation in December. The report may also include information such as easements and maps, to determine if the land is buildable.

Legislative Action

The trustees discussed several areas of legislative reform. They centered around amending Proposal A, working to achieve local levy authority, and working cross-governmentally.

Legislative Action: Amending Proposal A

Stead suggested amending Proposal A as a worthwhile goal for the board. [Proposal A was passed in 1994 to allow for distribution of state school aid fund revenues through a new foundation grant funding system]. She suggested lobbying for local levy authority, where local districts would be allowed to ask their own communities for support. Currently, the local option requires all member districts of a countywide intermediate school district to ask all voters in a group of districts for for an enhancement millage.

According to Stead, since the adoption of Proposal A in 1994, 76% of the 6 mills of revenue raised in Ann Arbor does not come back to AAPS through allocation from the state’s school aid fund. Stead said that back in 1994, sharing about half may have sounded reasonable. But the truth is, she said, is that more than half of what Ann Arbor property owners pay in taxes for schools is not returned to the district. So when people say they pay a lot of taxes in Ann Arbor for the schools, Stead agreed  – and said that it strikes her as an inappropriate amount.

Nelson noted that he has submitted a proposal to the Oxford Foundation-Michigan for a proposed revision of the law that deals with the enhancement millage. In his proposal, Ann Arbor would not keep all the money it raises through taxes. However, Nelson’s proposal would allow voters in local school districts to pass an enhancement millage of no more than 3 mills – with the constraint that no school would receive net revenue per student exceeding the amount consistent with average property wealth in the intermediate school district (ISD). He offered it up as one way of restoring local levy power.

Thomas pointed out that they would need to find natural allies around the state to push for any kind of legislative change at the state level. He said that legislators from local districts are supportive, but they would be facing a “stiff headwind” across the state. Nelson suggested that other 20j districts might be those natural allies.

By way of background, Section 20j of the School Aid Act makes calculations for “hold-harmless districts.” At the time of Proposal A’s enactment in 1994, some school districts’ foundation allowances exceeded the established  $6,500 per-pupil base level set by the state. Rather than have their funding lowered, the “hold harmless” districts were allowed to levy an additional millage to make up the gap. AAPS was one of those districts.

There was, however, a section in the revised school code that limited the growth of hold-harmless foundation allowances to the lesser of (1) the increase in the base level and (2) the rate of inflation. In 1999-2000, an inflationary increase of only 1.6% created a scenario in which giving the hold-harmless districts the full increase in the base level would have raised their grants higher than the rate of inflation. So Section 20j was created to provide hold harmless-districts the same foundation increase as other schools. In 2009, Section 20j was line-item vetoed by then-governor Granholm – which meant that districts previously identified as 20j schools saw a greater percentage decrease in school funding than other districts.

Legislative Action: Local Levy Authority

Mexicotte argued that if the district had local levy authority for the sinking fund, it could be used to pay for a broader range of expenses. [Currently the sinking fund can be used only for a limited set of expenditures, including major building renovation and the purchase of property.]

Thomas agreed and said that he took issue with laws that determined what schools could use funds for. As they think through the issues and challenges of transportation, Thomas said, it would be nice to have such a change enacted so charging for transportation could be a possibility. Mexicotte said that having access to such a common sense solution would be ideal, but state law did not allow it.

Baskett said she would like to engage the legislature on mandated costs that don’t make sense – such as paying into Michigan Public Schools Employees Retirement System (MPSERS) for employees who would not likely be able to access the pension. [One example is noon hour supervisors, which were discussed by trustees at the Sept. 19, 2012 board meeting. The board will vote on an outsourcing contract for noon hour supervisors at its Oct. 10 meeting]. Lightfoot suggested that talking about mandates, sinking fund allocation, and transportation might be an easier way of getting allies across the state.

When Mexicotte asked about working to change MPSERS, there was silence in the room – until Nelson said that the problem with MPSERS was that current public employees are paying for the mistakes of people years ago. Stead ventured that as a system, the state is weaker for the changes that have been made.

Legislative Action: Cross-Governmental Cooperation

Lightfoot promoted the idea of talking with the Ann Arbor Transportation Authority (AATA) and the University of Michigan to develop cross-governmental relationships to improve the district. Baskett said that it would benefit the district to advocate for various initiatives led by other entities like AATA, because their successful initiatives could benefit the district’s students.

Trying to determine how such advocacy would fit into the board’s financial goal, Mexicotte pressed for a connection. Baskett said that if the board advocated for AATA, transportation might not be as great a worry. She specifically mentioned AATA bus routes that now run past the Roberto Clemente Student Development Center, which could help reduce district transportation costs.

Legislative Action: Restoration of K-12 Funding

The trustees briefly discussed pursuing legal action to restore K-12 funding. In 2011, funding for K-12 schools was diverted to support state aid for community colleges and the state’s 15 public universities. While trustees agreed that they would like to see this funding restored, they also decided to wait until there was a better judicial climate to pursue it. Lightfoot, however, said she was not concerned with the opinions of legislators and justices. If restoring K-12 funding was important, then it should be funded.

Legislative Action: Miscellaneous

As the trustees brainstormed, several other suggestions were offered. Baskett said the district should have a presence at various educational workshops around the state – to be more “vocal and visible,” as Mexicotte put it. To target issues that might be worthwhile to pursue, Lightfoot suggested asking Robert Allen and his operations team to identify issues that have state implications.

Legislative Action: Next Steps

Putting together a case for amending Proposal A will be the joint responsibility of Lightfoot, Nelson, and Stead. They will be focusing on restoring local levy authority and local enhancement millages. Because Nelson and Lightfoot are already on the transportation committee, it was agreed that it made sense that they pursue advocacy opportunities with AATA.

Communication

Mexicotte felt that the trustees need to be more communicative with the public about what they’re doing and the goals they’re working towards. She asked the other trustees what steps they needed to take in order to be better communicators.

The board president’s report, Patalan offered, could be a useful tool for communicating with the public. During each regular board meeting, Mexicotte has the opportunity to report out as the board president. She has used that opportunity to update the community on the COTW work being done. Patalan suggested there should be an on-going report on progress towards financial goals.

Communication: Next Steps

Mexicotte said she would use the formalized board report to communicate better with the public. Nelson said that until they narrowed their focus, he wanted the narrative of the evening’s work to be that they had a “really good” meeting on discussing what they were going to do.

Present: President Deb Mexicotte, vice president Christine Stead, secretary Andy Thomas, treasurer Irene Patalan, and trustees Susan Baskett, Simone Lightfoot, and Glenn Nelson.

Next regular meeting: Wednesday, Oct. 10, 2012, at 7 p.m. at the fourth-floor boardroom of the Ann Arbor District Library’s downtown branch, 343 S. Fifth Ave. [confirm date]

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