Ann Arbor Schools Seek Input on Budget

Todd Roberts, superintendent of the Ann Arbor Public Schools, didn’t have much good news to deliver at Thursday’s budget forum, the first of four that the district is holding this month. Heavily reliant on declining state funding, AAPS faces as much as a $20.9 million deficit by fiscal 2010-11.

And after voters rejected a countywide schools millage in November that would have brought some financial relief, school officials are faced with difficult decisions as they work to close the funding gap between revenues and expenses.

Despite the season’s first significant snowfall, more than 100 people attended the Jan. 7 forum at Huron High School’s cafeteria, a gathering that included parents, teachers, administrative staff, some school board members, students and others in the community. Leaders of groups that supported the November schools millage proposal, as well as those who successfully led efforts to defeat it, also attended the meeting.

Roberts told the crowd that it’s unlikely the state will see a turnaround anytime soon, and their biggest hope is that revenues for schools at least remain flat. “But that’s certainly not a foregone conclusion,” he added.

The forum was organized into three parts: 1) an overview of the current fiscal year’s budget situation, 2) a presentation of options to cut costs and raise revenues in the 2010-11 fiscal year, which begins July 1, 2010, and 3) small group discussions among participants, giving feedback and offering other ideas to deal with the projected deficit. At the end of the meeting, members from each of the small groups gave a summary of their discussions to the full gathering.

“This is not a plan,” Roberts emphasized. “These are options that we want to get feedback on.”

AAPS Budget Overview

To set the stage for forum participants, AAPS deputy superintendent Robert Allen gave an overview of the district’s current funding status. He began by noting that if the district’s projections for the next two years hold firm, their budget will be reduced to its 2001-02 levels. [For a detailed look at how schools are funded in Michigan, see Chronicle coverage "Does It Take a Millage?"]

In the current fiscal year, which ends June 30, 2010, AAPS state per-pupil funding was originally expected to be $9,723. Last fall, the state reduced that amount by $398 per pupil, or $6.5 million – based on 16,489 students in the system. At one point, the district expected another $127 in per-pupil cuts, but Allen said it now seems unlikely that the state will take that step.

With operating expenses of $193.9 million, the district faced a $5 million deficit even before the additional cuts were made by the state, Allen said. Expenses are expected to climb to $199.3 million in 2010-11. Based on those projections, plus estimates for further cuts in state funding and no change in enrollment, the deficit could reach as high as $20.9 million, he said.

Expenses are weighted heavily towards personnel. Eighty-five percent of the general fund budget is used to pay for salaries and benefits, he said. Of that, 71% are costs tied to teachers, media specialists, counselors, and social workers.

Allen also noted that the district has a $27 million fund equity balance – essentially, the equivalent of a savings account that can be tapped to cover a budget shortfall. But if that were the only step taken, the fund would soon be depleted, Allen cautioned.

2009-10 Budget Reductions

Superintendent Todd Roberts followed Allen’s presentation with a look at specific reductions proposed for the current fiscal year. The main goal was not to disrupt programs mid-year, he said. The following steps would trim $2.59 million in expenses for 2009-10:

• $700,000 = Reduce discretionary fund budget.
• $600,000 = Limit all overtime.
• $400,000 = Keep six FTE vacancies unfilled.
• $200,000 = Limit textbook replacements.
• $100,000 = Reduce administrative costs.
• $100,000 = Limit conference attendance unless funded through grants.
• $100,000 = Reduce summer school costs.
• $90,000 = Change to November elections.
• $80,000 = Reschedule low-enrolled 2nd semester classes.
• $70,000 = Reduce heating & cooling costs.
• $50,000 = Reduce high school noon hour staff.
• $50,000 = Reduce substitute teacher costs.
• $50,000 = Reduce athletic transportation.

While reductions for the current fiscal year were included in the presentation, the budget forums were primarily intended to get feedback on the more substantive deficit the district faces in 2010-11, which begins July 1, 2010.

Options for 2010-2011 Budget

The AAPS administration has identified options that would help close the projected $20.9 million deficit by $17.43 million, through a combination of moderate revenue increases and deeper expense reductions. AAPS superintendent Todd Roberts said that budget decisions will be made based on the impact on student achievement and the number of students affected, among other factors.

Increasing Revenue

Roberts noted that local school districts in Michigan had limited options regarding revenue, because of constraints imposed by state law. One option has recently been rejected – in November 2009, voters rejected a millage proposal that would have raised $30 million countywide, to be distributed among Washtenaw County’s 10 school districts. Of that, AAPS would have received $11 million annually.

With that revenue source off the table, most of the options presented by Roberts for addressing the budget deficit focused on cutting costs. There were only two suggestions for raising revenue, totaling $1.23 million:

• $1.05 million = Increase enrollment in targeted schools of choice: 100 spaces in elementary and middle schools, and 50 spaces in Stone High School and the Roberto Clemente Student Development Center.
• $180,000 = Increase enrollment in the “options magnet” program. These would be students who live in the district but who aren’t currently enrolled in AAPS, Roberts said. They might be home-schooled, for example, or home-bound because of injury or illness.

[For additional background on these revenue options, see Chronicle coverage: "Revenue Bump in School Budget Draft"]

Cutting Costs

Roberts outlined reductions of $16.2 million in expenses, both instructional and non-instructional. The largest cuts included $5 million in salary and health care benefits districtwide. Wages and benefits are the district’s single largest expense, Roberts said, and while they don’t have control over retirement costs – those are mandated by the state – they do have the ability to reduce wages and health care benefits.

Here’s the complete list of options presented at Thursday’s forum. Roberts stressed that these are just being considered but are not formal proposals at this point.

INSTRUCTIONAL

• $960,000 = Reduce K-12 staff by an estimated 12 full-time equivalents (FTEs) by implementing a higher student-to-teacher ratio in targeted classes.
• $640,000 = Restructure the media and technology program for elementary schools (estimated reduction of eight FTEs).
• $400,000 = Offer more online high school classes (estimated reduction of five FTEs). Roberts said that close to 300 students currently take online courses offered by AAPS.
• $400,000 = Redesign alternative programs at Stone High School and the Roberto Clemente Student Development Center.
• $360,000 = Restructure the middle school planning center (estimated reduction of five FTEs).
• $320,000 = Restructure K-12 English as a Second Language (ESL) program (estimated reduction of four FTEs).
• $200,000 = Reduce K-12 textbook budget.
• $200,000 = Reduce substitute teacher costs by cutting some professional development that requires substitutes.
• $100,000 = Reduce summer school services and transportation costs.

NON-INSTRUCTIONAL

• $2.5 million = Reduce custodial and maintenance costs. Options include reducing salary and health care costs, or modifying the level of service. The district has already issued a request for proposals (RFP) to seek options for possibly privatizing this service, Roberts said. [Link to AAPS online bid site]
• $1.5 million = Reduce transportation costs. School districts in the county are looking at ways that they might consolidate their transportation services, Roberts said. AAPS is also seeking bids for possible privatization, similar to their RFP for custodial and maintenance services. Another option would be to alter some of their existing transportation services, such as eliminating shuttle buses from Pioneer and Huron to Community High, eliminating noon-hour kindergarten transportation, or having middle school and high school students ride the same bus. Feedback from the forum would be helpful in making these decisions, Roberts said.
• $700,000 = Reduce overtime costs. These reductions would be targeted for activities on the weekends or other times outside of the regular school day.
• $500,000 = Reduce athletic costs. Options include reducing the number of freshman games, cutting administrative costs at the middle school level, eliminating weekend transportation to sporting events in Washtenaw County, consolidating some sports, and instituting a pay-to-play system that’s augmented by needs-based scholarships.
• $400,000 = Seek energy cost savings by implementing an energy education and monitoring program.
• $50,000 = Eliminate high school lunch-hour supervisors, with those duties taken over by administrative staff or community assistants.

COMBINED INSTRUCTIONAL/NON-INSTRUCTIONAL

• $5 million = Reduce salary and health care benefits.
• $900,000 = Reduce discretionary budgets for supplies and materials.
• $600,000 = Eliminate five positions in central administration, and two high school class principal positions.
• $320,000 = Eliminate eight clerical staff – five in central administration, and two at the high school level.
• $150,000 = Cut funding for conferences.

Suggestions from Forum Participants

The bulk of the budget forum involved small group discussions among participants seated around tables in Huron High’s cafeteria, responding to the specific options that had been presented by Roberts. When those discussions wrapped up, the entire group reconvened and a representative from each table reported a summary of their discussions. Many of the groups cited general support for the options presented by the administration. Here’s a sampling of comments from the small group reports:

• If lower state funding levels are the new norm, the district needs to look more aggressively at how to generate additional revenues. That might include developing partnerships with local businesses or philanthropy, and seeking out available grant funding. A specific example cited was the $350 million distributed to schools nationwide through the Bill & Melinda Gates Foundation. [Wendy Correll – executive director of the AAPS Educational Foundation, a nonprofit that raises money to support the district – attended Thursday's forum.]
• Several groups expressed concern over privatization. Suggestions included looking at long-term savings rather than just the initial amount saved from privatizing a service – perhaps the long-terms savings aren’t high enough to make it worthwhile. Ethical concerns were raised as well. One group discussed how privatization risks impoverishing community members who are currently employed by AAPS. They cited the example of food service employees who lost their pensions and health insurance, and are “getting paid like McDonald’s workers” as a result of the district privatizing food service by contracting with Chartwells.

• Many of the groups said they didn’t have sufficient information to form an opinion about some of the options. One group criticized the format – by asking people to respond to options that the administration had already identified, they said, participants weren’t being asked to think broadly about how to address the deficit.
• What did the district look like in 2001-02? One group suggested that looking back at those years might give some guidance about the size of staffing and programming, as revenues drop to 2001-02 levels.
• There was general support for pay-to-play as an option to generate revenue from school sports, but some people expressed concern over the amounts suggested [$150 annually for high school students, $50 for middle schoolers]. One person earned a laugh when she suggested that everyone should be allowed to play “regardless of their ability.” She clarified that she meant “regardless of their ability to pay.” However, others felt that additional revenues could be raised beyond what’s being proposed. One group suggested that the fee should be levied per sport, so that students playing multiple sports would pay more than those playing just one. Another group suggested that the pay-to-play concept could be applied to other extra-curricular activities, not just sports.
• High school students who were at the forum were against dropping the 7th hour. One group suggested restricting 7th hours to non-core classes. One recent high school graduate said he was glad to learn that rumors about dropping the humanities program weren’t true – he said it had been valuable in preparing him for college.
• Several issues were raised related to transportation. One group suggested finding ways to partner with the Ann Arbor Transportation Authority (AATA). Another group raised concerns over mixing high school and middle schools students on the same bus. And one group cautioned that the district needed to minimize the impact on employees who were the least able to absorb cuts, such as bus drivers.

Other Ideas Proposed by Forum Participants

• Expand the Community Resource program that’s in place at Community High School. These courses are taught by “experts” in the community, though monitored by a certified teacher.
• Consolidate Stone High School and the Roberto Clemente Student Development Center with the other high schools.
• Reduce the number of administrators for special education.
• Contact parents who live in the district but who aren’t sending their children to AAPS, and ask them why they’ve decided to pursue other schooling options.
• Seek compensation from the University of Michigan for its student teaching program. The rationale: Student teachers pay UM tuition to teach in AAPS schools and use AAPS resources, so the district should receive funding for that.
• Help the community better understand what the schools do – that might generate more community support for a millage or donations. Make clear how people can advocate in Lansing on behalf of the schools.
• Reduce the number of community hall monitors.
• Find ways to collaborate with the Ann Arbor District Library.
• Charge more for student parking. [Annual parking permits for high school students vary. Permits at Community High and Skyline are free; Pioneer charges $40 and Huron charges $60 or $30, depending on the lot.]
• Look at how to use the district’s facilities to generate revenues. One example cited was the possibility of renting the use of swimming pools. Other suggestions: Close buildings that are underutilized, and sell land owned by the district that’s not being used.

One participant made the point that regardless of the specific cuts that are eventually made, it’s important to demonstrate that serious action is being taken by the district. The reasoning is that the recent millage proposal failed in part because voters didn’t believe the schools had reduced expenses as much as possible. If serious cuts aren’t made, it would underscore the belief that the millage funding wasn’t necessary.

What’s Next?

The district is holding three additional public forums this month, focused on the budget. The two-hour meetings, which will follow the same format as the Jan. 7 session, begin at 6:30 p.m.:

• Tuesday, Jan. 12 at the Skyline High School commons, 2552 N. Maple Road.
• Thursday, Jan. 14 at the Scarlett Middle School cafeteria,  3300 Lorraine St.
• Tuesday, Jan. 19 at the Pioneer High School cafeteria, 601 W. Stadium Blvd.

Participants at each forum are also asked to complete an individual survey giving feedback about the ideas presented at the forum, and asking for volunteers to work on the district’s strategic planning efforts. [.pdf file of survey]

In addition, an online survey is posted on the AAPS website to solicit feedback on budget-related options. About 200 people have taken the survey so far, according to Liz Margolis, the district’s director of communications.

There are also times reserved for public comment at the biweekly meetings of the AAPS board of education. [Link to rules for public commentary] Board meetings begin at 7 p.m. in the fourth floor board room of the Ann Arbor District Library, 343 S. Fifth Ave. The next regular meeting is on Wednesday, Jan. 20. In addition, board members can be contacted individually – contact information is available online.

The district has more budget information available online, including links to budget data and other financial documents.

Roberts said that all of this feedback will be factored in as the administration and school board prepares its 2010-11 budget.