An initial vote had been taken on Aug. 7, 2013, following significant debate and some failed amendments proposed by Smith. His amendments would have restored over $1 million in funding to programs and departments that had been cut in previous budget cycles. During the Aug. 7 meeting, other commissioners expressed general support for his sentiments, but cautioned against acting quickly and not giving sufficient strategic thought to these allocations, which they had seen for the first time that night.

Conan Smith, Alicia Ping (R-District 3) and Dan Smith (R-District 2) had dissented on the vote giving initial approval to the budget adjustments. Board approval is required for budget changes greater than $100,000 or a variance of more than 10%, whichever is less.

The county’s finance staff cited several factors related to the adjustments, including the fact that property tax revenues are $2.3 million higher than anticipated when the budget was approved in December 2012. The county is also receiving $205,344 more in state funding than was originally budgeted, from state liquor tax revenues.

On the expense side, $551,998 will be used to help pay for the trial court’s new records management software system. Those funds come from a refund to the court by the state of Michigan. There will also be an increase of $102,672 in expenses due to a higher substance abuse allocation mandated by Public Act 2 of 1986, and related to the higher liquor tax revenues that the county received. Those funds will go to the county’s designated substance abuse coordinating agency.

The 2013 general fund budget also is not expected to need a previously planned use of $2.8 million from the fund balance.

This brief was filed from the boardroom of the county administration building at 220 N. Main. A more detailed report will follow: [link]

The action was taken at the Aug. 7, 2013 ways & means committee meeting of the county board of commissioners, with dissent by Alicia Ping (R-District 3), Dan Smith (R-District 2), and Conan Smith (D-District 9). [.pdf of 2013 budget adjustment chart] Board approval is required for budget changes greater than $100,000 or a variance of more than 10%, whichever is less.

However, the board ultimately postponed the final vote on the budget adjustments.

The county’s finance staff cited several factors related to the adjustments, including the fact that property tax revenues are $2.3 million higher than anticipated when the budget was approved in December 2012. The county is also receiving $205,344 more in state funding than was originally budgeted, from state liquor tax revenues.

On the expense side, $551,998 will be used to help pay for the trial court’s new records management software system. Those funds come from a refund to the court by the state of Michigan. There will also be an increase of $102,672 in expenses due to a higher substance abuse allocation mandated by Public Act 2 of 1986, and related to the higher liquor tax revenues that the county received. Those funds will go to the county’s designated substance abuse coordinating agency.

McDaniel also noted that the 2013 general fund budget is not expected to need a previously planned use of $2.8 million from the fund balance.

During a second-quarter budget update for 2013, the county’s financial staff reported that the county is now expecting a $245,814 general fund surplus for the year. [.pdf of 2Q budget presentation]

At the ways & means committee meeting, Conan Smith offered an amendment – and an impassioned plea – to restore roughly $1.2 million in funding to three programs that had been previously cut. He felt that restoring this funding was possible in light of $2.3 million in higher-than-expected property tax revenues. The programs that he proposed funding were community corrections ($152,772), public and environmental health ($386,000) and workforce development ($650,000). His proposal, presented from the floor, had been seen by county staff for the first time just a few hours before the meeting started.

County administrator Verna McDaniel pointed out that if Smith’s amendment were approved, the money would be taken from unearmarked reserves in the county’s fund balance. She reminded commissioners that the original cuts had been structural.

A vote on Smith’s amendment failed at the ways & means committee meeting. Initial approval to the overall unamended budget adjustments passed on a 6-3 vote, over dissent from Conan Smith, Dan Smith and Alicia Ping.

When the board considered the 2013 budget adjustments for a final vote at the regular board meeting – which immediately followed ways & means – Smith spoke at length, chastising the other commissioners for not taking action to spend the unanticipated revenues. He noted that the board had identified human services as a priority, but was instead funding things like software and facilities. He then proposed another amendment, this time increasing the proposed spending to about $1.7 million. His amendment proposed allocating funds to community corrections ($152,000); public and environmental health ($386,000); workforce development ($754,000); programs for the elderly, people facing homeless and those in need of utility assistance ($252,000); and housing programs ($199,000).

Other commissioners expressed general support for his sentiments, but cautioned against acting quickly and not giving sufficient strategic thought to these allocations, which they had seen for the first time that night. Smith argued that he had asked that the item be pulled from the agenda prior to the meeting, because he had wanted more time for discussion. He indicated that he would support postponement.

A vote on his amendment failed, with support only from Conan Smith and Ronnie Peterson (D-District 6). Conan Smith then moved to postpone the entire budget adjustment resolution until the board’s Sept. 4 meeting. That motion passed unanimously.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The county works on a two-year budget planning cycle. In late 2011, commissioners set the budget for 2012 and 2013. However, state law mandates that the board must approve the budget annually. At its Nov. 7 meeting, commissioners gave initial approval to a budget “reaffirmation” for 2013, including several proposed adjustments. The original 2013 budget proposed a year ago was for general fund revenues and expenses of $97.066 million – $5.774 million less than the budget that was ultimately approved this month.

Property taxes typically account for about 63% of revenues, and the general fund budget is based on an operating millage rate of 4.5493 mills. Because property values have not decreased as much as originally anticipated, the county expects about $2.4 million more in property tax revenues for 2013 than it had previously accounted for in the 2013 budget. The 2013 budget now assumes that property tax revenues will be 2% lower than in 2012. The 2013 budget includes a planned use of $3.287 million from the fund balance. Of that, about $2 million is estimated to be carried over from a budget surplus in 2012.

The largest expenditures relate to personnel, which accounts for 66% of general fund expenses. The 2013 budget shows a $4.7 million increase in that category, compared to the original 2013 budget that commissioners approved in 2011. According to a staff memo, those additional costs relate to increases in fringe benefits, medical costs, and a higher number retirees than expected. There were 118 retirements in 2011, which added to pension costs.

Thomas Partridge was the only person to speak at a public hearing on the budget. He urged the board to find ways to increase revenues, including asking voters to approve a millage increase.

This brief was filed from the boardroom of the county administration building at 220 N. Main in Ann Arbor. A more detailed report will follow: [link]

The AAPS budget forum was held at Pioneer High School. (Photos by the writer.)

Community members who attended the presentation heard a presentation of the full budget proposal almost identical to the one presented to school board members last month.

Highlights of that presentation included a core budget proposal that calls for a reduction in staff by 32 full-time positions, the elimination of some busing services, and the closure or merging of one of the district’s alternative high schools. Roberto Clemente Student Development Center is one of the district’s alternative high schools.

Community members at Monday’s forum were asked to break out into small groups to discuss their concerns with the potential budget reductions and brainstorm additional revenue enhancement ideas.

In addition to concerns about Clemente’s possible closure, community members also expressed concern about the rise in class sizes that would be associated with the elimination of 32-64 teaching positions, the elimination of funding for music camps, and the proposed cuts to transportation services.

The district will host a second budget forum Monday, May 14, starting at 6:30 p.m. at Huron High School. The board is not required to approve the budget until June 30.

Budget Presentation

AAPS superintendent Patricia Green welcomed just over 40 community members, and roughly 17 administrators to the forum, and later singled out board trustees Glenn Nelson and Christine Stead, also in attendance. She introduced the budget by saying that the district doesn’t want to make any of the cuts.  But she said that until state funding changes, AAPS will continue to face drastic reductions. Green described the budget proposal as split into three parts – A, B, and C, which progressively increase the degree of cuts and decrease the amount of fund equity used to address the $17.8 million budget deficit.

AAPS deputy superintendent of operations Robert Allen then reprised the budget presentation he had given at the April 25, 2012 board meeting, with a slight revision of one slide. He reviewed the funds held by the districts and their restrictions, expenditure categories as a percentage of the total budget, how AAPS is funded, and assumptions underpinning both revenue and expenditure projections.

Allen’s presentation highlighted the effect of rising retirement costs on the structural deficit facing all school districts throughout Michigan. That highlight had been a suggestion from trustee Andy Thomas at the board’s most recent meeting. Finally, Allen reviewed the proposed $6 million in revenue enhancements and $13-$19 million in reductions that had been presented to the board at its April 18, 2012 meeting.

Community Response

Community members attending the forum were asked to work in small groups to answer the following three questions:

1. Given the budget realities facing the Ann Arbor Public Schools, what is your main concern with the proposed budget for 2012/2013?
2. Based on revenue options, do you have any suggestions on how the district could raise revenue, such as private giving or increased marketing?
3. What other questions to you have that were not answered this evening?

They were then asked to report out to the whole group. Meeting handouts also stated that AAPS would post further information on the district’s website after the community budget forums to answer questions from participants, and also invited forum attendees to submit their concerns or questions in writing.

Community Response: Concerns

All of the groups reported significant concerns about closing Clemente. Participants said that board members do not understand the Clemente program. They questioned how the board could be considering closing a program so central to the district’s mission of closing the achievement gap. They also expressed worry that Pioneer and Huron high school teachers would not be accepting of Clemente students, if they were returned to the comprehensive schools.

They also contended that this possible closure was coming too late in the year for Clemente families and staff to respond effectively to the dramatic changes. Participants noted that if Clemente is closed, programs that work to prevent learning gaps in earlier grades would become even more essential, and that the district has an obligation to protect its most vulnerable students.

Another theme that ran through the community’s responses to the proposed budget was that it “cut from the bottom instead of the top.” A few references were made to excessive administrator pay, including extra pay for completing regular duties, and the “cavalier nature” of the raises given to top administrators.

Regarding the proposed transportation cuts, it was noted that eliminating high school busing would have a negative impact on who could participate in the lottery to get into Skyline High School. Another community member suggested that transportation cuts should be looked at holistically – in the context of community health. That person suggested that transportation cuts would encourage people to walk, which would fight obesity. It was also noted that cutting busing would likely increase Ann Arbor Transportation Authority (AATA) ridership and that that was a good thing. However, shifting the cost of transportation from the district to the students was also stated as a concern.

A suggestion was made to frame budget decisions by asking the question, “What is the return on investment?” of various expenditures, and to stop emphasizing that this is the “state’s fault.” Several groups expressed concern about higher class sizes resulting from possible cuts to teaching staff. And, regarding the summer music camp expenditure of $60,000, it was noted that the cost is relatively small for the large number of students it supports.

Community Response: Revenue Enhancement Suggestions

Community members suggested the following strategies for bringing in additional revenue:

• Sell Clemente and its property
• Sell Community High School and its property
• Across-the-board pay cuts or step freezes (on the teacher salary schedule)
• Graduated across-the-board pay cuts – 10% for highest paid employees and smallest percentage coming out of teachers’ paychecks
• Use more fund equity
• Use recognition of the district’s “Julliard-type” music program to draw in students from surrounding communities
• Sell advertising space at athletic fields
• Study building utilization to see if other buildings could be closed
• Eliminate supplemental pay for high school department chairs
• Deepen cuts to non-academic extracurricular activities
• Reconsider attempting a countywide enhancement millage
• Make “pay to participate” fees cover the entire cost of participating in an activity, not only provide a subsidy
• Eliminate 7th hour at the high schools
• Increase grant writing and fundraising

Community Response: Questions

Table groups asked a number of questions which were not answered formally for the whole forum group, though administrators did walk around and answer specific questions individually during the small group discussion and after the forum.

Many of the questions asked during the reporting out of small groups related to Roberto Clemente Student Development Center:

• How much will the budget be affected if the tech bond does not pass? [The bond was approved by voters with around 70% support.]
• Do all employees have similar health insurance benefits?
• Why were there no cuts proposed to central administration?
• What happens if SB 1040 [state retirement system reform] passes and how will that affect the district’s budget?
• How much money is being spent on administrators’ extra pay if they achieve their goals?
• How much is the district spending on outside consultants?
• There is an interest in seeing the whole budget – what was cut and what was not cut.  Could the district provide line item detail on consultants and all budget items?
• Exactly how does fund equity function to maintain the district’s cash flow, and how much of the fund could be used without impacting cash flow needs?
• How does the student-teacher ratio change if teachers are cut by 32 FTEs [full-time equivalent positions], 48 FTEs, or 64 FTEs?
• Is there an update on a possible collaboration with AATA?
• Are there any contractual issues that would arise if cuts were made to the summer music program?
• Why give sports [lacrosse] a year to plan [to become a club sport], but not give a school a year to plan to close?
• What will happen to graduation rates and dropout rates if Clemente is closed?
• Would Clemente’s closure cause of loss of revenue from School of Choice students?
• Why was closing or restructuring Clemente in all three plans [Budget reduction plans A, B, and C]?
• What is the impact to the community of having uneducated children if Clemente is closed?
• Why was combining Community High School with other schools not considered?
• What was the rationale for closing Clemente or A2 Tech? Did the district consider all the buildings and real estate when it suggested this reduction?
• How was the decision made to possibly move Clemente students into A2 Tech rather than shifting the A2 Tech students or other AAPS students out of their buildings?

Allen said that AAPS plans to put answers to these questions on their website after the second community budget forum, to be held May 14 at 6:30 p.m. at Huron high school.

Green thanked everyone for their input, and praised Allen for his candid responses and financial expertise. She announced that the second AAPS forum would be held next Monday, and that the detailed summaries of each forum would be forwarded to school board members for their consideration.

Next regular board meeting: May 9, 2012, 7 p.m., at the downtown branch of the Ann Arbor District Library, 343 South Fifth Ave., Ann Arbor, MI 48104.