The forums are set for Saturday, June 9 from 10 a.m.-noon; Tuesday, June 12 from 7-9 p.m.; and Wednesday, June 20 from 7-9 p.m. All forums will be held in the downtown library’s basement multi-purpose room at 343 S. Fifth Ave. in Ann Arbor.

According to the press release, the library board is considering placing a bond proposal on the November ballot to fund changes at the downtown site, and wants to offer residents a chance to ask questions and give feedback. Comments or questions can also be emailed to downtown@aadl.org.

This is the latest action by the library’s leadership in moving toward a possible new downtown building. A recent survey commissioned by AADL – and presented to the board at its April 16, 2012 meeting – indicates voter support for a tax increase to pay for major renovations or reconstruction of that building. At that same meeting, the board voted to form a three-member special facilities committee, charged with making recommendations to the full board.

By way of background, several years ago the AADL board had spent months evaluating the condition of the downtown building and working with the local firm Luckenbach Ziegelman Architects on designing a new structure. But in late 2008 the board voted to suspend redevelopment of the downtown building, citing the shaky economy. [See Chronicle coverage: "Citing Economy, Board Halts Library Project."]

The topic has been addressed at subsequent AADL board meetings: “New Downtown Library? If, When and Where,” and “Board Renews Library Building Discussion.” And in November 2011, the board voted to provide $45,000 in funding for consultants to help resume the process of possibly redeveloping that downtown building. The building is located south of the city’s new underground parking garage, which is being built by the Ann Arbor Downtown Development Authority and is now tentatively named the Library Lane Parking Structure.

However, the board has not explicitly discussed at its public meetings the specific intent of putting a millage on the November 2012 ballot. To date, there has been very little public discussion among board members about specific options they might be considering.

Small group work made up a portion of the May 14 budget forum. (Photo by the writer.)

Attendance at the second community budget forum held Monday at Huron high school was lighter than at the first one, held a week earlier. Still, almost 40 community members and about a dozen staff members participated.

The two main themes that came out of the second forum were: (1) a desire to keep the cuts away from the classrooms (i.e. not cutting teaching staff or increasing class sizes); and (2) a concern that the cuts as proposed would disproportionately affect the most educationally vulnerable segments of the district’s population. Many participants also expressed concern that the timing of the proposed budget reductions would not allow for transition planning this late in the year, and that the district was not being sufficiently forthcoming with detailed budget information.

Trustees Glenn Nelson, Irene Patalan, and Christine Stead attended the May 14 budget forum. The board will hold a discussion on the budget during their next committee of the whole meeting to be held on Wednesday, May 16 beginning at 5:30 p.m. in the Balas administration building’s main conference room.

Budget Presentation

AAPS superintendent Patricia Green welcomed everyone to the forum, and reviewed the reasons behind the structural deficit that has caused AAPS to need to make over $55 million in cuts in the past five years. Green said that her administration does not want to be suggesting any of these cuts to the board, and that the cumulative effect of these reductions will be painful no matter which decisions the board makes. She then invited AAPS deputy superintendent of operations Robert Allen to present the proposed budget.

The proposed budget was made in terms of three alternatives – Plans A, B and C – each with progressively bigger cuts. Even Plan A, with the smallest number of cuts and the greatest use of the district’s financial reserves, 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. Plans B and C have progressively greater cuts and less use of reserves.

Allen gave a presentation of the full budget proposal almost identical to the one presented to school board members last month, and then asked participants to break out into small groups to discuss their concerns with the potential budget reductions and brainstorm additional revenue enhancement ideas. An AAPS administrator sat with each of the small groups to serve as the facilitator and recorder.

Community Response

Community members attending the forum were asked 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 additional 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

The concern mentioned most often at the May 14 budget forum was that the proposed cuts could negatively affect student learning – due to higher class sizes. Participants expressed the belief that the core curriculum will be what closes the achievement gap, and suggested that keeping class sizes as low as possible should be prioritized above everything else, including all extracurricular activities. “Don’t cut anything related to instruction,” “Cut anything but the basics,” and “Students first – preserve class sizes” were all suggestions made at the forum.

One community member noted that higher class sizes is what caused a lack of success for some students at their comprehensive high schools. And that had created the need for alternative programs such as the one in place at the Roberto Clement Student Development Center.

Another main set of concerns had to do with a perceived lack of equity in the proposed cuts. Participants argued that marginalized students who need the most support will be the most affected by transportation cuts; that “at-risk families are being hit hard across the board with cuts;” and that the cuts are being made “from the bottom up.” Another contention was that students of color would have more trouble getting to school, but the budget cuts will not reduce the academic achievement of whites, thereby widening the racial achievement gap.

Regarding the possible restructuring of Roberto Clemente Student Development Center, a few tables compared the timeline for transition for that alternative high school to a timeline for transition of an athletic program. Participants noted that lacrosse, previously a varsity sport, had been given a year to transition to a club sport, but Clemente could be closed with seven weeks notice – not enough time for the community time to re-group. According to a Clemente student who attended the forum, “Clemente students are starting to freak out.”

Participants also questioned if there was enough time left in the year to enact the budget reductions as proposed, and said that “people should have been given more time to react.” One table requested that the community be given detailed information earlier next year, because it’s projected to be another bad budget cycle.

Finally, it was argued that the district need to be more transparent, and that data should not need to be requested via Freedom of Information Act requests. A participant suggested that the district should also provide more background on the institutional history that had gone into the budget recommendations. Forum attendees also asked to be kept involved in the budget process between the May 14 budget forum and the final budget vote.

Community Response: Revenue Enhancement Suggestions

Community members suggested the following strategies for bringing in additional revenue – which are grouped thematically:

• Redouble efforts to pass a countywide enhancement millage
• Support the AAPS educational foundation
• Help the AAPS educational foundation raise substantial amounts of money
• Cut middle school athletics
• Cut all sports
• Convert more sports teams to club sports [as was done with lacrosse]
• Cut all extracurricular activities
• Institute a “pay to ride” plan to cover busing costs, waiving the fee for those who can’t afford it
• Have the PTOs subsidize busing
• Use smaller buses for smaller routes
• Outsource busing
• Eliminate two of the buses serving Ann Arbor Open
• Eliminate swimming at Ann Arbor Open [at Mack pool]
• Allow advertising in district spaces
• Apply for more grant funding
• Open more alternative programs in the district to bring in more School of Choice students
• Fill Clemente to capacity by allowing additional School of Choice students to enroll there
• Add Arabic language as an elective to attract kids who are attending local charter school
• Join the Early College Alliance
• Make sure the district is getting all of its Medicaid reimbursements
• Redistricting so all students can attend the elementary school closest to their homes
• Combine elementary schools and sell off unused properties
• Merge low-enrollment elementary schools
• Eliminate employees’ dental and vision benefits
• Outsource the payroll department
• Take back central administrators’ salary raises
• Cut administrator’s salaries
• Prohibit all administrators’ vacations until the budget is resolved

Community Response: Questions

Table groups asked a number of questions that 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. The district has said it would post on its website answers to questions asked by forum attendees. Questions asked included:

• How would cuts to the three dedicated police officers impact the schools?
• What percentage of the budget needs to be kept in the fund balance?
• What process was used in coming up with these suggested reductions?
• Why aren’t there details being offered in the plan to restructure Clemente?
• What is an estimate of the value of the Clemente building and property?
• Is there a plan for the alternative schools that could be shared to explain what could be happening and reduce fears?
• Why aren’t all of the alternative schools on the chopping block?
• What savings would be realized by eliminating the NWEA assessment?
• Why were there increases in central administration salaries?
• Can the district release more details on the proposed cuts?
• When a proposed cut in listed, are “offset expenses” reflected in that cut?
• What is the timeline – when will these budget decisions be made?
• How can people who aren’t present at the budget forum give input?

Green closed the forum by thanking everyone for their input, and saying that everything discussed at the forum would be shared with the board and posted on the district’s website as the budget conversations continue over the next several weeks.

Next board meeting: Committee of the whole, May 16, 2012, 5:30 p.m., at the Balas administration building main conference room, 2555 S. State St., Ann Arbor, MI 48104.

Ann Arbor Public Schools board trustee Glenn Nelson (light blue shirt), listening to parents at the AAPS budget forum on Nov. 10. (Photos by the writer.)

The forum served two distinct purposes: (1) to educate the public on school funding issues, including its specific challenges for crafting next year’s (2012-13) budget; and (2) to solicit ideas from the public on how the district can reduce its budget by $14 million.

The current fiscal year’s approved budget is $183.62 million.

The district typically schedules budget forums in the spring, but this year wants to involve the community earlier than that.

A second forum will take place Monday, Nov. 14 at 6:30 p.m. in the cafeteria annex at Pioneer High School.

At Thursday’s event, Allen said that the district is projecting a $14 million deficit for the 2012-13 school year. Over the past five years, the district has made a cumulative total of nearly $50 million in cuts.

How the Budget is Developed

Green led off the forum with a review of the main strategies of the district’s strategic plan. That was followed by a brief overview from Allen on how the district is funded, including restrictions on specific funds.

Budget Development: Strategic Plan

Green introduced her cabinet members and other administrators present. She then read the district’s mission statement, and reviewed the eight core strategies of the AAPS strategic plan, noting that the budget will be linked directly to these strategies.

Budget Development: Fund Restrictions

Allen explained that the budget he would be discussing that night is the district’s general fund, or “operating budget.” He contrasted the general fund with a set of other funds that have more restricted uses. Funds with restrictions include: grant funds (Title 1 and special education funds); bond funds (capital projects such as building construction, technology, bus purchases); debt service (to fund debt service on bonds); sinking fund (capital projects such as land acquisition, remodeling current buildings); and special revenue funds (food service, Rec & Ed).

Allen added that a proposed revision to the legislation governing sinking fund dollars could greatly help AAPS because it would allow the district to spend the sinking fund more flexibly, for example, on upgrades to technology.

Budget Development: How AAPS Is Funded

Allen then described how Michigan school districts are funded, which is primarily through each district’s foundation allowance from the state. The allowance is a per-pupil allocation determined by blending student count data from September of each year with the student count data from the previous February, in a 90-10 ratio. Proposal A legislation, which was enacted in 1994, stipulated that state revenue is also factored into the foundation allowance at a variable level, Allen said.

AAPS deputy superintendent of operations Robert Allen (standing), meeting with participants of the AAPS budget forum on Nov. 10.

He the explained how the district’s foundation allowance is calculated. The district’s allowance in 2011-12 was $9,020 per pupil.

Of the $9,020, Allen began, $3,310 comes from local non-homestead property taxes (commercial, industrial, rental, seasonal homes, etc.). The state contributes another $4,476 ( from a combination of state homestead taxes, state non-homestead taxes, sales tax, income tax, lottery revenue, etc.). And, the final $1,234 comes local homestead property taxes.

Though Proposal A’s intention was to equalize school funding across Michigan, Allen expressed frustration that the state had “broken its promise” by not allowing wealthier, “hold harmless” districts to continue to fund schools at a higher level than the base foundation allowance. “Hold harmless” funding was eliminated in 2009, costing AAPS $233 per student.

Budget Considerations

Allen then outlined a number of factors that will affect the 2012-13 budget in more detail: the structural funding deficit, administrative costs, the state retirement rate, incentives funding, and fund equity. Community questions and Allen’s answers have been included in each subsection, though at the forum, questions were held until the end.

Budget Considerations: Structural Deficit

Due to the variable nature of the state contribution to the foundation allowance, Allen said, “As the economy goes, so goes our funding.” With property values and other state revenue decreasing, and the consumer price index rising, Allen explained, Proposal A has caused a structural deficit in the district’s funding allocation of $6-7 million annually.

He suggested that the public should be able to look to the state School Aid Fund (SAF) to see how healthy the state budget is. However, he pointed out that the state has recently begun to use SAF surplus to fund other things, even though the intent of the SAF, as created under Proposal A, was exclusively to fund K-12 education. What should have happened to the SAF surplus, Allen argued, was to be added to the per-pupil allocations of the roughly 1.6 million students across the state.

Budget Considerations: Administrative Costs

Allen then showed a few slides summarizing categories of the operating budget as percentages of the total FY 2011-12 budget of $183.5 million.

One of the slides broke out expenditures as a percentage of the total budget as follows: Instruction and Support – 79% (includes principals, teachers, teacher assistants, counselors, social workers, psychologists, media specialists, secretaries, and custodial and maintenance staff in buildings); Operations and Maintenance – 11%; Central Administration – 5% (includes superintendent, executive administration, directors, supervisors, and executive support staff in finance and human resources); Transportation – 3%; and Other – 2%.

In response to a forum attendee’s question, Allen noted that “executive administration” refers to the superintendent’s cabinet.

Regarding the slide showing categories of expenditures, one attendee suggested it might be helpful to see the instruction budget broken out by school. Allen was asked if the budget allocation for all high school students is the same – for example at Community versus Pioneer versus Huron. Allen responded by saying that there is no material difference between those schools and that the district spends about $8,000 per high school student. He added that AAPS spends in the mid-$6,000s on each middle school student, and about $5,000 on each elementary student.

The forum attendee then asked how the allocations for central administration and administration have changed. Allen answered that they have both decreased.

At the AAPS board’s first Committee of the Whole (COTW) meeting on Nov. 2, Allen reviewed a draft of the presentation to be presented at the budget forums, and trustees suggested adding a comparison of AAPS administrative costs with those of districts of similar size.

The Nov. 10 budget forum presentation included a slide based on that recommendation, which showed data taken from the 2009-10 Bulletin 1014, a state report available on the Michigan Department of Education website. Bulletin 1014 ranks districts on a number of financial data points, student count, and average teacher salary, among other metrics. It includes traditional public schools (551 of them) as well as charter schools (232 of them) in its rankings.

Allen pointed out that while AAPS is the seventh-largest school district in the state, it ranks 363rd in terms of per-pupil business and administrative expenses.

One forum attendee asked how AAPS administrative costs compare to similarly-sized districts, such as the 21 districts (as noted on the slide) with student populations between 10,000 and 19,999 students. Allen said he did not know.

Another forum participant asked whether the “business and administrative expenses” as defined by Bulletin 1014 included administration costs for individual school buildings, and Allen said no, that it refers only to AAPS central administrative costs. A third participant commented that if all the charter schools were removed from the rankings, AAPS would look even more conservative with respect to administrative spending.

Budget Considerations: State Retirement Rate

Allen highlighted the state retirement rate as “one of the biggest obstacles” in setting the budget. He stated that one of the stipulations of Proposal A was to pass on the cost of funding the state retirement system to school districts. He also noted that the Michigan Public School Employees Retirement System (MPSERS) is a defined benefit plan (not a defined contribution plan).

School districts are mandated to contribute to MPSERS at a rate set by the state, Allen explained. When Proposal A was first enacted, the state retirement contribution rate was 4%, he said. To calculate the district’s obligation, that percentage is applied to the district’s total employee salaries.  This year, the rate is 24.46%, and is projected to increase to 27.37% in FY 2012-13, and 28.87% in FY 2013-14.

Allen added that staff reductions across the state are compounding the problem, because there are fewer employees left who are contributing to MPSERS. Contributions from fewer employees means a higher rate of contribution is required, in order to fund the defined benefits of the retirement system.

Allen stressed that the district has no control over this cost at the local level – there is no opportunity to negotiate with bargaining units for a lower rate. “This is an area where the legislature needs to make some changes,” Allen said, pointing out that every 3% increase in the state retirement rate adds $3-4 million to the district’s structural deficit.

A forum attendee asked for further explanation of the district’s obligation to MPSERS. Allen clarified that AAPS is required to contribute to MPSERS an amount equal to 24.46% of the total amount the district spends on salaries. Again, he stressed that the rate is non-negotiable, and that the mandated retirement contributions are above and beyond the salary costs themselves.

Budget Considerations: Incentives Funding

One forum participant asked if the district applied for and received the one-time “best practices” incentive funding being offered by the state. Allen said the district had applied, was approved, and that the first payment would come this month.

The participant then asked whether that money had been factored in to the projected budget deficit, and Allen said no. He explained that the 2011-12 budget will be amended three to four times throughout the year, and that the incentives funding will be included in the first budget amendment.

Budget Considerations: Fund Equity

Allen explained that the district’s fiscal year and the state’s fiscal year are on different calendars, meaning that there are two months in which AAPS does not receive state aid. Because of this, he said, AAPS needs to have $16-18 million saved to operate for those two months. If it did not have that money reserved, it would need to borrow money from the state and incur interest expenses.

Even if the interest were only $200,000, Allen noted, “that’s two teachers.” He also pointed out that having had money in fund equity two years ago, when the state reduced school funding mid-year, meant that AAPS did not need to lay-off teachers in the middle of the school year, as many surrounding districts were forced to.

Budget Suggestions

Forum participants formed smaller groups at individual tables. But before opening up the table discussions, Allen offered his own view on ways to address the budget. He stressed that the problem of the structural deficit needs a permanent fix, and encouraged everyone to lobby the state to change the ways schools are funded.

Allen also suggested that the district should focus on: increasing student enrollment; exploring additional opportunities for consolidation or collaboration with other schools and universities; and exploring new revenue options as well as cost savings. Finally, Allen emphasized the importance of considering the effect of any budget cuts on equity among all students.

Allen said that the AAPS bargaining units have worked collaboratively, and that the district has controlled health benefits costs. But, he said, “There are only so many cuts you can make, before your community looks elsewhere.” If students leave the district, the district loses funding, which causes more cuts and more transfers out of AAPS, Allen said. “It creates a downward spiral.”

Community participants then met at round tables in groups of four to six, with one member of AAPS administration (or AAPS board member Glenn Nelson in one case) present at each table to facilitate and take notes. Allen pointed out the summarized audit data on the table for review, as well as the five-year history of budget reductions by category included in the table packets, and thanked people for coming.

Community suggestions on the budget, as reported out by administrators present at each table, addressed the following areas: additional information requested; how to better include parents in the budgeting process; suggestions for budget reductions and priorities; and suggestions for revenue enhancement.

Suggestions: Additional Information Requested

• More detail about what created the structural deficit
• A handout of legislative contacts
• More concrete information about what to say and how to say it to legislators
• A list of what is “off the table,” or things the district has decided already to keep intact
• What other districts have done to reduce their budgets that has been successful
• How much it costs to run Skyline
• Administrative costs broken down by building
• Instructional costs broken down by building
• More “narrative” about revenue streams such as grants – how can we get grants
• Link dollar amounts to items on the strategic plan
• Amount spent on mandated programs versus amount reimbursed for such programs
• Budget breakdown by smaller categories with more detail
• Explanation for inequities regarding transportation
• List of contracted services and associated costs
• More information from a taxpayer perspective
• Re-create “user-friendly budget” document
• The value of property held by AAPS
• How AAPS compares to other districts in terms of cuts being made

Suggestions: Inclusion of Parents in Budgeting Process

• Post this budget presentation on the district’s website
• Explain that legislative reform to MPSERS needs to be done carefully – some proposals be considered would be detrimental to teachers
• Communicate with parents via the neighborhood centers
• Give specific information sooner in terms of what cuts would mean
• Get the PTOC more involved
• Contact school PTOs and PTSOs directly
• Include budget information in e-mails from the school – parents would be more likely to read it
• Attend school coffee hours to discuss the budget and get ideas
• Be more proactive in getting budget information out – send it as an e-mail with a link to the budget
• Put a budget survey online
• Explain the information better
• Address lack of trust (related to last year’s principal-sharing proposal  and the  2009 county enhancement millage)
• Address feeling that cash from parking fees is being “siphoned off”
• Trust parents to be more helpful in a volunteer capacity
• Engage Michigan Parents for Schools, which has many tools and direct e-mail contacts

Suggestions: Budget Reductions and Priorities

• Don’t touch teacher benefits – neighboring districts spend much more
• Remove instrumental music from 5th grade, for possible funding by the AAPS educational foundation
• Be mindful of equity – lower income students are more affected by all cuts
• Cut varsity athletics to keep class size down
• Continue collaborations with local universities
• Close elementary schools that are not at capacity
• Protect teachers and transportation – they were already cut
• Consider closing one or more of the six high schools
• Combine or close Clemente or Ann Arbor Tech
• Close Mitchell, then run Scarlett as a K-8 magnet school
• Consider principal-sharing
• Don’t get substitutes for absent high school teachers – just have a big study hall for all students whose teachers are out
• Don’t rely on lobbying – timeline is not soon enough to get action this budget cycle
• Adjust start times to combine transportation geographically
• Cut high school busing and work with AATA to provide transportation
• Ask parents to bring in supplies to buildings
• Reduce administration
• Reconfigure schools with small populations
• Pool health care costs with districts throughout the county
• Bring in more student teachers to increase collaboration with universities
• Don’t duplicate high school class offerings – hold classes at only one location, and bus students around as necessary
• Be careful of reducing class choices at high schools, as it may reduce enrollment
• Consolidate human resources and information technology with other local districts
• Do not share principals at Title 1 schools
• Do not close buildings this year – not feasible without more planning
• Cut the glossy brochures
• Possibly cut curriculum coordinators or others in central administration
• Figure out how to bring back students who leave for charter or private schools
• Help business community understand that we are educating the work force

Suggestions for Revenue Enhancement

• Lobby the state – the School Aid Fund should be used only to fund K-12 schools
• Help parents to lobby the state more effectively
• Encourage alumni to give back by donating to the AAPS educational foundation
• Ask AAPS educational foundation to lobby for funding change [Another participant ventured that 501c3 organizations are legally prohibited from lobbying.]
• Try to get students from Greenhills
• Offer in-district choice between high schools to increase enrollment
• Open up more Schools-of-Choice seats to increase enrollment
• Open up high schools to Schools-of-Choice enrollment
• Increase grant funding
• Rent out AAPS facilities (pools, planetarium, theater) without interfering with instruction
• Increase volume of parent communications with legislators
• Encourage the AAPS educational foundation to raise more money
• Make better case for tech bond
• Need more active grant searching
• Rent or long-term lease district-held property
• Increase user fees for field trips, athletics
• Increase football parking fees on Pioneer’s lot
• Conduct a better energy analysis – the heat is on at buildings in evenings
• Increase pay-to-play

Next Community Forum on the Budget

Allen closed the forum by inviting all members of the community to a second budget forum on Monday, Nov. 14 at 6:30 p.m. in the cafeteria annex at Pioneer High School. Green thanked everyone for coming and for sharing their thoughts.

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