Ann Arbor school district uses $3.4M more of its fund equity than planned, auditor says
Changes at the state level forced Ann Arbor Public Schools to use about $3.4 million more of its fund equity than planned, according to a financial report given to the school board Wednesday.
The district had budgeted to spend about $189 million in the 2010 fiscal year, but actual expenditures and revenues were about $195 million and $184 million, respectively. The difference was covered by the district’s fund equity, which sits now at about $16 million.
Eric Formberg, an auditor from Plante & Moran, said the increase was due to the elimination of some state funding and state-mandated compensation increases for retiring employees. Those employees retired at a higher rate in 2010 than in years past due to state compensation, which changed after the budget had been approved.
Formberg gave the district an "A" on its audit.
“The financial in stressors in Michigan are unparalleled, we haven’t seen this kind of sustained financial pressure in my 23 years,” he said. “However, the district continues to take big steps to manage those stressors as effectively as you can to perform the services you provide.”
Formberg’s presentation to trustees was the first financial report. Board members will hear a second report at their next regular meeting on Dec. 8.
The presentation also had a foreboding final page, which predicted increases in district spending. Revenue changes from the state are expected to hit 0 percent in 2012, with an increase in district spending hovering at about 2 percent — down from about 3.5 percent in 2011.
Formberg said the gap between district spending and state revenues on the chart was actually smaller than most districts.
“The district’s intention has been to deal with the issue head on and get ahead as much as you can,” he said. “This captures the fact that the challenge is to think creatively about you can get the cost line closer to the revenue line over time.”
Trustee Glenn Nelson said the district’s financial team should be proud of the audit.
Nelson compared audits from when he first joined the school board in 2002 to the current audit and found a $12 million decrease in state funding.
“We have an exciting vision of what education can be for students here in Ann Arbor,” he said. “The real point is that we need to continue to find ways in our local area to support education.”
As one of about three dozen Michigan school districts under section 20j of the Proposal A state funding reform passed in the 1990s, Ann Arbor had about $3.7 million in funding eliminated by Gov. Jennifer Granholm in October 2009. Formberg pointed to that funding being eliminated as another reason for the increased use of fund equity.
School board President Deb Mexicotte said the elimination of those funds caused Ann Arbor to become a donor district: Taxpayers are still paying for schools but are seeing less funding come back into their own schools.
“We’re still paying that amount of money to the state and not getting any of that money back, and now we’re a donor district,” she said. “We’re donating a mill that was supposed to keep us whole. It’s a violation of the agreement — we’re not a donor district and there’s no recourse to replace those funds.”
Kyle Feldscher coves K-12 education for AnnArbor.com. He can be reached at kylefeldscher@annarbor.com.
Comments
jns131
Fri, Nov 19, 2010 : 11:17 p.m.
Thru the freedom of information act? You can find out how much a teacher is paid in AAPS. Guess what? Most are paid higher then $75 grand. Look thru a lot of the on line articles. They mention it. Teachers were not hit that hard with their benefits. The custodians were. Teachers in Ann Arbor have it good.
sh1
Fri, Nov 19, 2010 : 7:56 p.m.
Re "AAPS really needs to rethink how it does business and start cutting teacher salaries. Period. The teachers need to realize that we can't keep paying them $65 grand a year." They already started; even before the recent contract with a large cut, teachers were hit through their insurance plans. And I don't know where your $65,000 comes from.
jns131
Fri, Nov 19, 2010 : 11:08 a.m.
local? The custodians lost out by 8%. The teachers? Will re coup that loss in 5 years. The bus drivers? Their jobs. WISD took over. Trinity is coming in to help Ypsilanti and I would not be surprised if it takes over Ann Arbor and Willow Run as well. With this new superintendent coming in? O that will go over well. No money? Spend like the government does until they have to increase your taxes. AAPS really needs to rethink how it does business and start cutting teacher salaries. Period. The teachers need to realize that we can't keep paying them $65 grand a year. Good luck AAPS.
Basic Bob
Fri, Nov 19, 2010 : 5:13 a.m.
There's a lot of numbers flying around in this article. The most important information is in the second paragraph. AAPS spent $11M more than it received. They spent $6M more than they budgeted. Spending $3.4M more than planned out of the fund equity implies that they *planned* to run a deficit. Do they also *plan* to deplete the fund equity in the next two years? The auditor's "A" is suffering from grade inflation.
eom
Thu, Nov 18, 2010 : 8:20 p.m.
A taxpayers perspective? Really? As a taxpayer, I am happy to help fund QUALITY schools. I find it amazing that Ann Arbor is constantly recognized NATIONALLY for the quality of our city and SCHOOLS, yet people continue to complain about how much teachers make and how little they do. Teachers have taken pay cuts, have added work loads, and are being asked to do more with less - and they do. I'm sure people (albeit the same 7 people) will write endless comments about how they aren't "bashing" and teachers have enjoyed their "Cadillac" benefits and time off...etc...but despite those naysayers...we live in a wonderful city with EXCELLENT schools and AMAZING teachers.
local
Thu, Nov 18, 2010 : 4:53 p.m.
aataxpayer Teachers already took a 2.2% cut as well as paying 3% more into a retirement fund. What more would you want teachers to do? Would you like them to take 8-10% cuts? How about this, we lower teachers salaries by 10% but allow them to get over time pay for grading papers outside the school day, answering e-mails from parents outside the school day, etc... In the private sector, people can collect for the extra time, why not teachers. When a parent misses a scheduled conference and a teacher as to come back at another time to meet, extra pay. I continue to have issues with people who come on this blog and complain about teachers and what they do. Until you have been in there shoes, I am guessing you have no idea. I am not a teacher, but many of my family members are and I see what they deal with day in and day out to be the best they can be. I will continue to advocate for these professionals, ones within my family and those who work daily with my kids.
sh1
Thu, Nov 18, 2010 : 2:18 p.m.
aataxpayer, we can always count on you!
PhillyCheeseSteak
Thu, Nov 18, 2010 : 1:15 p.m.
Maybe the A.A. Board of Education should reduce the proposed salary for the next superintendent? Maybe $245,000 is too much, in this economy, in this climate? Maybe it just feels wrong to increase the next superintendent's salary by $70,000 (or so) when other employees within the district have already reduced their salaries and benefits, and some have lost their jobs?