Ann Arbor school board authorizes district borrowing $10M to pay employees
After years of budget cuts and drawing down its fund balance, the Ann Arbor Public Schools has been forced to borrow money for the first time in its history.
The Board of Education passed a resolution Wednesday night authorizing district officials to obtain a line of credit in the amount of $10 million to fund school operations.
Ann Arbor board Secretary Andy Thomas looks at a powerpoint presentation as Finance Director Nancy Hoover discusses the district's third-quarter financial report, which shows the AAPS needs to add another $1.3 million to its current-year budget deficit.
Danielle Arndt | AnnArbor.com
The majority of a district's revenue is from the per-pupil foundation allowance it receives from the state. The Michigan Department of Education disburses this money throughout the fiscal year, which for the state runs from Oct. 1 through Sept. 30, as opposed to July 1 through June 30 for most school districts.
Districts with a healthy fund balance, or primary savings account, do not need to borrow money from the state or other entity to make payments. They can front the money necessary for payroll and operations from their fund balances and replace the transfer with the money from the state aid payment when it comes.
Director of Finance and Chief Executive Officer for the AAPS, Nancy Hoover, said Wednesday the amount the district would need in its fund equity in order to make payroll is between $14 and $16 million.
"We were able to make our payrolls last year when we had $16 million (in fund equity), but it was tight," she said.
AAPS has been one of only a few remaining districts in the county that did not borrow money from the state of Michigan. Borrowing is not that uncommon due to the state government and school districts being on two different calendars/fiscal years. The Michigan Department of Treasury offers a loan program to traditional public schools to finance short-term operational cash flow needs.
However, Hoover said AAPS will not be borrowing from the state, but instead will seek a line of credit through a bank. She said it's the less expensive route, as the interest rates should be lower.
AAPS began the 2012-13 academic year with $16.63 million in fund equity. However, according to the district's third quarter financial report, which also was presented to the board Wednesday, the district will finish this school year with just $6.8 million. This in part is due to a current-year budget shortfall of $3.8 million.
It was announced that the district had a deficit of $2.5 million in February. But from February to May, the shortfall has grown by another $1.3 million.
According to the third-quarter financial report presented Wednesday, the district's substitute teacher budget was increased by $300,000; and an extra $300,000 was budgeted for health care to cover anticipated usage through the remainder of the year; and an additional $700,000 for transportation was needed, due to increased fuel costs, and increased costs for maintenance and substitute drivers, as well as costs associated with transporting homeless students.
Nancy Hoover addresses a group of parents, students, staff and community members at a budget forum at Huron High School on May 2.
Danielle Arndt | AnnArbor.com
"I continue to be frustrated that these things keep popping up and biting us on the keister," said board Secretary Andy Thomas. "... We are talking about the price of gasoline costing us $700,000 more than we anticipated. ... And we are just now finding out about this in May.
"I would think that much of this would have become evident by October or certainly sometime in November. I am increasingly frustrated by having these budget adjustments come along six months after the fact."
Wednesday was the first reading of the third-quarter financial report and budget adjustment resolution. The board will vote on the resolution at its next regular meeting on May 22.
Hoover explained many of these issues are coming to light as the finance department continues to move from bottom-line accountability budgeting to line-by-line accountability, the first step of implementing zero-based budgeting. That method of budgeting puts every item at zero at the beginning of the budgeting process and then allows the district to allocate money for each according to its priorities.
But in addition to gas costs, Hoover said, there also were increased maintenance costs and costs incurred because the Washtenaw Intermediate School District, with which AAPS contracts for transportation services through a consortium with Ypsilanti and Willow Run, is having a difficult time finding substitute drivers. Because of this, the WISD is having to pay substitute drivers a higher rate, she said.
Trustee Susan Baskett asked: If it's the WISD's responsibility to find the drivers, then why is it Ann Arbor's books on the line? Hoover said this is because of the district's contract with the WISD.
"It's different than if we had privatized bus service," Hoover said, explaining if the district had privatized, a company then would have provided the service for a set fee. "But this is a pass-though. Whenever additional costs then incur beyond that, (they) are passed on to the districts in the consortium."
Trustee Simone Lightfoot said she was concerned about how much money the district actually saved by contracting with the WISD. But Hoover said the district previously spent about $7 million on transportation. Even with the increased expense, the district still is spending about $2.5 million less through the WISD.
Superintendent Patricia Green said the Washtenaw Intermediate School District just called a meeting about three weeks ago with the consortium districts to inform them of the increased costs of transportation.
"We were shocked at the meeting when we got the information," she said.
Hoover added that student homelessness is on the rise and is still a "new phenomenon" school districts are dealing with: "It's not really something we can project very easily. And it's not something we really have incurred in the past."
The district enacted a spending freeze around February to deal with the current-year deficit. Hoover said she is hopeful school officials will not end up spending all that they budgeted for, and the district will be able to close the budget gap and not have to transfer it over into the next school year.
Green emphasized the importance of continuing to move toward zero-based budgeting.
"Unless that takes root, this popping up (of expenses) will happen over and over again," she said. "In the old days when there was excess, you could transfer from one part of the budget to another to fill the gap, but there is no excess there anymore."
Green said the biggest thing about line-by-line accountability is "you are seeing the shortfalls. Before, you didn't know what you weren't budgeting appropriately.
"Budgets were built on projections from previous years that were not accurate. ... I won't be here in the future, but the blueprint will be here and Nancy (Hoover) is the architect going forward." Green announced her resignation earlier this year.
She told the board it would have to be patient because it takes time to recreate this process that, historically, has been done from the bottom up for years and years.
"It's building the bridge as you're crossing it."
Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at daniellearndt@annarbor.com.
Comments
Basic Bob
Fri, May 10, 2013 : 12:04 p.m.
you can call it a payday loan if you want. just some short term borrowing. but what is next? i don't think they are likely to receive a big inheritance from a rich uncle anytime soon. it's time to get your house in order, starting with what you think you need in administration and building inventory. hint: these are related.
sweetdaddy1963
Thu, May 9, 2013 : 11:15 p.m.
I don't have the answer, I'm clueless but I wish the kids had the freedom of just going to school without any programs being pulled, I wish they had yellow school buses to pick them up for school and to take them to after school events wow I had it easy in the 70's. really is that so hard to give to our kids they deserve that much before they hit the world that we adults live in, anybody want to go back to high now? Nope not me.
Poorman
Thu, May 9, 2013 : 10:22 p.m.
This is Detroit city council logic. We have a plan, we just need more money to implement it. It is the State's fault. Sounds just the same. Shame on you for not knowing or controlling your costs. Shame on you for being irresponsible with our tax money. How do you not know your $700,000 over budget on fuel until one month is left in the school year. Private America would know this within 1 month at any business that is afloat for more than 1 year.
Jay Thomas
Thu, May 9, 2013 : 9:02 p.m.
Look at all the money that the city has borrowed over the years under this Mayor. Staggering. Look at what the County commissioners are now doing borrowing 300+ million. Mind boggling. Now look at this. Is it really because of the state? I think financial incompetence is the norm here. Can anyone live within their means... or will we pass on a legacy of debt to the next generation. :(
Mike
Fri, May 10, 2013 : 1:28 a.m.
It's already passed on; we're working on the next two generations and the progressives want more..............
Orangecrush2000
Thu, May 9, 2013 : 8:49 p.m.
Cut admin by 50% (at least). Take half of the savings and hire more teachers, and give performance raises to the best teachers. There will still be savings left over; and the school district will improve, which will bring in more students, adding to more state aid. Cut sports for all but the most basic ones, like football, bball, baseball, track, etc... Let the country club sports stay where they belong....at the country club. They will survive as private sports teams, which is what they are, anyways; and no one wll be worse off. Again, there will be more savings, and less future expenses. Sell useless buildings and property, and get out of, and avoid engaging in, losing programs in terms of finances, like the wind turbines. More savings, still. In the meantime, I wouldn't mind going back to Pre prop A, for school funding. If I'm wrong about his, sorry. It's just my opinion. But, please add to, or adjust, to help.
Linda Peck
Thu, May 9, 2013 : 7:42 p.m.
I wonder if someone could inquire about projected costs before incurring them. That is how I do business.
Great Lakes Lady
Thu, May 9, 2013 : 7:33 p.m.
Wait....in another article you state administrative personnel taking a 3% pay cut......but you're borrowing $10 million. As has been suggested before, why not get rid of redundancy to meet your budget, whether the redundancy is in programs, building, or personnel?
Wake Up A2
Thu, May 9, 2013 : 7:16 p.m.
They owe the teacher union 4 million from the last contract. Now they borrow 10 million more. When will this stop? Quad A can now take cuts..... the teachers have given back more then 5% in direct contract language plus what the state took in retirement which is another 4%. Yet balas wants to only cut the cheap help..... you have the district wanting to cut the grant writer who makes 40k and who brings in 300k... that makes no sense. You want to cut the theater person at pihi who makes 29k..... why not cut on director and save the other two and who help our kids..... if the board cared they would act..... so when does the recall start...
Mike
Fri, May 10, 2013 : 1:26 a.m.
They owe the teacher union 4 million from the last contract. Now they borrow 10 million more. When will this stop? ANSWER: When they are broke...............
Goober
Thu, May 9, 2013 : 8:43 p.m.
We all know and agree that the AA BOE is inept, clueless and incapable of any fiscal responsibility. A full board replacement with a true leader at the helm of the schools is what we need. Other wise, this group will continue to damage our school system and eliminate more talented teachers.
GoNavy
Thu, May 9, 2013 : 6:41 p.m.
Borrowing to pay current expenses. Smart. /sarcasm.
EyeHeartA2
Thu, May 9, 2013 : 6:12 p.m.
" We are talking about the price of gasoline costing us $700,000 more than we anticipated. .." ...... because everyone projected gas to be at $2.99/gal this year? How incompetent can you be?
Judy
Thu, May 9, 2013 : 3:09 p.m.
Yesterdays Story: Here's where the local schools fall in the U.S. rankings, with their Michigan rankings in parenthesis: •298th: Saline High School (4) •633st: Community High School (25) •637th: Chelsea High School (26) •891st: Huron High School (38) •955th: Pioneer High School (40) •1019th: Skyline High School (44) It would be interesting to know how much money Saline and Chelsea spend per student.
Judy
Thu, May 9, 2013 : 7:06 p.m.
AMOC, Thank-you. Than my point to CLX is right on.
Judy
Thu, May 9, 2013 : 5:31 p.m.
CLX, Sure, Saline is not as diversified as Ann Arbor, my point is the way money is given to the different schools in Michigan is not the problem it is how local school boards spend the money. I do not want to hear being on a school board is a thankless job, they ran for the job so do the job they told the taxpayers they would do. Make school budgets and policies you can live with. I agree it is hard if you have parents that are not responsible in make sure their child/childred are in school and behaves but, you do not have to be "rich" to make sure you are involved in your child's education. How many of the same people complaining about Ann Arbor having different population, being more diversified do not want to cut here these parents monthly checks if there kids do not make it to school? You cannot have it both ways.
AMOC
Thu, May 9, 2013 : 4:58 p.m.
Judy - In Saline, the district got a foundation allowance of $7,473 / student in 2011-12 and $7,173 in the 2012-13 school year. Chelsea got a little more; $7,480 and $7,180 / student in those two years. Both the other districts have sinking funds, but neither has a technology millage or recent massive construction bond funding. Ann Arbor Public School, in contrast, received $9,490 / student in 2011-12 and $9,020 / student in 2012-13. All the rated schools are excellent, though in the case of Michigan's ranking high schools, there's little correlation between how much money each district gets from the state and their academic results. There is a closer correlation in results with the average level of education (not income!) in the communities whose schools rated highly.
CLX
Thu, May 9, 2013 : 3:43 p.m.
Not really, considering that they have different populations and hence needs in those communities. Not everything can be compared across the board.
JRW
Thu, May 9, 2013 : 2:19 p.m.
"...and an extra $300,000 was budgeted for health care to cover anticipated usage through the remainder of the year..." Help me out here. Why would the district need an extra $300,000 for anticipated usage of health care costs? Employees have health insurance, premiums partly paid by the district, as part of their contracts. These contracts start with employment in the fall. What is this extra $300,000 of "anticipated usage" of health care costs? Why is the district paying for health care costs at all, other than employee insurance premiums? Where is the district incurring these extra health care costs? Were there a bunch of new employees hired recently with new health insurance premiums for district? How could this expense not be part of the budget for the 2012-2013 school year?
Mike
Fri, May 10, 2013 : 1:24 a.m.
It's all in the contract, which was negotiated more skillfully by the union than by the school district..........................
Wondering
Fri, May 10, 2013 : 12:08 a.m.
Health care programs changed a lot this year. With UM accepting Priority many people may more people may be making changes than in previous years. I do not know if Priority costs more for the district or not. I do know it is the cheapest choice for employees.
Angry Moderate
Thu, May 9, 2013 : 5:36 p.m.
Wondering - true, but that happens every year. It should not suddenly pop up as an unexpected expense to the tune of $300000.
Wondering
Thu, May 9, 2013 : 4:56 p.m.
May is open enrollment in AAPS. This is when changes to health insurance can be done. Teachers may be choosing different health care plans that go into effect July 1st. This may account for the "anticipated usage" changes.
tom swift jr.
Thu, May 9, 2013 : 2:27 p.m.
I suspect (but am not certain) that, to some extent, the district self insures some costs. It is frequently cheaper to self insure a portion of the liability as opposed to paying the premium.
Craig Lounsbury
Thu, May 9, 2013 : 2:04 p.m.
"Borrowing is not that uncommon due to the state government and school districts being on two different calendars/fiscal years." I'm no accountant nor do I play one on the Internet. But why don't they all just get on the same fiscal year? Its not like they don't have a tight financial relationship.
JRW
Thu, May 9, 2013 : 2:03 p.m.
"After years of budget cuts and drawing down its fund balance, the Ann Arbor Public Schools has been forced to borrow money for the first time in its history." This is the direct result of not living within their means. They had budgets each year, yet they continued to put their heads in the sand and not make the necessary budget cuts in an appropriate manner. They drew down their fund balance. Salaries and benefits needed to be on the table. Concessions need to be made at ALL levels, and administrators needed to be cut. None of this happened in a meaningful way. Some schools need to be closed and consolidated. That didn't happen. AAPS has been living in a dream world and now the bill is due. Start by firing all the administrators that allowed this to happen. It is a totally irresponsible way to run a school district. And yet, AA keeps voting for more millages in these elections held at off times of year with very low turnout, except district employees. Where is the money from the tech bond passed last year, for example? Where are all the new computers that were going to be purchased with that money? AAPS should not be allowed to manage its own budget, that's clear. I'm certain that this debacle is part of why the super is "retiring" in the middle of her contract. She saw the train wreck and is jumping ship (sorry for the mixed metaphor...).
ChrisW
Thu, May 9, 2013 : 4:52 p.m.
The last general millage was voted down because the state made Ann Arbor combine the vote with the rest of the county. The Ann Arbor specific elections (technology, sinking fund) were approved, but that money can't be used to pay salaries.
Basic Bob
Thu, May 9, 2013 : 4:15 p.m.
And Mr. Allen has conveniently left as well. No one wants to be in charge when they run out of cash.
JRW
Thu, May 9, 2013 : 1:50 p.m.
It's just incredible that the managers responsible for budget management are even still employed by this district. How about looking at all those taxi cab rides for students? Yes, they use taxis for some students who can't behave on a bus. It's just incredible. Taxis come and get students on a daily basis at some elementary schools, because they can't sit appropriately on a bus. It should be the parents responsibility to transport their children if they do not ride the bus, not the district providing private, expensive transportation services for a handful of students. "...an additional $700,000 for transportation was needed, due to increased fuel costs, and increased costs for maintenance and substitute drivers, as well as costs associated with transporting homeless students." Exactly how many homeless students are flocking to AAPS and what are these increased transportation costs associated with homeless children? I cannot imagine how this is contributing to excessive and unexpected transportation costs.
Angry Moderate
Thu, May 9, 2013 : 5:34 p.m.
Basic Bob, why is it that there doesn't seem to be one single other school district in the entire state that has a multimillion dollar budget deficit because of the law regarding transportation for homeless students that's been around for ages? Have 90% of AAPS students suddenly become homeless in the last quarter?
AMOC
Thu, May 9, 2013 : 4:40 p.m.
JRW - If kids who can't behave appropriately on the bus are riding to and from school in cabs, their parents ARE paying the taxi companies. Taxis are paid for by the district when a student has been assigned BY THE SCHOOL DISTRICT to a school other than his or her "neighborhood" school. That might be because of special learning needs, because the student was being victimized by bullies, or because the student started the school year in that school, and later became homeless. And Basic Bob - it's a Federal requirement that school districts transport now-homeless students to the school where they were previously enrolled for the remainder of the school year. Your state representative or mine can't do much about it. Next September, those students become the problem of wherever their parents live now.
Basic Bob
Thu, May 9, 2013 : 4:07 p.m.
Those homeless students were in Ann Arbor when they became homeless. They were the responsibility of AAPS before, and they remain their responsibility. I guess you think we should just deport them to Inkster and make them go to school there. Call your state representative and ask them to change the law.
belboz
Thu, May 9, 2013 : 1:47 p.m.
Although I'm I can't believe the board signed a long term contract that locks up salary's for 5 years when it represents 75% of the cost, the citizens need to be accountable. Who voted for Skyline and the other millages that allow the board and district to spend recklessly? And we seem to expect no involvement from the city government.. If we are going to expect change, then people need to vote no on millages, and vote in new board members.
Mike
Fri, May 10, 2013 : 1:21 a.m.
AMOC - you win a prize for figuring out the problem and identifying the biggest number in the budget
AMOC
Thu, May 9, 2013 : 4:32 p.m.
Belboz - It's worse than that. Teacher salaries are much closer to 80% of the districts' expenses than 75%.
Chris Blackstone
Thu, May 9, 2013 : 1:26 p.m.
Blame is being laid at the feel of the Board of Ed, but much of it is unwarranted. While the Board should have required AAPS to be more specific with budget proposals and levels, it's ultimately up to AAPS staff to implement and actually spend that budget. The Board isn't approving purchases, AAPS staff is. Is there any accountability within AAPS for the staff people who have approved these expenditures? Did anyone raise a flag earlier in the school year as to possible over-runs? I worked for a school district for 7 years and every purchase I made had to be submitted to my supervisor for approval. I'm assuming that is the case in AAPS, which means there have to be some supervisors somewhere who were spending more than they should have. Danielle, was there any more detail shared about the increase in health care costs? $250,000 seems like a huge chunk of change to come out of nowhere. Where new employees hired? Did the terms of the AAPS health insurance package change?
Mike
Sat, May 11, 2013 : 1:56 p.m.
Isn't the board responsible for negotiating contracts? The problem is they have negotiated to spend more than they can afford. Simple question would be how can that be corrected? ANSWER: renegotiate.................
DJBudSonic
Thu, May 9, 2013 : 1:17 p.m.
...and some on our city council are thinking it is a great idea to appoint BOE Trustee Baskett to the Board of the AATA, presumably to encourage collaboration between the AAPS and the AATA in matters of transportation. Because everyone on the BOE is doing such a fine job, I presume? My family and business budgets take into account the fluctuations in the cost of gasoline.
SMAIVE
Thu, May 9, 2013 : 1:16 p.m.
Wow, so sick and tired of hearing all the whining, attacks and overall useless comments. If you want to see change, then step up. Amazing how easy everyone can point a finger, criticize and spout off when you have no skin in the game. This isn't Washington or Lansing, so if you think all the board members are in this for the prestige and benefits, get a clue.
Mike
Fri, May 10, 2013 : 1:20 a.m.
I have thousands of dollars of "skins" in the game every year according to my tax bill...................
DJBudSonic
Thu, May 9, 2013 : 6:33 p.m.
I was hoping to drive my least favorite expression re:taxpayers "skin in the game" into the ground with this comment...
A Voice of Reason
Thu, May 9, 2013 : 6:19 p.m.
Well, after reading "Electing your Employer" that was put out by the MEA (Michigan teacher's union) that teaches MEA members on how to make sure school boards stacked with members that are are teacher's first. The union has $350million dollars in assets to make sure union "yes men/women" are on the school boards and destroys the lives of those who do not tow the union line. This is why we have the board we do. Until we disarm the union by doing away with their profit center..MESSA their health insurance, life will not change.
TheDiagSquirrel
Thu, May 9, 2013 : 2:20 p.m.
Seeing as how public schools are funded by taxpayers, we all have "skin in the game"...
SMAIVE
Thu, May 9, 2013 : 1:46 p.m.
So when do you intend to run for a position
DJBudSonic
Thu, May 9, 2013 : 1:37 p.m.
I attend as many board meetings as I can, and communicate with BOE members on issues. Is that stepping up? I think that sitting on the BOE is easily one of the most thankless jobs one could have in this town; still, when you choose to serve you must know what you are getting into, and you must try to do your very best. What you describe as general complaining is a natural reaction of the taxpayer to the poor outcomes the BOE has had with issues like budgeting, hiring a super(repeatedly), slipping in millages with vague spending commitments, the failure to address parent concerns, etc. Here is a clue that you should get: When I pay taxes to the public schools I have "skin in the game". When my kids attend public schools I have "skin in the game". When the value of my property is in some part affected by the quality of the school district in which it sits, I have "skin in the game".
Solitude
Thu, May 9, 2013 : 1:10 p.m.
It's obvious that there is only one solution to this problem. Everyone must start buying more lottery tickets immediately.
Chris Blackstone
Thu, May 9, 2013 : 1:08 p.m.
The fact that WISD just told the participating school districts about the shortfall three weeks ago does not bode well for their ability to budget and manage such complex enterprises either. The future of this consortium doesn't look rosy. Maybe it's just me, but I have a hard time seeing how transportation of homeless students is having a significant impact on the school budget. How is that transportation provided? I wonder if sending a cab for each student, with a set fare negotiated with the cab company, would be cheaper?
PittsfieldPerson
Fri, May 10, 2013 : 1:35 a.m.
BTW - even charter schools must pay to transport "homeless" students, even though they don't provide transportation for the rest of their students. Makes no sense. While well intentioned, there is only so much money to go around and I don't believe this should be such a priority. Besides taxi service, schools often reimburse parents on a per mile basis for driving their own kids to school.
Chris Blackstone
Thu, May 9, 2013 : 5:52 p.m.
Thanks for that AMOC. Hopefully there will be a breakdown in the budget of exactly how much the displaced student transportation has cost (a cost that is well worth it IMHO)
jns131
Thu, May 9, 2013 : 5:42 p.m.
Might want to do the math and then see how the homeless have created nothing but a mess with the public education system. Homelessness is a parasite inside the system that the cities want nothing to do with and yet, the school systems are being forced to choke down this budget because the cities need to wake up and start helping out with the public education system.
AMOC
Thu, May 9, 2013 : 4:30 p.m.
Chris Blackstone - Sending a cab for each student or family of students is pretty much exactly what happens when a homeless student or a special education student must be transported outside the normal district attendance boundaries. The per-trip fee is set in advance and the cab company gives a discount for the recurring business. And it's significantly less expensive and easier on the student than having a bus route with such a huge area to cover.
Solitude
Thu, May 9, 2013 : 1:06 p.m.
This kind of money is being thrown around an no one knows to whom, for what or how much. In the meantime, all facets of administration appear to be invested in maintaining blissful ignorance while running the district into the ground. I don't know why, but I'm always surprised when grown adults can't seem to grasp the idea that you can't spend more than you have. Seriously...how hard is it?
Wondering
Thu, May 9, 2013 : 12:59 p.m.
A very important part of supporting the constructive functioning of public education is to insist that public education make the difficult priority decisions to live within its means....as we all must do. Needing to borrow money to address cash flow issues created by the State's public education funding policies is one thing. Having a fund equity balance that is constantly decreasing so that we need to borrow money to meet cash flow needs because we are choosing as a district to deficit-spend is quite something else. WISD is living on pass-through increases to its districts; public education has always lived on pass-through increases to its tax-paying community base. For most of us, finances don't work that way. If we care about the survival of public education, public education finances can't work that way either. Time to make those important priority decisions and live within our means. NOW...not tomorrow, or next year, or five years down the road.
Charles Curtis
Thu, May 9, 2013 : 12:52 p.m.
This reminds me of the substitute teacher fiasco. Lets just continue on and ignore the situation. I dont understand how the equity loses $10 mil, budget mess costs about $4 mil and gas is almost an extra $1 mil, where was the other $5 mil spent? AAPS needs to get their head out of their you know what and evaluate the building situation. They have too many building and too many administrators for partially full buildings. Close and consolidate would likely drastically reduce other needed cuts. Get the focus where the problem is. Cutting sports, busing, AP classes, the 7th hour is only going to result in lower education quality and the 'achievement gap' will grow substantially as a result. While I have issues with a few teachers and their lack of effort/ability, I do think the teachers by a great majority are the strength of the district. Lets get rid of more administrators and pay teachers extra to be in committees to decide curriculum. They would be more responsive to the student needs instead of some administrator who never goes into the classroom or get their directives from the useless Dept of Ed.
Mike
Fri, May 10, 2013 : 1:17 a.m.
"Get the focus where the problem is." Thank you for bringing up personnel costs........
A Voice of Reason
Thu, May 9, 2013 : 6:13 p.m.
We are also paying teacher's extra to help with curriculum and they leave classes to attend meetings. A lot of the administration spends their time looking for grants and funding for our schools. My only problem is with having a Communications Director who has a huge budget.
PhillyCheeseSteak
Thu, May 9, 2013 : 1:43 p.m.
The BOE and the AAPS administration thinks that redistricting (closing) of under-used elementary and middle schools is a process that needs to happen over a long period of time. They do not seem to understand that the school district is in crisis and big, tough decisions need to be made...now. Certainly it's not ideal to consolidate and close schools in the summer before the start of a new school year but when $8 million needs to be cut, then action must be taken. If a state-appointed financial manager were making the decision, it would happen quickly, with little to no regard for families' reactions.
Solitude
Thu, May 9, 2013 : 1:09 p.m.
It's also a vicious circle...the more you cut things that impact classroom excellence and the programs people know are important for their kids, like music, physical ed and foreign languages, the more people elect to take their kids out of the district. The more kids that leave, the less money coming in from the state. It's a death spiral.
Wondering
Thu, May 9, 2013 : 12:46 p.m.
There is a concerted attempt to undermine our system of public education in the State of Michigan, and in our country as a whole. Of course, the best way to undermine our system of public education is to have the State control the finances and to decide when to dole out the funds. A related way is for the State and local districts to have different fiscal years, and for the State to charge megabucks in interest to districts to borrow funds to meet their cash-flow needs caused by the different fiscal years and the State's delays in distributing funds. The second best way is for public education to shoot itself in the foot by not doing what it takes to take care of business. Of course, a good way for districts and communities to stand up to this nonsense is (a) vote for folks who support public education; (b) insist on competence at all levels of government, including public education, and vote accordingly; and (c) support the management, instructional, and client bases of public education to work much smarter than those who oppose it. Time to get started supporting the constructive functioning of the foundation of our democratic society.
Mike
Fri, May 10, 2013 : 1:15 a.m.
Charles - the funding model is an accurate reflection of the financial condition of the people who pay the bills. When property values decline the taxpayers are the ones who feel it in loss of equity in their homes, many times tied also to a loss of their jobs. These same taxpayers are asked many times to take pay cuts, sometimes very substantial during these downturns. As the economy improves so does their income and property values. Teachers feel that a pay cut of 3% is a big deal while the taxpayers faced declines in their property values of 30 - 40%, pay cuts of 10% and more, declines in benefits or total loss of them. The teachers have been insulated from the pain in the past but this can be no more, we're in a real financial crisis and have to make painful cuts. Just about any district in the state is in the same situation but their hands are tied by their union agreements....................until the financial manager comes in and does it for you.
Poorman
Thu, May 9, 2013 : 10:12 p.m.
Yes, the state hates itself. There are open seats for Detroit's city council, this would be perfect logic there. Might it also be that there is no effort to control costs or even monitor them. How do you not know you are $700,000 over budget on gas until 1 month before the end of the school year? People are fired for this in the private sector. This is irresponsible use of tax dollars. Couple that with pay and benefits that are not sustainable, and you are on your way to Detroit financial planning.
cook1888
Thu, May 9, 2013 : 5:21 p.m.
We will undermine every taxpayer if we don't start getting budgets under control. Throwing money at a bloated wasteful system does not help our kids.
DJBudSonic
Thu, May 9, 2013 : 1:08 p.m.
The red flag for State control is suggested in the article, the BOE is going to a commercial bank to get the loan, so that they get a more favorable rate than through the State. If the State was interested in supporting public schools, they would offer the money at the lowest rate. Of course, in the case of our BOE, I would be hesitant to write that loan, they just seem so removed from practicing sound monetary policy.
Charles Curtis
Thu, May 9, 2013 : 1:06 p.m.
The funding structure of the state is not good, but its was set up so all districts could get more equal funding. That was a great idea, but like most things done in government, it was an emotional decision and now has no flexibility. In spite of that AAPS still gets more per student that many other districts in the area and AAPS cannot manage it well. The federal government is also at fault since DOE has not increased this countries rank in any category since it was founded. Its useless and cost students so much time wasted on teachers teaching and giving the stupid standardized tests. My kids lose at least 2 weeks a school year taking the tests and who knows how much time is lost on curriculum taught just for the tests.
annarboral
Thu, May 9, 2013 : 12:38 p.m.
The problem should be obvious. We have somehow elected a BOE that is clueless about managing money. The AAPS is a "business" that spends roughly 200 million each year. To do that effectively takes people with extensive business and financial experience. We could still have an "advisory" BOE for educational policy issues but even that would need to be under the control of fiscally responsible managers.
jns131
Thu, May 9, 2013 : 5:37 p.m.
You folks hired em. Time to vote em out and elect a better bunch of folk who know how to budget.
antikvetch
Thu, May 9, 2013 : 12:24 p.m.
Who cares! Did we fix the "gap" yet? More consultants are needed!
local
Thu, May 9, 2013 : 4:56 p.m.
And that they stay out of trouble on the bus and can get to school!!
SemperFi
Thu, May 9, 2013 : 12:31 p.m.
The "gap" will be fixed by responsible parenting. Make sure your kids do their homework, make sure they get enough sleep, make sure they get good nutrition, and make sure their school work is done before they go out of the house.
brimble
Thu, May 9, 2013 : 12:14 p.m.
Imagine, for a moment, that AAPS was a private enterprise, and that you are a banker. They come, hat in hand, saying: "Revenues are down, expenses are higher than we thought, our accounting system is a little fuzzy, and our cash fund is shrinking, so we need a little cash to tide us through, just so we can make payroll." Would you write that loan? This ceases to be sloppy practice, and moves toward being a real violation of the public trust. The Board needs to get its ducks in a row very quickly, or needs to hand in resignations and turn over the reigns to competent replacements.
Angry Moderate
Thu, May 9, 2013 : 5:29 p.m.
Of course I would write the loan...it's fully backed by the taxing power of the government--just like the subprime mortgages the banks were handing out in 2005, and the student loans for useless degrees the feds are handing out now.
Mike
Thu, May 9, 2013 : 12:11 p.m.
This is insanity! How are they going to pay it back? The problem causing it (salaries) is not being addressed. How can they expect to fix the problem if they won't address it? Get your head out of the sand, bring the unions to the table, and if they won't negotiate lay them all off' because you can't afford to pay them. Once a business has to start borrowing money to make payroll and has no income stream to pay it back they are on the road to bankruptcy. Why do school systems think they can defy logic and common sense?
DonBee
Thu, May 9, 2013 : 5:44 p.m.
For the district's current rating it should be under 4 percent, so long as the interest rates don't change. If they wait until they really need it - but make arrangements early for it - they will owe on it for less than 90 days - maybe as little as 60 days.
Jack Panitch
Thu, May 9, 2013 : 5:35 p.m.
This is a cash flow issue, and the District won't likely leave the debt outstanding any longer than the lag between the the payroll expenditure and the receipt of funds from the state to cover the expenditure. But it's going to cost money (interest) to do it, and that will be a real cost no one wanted. In the past, the District has always been able to avoid borrowing, due to the level of fund equity it maintained, i.e., it borrowed from itself to meet the payroll cost. There is no issue at all here about repayment. At the meeting last night, Trustee Thomas estimated an interest cost of $150,000. I think he was using a rate of 6%. But President Mexicotte pointed out that the rate will depend on the District's rating, and it looks as though the number will be south of the estimate.
Charles Curtis
Thu, May 9, 2013 : 1:12 p.m.
They aren't going to pay it back, its not their money. Easy to spend and barrow when its someone else's money, namely yours. The payroll issue is more benefits and there has been fraud in the benefits that was never made right. Retirement and such are lingering issues that will be the next funding mess.
SemperFi
Thu, May 9, 2013 : 12:10 p.m.
And you ain't seen nuthin' yet! The Republican House Committee on Transportation & Infrastructure on Tuesday sent HB 4571 & 4572 to the house for a vote that will eliminate sales tax on gasoline and aviation fuel. That will directly cut $825.1 million from our kids schools. Republican leadership is suggesting that they will fill this nearly $1 billion hole by asking Michigan voters to raise taxes on themselves by voting for a 1% increase in the general sales tax.
Poorman
Fri, May 10, 2013 : 2:31 a.m.
Semper, To use AMCO's data from a post below, "In Saline, the district got a foundation allowance of $7,473 / student in 2011-12 and $7,173 in the 2012-13 school year. ... Ann Arbor Public School, in contrast, received $9,490 / student in 2011-12 and $9,020 / student in 2012-13." Chelsea had similar funds per student to what Saline received. School performance did not correlate to funding per student. So how is AAPS not getting enough money from the state? Your statement is very similar to what Detroit city council folks claimed. The issue here is unsustainable wages and benefits for employees who get pay increases that are independent from job performance. AAPS is getting more funding per student than other schools and still spending more than they have. This is not an issue of funding, it is a cost problem. Throwing more tax money at a cost problem doesn't work. The state is just not giving out more money than it has. I like the balanced budget that our state has archived with this Govenor.
Jack Panitch
Fri, May 10, 2013 : 2:20 a.m.
One more link to a recent article for additional background: http://tinyurl.com/c3skqnf
Jack Panitch
Thu, May 9, 2013 : 8:22 p.m.
DonBee: Here are the links to the House's fiscal analysis. They acknowledge the hit but say they can't estimate it. Apparently, get this, hint, hint, one of the reasons is that the price of fuel is volatile. The analysts don't use the word "volatile," but they identify price as a factor. Anyway, you see where I'm heading with this: fuel prices aren't stable enough for a solid estimate. http://tinyurl.com/cv9uvug http://tinyurl.com/cmhl7np
DonBee
Thu, May 9, 2013 : 5:41 p.m.
SemperFi - What they are doing is moving the tax to the wholesale level, since so many large users buy gas at the wholesale, rather than the retail level. This means those large users will have to pay the tax too, It also means that it will be paid in more quickly and there will be less accounting required to collect from the individual gas stations. The money will still come in. I read both bills and the background on both. It saves the state money in collections, gets the money in the treasury quicker and NOTHING in the bills changes the designation of the revenue away from schools. If you have other information, please, please provide the link.
cook1888
Thu, May 9, 2013 : 5:19 p.m.
Yeah and John Kerry just announced "we" will be sending 100 million to Syria in aid. I'd rather give small business a break on taxes than send it to another money pit war.
SemperFi
Thu, May 9, 2013 : 2:39 p.m.
Jack, the Republican attack on public education is epic. If you go to the Senate webpage: http://www.senate.michigan.gov/sfa/Departments/DataCharts/DCtrn_TransFundProposals.pdf you will see the options that were proposed with these bills. The republican led committee chose 'option 3', the one that causes the deepest cuts to the School Aid Fund. This is clearly an attack on the common man and middle class. Snyder and his band of thugs are operating without a conscience.
Jack Panitch
Thu, May 9, 2013 : 1:40 p.m.
SemperFi: Do you know whether it is even possible to tie-bar the effect of HB 4571 and 4572 to the success of the 1% increase? To me, the move would be irresponsible, otherwise. But if the two could be tie-barred, it's a brilliant political move. Republican legislators don't have to violate any pledge not to raise taxes: instead, they put the whole question of investment in education up to the voters. Then, when the measure is approved, the Governor and legislature continue to raid the School Aid Fund anyway in the newest chapter of their epic reverse-Robin Hood saga. Actually, the premise of the legislation makes some sense: use of these types of taxes to fund a deteriorating infrastructure that will fall apart completely without an influx of funding could be appropriate if done right. But taking the funds from the School Aid Fund to do it is akin to throwing a grenade down the hole as the opening shot in the final assault against the MEA. And to my way of thinking, that's just out-of-control nuts. Human nature hasn't changed in 100 years. Unions are vital to protect workers. There has to be a truce, a happy medium, bipartisan partnership with teachers, the MDE/BOE and other education experts providing visionary leadership. Until that happens, Michigan kids lose.
JRW
Thu, May 9, 2013 : 1:32 p.m.
Typical Repub regressive tax proposal. Raising sales taxes is very regressive and hits the poor more than the rich, since lower income families spend a greater percentage of their income on necessities. Then these same politicians will scream that there is a huge deficit and the only way is to have voters raise the sales tax, so they are off the hook! The politicians "lowered" taxes creating a huge hole, and the voters "raised" their own taxes! Guess what, people. Don't play into this scheme. Vote down any increase in sales taxes and let Lansing clean up their own mess.
SemperFi
Thu, May 9, 2013 : 12:35 p.m.
Picking and choosing who pays sales tax is not simplifying the tax code, it's playing politics. I don't necessarily disagree on changing the tax code, but do it with a holistic approach, not by piecemeal legislation.
Mike
Thu, May 9, 2013 : 12:15 p.m.
They're trying to simplify the tax code and maybe make traveling more palatable for tourists (one of our biggest industries). We'd get the money back when people drive more places and spend money they now don't have. We could also eliminate some bureacracy I would assume. You pay the fuel taxes anyhow even if you take a bus. They should eliminate all taxes and just go to a flat tax on consumption. That would simplify all of our lives................
RUKiddingMe
Thu, May 9, 2013 : 12:02 p.m.
Doesn't the school system still own a bunch of land not being used? That's ridiculous. Sell it. Can we all band together and say the next stupid wasteful purchase will result in immediate termination of all parties involved? Can someone stand up and ask the school why, in this crisis, they are spending tens of thousands of dollars on TWO wind turbines, when it is public knowledge that they will perform at a huge loss? Is the school system still storing $1700 MacBook Pro's in a bunker somewhere? Why are there still the same number of administrators? Didn't we get a report that showed there are multiple go-betweens and assistants for principals and vice principals? Or am I misremembering? This will continue, folks. No one's being more careful with money. We've got to get these people who don't do a good job OUT.
DonBee
Fri, May 10, 2013 : 7:52 p.m.
SemperFI - It is not the teachers, never has been the teachers. Some of the state laws around retirement and benefits are an issue, but that is not the teacher's fault. Some of the work rules in the contract are an issue, but again that is not the teacher's fault. I see the teacher's union as an issue, I also see the folks in Lansing as an issue. Those are both beyond the reach of the current school board. The local issues that are within the reach of the board are the fiduciary responsibilities that they seem to have ignored over the last 8 years and the lack of real communication with the citizens in the district. Then there is the administration...too big, too powerful, too opaque, too (choose your words). The current overruns and other issues fall directly in the lap of Glenn Nelson, as the treasurer. He has had long enough on the board to get a handle on the finances of the district.
SemperFi
Thu, May 9, 2013 : 12:12 p.m.
It's easier to blame the teachers.
Judy
Thu, May 9, 2013 : 11:52 a.m.
Why is it so hard for people to understand if you vote poorly or don't vote at all you get what you vote for, in all levels of government. The old saying crap in crap out!
aamom
Fri, May 10, 2013 : 2:37 a.m.
Wasn't there only one new guy running? So if you didn't like him you were out of luck.
newsmuse
Fri, May 10, 2013 : 1:46 a.m.
Basic Bob, We just had a school board election in the fall. The people who voted chose to keep the incumbents, who were the people who got to vote for our administration. We could have changed the personnel on the school board this past fall, but the electorate either didn't choose to or didn't bother to do so.
DJBudSonic
Thu, May 9, 2013 : 6:23 p.m.
@chrisw. @plato Right On!
Judy
Thu, May 9, 2013 : 5:37 p.m.
I do not want to hear being on a school board is a thankless job, they ran for the job so do the job you told the taxpayers they would do. They need to make school budgets and policies you can live with.
Angry Moderate
Thu, May 9, 2013 : 5:27 p.m.
Chris, the school board doesn't deserve any thanks because they manufactured the crisis themselves (especially Deb Mexicotte, the most incompetent of them all).
ChrisW
Thu, May 9, 2013 : 4:45 p.m.
The School Board is a thankless job, especially in times of a budget crisis, so most sane people shy away from running. I am, however reminded of Plato's Republics: "The good man takes on leadership because he fears the penalty for refusal, which is to be ruled by lesser men."
Basic Bob
Thu, May 9, 2013 : 3:53 p.m.
i don't remember getting to vote for the administration.
sweetdaddy1963
Thu, May 9, 2013 : 11:49 a.m.
I'm thinking 20 yrs from now people will say what was public school like? I don't know I've always gone to charter schools ugg....
jns131
Thu, May 9, 2013 : 5:36 p.m.
More like what was school like period before being homeschooled and on line classes.
Stephen Lange Ranzini
Thu, May 9, 2013 : 11:32 a.m.
"Green emphasized the importance of continuing to move toward zero-based budgeting. "Unless that takes root, this popping up (of expenses) will happen over and over again," she said. " Green said the biggest thing about line-by-line accountability is "you are seeing the shortfalls. Before, you didn't know what you weren't budgeting appropriately." What you cannot measure, you cannot manage! The AAPS needs a better budgeting process immediately, not next year! Rather than transitioning to zero-based budgeting and line by line accountability over a year as is currently planned, I recommend an emergency crash program to do it ASAP before the new school year begins. This would take hiring some temps or an outside accounting firm or even some citizen volunteers with accounting degrees to compress the process into a couple of months, but it is necessary. I realize that this would cost some money, several hundred thousand dollars perhaps, but it would clearly pay immediate dividends since money is being lost right and left through inadequate controls on spending. Publicly AAPS has admitted to over a million per year of wasteful fraud that slipped through the cracks in the past. The operational budget alone is $190 million a year and the capital budget is a large amount on top of that. Lastly, I again recommend the board hire a financial expert as a short term superintendent to lead and implement this effort. Everything else must really be secondary since on the current financial course it is a disaster for the staff, the children and our town.
SonnyDog09
Thu, May 9, 2013 : 11:06 a.m.
"It's different than if we had privatized bus service," Hoover said, explaining if the district had privatized, a company then would have provided the set service for a fee. "But this is a pass-though. Whenever additional costs then incur beyond that, (they)are passed on to the districts in the consortium." Who signed that contract? Are they still employed by the district?
Stephen Lange Ranzini
Thu, May 9, 2013 : 10:55 a.m.
"Green emphasized the importance of continuing to move toward zero-based budgeting. "Unless that takes root, this popping up (of expenses) will happen over and over again," she said. " Green said the biggest thing about line-by-line accountability is "you are seeing the shortfalls. Before, you didn't know what you weren't budgeting appropriately." Translation: It is the fault of the Board of the AAPS that every year they have adopted and accepted a budget methodology that was useless to them and provided no oversight of the rate of spending, except after the fact after the money was spent.
A Voice of Reason
Thu, May 9, 2013 : 6:08 p.m.
This is Glenn Nelsen's baby! Mr. Budget/Treasurer. Time to retire Glenn.
Barzoom
Thu, May 9, 2013 : 10:51 a.m.
We, as a city, have gotten what we voted for.
a2edu
Fri, May 10, 2013 : 12:35 a.m.
Best comment of the month.
tom swift jr.
Thu, May 9, 2013 : 10:40 a.m.
"Washtenaw Intermediate School District, with which AAPS contracts for transportation services through a consortium with Ypsilanti and Willow Run, is having a difficult time finding substitute drivers. Because of this, the WISD is having to pay substitute drivers a higher rate, she said." An interesting statement, and very telling. The reality is that Washtenaw Intermediate School District IS able to find substitute drivers. They just weren't able to find drivers at a pay rate lower than people are willing to work for. Driving a bus, especially in an urban area like these sections of Washtenaw County is difficult. Students tend to be unruly, I've seen drivers and their aides forced to break up fights on the bus. When you're asking someone to take responsibility for a bus full of young people, and to drive safely while supervising these adolescents at the same time, you need to pay them for the skill and effort needed to do so. WISD lowballed the cost of hiring skilled drivers to sell this consolidated bus system to the districts, now they are being forced to pay the true cost of transporting children. You have to wonder if the cost of operating the new consolidated Ypsilanti district, also being run by Menzel from WISD, is also being lowballed.
jns131
Thu, May 9, 2013 : 5:35 p.m.
When WISD took over 3 years ago June it was based on the fact that it would save them money. Sort of. Here is the catch 22. You retire? You come back and get paid $22 an hour. Yup, $22 an hour. The top rate of pay to a driver is capped at $16 if you do not retire. When it was solely AAPS? $18. To keep drivers you need benies to keep them there. As for Aides? Federal law under the special needs act. You drive and the aide takes care of the special needs and the preschool. It is the law. Currently the drivers do not have a contract and have not had one since the take over. I am very surprised the BOE has not set its sites on the custodians who are now without a contract and are in negotiations currently. Their contract expired a year ago June. This is going to get ugly before it gets pretty. Start in on Balas before setting your sites on the spokes that make this place run. Otherwise, you might see more parents head to charters and private schools. Then where will you be? Time to oust Green, the BOE and Balas.
local
Thu, May 9, 2013 : 4:53 p.m.
towncryer, no behavior doesn't generally change. They also tend to be the kids in classrooms who cause havoc and have zero consequences because the district doesn't allow principals to discipline kids (suspend). In my opinion it stems from family issues, but that is strictly my opinion from dealing with many of these kids on a daily basis.
SEC Fan
Thu, May 9, 2013 : 4:22 p.m.
My guess is that the "higher rate" is for overtime...
Judy
Thu, May 9, 2013 : 3:04 p.m.
I am not sure about AAPS but my husband is a sup driver for a Washtenaw County school and his bus has a camera in it. Both the drive and the kids know it, so if a kid misbehaves they are off the bus. As far as pay as a sub-driver he makes $10.00 dollars an hour, so the pay is not great, but he loves being a bus driver and the kids love him. I agree parents of kids who do not behave on a bus should be held responsible for there childs behavior, but the problem is many of the kids who mishave have parents who could careless. That is why the bus drivers need Aides.
RUKiddingMe
Thu, May 9, 2013 : 12:06 p.m.
The drivers have AIDES??!!! Like a copilot? What for? When I was a kid, there was a driver. What does the aide do? I see that as a problem.
towncryer
Thu, May 9, 2013 : 11:49 a.m.
@local. Once a student loses bus transportation for a few days, does their behavior improve when they return? Do the parents seem to care? It is hard to imagine a parent allowing it to get to the point where their kid loses bus privileges (and I consider it a privilege, not a right no matter what anyone says), but I guess it does. I can't even fathom the frustration some of the driver's must have about these situations..
local
Thu, May 9, 2013 : 10:57 a.m.
So true, not enough money in the world to drive some of the buses that leave our school daily. Complete chaos with kids jumping around and screaming out windows, etc... The problem is that if they write a student up in a referral, enough referrals and they lose bus transportation for a few days. Which ultimately means, they don't go to school that day because these are the families that need transportation the most.
TheDiagSquirrel
Thu, May 9, 2013 : 10:35 a.m.
We still have not heard any substantial plans about the Balas administration consolidating costs or cutting back on their staff and bloated salaries. Why are they the only AAPS entity immune or exempt from budget cuts?
TheDiagSquirrel
Fri, May 10, 2013 : 12:28 p.m.
I saw the article Danielle, thank you.
Great Lakes Lady
Thu, May 9, 2013 : 7:38 p.m.
3% pay cut? This is the lazy man's fix. As has been suggested over the last several years by concerned citizens: Why not cut redundancies? ....whether it be in buildings, programs and personnel, etc. Administration gets paid the big bucks to make tough decisions, but instead take the easy road by cutting everyone's salary 3%....incompetent leaders
Danielle Arndt
Thu, May 9, 2013 : 7:29 p.m.
TheDiagSquirrel, there is now a story up addressing administrator pay cuts: http://www.annarbor.com/news/education/ann-arbor-central-administrators-agree-to-3-pay-cut/
1bit
Thu, May 9, 2013 : 10:29 a.m.
"It's building the bridge as you're crossing it." So that's why we've all got that sinking feeling...