At the precipice

Ann Arbor Board of Education balks at massive cuts to the school district. But where do we go from here?

In a grueling meeting that ran eight hours and ended in the wee hours of Thursday morning, the AAPS School Board’s Committee of the Whole stepped back from some of the largest cuts proposed for the next fiscal year. The list of potential cuts, originally presented as options to the Board back in April and described at a number of public forums since then, had been assembled to deal with an anticipated $17 million deficit in the 2012-13 school year. While the Board indicated their willingness to accept a range of cuts, they held back on reducing teachers, cutting transportation and closing an alternative high school program. Their decisions last night are not the last word on the budget, but provide guidance for administrators in assembling their formal budget proposal.

District officials, led by Deputy Superintendent for Operations Robert Allen, presented three plans with increasing levels of cuts. As originally formulated, the least painful plan would still have required $4.4 million of the district’s reserve fund (called "fund equity," essentially the balance carried in the district’s operating account) to close the gap. The most severe plan would have generated a budget surplus but also required over $13 million in service cuts and other economies.

The most controversial proposals included various plans to cut back on transportation expenses and a proposal to "restructure" the district’s alternative high school programs for at-risk students. On the transportation side, administrators offered the Board a menu of options, extending from smaller cuts such as ending late buses at middle schools and eliminating mid-day shuttles between high schools all the way to ending all but legally mandated busing. (Under Federal law, school districts must provide transportation to special education and homeless students. Michigan law does not require schools to offer transportation, but does require them to offer it equally to whole classes of students – elementary students, for instance – and prohibits charging families for this service.)

The restructuring proposals would have saved money largely by closing one school building. The alternative programs in question, the Roberto Clemente Center and A2 Tech High School (formerly Stone HS), primarily serve at-risk students who have not succeeded in the more traditional high schools. Clemente focuses on students struggling in the early high school years, and offers an intensive alternative program aimed at helping students return to their home schools for graduation. A2 Tech, in contrast, serves older students whose education has been interrupted by life events and who are working to complete their schooling. Both schools currently run in buildings which have excess capacity, and the proposal included closing one of the buildings and placing both programs in one facility. Clemente, with a more limited building located in Pittsfield Township, far away from most other AAPS facilities, was the candidate for closure. Options included merging both programs in the A2 Tech building under one administrative team, or simply housing both programs in the same building but retaining their structure (which would halve the savings).

Supporters of the Clemente program have been vocal at Board meetings and public forums on the budget, insisting that their program provides a critical safety net for struggling students and that it would not be effective if relocated. In the end, Board trustees agreed that decisions to change the alternative programs needed more time and investigation. While they agreed to leave the Clemente program in its current form and location for next year, they also called for a full review of the programs’ effectiveness and cost. Trustees had some concerns about the disappointing test scores from the programs, but they also wanted to evaluate a wider range of indicators about the programs’ performance and shrinking enrollment.

On transportation, the Board endorsed some substantial cuts but ruled out wholesale elimination of busing or high school busing. Notably, mid-day shuttles between Community and other high schools are on the block, as are late buses at middle schools. The board also expressed interest in a schedule change at Skyline that would eliminate some duplication. (Please see the table below for details.)

One of the largest cuts had also received the least attention: the elimination of 32 or more full time equivalent teaching positions, providing savings of $3.2 million or more. Most of the 32 positions could have been cut by attrition, but larger cuts would have likely required layoffs. Some trustees were particularly vehement about the need to minimize cuts to teachers (and thus class size increases), even at the cost of other programming. In the end, they accepted a proposal from Trustee Glenn Nelson, who proposed that instead of eliminating all 32 positions the district should hire new teachers at the bottom of the salary scale to fill those slots. The estimated savings from that approach was some $960,000, or less than one third the original savings.

The combination of all the cuts and other economies accepted by the Board generated some $4.8 million in savings. When combined with anticipated revenue increases in various areas, these cuts offset some $10.8 million of the $17.8 million projected deficit, leaving $7 million to be drawn from the district’s reserve (currently at $14 million). By law, districts may not run a permanent budget deficit; those that do risk state takeover with an emergency manager.

The district’s reserve provides both a cushion against unexpected changes mid-year and cash-flow to avoid borrowing during the two months each year without State aid payments. Whatever portion of the deficit is covered by the reserve fund this year must be added to the projected deficit for next year, which is already estimated at some $13 million. This "structural deficit" stems from stagnant or declining state funding despite increasing inflation, rapidly increasing payments required to the state pension system, and rising health costs.

Absent a dramatic change in state funding levels, AAPS has few options to avoid continual rounds of cutting. One option, being pursued by districts around the state, are private giving campaigns – often through local Educational Foundations – aimed at saving specific programs. Another alternative, last tried in Washtenaw County in 2009, is a regional "enhancement" millage that can legally be used to pay for school operations. Both these avenues will need to be explored as AAPS confronts further spending cuts.

Item Board intention Projected savings Notes
Total service cuts likely so far   $3,686,000  
Total transfers and other savings   1,120,000  
Total revenue enhancements   6,000,000  
Estimated budget gap   (16,000,000) Included net cost of all-day kindergarten ($1.9 million)
Current year deficit as of Q2   (1,800,000) From FTE not able to be eliminated this year; amount may be reduced by current spending freeze
Transfer necessary from reserve (fund equity)   (6,994,000) Current balance is roughly $14 million
Service cuts
Teaching staff reductions Yes, with modifications $960,000 The original proposal included reductions of 32 FTE teachers (or more), mostly to be accomplished by attrition. Trustee Glenn Nelson proposed replacing those teachers with new teachers at the bottom of the salary scale. Original savings would have been $3.2 million plus.
Combine bus routes for Bryant & Pattengill Yes 16,560 Parents had requested this change in any case.
Eliminate 4pm Middle School bus Uncertain, leaning yes 85,284 Had originally been proposed for 2011-12
Eliminate mid-day shuttles among HS Yes 230,184 Mainly affects Community HS, and shuttles are not heavily used. May replace with distance learning.
No transportation to "choice" schools Varies 98,800 Busing to AA Open will be maintained, probably with a hub system, by finding offsetting savings. Clemente maintained, Skyline lottery student busing to be determined
Change Skyline start time 15 minutes earlier Leaning yes 266,400 Currently, buses that go to Skyline cannot be turned around in time to cover middle school routes; changing Skyline’s start time would allow a reduction in total buses run every morning.
Eliminate remainder of HS busing No Would have saved $545,000 or more beyond cuts above.
OR Eliminate all busing No Total savings from eliminating all but legally required busing (special education and homeless students) would have been $3.5 million
Restructure or close alternative HS programs No, but programs to be evaluated over next year Original savings had assumed closure of Roberto Clemente building and combining administrative staff with A2 Tech and relocating program there ($400,000). Other options to keep Clemente program fully intact but located in another building (A2 Tech or Pioneer) would have saved about half that.
Police liaison Leaning yes 350,000 Savings reflects elimination of 3 AAPD officers based in each comprehensive HS and available to all feeder schools. Options short of complete elimination also possible.
Counseling Yes 400,000 Represents reduction of 4 FTE counselors; mostly covered by retirements. This represents increase from current ratio of 300:1 to contractual maximum of 350:1.
Eliminate site-based budget Yes 250,750 This money represents SIT funding now available to buildings for local projects; will be removed entirely.
Reduce district-wide departmental (discretionary) budget Yes (10% cut) 500,000 These are funds used for professional development, conferences, hourly and temporary employees, supplies, etc.
Reduce budget for substitutes Yes 200,000 Reduce the total amount budgeted for substitute teachers and making each building responsible for its own local sub budget
Eliminate MS athletic director stipends Leaning yes 37,500 End stipends for MS teachers to also act as athletic directors at each school. Amount represents savings district-wide
Limit athletic entry fees Yes 58,000 End district payment of entry fees to athletic events which are not "required" (e.g. invitational events)
Shift lacrosse to a club sport Yes 93,000 Held over from current year
Combine summer school programs Yes 80,000 Fold separate Roberto Clemente summer school program into main program at Pioneer. Savings mostly represents end of transportation to Clemente building; no transport is offered to other summer school students because of mass transit options at Pioneer
End district payments for summer band and music camps Yes 60,000 District had paid for teachers to run music camp programs at other locations. Will have to be covered by contributions instead.
Transfers and other savings
Phase 5 energy services Yes $500,000 Estimated operating savings from energy efficiency improvements supported by sinking fund
Shift Rec&Ed director and assistant to Community Ed fund Yes 205,000 Remainder of Rec&Ed is supposed to be self-supporting; enough progress has been made that they can transfer these last costs to the Community Education fund
ITD restructuring Yes 200,000 Mainly reductions of maintenance and repair costs; had been contingent on Tech Bond passing
Health care savings Yes 100,000 Health care rates appear to be rising somewhat less than assumed in the original deficit projection.
Outsource noon hour supervision Yes 75,000 Savings from shifting current noon hour employees to an outside company that will not require state retirement system contributions. In this case, most of these employees never qualify for pension in any case.
End retirement notification incentive Yes 40,000 District has offered incentives for staff to inform them early of any plans to retire. Not clear if it is worth the cost
Revenue enhancements
Schools of choice   1,100,000 Students from other districts; assumes most, but not all, spots are filled. Income students bring their (lower) home district per-pupil funding with them.
Medicaid reimbursement   500,000 Temporary – reflects reimbursements due in prior years but held up by an audit at the WISD
MPSERS offset (proposed)   1,800,000 Offset for districts retirement costs proposed in Governor’s budget. Legislature may shift its form, which would help AAPS less
State best practices incentive   2,600,000 Proposed in Governor’s budget, but not clear if it will survive the legislative process.