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Superintendent, Jeanice Swift, hosts "Continuing the Conversation" meeting at Clague Middle School, Tuesday, January 20, 2015. Nicole Hester | The Ann Arbor News
(The Ann Arbor News file)
ANN ARBOR, MI - Facing declining enrollment after a series of budget cuts and staff concessions, Ann Arbor Public Schools took a risk to try and improve its financial position.
Three years later, the school district is seeing those efforts pay off - literally - as evidenced in the 2015-16 financial audit the board of education reviewed on Wednesday, Nov. 16.
Board secretary Andy Thomas called 2013 his "worst nightmare" as a school board member. That was the year AAPS fell into a downward spiral toward deficit spending that has trapped other schools across the state. The state reduced its per pupil foundation allowance in 2011-12, and AAPS began looking for ways to cut expenses. In 2012-13, the district had to spend a significant amount from its fund equity to balance the budget.
The cutbacks that came in 2013 and 2014 drained AAPS' fund balance down to less than 5 percent of the district's total annual expenditures.The state requires schools to keep a fund balance of at least 5 percent, and the school board would like to keep the reserves between 6 and 15 percent of annual operating expenses each year.
The graph shows Ann Arbor Public Schools' fund balance over the years. The school board would like the fund balance to be between 6 and 15 percent of the district's total annual expenditures.
"2013 was really the year that things took a nosedive," Thomas said. "My recollection of the budget process that year is literally my worst nightmare. ... I did not run for school board so I could close the middle school pools or so that I could eliminate reading intervention specialists or so that we could reduce the number of high school counselors or middle school counselors or so that we could increase class size beyond what is reasonable.
We also had to go back and negotiate some pretty significant concessions from all of our employees."
Ann Arbor schools also saw a drop in enrollment of about 200 students in the 2013-14 school year. Because state funding is tied to student enrollment, AAPS found itself with even less revenue and needing to make another round of cuts, which made the district less attractive to families and threatened to keep AAPS stuck in the cycle of declining enrollment followed by budget cuts that lead to further declining enrollment.
"When we think about programming - the one thing that we can pull students in with - at that point, we had to diminish our programming in order to keep ourselves afloat fiscally," said Superintendent Jeanice Swift. "School districts don't often pull out from that point. We get at a point where the downward trend starts. It's extremely difficult for school districts - particularly in Michigan with our funding mechanism - to ever pull out of that."
The school board hired Swift as superintendent going into the 2013-14 school year, and trustees decided to take a chance on her vision to turnaround the district.
"2014 was a pivotal year," said board vice president Christine Stead. "That was, if you all recall, Dr. Swift's first year of implementing new programs. She came to our district, she listened to the community, she launched seven new programs with her team that one year. And that's the difference. That student growth that started to show up in 2014 is the difference between a continued drop in fund equity. ... We all together took a leap of faith to invest in those programs and position Ann Arbor Public Schools strikingly different than any other district in our county, and perhaps in the state of Michigan."
Some of those new programs include expanded early childhood education; International Baccalaureate; Science, Technology, Engineering, Art and Math (STEAM); and Project Lead The Way. Implementing those programs required new curriculum, professional development for staff and school renovations in some cases.
Now, the school board is seeing the return on that investment as Ann Arbor's enrollment continues to increase for the third consecutive year, and the district received a positive financial audit for 2016. AAPS has grown its enrollment by nearly 1,000 students since the 2013-14 school year.
The graph shows Ann Arbor Public Schools' student enrollment over the years. The state distributes money to public schools on a per pupil basis.
"For the third year in a row, you've had sizeable increases in your enrollment - 300-plus (students) - and that is one of the highest ... numbers that we see statewide," said Laura Claeys, one of the Plante Moran accountants who completed the audit. "So congratulations to that, and I know that comes with a lot of work. ... It really is a result of the programming options that you provide to (families), making sure that you're getting the word out and just the momentum that's building because they see the great things that are happening within the district."
Board parliamentarian Simone Lightfoot was pleased to see the fruits of the board's efforts, noting that there is always some uncertainty in whether the results will match the board's intentions.
"This is awesome given the challenges traditional public education is facing in this state and in this country," Lightfoot said. "That our voters and our staff and our board has put these results together, and then of course the students are just dynamic."
Swift noted the community's contributions in improving the school district's financial status by supporting a 2015 bond and the special education enhancement millage that passed in May.
Since the low point in 2014, AAPS has built up its fund balance from $8.82 million to $21.5 million by the end of the 2015-16 fiscal year. The fund balance represented 10.2 percent of the district's expenses in 2016.
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A healthy fund balance allowed the school district to cover the emergency expenses of repairing the damage to Allen Elementary School caused by flooding in August and temporarily relocating the school while that work is completed.
AAPS also has been able to grant modest pay increases to teachers the past two years. The district made a point to hire more staff to reduce its class sizes going into the 2016-17 school year, and now at least 94 percent of classes at each grade level are within the target class size range.
"The story of our audit is a remarkable story this year," Swift told the board Wednesday. "It represents a narrative about fiscal responsibility. Quite frankly, when I arrived in Ann Arbor the fall of 2013, we were just such a long way from where we are today."