The Schools' Unhappy New Year
The superintendent's budget recommendations come this month.
"Our fingers are crossed that we won't have to borrow [to meet] December payroll," says Ann Arbor school board president Deb Mexicotte.
Ten years ago, the public schools had a $40 million savings account. But as state funding fell and retirement costs rose, the board started spending it to fill the holes--a process that accelerated during the recession. Last year, with the "fund balance" projected to fall to just $5 million, the board set up a line of credit in case it had to borrow to pay its bills.
The good news, says board president Mexicotte, is that "the final budget turned out to be not as bad as we thought. Austerity measures and cost savings we put into effect in the last few months of the [fiscal] year meant we didn't have to take as much from the fund balance. It's now closer to $9 million." That's better than $5 million--but still down $8 million from last year.
"Since Proposal A [the 1994 law that prohibits districts from raising local millages], we've had a structural deficit of $6 million built into the budget," explains Mexicotte. "The question every year is: how much worse is it going to be?" This year, state funding actually increased slightly, but ballooning retirement costs swallowed most of the money. And with the district's financial cushion gone, the board and new superintendent Jeanice Swift have no choice but to cut spending now.
"Everyone wants us to tell them how it's going to affect their school," Mexicotte says. "But we don't know yet. Some board members think the deficit [projected for the 2015 school year] will be $8 million. Some think it could be as much as $25 million. I think it'll probably be somewhere in the middle."
Board treasurer Glenn Nelson says it all depends on Lansing. "The state will have enough money to give a sizable increase to education if policy makers choose to do so," he emails--potentially as much as $400 per student. For
Ann Arbor, that would come to almost $7 million.
If the legislature doesn't come through, will the board finally be forced to close schools? "We're looking toward January to see what the administration recommends," Mexicotte says. "The board sets the parameters--like have cuts hit the classrooms last--and the administration comes back with specific proposals the board then votes on in June."
The board may even try a millage. "In the budget forums [last year], we were asked repeatedly why we don't try a Rec and Ed millage," says Mexicotte. "We thought it was kind of limited. While it might raise a million dollars, some board members wondered if we shouldn't try for an enhancement millage instead, since it could be used more broadly. But then there was also concern we'd need it to pass in the rest of the county, and that didn't work last time [in 2009.]"
After the brief but turbulent tenure of Pat Green, how is Superintendent Swift working out? "She's great," gushes Mexicotte. "She's smart, warm, and funny--and engaged. By the end of December, she'll have gone to thirty-five community events."
[Originally published in January, 2014.]