At a special meeting in early April, the school board voted 4–3 to have superintendent Jazz Parks warn most of the district’s unions of impending layoffs. They did so, president Torchio Feaster says, because they needed “to send a realistic plan to the state” for how to address a $25 million shortfall. If they hadn’t acted, he says, they’d have left the district “open to the possibility of [state] emergency management, and of union contracts being voided, and of programs being cut that we don’t have any say in.”
Superintendent Jazz Parks, school board chair Torchio Feaster, consultant Marios Demetriou, and trustee Susan Ward Schmidt gather public feedback at an April meeting. A $14 million bookkeeping error Demetriou discovered meant that the district’s fund balance was even lower than it seemed. | Photo: Mark Bialek
“We’re devastated by this resolution and the authorization to give layoffs,” says Ann Arbor Education Association president Fred Klein. “We’re angry with the district. [Teachers are] being asked to make the ultimate sacrifice for all these mistakes that this district made.”
One mistake was adding 480 positions over the last decade. That may have seemed sustainable when enrollment was growing—from 16,449 in the 2013–14 school year to 17,961 in 2018–19—but it’s since fallen back to 16,927, a net gain of fewer than 500 students. Since state funding is tied to enrollment, that created a structural deficit.
The problem was patched over temporarily with $24 million in state and federal pandemic aid. But when that ended last fall, AAPS, like many districts around the country, faced the “Covid cliff.”
That itself wasn’t a surprise. Last spring, Klein told the Observer that the union wanted any “right sizing” to be done “through attrition—people retiring, people resigning.” Then-superintendent Jeanice Swift, we wrote, “planned to analyze everything added during the pandemic, from physical property to day-to-day operations, to see what can be reduced or eliminated” (Jeanice Swift’s Decade, May 2023)
But in August, a narrow board majority voted to notify Swift that it planned to terminate her contract. She negotiated a settlement and stepped aside at the end of October. The board chose Parks, then an assistant superintendent, as the interim chief while it searched for a permanent replacement.
When Feaster joined the board in October, he says, “I specifically asked trustees where we stood financially, and everyone assured me that the district was a good place.” But after he was elected president in January, the public defender and former business owner thought the budget looked tighter than it should. “I began to ask questions trying to understand the district finances.”
Parks was unavailable for comment because “she’s focused on gathering feedback from the community,” the schools’ communications director Andrew Cluley emails. But according to Feaster, she “saw that the numbers didn’t make a lot of sense.” Because the district’s chief financial officer, Jill Minnick, had left for the Plymouth-Canton Community Schools in December, Parks recommended bringing back retired CFO Marios Demetriou to look more closely.
Demetriou discovered that the fund balance was even lower than it seemed: A $14 million transfer from the state to the AAPS retirement fund had been recorded as revenue—but its transfer back to the state-run fund hadn’t been recorded as an expense.
When Feaster learned about the error before the March 13 board meeting, he says, “I was first in shock, and, second, I was angry.” He wasn’t alone. “How could this $14 million possibly have happened without it being detected?” asks school board secretary Jeffrey Gaynor. “I don’t understand.”
Accounting firm Plante Moran is doing an audit. Once it’s done, Feaster says, “We’ll be able to speak much more plainly, be much more frank, and be able to give the community the transparency that they’re looking for.” But Gaynor warns that it “may not tell us anything more than there was this entry that shouldn’t have been there.”
To restore the fund balance, Demetriou determined that the district will need to cut $25 million from its upcoming 2024–25 budget. Since 81 percent goes to staff salaries and benefits, layoffs are inevitable.
The board cut short its search for a superintendent and hired Parks permanently. Feaster says she has been meeting with staff and will have a plan for the board to consider in time for budget deliberations in June.
“We’re hoping not to drop any program,” he says. “But we don’t know yet.” Fewer students could also mean less need for buildings. “We’re hoping not to close any doors,” says Feaster, but that depends on enrollment.
“They can consolidate some students and close a building or two,” says Klein, the union president. Voters approved a $1 billion bond in 2019 to renew the district’s schools, and “those would be buildings that wouldn’t need to be upgraded, renovated, or torn down and replaced.” But by law, the borrowed money can only be spent on capital investments like buildings, not operating expenses like teachers’ pay.
Klein faults the board and Swift for the situation because “they were the ones making the decisions.” (Swift didn’t respond to messages seeking comment.) The community “should be appalled at where we are right now as a school district,” he says. The union wants more gradual cuts, laying off only administrators and other nonteaching personnel and allowing the number of teachers to shrink by attrition.
“I know the community is not happy with the board,” says Feaster, “and I don’t blame them.” Gaynor describes the group as “dysfunctional” with “personality issues” that “got in the way of us focusing on what we needed to focus. And I believe it distracted Dr. Swift.”
Feaster says he’s determined to fix the budget issue this year, and then “start coming back stronger next year.” And though “not many financial people want to take over a role where they’re coming and dealing with a $25 million shortfall,” he thinks they’ll be able to hire a new CFO “sometime in June.”
The board president predicts “some tough discussion. It may come down to another 4–3 vote, unfortunately. But we’re gonna find those reductions.”
