Thursday, June 19, 2014
Hello AAPS Staff and Community,
Over this past week we have wrapped up an exceptional 2013-2014 school year with our 16,500 students. I am always so impressed with the quality I observe in Ann Arbor classrooms; our team delivers top-quality educational experience every day for our students. With impressive student academic performance, an exemplary staff, and top-shelf core academics, arts, athletics and extra-curricular programming, we have so much of which to be proud in Ann Arbor Public Schools.
This June is an important time in AAPS as we strive to set the table for a successful ’14-’15 school year and complete challenging work to balance the budget and bring the AAPS organization to a stable fiscal reality.
In Ann Arbor, we are not alone in experiencing fiscal challenges. School districts across our county, state and nation continue to grapple with painful budget realities of reduced resources to classrooms. Over recent months, we all have read news stories that detail the struggles of many school districts across Michigan facing reductions in staff salaries, ranging from 2% to 19%, and several are currently experiencing significant staff lay offs.
We are committed to a process of extending and enhancing the quality for which Ann Arbor Public Schools has always been known. The goal is to ensure that the district is aligned to operate within our resources. This is why we are seeking a collaborative solution that involves all groups across the district.
AAPS Budget Reality
Currently, our fund equity balance is expected to be at an all-time low – at approximately 2.3% – less than 2 weeks in operating costs for our district operation. A brutal reality in AAPS is that our rainy-day fund is precipitously low, and is no longer sufficient to satisfy day-to-day cash-flow demands.
Over the previous decade, AAPS has leveraged our fund equity balance to ease annual reductions in state funding; that option is no longer available. In April, 2014, Standard and Poor’s notified AAPS of a downgrade in our bond rating due to the low fund equity balance; this followed a downgrade by Moody’s the previous year. Using fund equity to balance the current budget is no longer an option. In fact, we must realign the budget and prioritize the restoration of our fund balance over the coming years.
We will not go the path of other Michigan districts, approximately 50 in number, currently in deficit status and facing the loss of control over day-to-day school operations and programs to an emergency manager, risking the loss of community values and commitment to our students and staff.
Our Commitment to Collaborative Problem Solving
We will work together to avert deficit status for the Ann Arbor Public Schools. In order to accomplish this goal, we are making some difficult decisions as we work to continue improvement.
The staff and community have shared, during the Listen and Learn tour, their desires and expectations for our district. We are working to provide the quality programs that our community expects and to grow our way through this challenging time. Without innovative programming, students will continue to choose beyond AAPS.
In the face of our current fiscal challenge, I encourage our community to pull together, to advocate and insist that our state legislators renew investment in our public schools and in our children.
Our Commitment to Responsible Financial Management
On May 28th, I sent a communication to all Ann Arbor employees sharing information regarding next steps in moving toward a stronger fiscal position, in the face of our current funding challenges.
Since that time, our state legislature has passed the School Aid budget that further increases the negative impact to the Ann Arbor Public Schools budget. While AAPS will receive $50 more in per pupil funding, increased retirement contributions will cost $60 more per pupil. This is a net loss in State funding. The minimal level of State funding creates a greater risk that the District will not be able to avoid a deficit budget position, which is not permitted by State law.
Our detailed plan for balancing the budget falls into three distinct categories designed to maintain the excellence and avoid the lay-offs of teachers, further reductions in school programs, and additional increases in class size targets.
2014-2015 Budget Plan
1. Increase revenue through enrolling and attracting more of our own students from the Ann Arbor attendance area as well as Schools of Choice students.
Due to extended and enhanced programming, more than 245 students from within the Ann Arbor attendance area have decided to join AAPS schools. Many additional students, Young 5’s, and others, are on their way to Ann Arbor Public Schools classrooms in September.
All indications are that enrollment is looking up for AAPS for 2014-2015. This is an important development following a decrease of more than 200 students last year. The largest group of incoming students is at kindergarten and this is excellent news for the long-term success of the organization as we look forward. It is also extraordinary news for these fortunate children who will experience the Ann Arbor difference. Our exemplary AAPS staff continues to make a quality difference for children every day.
2. Streamline back-of-the-house operations to spare the classroom from additional negative impact.
We will streamline operations, making additional reductions to central administration and implement outsourced solutions for custodial and portions of maintenance services saving the district an approximate 3 million recurring operation costs.
In addition, we will pursue the sale of excess property as a tool for generating additional revenue to be invested toward strengthening fund equity balance.
Austerity measures already in place, including limitations on purchases, travel, and other expenditures, will continue.
3. Employee Compensation to Remain the Same in ’14-‘15
On May 28th I shared with you my request that all employee groups freeze compensation for ’14-’15 at the ’13-’14 level, subject to negotiations. This is hard news to hear – this is a sacrifice for all as it extends reductions from previous years, and yet we are asking this from all our AAPS team members.
Salaries and fringe benefits amount to 87% of the overall general fund budget; it is impossible to stabilize the budget without stabilizing salaries as a part of the strategy moving forward.
Many districts in our county and across the state of Michigan are currently facing reductions in employee salaries – ranging from 2% to as much as 19%. Some are preparing for devastating lay-offs. I am asking that our AAPS employees hold salaries stable at the ’13-’14 levels and requesting this shared sacrifice of every employee in our Ann Arbor system.
In executing these three strategies: revenue generation through attracting students, streamlining back-of-the-house operations, and holding salaries stable, we will bring Ann Arbor Public Schools to a more solid fiscal condition – this plan gives us a fighting chance at surviving with our values and our mission intact.
Our Commitment to a Tradition of Continued Educational Excellence
We will navigate these current financial challenges, we will become stronger as an organization, and we will look to a better day ahead.
I know that by working together, by sharing sacrifice, and by understanding how fortunate we are to participate in this amazing Ann Arbor community, we move forward to preserve the viability of the Ann Arbor Public Schools as a great place for students to learn and educators to work. Ann Arbor will continue to be an exceptional place to live and to raise children.
Thank you, on behalf of each of our 16,500 students, for your incredible support of the Ann Arbor Public Schools.
Jeanice K. Swift
Superintendent of Schools
Ann Arbor Public Schools