Balancing AAPS Budget Toward a New Fiscal Reality

Dr SwiftWednesday, May 28, 2014

May is an important time in Ann Arbor Public Schools as we strive to finish this year, set the table for a successful ’14-’15 school year, and complete the necessary work to balance our budget and bring the organization to a better fiscal reality.

This week we have entered the final three weeks of class with our students and we realize the importance of finishing this exceptional ’13-’14 school year well. I am always so impressed with what I observe in Ann Arbor classrooms; our team delivers an exceptional educational experience every day for our students, and we have so much of which to be proud in Ann Arbor Public Schools.

May is also an important time in our organization as we work together to prepare for next school year – 2014-2015. I know that school teams are busy collaborating on next steps in improving our work with students. I have been so grateful for the outpouring of support across the district for our Schools of Choice, In-District Transfer, and the new initiatives we are planning. Over recent weeks, we are pleased to have heard from so many students from the Ann Arbor attendance area who have shared that they intend to enroll in AAPS for the first time next year. Congratulations, Ann Arbor Public Schools team, this is very encouraging news.

Mid-May also brings the challenge of balancing our budget for the coming fiscal year – this challenge of balancing the AAPS budget with lackluster revenues is an all-too-familiar refrain repeated over the previous decade, and I realize that our AAPS team, our families, and our community are weary with this difficult process and the painful reductions.

Budget Update & Next Steps

 Today I need to share some information with you regarding our work and our next steps in moving the AAPS organization to a stronger fiscal position despite the dire reality of current state funding.

The current news from our state legislature regarding funding for next school year offers estimates ranging from a positive of +$2.50 per student (about $50,000. to the district overall) to the most negative proposal – from the Senate – that would result in the loss to AAPS of an additional 2.5 million dollars for the next fiscal year.

This evening, we will be participating in a Board of Education Briefing where we will share more specific details of how we plan to balance the budget and close the 10.7 million dollar gap we face this year.

You will note that our detailed plan for balancing the budget falls into three distinct categories designed to maintain the exceptional Ann Arbor quality and to avoid the lay-offs of teachers, further reductions in school programs, and the increases in class sizes that we experienced last school year.

Budget Strategy for 2014-2015

  1. Increase revenue through enrolling and attracting more of our own students from the Ann Arbor attendance area and Schools of Choice students.

We are pleased to share that, due to the work to extend and enhance programming, more than 245 students from within the Ann Arbor attendance area who have not been attending AAPS schools have already filled out enrollment paperwork and indicated their intention to attend AAPS in the fall. Many additional students, Young 5’s, and others, are on their way to Ann Arbor school classrooms in September.

All indications are that enrollment is looking up in AAPS, the largest group of incoming students is at kindergarten and this is excellent news for the longterm success of the organization. It is also extraordinary news for these fortunate children who will experience the Ann Arbor difference; the opportunity to attend an AAPS school and experience an Ann Arbor Public Schools education will positively and powerfully impact the lives of so many children. 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.

Streamline of operations will include additional reductions to the central administration team as well as a recommendation to pursue outsourced solutions for custodial and portions of maintenance services to streamline and significantly reduce operational costs.

An additional recommendation will be to 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 throughout this year, including limitations on purchases, travel, and other expenditures, will continue over the coming year.

3. Employee Compensation to Remain the Same in ’14-‘15

I need to share with you that I will be asking all employee groups to freeze compensation for ’14-’15 at the current ’13-’14 level, subject to negotiations. I realize that this is hard news to hear – that it is a sacrifice for all, and yet I am asking this across the system of 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 within a declining resource environment and bring the AAPS district to a more sound fiscal position without stabilizing salaries as part of the strategy moving forward.

While many districts in our own county and across the state of Michigan are currently requesting reductions in employee salaries – ranging from 7% to as much as 19% – and some are preparing for devastating lay-offs across their school systems, I am asking that our AAPS team hold salaries stable at the ’13-’14 levels. I am requesting this shared sacrifice of every employee in our Ann Arbor system.

In executing these three strategies: revenue generation through attracting students, streamlining of the back-of-the-house operations, and holding salaries stable, we will bring Ann Arbor Public Schools to a more solid fiscal condition.

Currently, our fund equity balance, when we close this current fiscal year, is projected to be at an all-time low – at around 2.8% – this amount equals approximately 2 weeks in operating costs for our district. A brutal reality in AAPS is that our rainy-day fund is precipitously low.

We will not go the path of other Michigan districts, currently more than 50 in number, who are in deficit status and facing the loss of control over their day-to-day school operations and the futures of children.

We will work together to ensure that we avert a deficit status for our excellent Ann Arbor Public Schools and in order to accomplish this goal, we are making some difficult decisions as we work to continue improvement in the three areas outlined today.

The community and staff have shared, during the Listen and Learn tour their desires and expectations for Ann Arbor Public Schools; we are working to provide those programs, and to grow our way through this challenging time.

In times of big challenge and change, sometimes a first response is to criticize or find fault, to lay blame – and often we begin that reactive process with those on our own team.

In the face of this ’14-’15 fiscal challenge, I encourage our Ann Arbor Public Schools community to continue to pull together, to advocate and apply pressure on our state legislators for a renewed investment in our public schools and in our students.

Our legislators in Lansing are not accomplishing nearly enough in Michigan to support a constitutionally guaranteed free and quality public school experience, and we need to keep our focus on securing our children’s share of the significant increased revenues now coming into state funds. Over the coming days, we will continue to urgently address our State Legislators and the State Board of Education on exactly this issue, and I hope you will reach out to them as well.

 I believe in the quality of the Ann Arbor Public Schools – we are truly exceptional.

I know that by working together, by sharing the sacrifice, and by reflecting on how fortunate we are to have quality schools in this amazing Ann Arbor community, we will move forward to preserve the viability of Ann Arbor Public Schools organization as a great place for students to learn and a wonderful place for educators to work. Ann Arbor will continue to be an incredible place to live and to raise children.

We will navigate these current financial challenges, we will become stronger as an organization, and we will look to a better day ahead.

You may remember the African Proverb that I shared at the beginning of the school year:

If you want to go fast, go alone. If you want to go far, go together.        –       African Proverb

There is a better day coming; let us go there together.

Thank you, on behalf of each of our 16,500 students, for your  incredible support of the Ann Arbor Public Schools.


Jeanice Swift

Superintendent of Schools

Ann Arbor Public Schools

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