Ann Arbor Public SchoolsAnn Arbor Public Schools

Funding and Finances

4/17/07

Goals for This EveningGoals for This Evening

• How is AAPS FundedHow is AAPS Funded

• How are Funds SpentHow are Funds Spent

• Where Do We Go From Here Where Do We Go From Here

Definitions:Definitions:

Foundation Allowance:Foundation Allowance: A funding formula providing for a per A funding formula providing for a per pupil distribution of State aid based on the pupil distribution of State aid based on the district’s previous combined State and local district’s previous combined State and local revenue, the growth in the State’s School Aid revenue, the growth in the State’s School Aid Fund and legislative action. Since Fund and legislative action. Since determined in 1994, growth can only occur by determined in 1994, growth can only occur by legislative action.legislative action.

Blended Membership Count:Blended Membership Count: The actual number of pupil memberships The actual number of pupil memberships (converted to full-time equivalent) for the (converted to full-time equivalent) for the February and September counts. A 25 percent February and September counts. A 25 percent to 75 percent blend respectively of these to 75 percent blend respectively of these counts determines the number of pupils counts determines the number of pupils eligible for Foundation Allowance Funding.eligible for Foundation Allowance Funding.

Building a Foundation Building a Foundation AllowanceAllowance

State

Homestead

Non-Homestead FY 2006/07 Per Pupil Allocation

17.97 Mills $3,448 Local Non-Homestead (Commercial, Industrial, Rental, and Seasonal Homes) (Variable) 4,704 State Contribution (Variable)

$ 233 State Contribution -20J Hold

Harmless

$8,385 Foundation Allowance (Base)

1,234 Hold Harmless (fixed)

$9,619 Foundation Allowance

(Per-pupil Funding)

Revenue Sources:

Sales, Income, Use, Cigarette, Liquor, Excise Taxes, Lottery, etc.

6 mills (fixed)

6 mills (fixed)

4.98 mills (variable)

Valuation $3.21 Billion

Valuation $4.11 Billion

Revenue ProjectionRevenue Projection FY 2006/07FY 2006/07

Funding driven by two major factors:

Student population (possible slow growth)

State revenue (economic down-turn, uncertainty)

Before and After Before and After Proposal A Proposal A

Local, 93.31%

State, 1.21%Other,

5.48%

Local State Other

Projected 2006-07

Before 1993/94

Foundation Allowance

85.6%

Other State Sources

4.7%

Other Local Sources

1.1%Other Sources8.6%

State Budget ShortfallState Budget Shortfall

• GF/GP shortfall $500 million GF/GP shortfall $500 million

• K-12 shortfall $577 million? K-12 shortfall $577 million?

• TOTAL SHORTFALL $1,077 TOTAL SHORTFALL $1,077 million?million?

FUNDING ALLOCATION SINCE PROPOSAL A

Fiscal yearPer Pupil Allocation

$ Incremental Increase % Increase

93-94 $7,574

94-95 $7,734 $160 2.11%

95-96 $7,887 $153 1.98%

96-97 $8,042 $155 1.97%

97-98 $8,196 $154 1.91%

98-99 $8,196 $0 0.00%

99-00 $8,434 $238 2.90%

00-01 $8,734 $300 3.56%

01-02 $9,034 $300 3.43%

02-03 $9,181 $147 1.63%

03-04 $9,160 -$21 -0.23%

04-05 $9,234 $74 0.81%

05-06 $9,409 $175 1.90%

06-07 $9,619 $210 2.23%

Average Increase $157 1.86%

Per Pupil Allocation vs Per Pupil Allocation vs InflationInflation

0%

5%

10%

15%

20%

25%

30%

35%

40%

1994 1995 1996 1997 1998 1999 2000 2001 2002 *2003 *2004 2005 2006

Fiscal Year

Co

mp

ou

nd

ed P

erce

nta

ge

Foundation Increase Detroit CPI

Note: Foundation increasehas trailed inflationby approximately$16.95 million over the past 13 years

Historical Blended FTE Historical Blended FTE EnrollmentEnrollment

Student FTE Enrollment

15,619

16,091

16,49816,635 16,668 16,632

16,817 16,852

16,353

15,322

14,000

14,500

15,000

15,500

16,000

16,500

17,000

17,500

FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06

1

$24,063,658

$36,420,905

$40,932,993$36,886,039

$27,971,185

$23,589,214

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

FY01 FY02 FY03 FY04 FY05 FY06

General Fund General Fund Historical Fund BalanceHistorical Fund Balance

Expenditures as Percentage of Expenditures as Percentage of Total Budget Total Budget

FY 2006FY 2006

Total Budget $181 Million

Instruction & Support

80%

Administration & Support

20%

Instruction & Support Administration & Support

What’s Included?What’s Included?

Instruction & Instruction & Support Support

• TeachersTeachers• ParaprofessionalsParaprofessionals• Technical Technical Assistants Assistants

• CoordinatorsCoordinators• Building Building AdministrationAdministration

• Building Building SecretariesSecretaries

Administration & Administration & SupportSupport

• Central Central AdministrationAdministration

• Directors/Directors/SupervisorsSupervisors

• Administrative Administrative Support Support

• Custodial/Custodial/MaintenanceMaintenance

• TransportationTransportation

Public Schools of the City of Public Schools of the City of Ann ArborAnn Arbor

Current Operations Fund ExpendituresCurrent Operations Fund ExpendituresYear Ended June 30, 2006Year Ended June 30, 2006

3%

3%

3%

91%

Salaries and Benefits Utilities and Insurance

Contracted Services Supplies, Materials and Equipment

Note: Excludes transfers to other funds

Budget Breakdown 2006/07Budget Breakdown 2006/07Salaries & BenefitsSalaries & Benefits

Other3%

Administration & Support

11%

Instructional Support

14%

Teacher Costs72%

Total Teacher Costs Instructional Support Administration & Support Other

Teachers Include:Teachers Include:

• Classroom TeachersClassroom Teachers

• Media SpecialistsMedia Specialists• CounselorsCounselors• Occupational/Occupational/

Physical Physical TherapistsTherapists

• PsychologistPsychologist• Social WorkerSocial Worker• Speech TherapistSpeech Therapist• Teacher ConsultantsTeacher Consultants• NurseNurse

• ElementaryElementary• Middle SchoolMiddle School• High SchoolHigh School• Special EdSpecial Ed• Vocational EdVocational Ed• English As A Second English As A Second

LanguageLanguage• LiteracyLiteracy• Adult EdAdult Ed• PreschoolPreschool

Direct InstructionDirect Instruction

High High

SchoolSchoolMiddleMiddle

SchoolSchool

ElementarElementary y

SchoolSchool

OperatiOperating Costng Cost

$27,352,2$27,352,23333

$20,282,3$20,282,30404

$38,474,0$38,474,05959

Number Number of of

StudentStudentss 5,7395,739 3,6923,692 7,4137,413

Cost Cost Per Per

StudentStudent $4,766$4,766 $5,494$5,494 $5,190$5,190

Instructional SupportInstructional Support

Special Education & Special Education & Pupil Support ServicesPupil Support Services $31,017,416$31,017,416

Compensatory InstructionCompensatory Instruction $2,670,875$2,670,875

Vocational EducationVocational Education $2,489,304$2,489,304

Support Services-Support Services-Instructional staffInstructional staff $8,527,424$8,527,424

Support Services- School Support Services- School AdministrationAdministration $11,503,418$11,503,418

TotalTotal $56,208,437$56,208,437

Administration & SupportAdministration & Support

Legal Costs (Board of Legal Costs (Board of Education)Education) $1,024,041$1,024,041

Executive AdministrationExecutive Administration $1,318,317$1,318,317

Business ServicesBusiness Services $2,197,779$2,197,779

Operations & MaintenanceOperations & Maintenance $18,299,292$18,299,292

TransportationTransportation $6,788,307$6,788,307

Support Services- Support Services- CentralCentral $3,832,759$3,832,759

AthleticsAthletics $3,017,616$3,017,616

TotalTotal $36,478,111$36,478,111

Specific ExpensesSpecific ExpensesFY 2006FY 2006

• Teaching Supplies and Materials Teaching Supplies and Materials = $1,568,000 = $1,568,000

• Equipment and Furniture = Equipment and Furniture = $57,000$57,000

• UtilitiesUtilities = = $5,315,693$5,315,693

Three Year Budget ProjectionThree Year Budget ProjectionWith No Foundation Allowance IncreaseWith No Foundation Allowance Increase

FY 2008 - 2010FY 2008 - 2010

Item Description 2008 2009 2010

Blended Count: 16,553 16,497 16,422

TOTAL REVENUE $179.75 $180.98 $182.05

EXPENDITURES:

Basic Expenditures $187.32 $189.29 $187.02

REDUCTIONS: Salary Differential Savings Proposals Health Care Savings

TOTAL EXPENDITURES $187.32 $189.29 $187.02

Balance / Deficit ($7.57) ($8.31) ($4.97)

Fund Equity - Beginning Balance $23.29 $15.72 $7.41

Fund Equity - Ending Balance (Est.) $15.72 $7.41 $2.44

Estimated Per Pupil Funding Estimated Per Pupil Funding Needed to Cover Annual Needed to Cover Annual Expenditure IncreasesExpenditure Increases

Example:Example: Per Pupil Per Pupil Increase Increase

Needed Each Needed Each YearYear

Total Cost Total Cost Increase Each Increase Each

YearYear

Cost of a 2% Cost of a 2% raiseraise $172$172 $2,850,000$2,850,000

Cost of StepsCost of Steps $115$115 $1,900,000$1,900,000

Mandated Mandated Increase in Increase in Retirement from Retirement from 17.74% to 18.56% 17.74% to 18.56% of Payrollof Payroll $56$56 $931,200$931,200

Health Premiums Health Premiums Go Up 10%Go Up 10% $103$103 $1,700,000$1,700,000

ESTIMATED ESTIMATED TOTALTOTAL $446$446 $7,381,200$7,381,200

What Have We Done to Reduce What Have We Done to Reduce Costs?Costs?

• Reduce costs by over 8 million Reduce costs by over 8 million dollars over the past two years:dollars over the past two years:– Eliminated positionsEliminated positions– Self-funding of health and dental Self-funding of health and dental insurance benefits for some employee insurance benefits for some employee groups and capped district contribution to groups and capped district contribution to employees for MESSA health insurance at a employees for MESSA health insurance at a 5% increase annually5% increase annually

– Reduced Property and Liability Insurance Reduced Property and Liability Insurance Costs by over $500,000Costs by over $500,000

What We are Doing to Reduce What We are Doing to Reduce Costs?Costs?

• Continuing to look at ways to reduce health Continuing to look at ways to reduce health insurance costsinsurance costs

• Reducing legal expensesReducing legal expenses

• Restructuring middle school programRestructuring middle school program

• Reducing contracted services costsReducing contracted services costs

• Looking for opportunities to consolidate Looking for opportunities to consolidate services county-wideservices county-wide

Where Do We Go From Here?Where Do We Go From Here?

• Possible Means to Address/Manage DeficitPossible Means to Address/Manage Deficit

– Increase Student EnrollmentIncrease Student Enrollment• 100 new students equals $961,900 in additional 100 new students equals $961,900 in additional revenuerevenue

• Approximately 1,274 K-12 students live in AAPS Approximately 1,274 K-12 students live in AAPS district and attend charter schools and other district and attend charter schools and other public schools within the countypublic schools within the county

– Lobby the State for Change in the Way Lobby the State for Change in the Way Schools are FundedSchools are Funded• Increased local control over school fundingIncreased local control over school funding• Changes to the funding of retirement costsChanges to the funding of retirement costs

Where Do We Go From Here?Where Do We Go From Here?

– County-wide Enhancement MillageCounty-wide Enhancement Millage• 1 mill equals approximately 4.5 million dollars 1 mill equals approximately 4.5 million dollars per year in additional funding for AAPSper year in additional funding for AAPS

• 1 mill equals approximately $150 per year in 1 mill equals approximately $150 per year in additional taxes on a home with a $150,000 additional taxes on a home with a $150,000 taxable valuetaxable value

– Renew Sinking FundRenew Sinking Fund• 1 mill sinking fund expires in 20091 mill sinking fund expires in 2009• Sinking fund generates approximately 6.8 million Sinking fund generates approximately 6.8 million dollars per yeardollars per year

• Sinking fund can be renewed without increasing Sinking fund can be renewed without increasing taxes beyond current leveltaxes beyond current level

• Sinking fund dollars can be used to fund repairs Sinking fund dollars can be used to fund repairs and renovations currently funded through general and renovations currently funded through general fund dollarsfund dollars

Where Do We Go From Here?Where Do We Go From Here?

– Private GivingPrivate Giving• Seek private funding (donations and Seek private funding (donations and grants) for programsgrants) for programs

• Work of PTO’s, Booster Clubs, Ann Work of PTO’s, Booster Clubs, Ann Arbor Educational Foundation…Arbor Educational Foundation…

– Make ReductionsMake Reductions

Ann Arbor Public Ann Arbor Public SchoolsSchools