Running on Empty

1. Running on Empty Running on Empty The Tale of Two Districts Facing Reality and Confronting General Fund Deficits Garden City SchoolsOak Park School District Dr. Richard Witkowski Dr. Sandra Harris Ms. Sheryl Quinn Ms. Maria Bolen Moderator: Amanda Van Dusen Miller, Canfield, Paddock and Stone MASA - September, 2006

2. Running on Empty THE SETTING What You Do Not Control • State School Aid/Foundation Allowance Per Pupil Increase in Foundation Allowance By Years 1 Base foundation increased by $400; Others by $200 2 Lowest level of pupil funding for a district in 2006/7 is $7085, up from $5700 in 2000 3Prorations reduced state aid by $67/pupil in 2003 and $74 in 2004 4 Base foundation grant has grown since 2000 at a rate higher than CPI, but that is not necessarily true for School Districts with higher foundations.

3. Running on Empty • Pension and Retiree Benefits % PercentofPayroll Fiscal year Health Care Costs: Double Digit annual increases (11-15%) 2001-2004; ↑ 9.2% 2005(1) Utilities: Natural Gas: ↑ between 19.3% and 8.3% in 2003/4 and 2004/5(2) Fuel For School Buses ↑ 33% in 2003/4; ↑ 16.5% in 2004/5(2) DOES NOT LEAVE ROOM FOR WAGE INCREASES THROUGH BASE PAY OR STEPS • Source: Kaiser Family Foundation • Source: U.S. Department of Energy

4. LAW Running on Empty • BALANCED BUDGET (NO NEGATIVE FUND BALANCE!) (SECTION 5 OF PA 2 OF 1968) (141.435) • DEFICIT ELIMINATION PLAN (388.1702) • BORROWING OPTIONS • Straightforward Option For Deficit Funding Sunsetted in 1994 • What Remains: State Approved Multi-Year Agreement (Conversion of State Aid Note) 380.1225(3) with Reporting, Covenants, Intercepts Voted or Non-Voted Deficit Bonds to Fund Deficit Resulting From Property Tax Appeal or Court Order. (($100) per pupil) • LAST GASPS: • Emergency Financial Manager, Act 72 of 1990 (141.1201 ET. SEQ.) • http://www.michigan.gov/mde/0,1607,7-140-5235_5686-66897--,00.html • Maybe Bankruptcy • Consolidation With Other District(s)

5. TWO DISTRICTS: SIMILARITIES AND CONTRASTS Running on Empty • BALANCING ACT: Revenue Opportunities Achieving Efficiencies/Savings Without Hurting Enrollment • Both have focused on budget elements with their control • Both conducted an asset inventory • Additional challenge to achieve savings when 85-90% of budget represents employment costs (and a lot of that employment lives in the district). One district began to address serious challenges last year; the other has been making tough decisions for many years.

6. OAK PARK SCHOOL DISTRICT PROFILE Running on Empty • High Minority Population Foundation Allowance - $7,971 for 2006-07 Enrollment – 3,616 students on 4th Wednesday in February Fund balance has been steadily declining since 2000 Federal Revenue - $4.8 million Total General Fund Budget 2006-07 - $39.9M New administration in the 2005-06 school year Found all departments operating at a sub-standard level

7. OAK PARK’S APPROACH TO FINANCIAL HEALTH Running on Empty Current Opportunity – increase enrollment of resident or nonresident Began large scale marketing campaign Schools of Choice – estimating 600-800 students over budget Eliminated “low hanging fruit” to right-size district Priorities - fiscal health and new culture within district - retaining current and newly enrolled students Successes – Increased enrollment, dress code, key hires Obstacles/deferred goals – additional cuts necessary, bond issue

8. OAK PARK’S “LOW HANGING FRUIT” Running on Empty • 4 FTE’s at central office • 19.50 FTE’s in Instruction • 6.00 FTE’s in instructional support (paras) • 10.00 FTE’s in custodian/maint/transp • 4.00 FTE’s in secretarial support TOTAL REDUCTIONS - $2,637,638

9. GARDEN CITY PUBLIC SCHOOLSPROFILE Running on Empty • DEMOGRAPHICS • URBAN FRINGE DISTRICT LOCATED WEST OF DEARBORN/DETROIT. • LOWER/MIDDLE INCOME POPULATION • AGING POPULATION • DECLINING K-12 ENROLLMENT • STUDENT ENROLLMENT (6/30/06) – 5,437 • 4,800 K-12 • 350 – CENTER PROGRAMS • 337 – ADULT/COMMUNITY EDUCATION • 2.68% MINORITY ENROLLMENT • FOUNDATION ALLOWANCE (2007 FY) - $7,569

10. GARDEN CITY PUBLIC SCHOOLSPROFILE (Continued) Running on Empty • FUND BALANCE TRENDS • 2001FY - $212,000 • 2002FY – ($256,000) • 2003FY – $1.2 MILLION • 2004FY - $339,000 • 2005FY - $196,000 • 2006FY – ($1.3 MILLION) UNAUDITED • LIMITED SCHOOLS OF CHOICE – K – 5 • FEDERAL DOLLARS – 5% • GENERAL FUND BUDGET - $42. 1 MILLION (89% State Sources) • TAXABLE VALUE - $692.2 MILLION • HISTORY OF BUDGET CUTS

11. GCPS PRIOR YEAR REDUCTIONS Running on Empty • SPECIAL PROGRAMS AFFECTED • Dunes Project • Model UN Project • Sea Camp • Garden City Tour at Elementary Level • Japan Bowl • Art Works • 0.20 FTE for TAG Coordinator at High School • Increased General Special Education class average through deviation process from 10 to 12. • All Special Education program aides and one teacher funded through other grants. • 20 student class enrollment limitation restricts the number & types of classes offered at the secondary level.

12. GCPS PRIOR YEAR REDUCTIONS Running on Empty • Limited Staff Development Funding • Level of Vocational Program Funding limits course offerings. • Funding for New Textbooks Adoptions and Replacements Reduced • Supply Accounts Reduced • Reduction in technology purchases not funded though other sources. • Middle School Swimming Pool Closed • Elementary Band • Cyesis Program • Latchkey Consolidated • Loss of DARE program – District could not provide financial support

13. GCPS PRIOR YEAR REDUCTIONS Running on Empty • Modified Elementary Foreign Language Program from enrichment to ABT Program (5.0 FTE) • Split Classes (3.0 FTE) (2003/2004) • Elementary Self Contained Classroom (1.0 FTE Teacher & 1.0 FTE Aide) • Special Education Consulting Hour at HS (1.6 FTE) • In School Suspension at HS & ALC at MS (2.0 FTE) • Reduced 0.2 FTE HS Librarian (from 1.2 FTE to 1.0 FTE) • North Central Coordinator (.2 FTE) • Consolidation of Early Childhood Consultant & Behavior Specialist Positions (1.0 FTE) • WIN Program for MS At-Risk Students (2.0 FTE) • Reading Teacher at Each Elementary School (5.0 FTE)

14. GCPS PRIOR YEAR REDUCTIONS Running on Empty • Cyesis Pregnant Girl Program (2.0 FTE) • Pre-School Readiness (1.0 FTE) • Class Size Reduction Grant Eliminated/Reduced which General Fund could not support (2.0 FTE) • Service Learning Grant Eliminated which General Fund could not support (.2 FTE) • Combined health and physical education program (1.0 FTE) • English as a Second Language (ESL) Eliminated • GED Program reduced. • Community Ed Pre-Vocational/Vocational Programs eliminated/reduced • Social Worker position eliminated

15. GCPS REDUCTIONS Running on Empty • Athletics • Pay to Participate ($75 per sport participated, 2007FY $100/Sport)) • Elimination of HS & MS Intramural Program • Fund Raising for 9th Grade Sports • Sports Teams increased fund raising. • Athletic Trainer Eliminated • Middle School Sports Eliminated • Maintenance of Athletic Facilities Delayed (HS Pool, Track, Gym Bleachers, etc)

16. GCPS REDUCTIONS Running on Empty • Operation & Maintenance • 11.5 FTE (21% Reduction) • Every Other Day Cleaning • Scheduled Maintenance and Repair of Buildings Postponed • Capital Improvement outside of Bond Issue postponed • Summer Temporary Positions Eliminated • Privatized Building Custodians (2007 FY) • Clerical – 8.3 Clerical Positions (19%) • Administration – 6.0 FTE Positions (20%)

17. GCPS ADDITIONAL REDUCTIONS Running on Empty • Lunchroom Supervisor Hours Reduced • Teacher Supervised Lunch Detention Program Eliminated • Property Sales (Marquette, Burger Field, Radcliff) • Support from GC Foundation • Cost of Borrowing - $600,000 (FY 2007 Line of Credit) • All Field Trips Paid by outside sources

18. GCPS ADDITIONAL REDUCTIONS Running on Empty • Sub Teacher incentive eliminated • PST Program with Madonna University eliminated. • Administrative Beginning of Year In-service reduced in scope • Substitute Wage rates frozen – 6 years • Staff communications printed electronically • Police Liaison Officer • School District Publication reduced to once per year. • Marketing and Communications expenses reduced • Negotiations • Reduced Health Benefits (Prescription Riders) • Negotiated increases less than Wayne Average

19. GCPS Running on Empty • Revenue Enhancements – Little opportunity for significant revenue increases beyond state Aid • Adult & Community Education Enrollment • School of Choice K-6 (170 FTE’s) • Sucontract Food Service

20. GCPSFY 2007 & Beyond Running on Empty • FY 2007 • Privatized Building Custodial & Lunch Programs including LR Supervisors. • Increased Pay to Participate fee to $100/Sport • Continue School of Choice • Eliminate 9th grade sports • Contracted 5.0 Administrative Positions • Spending Freeze • Unaffiliated Salary Freeze • Increase Rates in Tuition Based Programs • Voluntary Severance Package • Deficit Reduction Plan

21. GCPSFY 2007 & Beyond Running on Empty • Beyond • Additional Property Sales and/or Lease Arrangements • Split Classes • Building Grade Reconfiguration • Negotiated Reductions/Freezes • Increase Class Size Maximums • Sinking Fund • Increased cost of Security Programs • Cost of Mandates & Legislation • HS Curriculum Requirement • Cooperative Agreements with Other Districts • Textbook Needs • ???????

22. BOARD AND COMMUNITY Running on Empty • CHALLENGES • Work toward positive fund balance • Recall Effort • Non – Academic Board Goal-Community Engagement • INFORMATION • FINANCE COMMITTEE • POLICY COMMITTEE – FOCUS GROUP • IMPROVE/ENHANCE COMMUNICATION • CONSERVATIVE BUDGETING • INFORMATION GATHERING/SHARING

23. Running on Empty • BOARD AND COMMUNITY • OTHER STRATEGIES • THIRD PARTY INFORMATION ABOUT FACTORS OUTSIDE CONTROL • MULTI-YEAR FORECASTS • EMPHASIZE WHAT A DISTRICT CAN CONTROL • VETTE THE IDEAS • LONG TERM GOALS • DON’T FORGET THE POSITIVE

24. Running on Empty • K-16 BALLOT INITIATIVE – MAY HELP, BUT NOT A PANACEA • NOT CONSTITUTIONAL • SMOOTHES, BUT DOES NOT ELIMINATE IMPACT OF DECLINING • ENROLLMENT • ADDRESSES PENSION ISSUES, BUT OTHER EXPENSE PRESSURES COULD EXCEED CPI INCREASES • MORE INFORMATION: www.michigank16.org and www.crcmich.org

25. Running on Empty • QUESTIONS AND DISCUSSION.