GPPSS budget surplus proves capacity for tech funding

Last week the Grosse Pointe Public Schools received the independent financial audit for the 2013-14 school year. I have prepared an analysis of the audit in the slide deck embedded here.

The 2013-14 financial year was particularly critical because it began with just $2 million in fund equity. Also the district ran a $3.5M deficit in 2012-13. The 2013-14 audit shows a dramatic turnaround. Here are some highlights from the 2013-14 audit:

  • The district ran a $3.7M budget surplus when it had expected to run a $2M surplus. This ended a four year run of annual deficits that saw fund equity lose over $18M (details on how here.)
  • Compared to the previous year, 2013-14 revenues came in $464,000 higher and expenses dropped by $7.8M – undoubtedly the single largest annual expense reduction the district has ever seen. This puts the district a year ahead of schedule in the quest to return to 10% fund equity.
  • If the district could maintain expense controls in the current year (2014-15) consistent with last year, fund equity could increase by $4M and fund equity would end 2014-15 at 10% – two years ahead of schedule.

Bottom line for now: There is more financial capacity in the general fund than had been expected. The knock on effect is that the district now has a budget source to continue to address technology issues – including looking at cloud based services and leasing which will have no capital investment requirements and would not be allowed in a bond based funding model.

It would not be unreasonable to earmark $1M in additional general fund budget annually to make great strides in this area. Any further talk of a tech bond should be received with very healthy skepticism. (For reference, see my post on addressing district technology needs without a tech bond.)

GPPSS fund equity increase more than expected

The Board of Education Building at 389 St. Clair

The Board of Education Building at 389 St. Clair

In the Grosse Pointe Public School Systems’ annual financial audit for operations ending on June 30, 2014 (last school year) the district’s General Fund Equity had been expected to finish at $4 million or about 4% of total expenditures.

The audit shows that fund equity ended at $5.7 million or 6% of expenditures, which were $1.7 million less than the final budget for 2013-14 and the main reason why fund equity increased more than expected. The ending fund equity then is 142% above the anticipated levels.

This is significant, and welcome, news as the district is now a year ahead of original schedule in its return to 10% fund equity levels and changes the dynamic relative to concerns about inability to make certain necessary investments.

More analysis to follow shortly. The full audit is available here.

GPPSS millage patterns worth noting

This month the Grosse Pointe Public School communities renewed two millages that constitute about 25% of the district’s operating budgets. The Hold Harmless (referenced in below as “HH”) represents about $23 million in annual revenue. The Sinking Fund (“SF”) delivers about $2.5 million. They are both important, but clearly losing the HH would be far worse than losing the SF.

The 2014 renewals generally reflect the community understands their importance. Each of the six voting communities passed both at similar proportions within their cities, but oddly the SF passed at a slightly higher overall rate than the HH millage.

Also worth noting is the higher passage rate of the millages in the City, Farms and Park in comparison to the Woods, Harper Woods and the Shores. The City’s passage rate of the HH was a 15.7% percentage points higher than the Shores.

2014 Both Millages

 

The pattern was different in 2009 when the HH received stronger support than the SF.

2009 Both Millages

As we look at the comparison of the HH elections from 2009 to 2014, the gradation across the cities follows the same pattern, but more noteworthy is a significant reduction in the overall passage rate, that dropped from 77.4% in 2009 to 70.5% in 2014.

GPPSS HH Millage Only

Oddly the SF did not experience the same degradation of support from 2009 to 2014 with both years showing a near identical passage rate.

GPPSS SF Millage Only

Between this comparison and the otherwise proportionally consistency across the communities, there was something about the HH millage question this year that induced a decrease in support.

GPPSS board vote: A tale of 6 cities

The Grosse Pointe Public School System is comprised of five cities (the Pointes) and part of a sixth (Harper Woods). It’s been that way for decades and the community takes that for granted in many respects – or painfully reminds us. (Unite the Farms, anyone?)

The North end / South end thing is indeed a thing of sorts. While some look with disdain or cast this thing aside with a trite phrase, the 2014 school board vote demonstrates mathematically that the difference between the two ends of the district is real.

2014 vote_NorthvSouth

While Margaret Weertz gained a seat on the Board this week, if the the South end had its own board of education, she would have lost and Cynthia Sohn would have won. Weertz overall top 3 finish is attributable mainly to her Woods success where she beat Sohn by over 1,100 votes. Her message didn’t play too well down South.

So what?

The message Cynthia Sohn brought to the campaign resonated strongly with the South end. The newly configured Board of Education, when seated in January 2015, ought to take note of this.The board really ought to endeavor to resolve why the South end cities’ perspective is so different from the North end’s.

Speaking of unity, this breakdown also demonstrates that Summerfield and Ismail would have won in both these hypothetical districts. That matters, like it (or Ismail) or not – particularly in light of this past election cycle and “the slates.”

I was puzzled from the get go on why Weertz, Summerfield and Howlett chose to formalize their campaign. Their responses to repeated questions about it rang hollow and were really counter to their own calls for unity.

Why? Because their alignment was really designed to block Ismail from winning… and it didn’t work. I make this claim mainly because Sohn’s candidacy was the square peg to the slate’s approach. By almost any objective view, she would be a great trustee. Why go out of their way to block her? Well, apparently because she was thought to be aligned with Ismail. And that’s who the district establishment – including members of the board and staff – really did not want to see win.

Well, he won. Now we’ll see whether the call for unity was real and genuine or a pandering campaign slogan. Hint: We’re not off to a great start.

What I will call “The Ismail Factor” is a topic worth more attention and I will write more about it. I have some experience there having known Ahmed Ismail for years and having served on the Board with him.

For now, we know that Ismail’s reputation (good and bad) precedes him. We know that this past campaign was influenced in large part to block Ismail’s candidacy. We know that despite that effort, Ismail’s candidacy was well received by both the North and South end of the district – more balanced than even Margaret Weertz’s candidacy.

All that matters because we’re talking about the voice of the voting community. The same voices (votes) that entrusted this board with $25 million annually in renewed millages also believes Ismail is worthy of their trust and that Sohn should have represented the South end of the community.

Updated: 2014 GPPSS school board results

UPDATES: We now have results by city. Of note is now Summerfield becomes top voter getter. Amazingly tight Park race with just 70 votes ranging from 2nd (Weertz) to 4th (Sohn). Amazing that Howlett goes 5th in the Park. Big (proportionally) win by Ismail in Shores, even beating Weertz there.

Top 5 biggest wins by city and candidate:

  • Sohn – GP City – 22.2%
  • Summerfield – GP Park  and Weertz – GP Woods – 20.4%
  • Ismail – GP Shores – 19.7%
  • Sohn – GP Farms – 18.7%

More analysis to follow.

Nov 2014 GPPSS Election Results