GPPSS projects significant enrollment drop

If Assistant Superintendent Chris Fenton’s projections for the 2015-16 school year come to pass, the Grosse Pointe Public School System’s General Education student enrollment will fall to its lowest level since 1993.

That date is significant as it preceded the state’s landmark school funding overhaul, 1995’s Proposal A, among whose most significant characteristics is that district revenue is tied directly to student enrollment.

The GPPSS enjoyed the ride since Proposal A’s passage. In 1993, the General Education student enrollment was 7,680. It rose steadily from that time hitting a high water mark of 8,930 in 2005. But it’s been all down since then, reaching 7,914 this year and then a projected drop to 7,760 next year.

That drop from 8,930 t0 7,760, if it were to come to pass, represents an annual revenue loss of nearly $12 million since the GPPSS receives about $10,000 per pupil in revenue.

The only good news about that kind of drop is that it has been gradual and the district’s response to that kind of revenue loss has generally been staff level reduction. Historically, teaching staff reduction has been roughly proportional to student enrollment. Non-teaching staff reduction has been much more steep.

It is true that the GPPSS enrollment reduction is directionally consistent with Michigan population, but not as bad. From 2004 to 2013, Michigan’s student population has dropped about 12% while the GPPSS has dropped just over 6%. This student population drop has been a statewide phenomenon and was one of the big drivers for the growth in School of Choice programs – as districts competed with each other for a more scarce resource – students.

The GPPSS famously has not, and will not, be a school choice participant, but that factor alone cannot completely account for its drop in enrollment in contrast to other similar districts.

Select District Enrollment Trends

As the chart on the left shows (please click to enlarge), among the GPPSS, Birmingham, Bloomfield Hills, Northville, Rochester and Troy Schools, Grosse Pointe and Bloomfield are the only two whose enrollment has dropped from 2004 to present.

I have highlighted the contrast to Birmingham before. In 2004, the GPPSS had 1,000 more students than Birmingham. Today Birmingham enrollment is greater than GPPSS. Birmingham has not relied on School of Choice to increase enrollment.

Bloomfield has been more like GPPSS, in fact far worse. Within the last few years, after a protracted and divisive battle, Bloomfield closed one of its two high schools.

This is the kind of issue that requires a great deal of analysis – and probably more than the district has undertaken. But at least among the statewide data and in contrast to Bloomfield and Birmingham Schools, we cannot fairly pin the GPPSS’ enrollment drop on any one thing – and probably not even on just the school system itself.

Yes, great schools can and do attract families. But of course the schools in Bloomfield are outstanding – and I generally think GPPSS are very good schools. Birmingham and Northville are examples of communities that are solving this riddle. The Grosse Pointes have some work to do.


10 observations on proposed Michigan School Aid Fund budget recommendation

Capitol Building, Lansing, MI

Capitol Building, Lansing, MI

If it’s been a while since you familiarized yourself with state spending patterns and state school spending in particular, I suggest reviewing the State of Michigan House Fiscal Agency report embedded below along with one published by Gov. Snyder’s office, available here.

Here are my top ten observations prompted by my review of these two presentations, along with my previous years of analysis of state and local education budgets.


  1. The state has two primary funds; the General Fund (GF) and the School Aid Fund (SAF). The 2014-15 proposed General Fund totals $10.1 billion. Of that a mere $115,000 goes to the SAF. The SAF itself totals $12.3 billion – 20% higher than where state budget money goes to fund everything else but schools. Nearly 97% of the SAF goes to K-12 funding.
  2. Sales Taxes are the largest revenue source for the SAF – accounting for 46% of its total. Next highest source is Income Tax at 20%. Property Taxes, in the form of the State Education Tax, accounts for 15% of the SAF.
  3. SAF budget appropriations have increased every year since 2012, but the vast majority of those increases (almost all of it) has flowed to offset the underfunded Michigan Public School Employee Retirement System (MPSERS).
  4. In real dollars, Michigan’s SAF appropriations are down 7% from 2006 levels ($13.9 billion vs. $14.9 billion); however, student enrollment is down 11% in the same time (1.7 million to 1.51 million). So why have we struggled so much financially? One word – MPSERS.
  5. The proposed SAF budget is at its highest level since 2005. The controversy surrounding whether this is a true increase is based on such an increasing percentage flowing to MPSERS.
  6. MPSERS now accounts for 6.4% of the SAF budget and ever increasing portions of local school budgets. In 2014, 13.4% of the Grosse Pointe Public School System’s total General Fund budget was spent on MPSERS expense. Ten years ago it was about 8%. That’s about a $5.5 million increase in cost to fund legacy costs.
  7. From 2013 to 2018, the SAF is projected to grow by $2.2 billion – again reinforcing how Proposal A works well when the economy is stable and growing. But half of that revenue growth is earmarked to reduce MPSERS unfunded liability. In next year’s state budget alone, GP Schools would have been obligated for an additional $200 per student – or over $1.6 million – in MPSERS cost increase if the state did not defray that cost. This is a huge shift in how Michigan is better managing school budgets.
  8. The MPSERS reforms passes in 2012 have already reduced the unfunded liability from $47 billion to $31 billion.
  9. The proposed 2016 SAF budget with its $815 million allocation to pay down MPSERS liability translates to $600 per Michigan student. The 2012 reforms translates to $475 per student totaling $1,075 per each Michigan student. Without these reforms and investments, a district like Grosse Pointes’ would have seen $8 million in increased cost.
  10. Over the last couple of years, and into the next decade plus, local school districts will have been required to budget an incremental 25% of total salary costs to fund MPSERS. With all these reforms and pay-downs, that rate will decrease to less than 5% in 2039.

The summary, if I didn’t flog the dead horse above briskly and frequently enough, is similar to what I said so many times when I served on the Board of Education: MPSERS has been the beginning, middle and end of most of the economic trauma. It proved to be an unsustainable expense and the 2012 reforms and other Snyder administration budget and policy decisions are proving to address the root cause issue.

Statewide and local fund equity analysis

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.