Brendan P. Walsh

According to current district budget projections, the Grosse Pointe Public School System’s return to the long-sated goal of 10% fund equity has stalled.

The outlook was once much brighter. Let’s look back.

In early 2013 the GPPSS board of education projected general fund equity to reach 14% at the end of 2014-15 school year. The March 2013 contract delayed that return by design. Sharp reduction in fund equity levels (all the way to 2%) would trigger equally sharp employee compensation reductions – as high as 10%. This was also by design of the May 2010 contract.

The March 2013 deal reduced the compensation reductions to less than half of what the May 2010 deal had prescribed. The return to 10% fund equity would come, just at a slower pace. That was the plan.

This new plan would also delay the restoration of proper budget (expenditure) levels for things like technology and building repairs, both of which were gutted during the budget contraction between 2007 and 2010. The operating budget funded these areas for years, even before the Sinking Fund, but increases in employee compensation eroded them. This was a key driver in the May 2010 GPEA/GPPSS agreement. This district budget needed equilibrium.

Things were supposed to get better. In June 2014 the district projected a $2.6 million operating surplus for the current school year (2015-16).  A year later that surplus was revised down substantially. That $2.6 million surplus was to be just $1.5 million.

Most recently, in January 2016, with the new figures posted, the district now projects to run almost no surplus this year ($124,229 to be specific). More importantly it means the return to 10% fund equity has stalled. Revised budget figures forthcoming could even project an operating deficit in 2016-17. At that point the march to 10% fund equity would be in reverse.

So what happened from the optimism of a $2.6 million surplus to a break even budget this year?

The biggest contributor to the regression is enrollment reduction and the lost revenue associated with it. This is why I have been writing about Farmington’s troubles as well as the clear and unfortunate trajectory of enrollment loss for the GPPSS. The bear that has mauled Farmington remains on the GPPSS’ back.

In June of 2014, the district’s enrollment projections for 2015-16 were 330+ students higher than what they became. At roughly $10,000 in revenue per pupil, this is a $3.3 million loss of revenue. County revenue loss was the second biggest contributor, coming in at a projected $1.4 million less that expected. Total revenue is expected to come in $5.7 million less than June 2014 projections.

There has been some expense control, but the biggest source is in non-human resources expenses and thus most likely in repairs and maintenance. Is it a surprise that the district is now again talking about a new bond vote for infrastructure?

These are unwelcome trends, and not surprising given what we know about districts with declining enrollment. The accretion of the $2.6 million surplus shows that traditional expense control is not working, as the richest districts (Bloomfield Hills) and the least fortunate (DPS) and those in between (Farmington) have all learned.

It is time the people of Grosse Pointe watched this issue very closely. These very dynamics six years ago led the school board at that time to the May 2010 teacher contract. That was the GPPSS’ response while other districts outsourced custodians, adopted schools of choice, closed buildings, adopted trimester schedules, and raised class sizes.

If the current school board veers from the strategy adopted (by contract) in 2010 they had better be ready to make some of these horrible decisions that were so roundly and loudly met with community disapproval.