Things are pretty bad at Farmington Public Schools these days, the Detroit News reported last week:

Farmington Public Schools should close or repurpose three schools, including a high school, the superintendent said Tuesday, unveiling his recommendations for downsizing the district… 

“I believe, and the enrollment numbers demonstrate, that the continued projected enrollment decline has created excess student capacity in the system,” said Superintendent George Heitsch.

District enrollment has dropped 12.3 percent since 2000.

Farmington Public Schools also made news recently for having the highest average teacher salaries in the state. The dynamic between enrollment and average teacher salary is worth exploring.

When school districts experience enrollment loss, they cut teaching staff. Teacher contracts are of the “last in, first out” variety. The first teachers who lose their jobs are those most recently hired and therefore have the lowest salaries. Starting salaries are typically less than half the average of all the teachers in the district. Slashing low cost teachers drives average salary higher.

This is not just a statistical issue, but a real problem. It means the cost of providing the same services before enrollment loss gets more expensive. Let’s take a closer look at these dynamics in Farmington since 2000:

FPS 2000 to 2014

Not a whole lot of good things are happening here. In response to budget constraints and enrollment loss, Farmington has reduced its teaching staff by nearly a quarter – a rate far exceeding the 14% enrollment loss. This results in a 12% increase in the ratio of students to teachers. This means class sizes are probably getting bigger and/or students have fewer course choices. In Farmington, they’ll soon have fewer schools.

The massive increase (48%) in average teacher salary is mostly a function of the 23% reduction in teaching staff, who were on the lower end of the salary scale.

Worst of all, this strategy has not worked. Farmington ran a $7 million deficit is 2014, a $3 million deficit in 2015, and now in 2016 they are discussing closing schools.

We’ve seen this movie in Grosse Pointe and to some extent we’re still living it, but with some major differences. Let’s take a look at similar data for the GPPSS.

GPPSS 2004 to 2015

The dynamics here are similar. 8% enrollment loss led to a 17% reduction in teaching staff. This drove up the student to teacher ratio at about the same rate as Farmington’s.

What the GPPSS data does not show is the fluctuations in average teacher salary within this time period.

GPPSS FTEs and Salary

At its peak in 2010, the GPPSS average teacher salary reached $85,851 –  slightly below Farmington’s current levels. GPPSS then, like Farmington now, had the highest average teacher salary in the state.

But average salary went down in the GPPSS between 2010 and 2015 for two main reasons. The first was an early retirement incentive that was part of the 2010 teacher contract. 80 teachers took the offer and the district’s highest paid staff left the payrolls. The second reason was the contract’s salary reduction triggers once fund equity went below 10%. Average salaries went down about 7% as a result.

Without these, the GPPSS would be talking about closing schools just as they are in Farmington. Where Farmington has tried to control cost by continuing to reduce staff faster than enrollment loss, the GPPSS spread salary cost reduction across all teaching staff and therefore averted the crisis Farmington now faces.

Despite these cost controls in Grosse Pointe, the financial situation is still tenuous, but certainly not anywhere nearly as bad as Farmington’s. Enrollment declines remain a major problem in Grosse Pointe. This year the GPPSS experienced a 2.2% decline in enrollment, the second largest loss of students in the last 12 years.

For now, the key message is that slashing teaching positions in response to declining enrollment is not in itself a viable financial management strategy. Grosse Pointe had the vision to see this in 2010 and Farmington is learning the hard way right now. With a neighborhood school structure, no buses, and just two high schools, closing schools in the GPPSS is a much more daunting proposition. We don’t want to be there.

This dynamic of enrollment loss and teacher employment levels raises many questions about what is the right and fair approach to balancing budgets in districts with declining enrollment. We will look at this in more detail soon.