Brendan P. Walsh

At tonight’s meeting, the Grosse Pointe Public School System Board of Education will pass two budgets – a final revision to the 2015 budget and the first version of the 2016 budget.

It’s only fitting it is happening this way. The 2016 budget aims to accomplish what the 2015 budget failed at – bringing General Fund Equity to just above 8%.

That was indeed the plan for the 2015 budget. My last blog, “2015 budget lower than expected”, broke this down in more detail. With the final revision tonight, the 2015 performance worsened. Here’s a snapshot:

The original 2015 budget planned for an ending fund equity of 8.2%. But instead of the anticipated surplus of $2.3 million, the actual surplus (which is how fund equity grows) came in at less than $700,000 – a huge miss to budget. Here’s a further breakdown:

The 2015 budget miss is even more disappointing considering the strong momentum of the 2014 budget. The chart above shows a $3 million erosion of the 2014’s $3.7 million operating surplus that dwindled to $700,000 this year. This chart breaks this down further.

After some odd twists and turns through the budget year, 2015 revenue came in near the original budget projections. But while close in total, it massively missed on student enrollment revenue and state retirement revenue, which was just a pass-through cost. Expenses were worse, coming in $3.3 million higher than budget.

Now in 2016 the district needs to make up for this budget performance. The good news is that per pupil state revenue is higher, but GPPSS enrollment continues to drop ( a 137 student enrollment drop is projected in the budget). As a result, the district will reduce teacher headcount levels by almost 11 full time equivalents.

In total the 2016 instructional expenditure, despite fewer teachers, is $61.7 million versus 2015’s $61.99 million. As the teacher contract calls for a 1% salary increase this year, total Basic (non-Special Needs) salaries are only $103,000 less in 2016 despite that drop in 10.9 teacher headcount.

The only reason the 2016 projected operating surplus is $1 million better than 2015 is the end to internal transfer payments for legacy energy bonds. This is welcome news, but without that the district would be standing still economically despite fairly significant employment reductions and a slightly worse ratio of student to teachers.

The district cannot afford a budget miss in 2016 as it did in 2015 or it will have to revert employee headcount reductions at a pace greater than student enrollment loss. History tells us this is an unsustainable.

To end on a more positive note, the district did at least run a budget surplus for the second year in a row and a greater surplus is projected in 2016. Surpluses should not however lessen focus on expense controls, and that should be an area of improvement for the Board and administration starting right about now.