The Ann Arbor Public Schools Board of Education will talk about the 2013-14 budget and hear a third-quarter financial report for the current school year Wednesday night. For the first time, the board is faced with needing to borrow money from the state to make summer payroll for employees.
Courtney Sacco | AnnArbor.com file photo
The Ann Arbor Public Schools is yet another $1.3 million over budget for the 2012-13 academic year and will be faced with needing to borrow money from the state of Michigan — for the first time — in order to make its summer payroll for employees.
This information was released in the district's third quarter financial report. The report is on the agenda for Wednesday's regular Board of Education meeting.
Officials with the AAPS finance department will go through the report with board members at the meeting in more detail, but an initial review shows the district had to budget an additional $700,000 for transportation due to increased fuel costs, maintenance and substitute drivers, as well as increased costs associated with transporting a growing number of homeless students.
Also according to the report, the district's substitute teacher budget was increased by $250,000, and an extra $300,000 was budgeted for health care to cover anticipated usage through the remainder of the fiscal year, which ends June 30.
School district budgets often change throughout the year and little adjustments at each quarter are not uncommon. However, for Ann Arbor, the $1.3 million shortfall revealed in the third-quarter financial report is in addition to an approximately $2.5 million current-year shortfall the district saw in February, when central administrators presented its second-quarter financial report.
The $2.5 million shortfall was attributed in part to the district receiving less revenue than projected for meeting Gov. Rick Snyder's "best practice" criteria. AAPS expected to be awarded $2.6 million but instead was given $860,000.
About $1.4 million of the $2.5 million shortfall total was the result of AAPS employing 24 more teacher assistants and five more teachers than it budgeted for, according to the second-quarter report. Eight of the teacher assistants were said to be required for classroom "overages." The teacher assistants were assigned to teachers with more students in their classes than the maximum agreed upon in the district's contract with the Ann Arbor Education Association.
The remaining 16 teacher assistants were necessary by law to accommodate the district’s special education programs and the number of special needs’ Individualized Education Plans (IEPs).
Superintendent Patricia Green enacted a spending freeze in February to try to close the then-$2.5 million gap. She personally is approving or denying all requests and purchase orders that come through the district until the end of the year to help control spending and curb unnecessary expenses.
Green also decided not to fill Deputy Superintendent of Operations Robert Allen's position after he resigned in late February to take a position in North Carolina. She said this decision also was intended to aid the district's current budget situation.
If $3.8 million is not reduced from the district's expenditures by the end of the school year, or attained through new revenue, the district's fund balance, or primary savings account, will dip to $6.8 million, according to the third-quarter financial report. The Ann Arbor Public Schools started the academic year with $16.63 in fund equity.
School officials have said previously that the district needs about $9 million in its fund equity to be able to avoid borrowing money from the state to make payroll during the summer months, before the state issues its first per-pupil foundation allowance allotment in the fall, the start of the state's fiscal year.
There is a resolution that would authorize the district to obtain a line of credit on the agenda for Wednesday's school board meeting. The resolution calls for a line of credit in the sum of not to exceed $10 million.
Ann Arbor Public Schools is in the process of establishing a budget for the 2013-14 academic year. The district is facing an $8.67 million deficit for fall and a number of painful cuts to athletics, teachers and other employees, high school transportation and high school theater, among others.
Wednesday's Board of Education meeting starts at 7 p.m. on the fourth floor of the downtown Ann Arbor District Library.
Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at daniellearndt@annarbor.com.