Ann Arbor school district will have to pay unemployment insurance for laid-off teachers

Cuts to teaching positions are the largest cost savings in the Ann Arbor Public Schools' proposed budget for the 2013-14 academic year.

But if the district is forced to achieve these staffing reductions through layoffs, the cuts will have monetary repercussions.

The school board Wednesday approved issuing layoff notices to 233 teachers, in order to prepare for a possible cut of 50 positions.

The 50 positions carry a price tag of about $4.7 million — more than half of the district's $8.67 million budget shortfall for next year.

For every full-time teacher the Ann Arbor district lays off — or cuts through attrition — the savings in salary, benefits, pension contribution and Federal Insurance Contributions Act tax will be $100,000. But for each laid-off teacher, the district is required to pay about $7,200 in unemployment insurance.

District officials explained workers who become unemployed through no fault of their own are entitled to temporary benefits for up to 14 to 20 weeks paid for by the district. The cost is around $360 per week, for a total expense per employee of about $7,200, said Deputy Superintendent of Human Resources and Legal Services David Comsa.

So despite saving $4.7 million in compensation costs by laying off 50 teachers, the district would be required to add about $360,000 back into its expenses to cover unemployment insurance for the laid-off instructors. So the net savings would be $4.34 million.

The expense of laying off staff was not figured into the $8.67 million deficit projection, a fact which concerns at least one school board member.

Trustee Christine Stead said the act of teacher layoffs will add to the amount of money by which the district must reduce its operating expenses in order to pass a balanced budget for 2013-14, resulting in more agonizing discussions about tradeoffs and which awful cut is better than another awful cut.

"I do want to raise my colleagues' awareness of some of the other impacts that we may have," Stead said at Wednesday's Board of Education meeting.

Stead has been one of the trustees most vocal about trying to save teachers.

The unemployment insurance costs would apply to any employees that are laid off, which could include another 26 FTEs from grounds, maintenance and custodial services and from guidance counselors and central office staff. The school board agreed to keep these positions on the chopping block at a study session on May 15. The gross savings would be about $1.5 million.

The board also looked Wednesday at reductions to office personnel (3.5 to 6.5 FTE), teacher consultants (8 to 8.5 FTE), teaching assistants (4 to 4.5 FTE) and speech and language pathologists (2 FTE) for a savings of $250,000. There also is the possibility to cut two community assistants or paraeducators from each comprehensive high school, one from Ann Arbor Technological High School and one from Roberto Clemente Student Development Center for an estimated gross savings of $347,200.

The cost for unemployment benefits for all of these additional 45 employees could be around $324,000. Combined with the teachers' unemployment insurance, the total cost to the district to lay off staff could be in the realm of $648,000.

Which staffing positions ultimately will be cut is still unknown at this point. It likely will not be clear until the board passes a budget in June.

Trustees have been trying to find ways to look at anybody and anything else but teachers to get to the needed $8.67 million in savings for 2013-14.

The board has until June 30 to approve a balanced budget for the next fiscal year.

Stead touched on the remaining financial unknowns at Wednesday's regular Board of Education meeting as well as Thursday on her blog.

Among the many things still in flux, Stead said, is the potential to lose a portion of the district's special education funding due to the federal sequestration. There also are about five pieces of legislation that have been proposed in Lansing that could permanently decrease money that goes into the School Aid Fund, Stead said.

Another cost that will need to be factored into the district's $8.67 million budget shortfall is the expense of borrowing $10 million to make payroll. The district will be required to pay some processing and interest fees on the line of credit. District spokeswoman Liz Margolis said the district's interest rate is not finalized yet.

A Republican-led School Aid Conference Committee last week approved a 3 percent increase to K-12 education funding in Michigan. It is unknown whether the Ann Arbor Public Schools will see any of this money because, as of Thursday, the proposal on the table was to raise the per-pupil foundation allowance by $60 at the state's lowest-funded schools. Other proposals are still floating around, however, Stead said. The latest idea is to give all districts a $5 to $40 per-pupil boost.

For AAPS, that boost could mean an additional $82,500 to $660,000 in revenue and could save — on the low end — the Pioneer High School theater technician or keep the middle school pools open. On the high end, the boost could preserve high school transportation, the seventh-hour option or 6.5 teaching FTEs — or cover the cost of unemployment benefits for laid-off staff.

Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at daniellearndt@annarbor.com.