1. Ann Arbor Public Schools Budget Update March 21, 2011

2. Tonight’s Agenda I.Welcome and Introduction II.Overview of the 2010-11 AAPS Budget III.Presentation of Governor’s Proposed Funding for K-12 and the Impact on the AAPS Budget for 2011-12 IV.Information on May 3, 2011 Special Education Millage V.Questions & Discussion

3. Overview of 2010-11 AAPS Budget

4. Specific Fund Use General Fund – Used for general operating expenditures of the school district such as salaries and benefits, utilities, supplies, equipment etc. Grant Funds - Restricted by the grantor, i.e Title I, IDEA, Career & Tech Ed., etc. Bond Funds – Restricted by the voters to fund capital projects such as building construction, technology, bus purchases, etc. Debt Service – Restricted by law to fund debt service for bonds. Sinking Fund – Restricted by state law to fund capital projects including land acquisition and remodeling, and repairing of current facilities by contracted sources. Special Revenue Funds – Restricted for specific purposes such as Food Service and Rec & Ed.

5. Analysis of Operating Budget Fiscal Year 10-11 Basic & Added Instructional Needs $102,817,739 56.48 Adult Education 68,492.04 Student Support Services42,372,93723.27 Executive Administration 1,594,4870.88 Central Administration5,764,3773.17 Operations & Maintenance 18,052,3809.92 Business Services 2,149,5031.18 Transportation6,044,2853.32 Community Services663,8020.36 Outgoing Transfers 2,529,5081.39 Total$182,057,710100.00%

6. Expenditures as Percentage of Total Budget FY 2010-11

7. What ’ s Included? Instruction & Support Teachers Teacher Assistants Technical Assistants Coordinators Building Administration Building Secretaries Administration & Support Central Administration Directors/Supervisors Administrative Support (Executive Secretaries) Custodial/Maintenance Transportation

8. Definitions Foundation Allowance: A funding formula providing for a per pupil distribution of State Aid based on the district’s previous combined state and local revenue, the growth in the State’s School Aid Fund and legislative action. Since determined in 1994, growth can only occur by legislative action. Blended Membership Count: The actual number of pupil membership (converted to full-time equivalent) for the February and September counts. A 25% to 75% blend respectively of these counts determines the number of pupils eligible for Foundation Allowance Funding.

9. State Homestead Non-Homestead FY 2010/11 Per Pupil Allocation 18.00 mills $3,432 Local Non-Homestead Commercial, Industrial, Rental, and Seasonal Homes (Variable) $4,824 State Contribution (Variable) $ 0 State Contribution - 20J Hold Harmless $8,256 Foundation Allowance (Base) $1,234Hold Harmless (fixed) Revenue Sources: Sales, Income, Use, Cigarette, Liquor, Excise Taxes, Lottery, etc. 6 mills (fixed) 4. 5344 mills (variable) Valuation $3.00 Billion Valuation $4.45 Billion Building a Foundation Allowance 6 mills (fixed) $9,490 Foundation Allowance (per-pupil funding)

10. Funding Reduction 2009/10 $233 Per Pupil cut in 20j Funding 2010/2011 $0 Increase in Foundation Allowance 2011/2012 $454 Decrease in Foundation Allowance

11. Funding Allocation Since Proposal A Projected

12. Impact of Governor’s Proposal on 2011-2012 AAPS Budget

13. Projected surplus:  2011-12: $631 million  2012-13: almost $1.07 billion State Revenue Projections for School Aid Fund

15. Revenues driven by two major Factors:  Student population (blended count)  State revenues (dependent on state economy) Revenue Projections

16.  Stable enrollment  Foundation allowance decrease by $300/pupil  Other local funding to remain flat (i.e., Interest Income, Tower Rentals, Universal Service Fund (USF), Parking Project Assumptions Used for Revenue Projections

17. Key Components: Incremental Budget Increases (Step, FICA, Retirement) Fringe Increases (Health, Life, Dental, etc.) State Retirement Rate Contract Negotiations Other (Legal, Liability Insurance, Utilities, etc) Expenditure Projections

18.  Annual expenditure increase of 8% over the next three years for health benefits  Retirement rate will increase from 20.66% to 24.46% for FY 11/12  Retirement rate will increase to 27.37% for FY 12/13 and to 28.87% for FY 13/14 Assumptions Used for Expenditure Projections

19. Current 2011-122012-132013-142014-15 Blended Count:16,532 TOTAL REVENUE (in millions)$188.03$180.05$177.51$179.54 EXPENDITURES: Basic Expenditures $183.07$186.41$195.16$201.78 Salary Differential/vacancy Savings $0.000.00 Step, FICA, Retirement, Fringes $1.72$1.76$1.77 Fringe Increase $1.57$1.69$1.83 Retirement Rate Adjustment$1.33$4.09$3.17$1.65 Utilities Increase $0.00 Skyline High School $0.00 AAEA negotiations settlement $0.00 Other Barg. Units (settled contracts) $0.00 WAY, ECA, IB Programs$1.37$0.00 Sub-Total $191.02$191.07$196.14 Budget Reduction Plan $0.00 TOTAL EXPENDITURES $185.30$195.13$201.78$207.03 Balance/ Deficit$2.64($15.11)($24.27)($27.49) Fund Equity - Beginning Balance $16.96 $19.60 $4.49($19.78) Fund Equity - Ending Balance (Est.) @ $19.60$4.49($19.78) ($47.27) Three-Year Budget Projection PROJECTED

20. Important Budget Issues AAPS cut $18.6 million from the FY 2010/2011 expenditure budget AAPS is projecting a $15 million deficit for FY 2011/2012 The $15 million deficit assumes passage of the countywide Special Ed. Millage renewal on May 3, 2011 If the millage fails, AAPS stands to lose an additional $6 million

21. Budgeted Expenditure Reduction & Fund Equity Usage

22. Budgeted Expenditure Reduction 2006-2011

23. Possible Means to Address/Manage Deficit Lobby the State for Change in the Way Schools are Funded Increase local control over school funding Changes to the funding of retirement costs Focus on Increasing Student Enrollment 100 new students equals $966,700 in additional revenue Approximately 1,274 K-12 students live in AAPS district and attend charter schools and other public schools within the county Where do we go from here?

24. Continue to Focus on Consolidation and Collaboration With: Local Universities WISD Other area ISD’s Other local school districts Private Giving Seek private funding (donations and grants) for programs Work of PTO’s, Booster Clubs, Ann Arbor Educational Foundation… Continue to Make Reductions Where do we go from here?

25. Special Education Millage Renewal Vote May 3, 2011 25

26. Student Intervention & Support Services In the AAPS, Special Education Services is provided through Student Intervention & Support Services (SISS) Our Mission Statement: Our mission is to ensure that every special needs student has access to, and progresses in, the general education curriculum. Each student with special needs will be provided appropriate supports, interventions and strategies to afford s/he an opportunity to receive the highest quality education in the least restrictive environment. Special Education Millage Renewal Renewal of 0.985 mill for seven years for special education will help maintain programs for ALL children in Washtenaw County public schools by reducing support for special education from the general fund. Special Education Millage Renewal Renewal of 0.985 mill for seven years for special education will help maintain programs for ALL children in Washtenaw County public schools by reducing support for special education from the general fund.

27. Who Receives Special Education Services? On average, 1 in 7 students, or 3 in a classroom of 24, receive some form of special education services. This year in the AAPS, 2,093 students are receiving special education services (total AAPS students enrolled: 16,569) The table on the next slide provides a list of the disability categories for our students and the number of students that comprise each category

28. Who Receives Special Education Services? Disability# of Students Specific Learning Disability602 Emotionally Impaired124 Cognitive Impaired67 Severe Multiple Impaired26 Autism Spectrum Disorder241 Visually Impaired11 Hearing Impaired22 Physical Impairment25 Early Childhood Developmentally Delayed96 Otherwise Health Impaired324 Speech & Language Impaired548 Traumatic Brain Injury7 Total2,093

29. AAPS Special Education Trends Moving average trend line

30. AAPS Special Education Trends Moving average trend line Autistic Spectrum Disorder is a type of disorder that has been increasing nationally. We anticipate that this type of need will only increase in the foreseeable future. The costs for ASD students are higher than some other categories.

31. Special Education Cost CategoryCosts Special Education Instruction$15,737,263 Support Services$16,495,268 Indirect Cost & Capital Outlay$3,381,193 Transportation$1,508,051 Services Supported by Federal IDEIA Grant$2,424,438 Total$39,546,213 Special Education Costs FY2010 Special Education Services is comprised of several different cost categories. Last year, the total cost of these services was almost $40M.

32. WISD Special Ed Funding to AAPS Ann Arbor$5,767,020 Chelsea$752,360 Dexter$790,300 Lincoln Consolidated$1,464,120 Manchester$281,540 Milan$403,480 Saline$1,349,460 Whitmore Lake$296,100 Willow Run$542,640 9 Public School Academies$189,980 Total$14,000,000 Estimated disbursement to local school districts based on 09/10 reimbursable costs at renewed millage rate of 0.985:

33. Millage Impact to AAPS Since this millage is a renewal (of 0.985 mills) and there have been declining property values, the revenues from the renewal will not cover costs: Vote on May 3 Passes Fails $(942,000) $(6,710,000) Even if the millage passes, the general fund will have to contribute about $1M for special education in AAPS, requiring cuts in other parts of the general fund budget. If the millage fails, AAPS will have to use an additional $5.8M from its general operating fund for special education, in addition to the $1M noted above, or almost $7M total (as shown).

34. QUESTIONS?

35. Contact us… Contact us… Robert Allen - allenr@aaps.k12.mi.us Interim Superintendent Liz Margolis - margolis@aaps.k12.mi.us Director of Communications Board of Education Office - osinski@aaps.k12.mi.us Amy Osinski Board of Education Trustees - boe@aaps.k12.mi.usallenr@aaps.k12.mi.usmargolis@aaps.k12.mi.usosinski@aaps.k12.mi.usboe@aaps.k12.mi.us