A $25 million budget shortfall. A $14 million clerical error. Largescale layoffs. These are the problems suddenly facing Ann Arbor Public Schools (AAPS), one of the richest districts in Michigan.
School officials shocked the community on March 13 by announcing the need to cut $25 million from next year’s budget. The fund balance (loosely speaking, the district’s savings account, a key indicator of financial health) is projected to drop to 2% by the end of this fiscal year. Last year, the fund balance was only 4%, short of the 15% recommended by finance experts and the 5% required by the state.
Why is this troubling situation only just now coming to light? Part of the problem is a $14 million accounting error that went undiscovered until recently. One-time money from the state toward the pension fund incorrectly counted as revenue masked the fact that the district was on shaky fiscal ground.
Interim Superintendent Jazz Parks says personnel reductions are necessary to bring the budget back to health. The school board has authorized AAPS to begin issuing layoff notices, starting with members of the Association of School and Community Service Administrators (a bargaining unit made up of supervisory staff). The threat of additional layoffs looms large.
The community is stunned and confused. How did we get here?
