AAPS Board of Education authorizes staff layoffs

The Ann Arbor Public Schools Board of Education met in the Earhart Road Building Thursday evening to discuss resolutions to authorize staff layoffs and the development of a corrective action plan on budget cuts, which must be reported to the state of Michigan by April 15. At the meeting, the Board also voted on a recommendation to limit the number of seats for Schools of Choice, a policy allowing students to elect to attend a school different than the one they are districted for, as well as a resolution authorizing the issuance of notes in anticipation of state school aid.

The district is facing financial issues that require immediate action, including staff reductions, according to a March 13 letter from interim superintendent Jazz Parks, who is in ongoing negotiations with the AAPS Board for the position of permanent superintendent. Marios Demetriou, former AAPS chief financial officer who was recently asked by Parks to advise the district on their finances, said he recommends reducing the board’s operating budget by $25 million for the 2024-25 school year to rectify financial issues. 

The meeting began with public commentary from 143 individuals including teachers, parents, students and community members. 

A2 STEAM teacher Jessica Bell asked the Board to consider the implications of staff reductions for students’ educational experiences. 

“When you cut teachers, you lose students and families,” Bell said. “This leads to diminishing the strength of our district, which leads to more families and teachers leaving, which in turn further diminishes the strength of our district.”

In a report to the board on behalf of the Ann Arbor Education Association, AAEA President Fred Klein asked the Board for more honest and direct communication with teachers. Klein said one step toward more open communication is listening to the advice of the Blue Ribbon Advisory Group, an organization recognizing public and non-public schools for their academic achievements.

“Start listening to us,” Klein said. “Listen to the recommendations from the Blue Ribbon team. Listen to what educators will share at the upcoming community forums, and act on those. To this board, you must demand that the district’s budget cycle begin with line items for step increases; for those in the steps, cost of living increases for everyone and relief from our exorbitant out-of-pocket costs for health care.”

In a presentation on the budget, Demetriou spoke about possible methods for reducing the general fund budget — which includes the district budget for personnel and district expenditures such as wages and maintenance — and possible financial scenarios for each budget reduction. 

Demetriou developed five scenarios that could be alternatives to cutting $25 million in one year. These scenarios include attrition only with no other budget reduction, attrition and $15 million reductions, attrition and $20 million reductions, attrition and $25 million reductions over two years, and attrition and $25 million reductions over four years.

According to Demetriou, after the Board submits its financial plan to the state, the state committee will review it within 10 days to determine whether they believe the district is in financial distress. If the state determines there is financial distress, the Treasury Department could take several options, including appointing an emergency manager or filing bankruptcy. If the state does not determine that AAPS is in financial distress, then the district will likely meet monthly to discuss its budget with the Treasury Department, according to Demetriou.

“It depends on what kind of deficit elimination plan we submit,” Demetriou said. “If they determine there’s no financial distress, then we’ll determine if the state might meet with us once a month or they send somebody from the Treasury or we go to the Treasury every month. We submit our cash flows until they feel comfortable that we are okay.”

The district’s fund balance, or percent of its budget remaining at the end of the fiscal year, is projected to be 1.96% for 2023-24, according to Demetriou’s presentation. If the district does not have a positive general fund balance of at least 5% for each of the two most recently completed school fiscal years, AAPS is required to submit its budgetary assumptions to the state. 

Demetriou created five-year projections for the five scenarios presented. He recommended a $25 million reduction scenario over the course of a year, saying that with this scenario, the district will have about $11.2 million in fund balance for the 2024-25 year, which brings the fund balance back up to 5% of its revenue. Although this does not meet the Board’s own policy, the district will meet both the requirement and policy from the second year, according to Demetriou. 

The other option the board discussed at the meeting was a $25 million reduction scenario over two years, with a reduction of $12.5 million taking place each year. Demetriou said in this scenario, it would take three years for the district to meet the state’s minimum requirement for their fund balance.

“(If we use this scenario), we’ll be at 1.6% at the end of next year,” Demetriou said. “And then in the second year, it’s going to be 4.47%. The third year is where you’re actually meeting the 5% state requirement.” 

Board Treasurer Susan Ward Schmidt said it was important to make a decision based on the presented scenarios quickly considering that AAPS employees have a right to know if they will return post-summer break.

“This waiting right before school’s out to tell people if they’re laid off … I don’t know how people feel about that,” Schmidt said. “We need to right the ship now. It’s hard to make this decision but I’m not sure we’re any better off stretching this out and making teachers and the community wonder what’s going on.”

Trustee Rima Mohammad said the scenario in which AAPS cuts $25 million from its budget over two years gives more time for consideration for everyone.

“When you do it all at once, if it is going to impact student enrollment, if it’s going to impact teachers staying with us, that seems like a bigger shock to the system,” Mohammad said. “Even though it’s not getting us to the goals, at least it gives us time.”

Trustee Ernesto Querijero said although he understands the reasoning behind the proposed $25 million cuts, he wants more information before the board authorizes the layoff of staff.

“I am in communication with our employee groups and the public, and I don’t feel comfortable giving approval for layoffs,” Querijero said. “The reason why I don’t feel comfortable with that is I want to hear from our union leadership and our community. I just don’t know what the cause and consequences would be and what the benefits would be.”

The resolution to approve the layoffs passed 4-3, approved by Trustees Susan Baskett, Krystle Dupree, Torchio Feaster and Schmidt. Trustees Jeff Gaynor, Mohammad and Querijero voted against the resolution. 

The board approved the resolution authorizing issuance of notes in anticipation of state school aid. The resolution goes up to $35 million, depending on how much the district reduces the budget. 

“If the 25 million is reduced, we will probably be borrowing somewhere between $10 and $15 million,” Demetrious said. “If it’s not, then we’ll have to borrow 35 million. It’s called 372 days. So if you don’t make the cuts in 365 days, we probably have to borrow again more than what we are asking now.”

Dawn Linden, assistant superintendent for teaching & learning, presented the proposal for  limited Schools of Choice for the 2024-25 school year. The State of Michigan allows school districts to participate in the School of Choice Program. According to Linden, since 2010, AAPS Teaching & Learning department has been asking for the approval of a limited schools of choice window that would designate where space is available by building in grade level. 

“There are provisions for all schools of choice applicants regarding eligibility, and acceptance is conditional on behavior records received by the district,” Linden said. “We believe this mechanism is critically important for a number of reasons with increased mobility in the state of Michigan which has only become more evident and prevalent post COVID. It is a way for families to continue to be enrolled with us should they have to move outside of the Ann Arbor Public Schools boundary.”

The limited schools of choice resolution was approved by the board. The first windows will be opened from April 16 and ending May 10, and a second window opening May 29 and ending June 28.

Daily News Contributor Gina Ko can be reached at hwko@umich.edu.

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