Ann Arbor schools details plan to chip at projected $25 million deficit in next budget

Ann Arbor Public Schools plans to slash $4.5 million in central office positions and possibly sell one of its buildings to chip away at a projected $25 million deficit in its next school budget, according to an action plan submitted to state education officials.

The five-page "corrective action" document filed to the Michigan Department of Education on Monday also states the district has already negotiated $660,000 in savings with its custodial contractor and $660,000 in negotiated savings with its transportation contractor as part of its plan to balance its budget for the 2024-25 school year.

The district, which currently has a $315 million budget, also has identified $1 million in different sources of funding where it can move some employees into state categoricals, or federal grants, according to Superintendent Jazz Parks, who signed the document.

The district is looking to sell one of its buildings "which could bring in several million" and is looking at the sale of land, according to the filing. The district didn't disclose which building it could potentially sell.

Last week, the school board authorized layoffs for nearly all employee groups for the 2024-25 school year to address the budget shortfall. The number of layoffs or employee groups were not specified in the new report.

The district has six employee groups, including its educators who have a collective bargaining agreement through Dec. 31, 2025. It has begun an economic reopener for the new budget year but no agreement has been reached.

The district was required to file the plan after learning in March it expected to face a budget deficit for the new school year unless it made changes in spending.

The district, which has 16,838 students this fiscal school year, says it projects a loss of 105 students a year through 2028. The district is expected to run a $2.7 million deficit by 2028 in enrollment losses alone.

Parks also told the state's education department that the district reauthorized schools of choice for next school year — which accounts for about 10% of its student enrollment; the policy allows students from outside the district to enroll — and is developing a marketing and enrollment plan to retain its current students and captures those students it has lost to other school districts.

For next school year, it is getting an additional $200 per student in its state foundation allowance, raising that amount to $10,809 per pupil.

The plan also discloses that the district spent $260.5 million on salaries which includes $14 million on wage increases this school year.

Parks said staff has increased by 480 in the last decade, while student enrollment has decreased by 1,123 over the last four years and raises for employees approved by the board have increased staffing costs.

Parks has instituted a hiring freeze, reduced central office and administrative positions, renegotiated contracts with vendors and is searching for costs savings in all departments.

The district planned to host a community meeting at 6:30 p.m. Tuesday at Huron High School. There will be another meeting at 6:30 p.m. Thursday at Skyline High School. On Wednesday, the district plans to meet with staff.

An analysis by the Citizens Research Council of Michigan says Ann Arbor Public Schools would need to shrink by 142 teachers if it wanted to go back the same staffing ratio it had four years ago, in the 2018-19 school year.

Craig Thiel, the CRC's research director, says the district's student-teacher ratio shrank from 15.7 students per teacher in 2018-19 to 13.8 in 2023-24. Over the five-year period, the district increased its teaching staff by 6% even as student enrollment dropped 6%.

jchambers@detroitnews.com