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Layoffs, Schools of Choice Needed to Balance Budget for Dearborn Schools

The district will implement a number of fixes, including enrolling a minimal number of students that live outside of Dearborn, to rectify a $4.4 million mid-year shortfall.

Facing a $4.4 million shortfall, Dearborn Public Schools announced this week that administration will have to make mid-year cuts of $1.5 million from the district's $170 million 2012-13 budget.

The comprehensive plan will include mid-year layoffs, introducing the state’s “Schools of Choice” program for the semester beginning in January, extracting money from the district’s fund balance, and creating a six-month instead of a 12-month projection to allow for the resolution of a legal fight regarding teacher pension contributions.

“It’s unfortunate to have to cut in the middle of the year, but there was no way to avoid it,” said Supt. Brian Whiston. “You hate to have to let staff go. We’re not sure how many people will be laid off, but I think it will likely be around 20 employees.”

David Mustonen, the district’s spokesman, said the goal of the administration is to keep the cuts as far away from the classroom as possible.

But Dearborn Federation of Teachers President Chris Sipperley said is concerned about how the cut will affect students, and her membership.

“Mid-year layoffs are a nightmare—as we witnessed in February 2010,” she said. “I am confident that working in collaboration with the school board and central office administration, that if mid-year layoffs become a reality, we will be able to achieve them at the absolute minimum and with the least disruption to the learning environment.”

Opposing Forces

Several fiscal forces conspired to create a mid-year deficit.

The board approved the 2012-13 general fund without the Michigan Legislature providing a firm answer regarding pension rate increased to Michigan’s schools. Many expected the rate districts must pay into the state school employee pension fund to be fixed at the 2011-12 rate of 24.46 percent.

However, in September, the state informed districts the rate would jump to 25.36 percent—causing an immediate $1 million shortfall.

Another factor came as a shortfall in “Best Practices” funds from the state.

These funds allow districts to re-capture a portion of previously-cut per-pupil funding if a district meets seven out of eight requirements which include bidding out services, consolidating operations with other districts, holding the health insurance policy, meeting academic standards, and requiring employees to pay 20 percent of their own healthcare costs, among others.

The district is required to implement seven of eight requirements; and will implement a limited “Schools of Choice” plan. Because the district can opt out of one requirement—which, for Dearborn, will be expanding its physical education requirements at all grade levels—they will be able to collect $1 million of the available funds.

The district will, however, still lose $600,000 because of academic performance, Whiston said.

Expenditures of $1.4 million to hire new teachers because of an enrollment increase of about 160 students and costs to perform necessary repairs to facilities also added to the shortfall.

Another $1.6 million in funding for the 2011-12 school year that was intended to be pushed forward into this year was prohibited by the district’s auditors. Those funds were added to the district’s coffers, and will be used to defray the deficit.

Painful Fixes

To balance the books this year, the district will propose several fixes. The first will include using $1.4 million from the district rainy day fund to reduce the shortfall from $4.4 million to $3 million.

The district will also use a 6-month projection as opposed to a one-year projection to pay for increased pension rates. This will save $500,000 because if the Office of Retirement Services irons out a lawsuit that would reduce the rate increase—or eliminate it all together—the other $500,000 will not be due within the fiscal year. The shortfall would then be reduced to $2.5 million.

Another piece of the deficit reduction plan would bring $1 million in Best Practices dollars to the district, which would reduce the shortfall to $1.5 million. This would be achieved by introducing Schools of Choice, the provision in the School Aid Act of 1978 that allows districts to enroll nonresident students that reside within the boundaries of the intermediate district associated with the local district.

Proponents of the provision believe competition among local districts, who receive the per-pupil funding for each student they enroll. But opponents say the choice initiative creates inequities among districts because funding is diverted from districts in need of funds to wealthier schools.

In Dearborn, the program would be limited to four to six open slots at Nowlin Elementary School, enough to satisfy the Best Practices requirement.

Whiston has stated he did not believe Schools of Choice was a good fit for the district because most of the buildings are at capacity, and a need to focus on students who live within the district proper.

Mustonen said that, given the money at stake, the district and board needed to act.

“It’s a combination of the state pushing school districts to go in this direction, and the money involved,” he said. “The board is implementing this in a limited way; we’re not a district with enrollment issues here. But if we don’t have room, we don’t have room. It something we have.”

The remaining $1.5 million in cuts would likely come from laying off staff, Mustonen said. School Board trustees will be asked to approve a plan to cut the $1.5 million at the first meeting in January.

Implementing the overall plan is likely to place stressors on the district, said Trustee Joseph Guido.

“I can’t say I’m happy continue to the best that’s the bottom line for us,” he said. “It’s certainly something we would not prefer to do. If a student loses a teacher half way through the year, it’s going to affect them.”

Leslie November 30, 2012 at 05:19 PM
The district is losing $600,000 due to "academic performance"... Should the word "poor" be used before that phrase? Where did that $600,000 come from previously? State or federal? It seems that to overcome poor academic performance, the district needs more, not less, funding to pay for additional resources to help students succeed. Books? Tutoring? Teachers to help students learn English? Interpreters? But unfortunately I'm saying this without having gathered enough background to fairly comment.
Lee Jacobsen November 30, 2012 at 09:00 PM
Leslie, more money does not necessarily mean higher grades and better performance from students and teachers. It helps , but if it were the only factor, Detroit's kids would not be the bottom of the academic ladder. Broken homes, poor study habits, should I join this gang, or study tonight?,etc are factors. Taking the summer off is a factor. Other countries don't do that. Remember, teachers work essencially a 9 month year, plus all the holidays, etc. so that $60 grand for 9 months of work is around $80 grand per yr, not to mention the benefits. Montessori charges a lot less than the stipend given the public schools, yet the education level is exceptional . There is some pick and choose, but why can't the public schools do the same , pick the ones that want to learn, and ship the ones that don't to a trade school. We all can't be teachers, can we? Time to initiate year round school, and , since the teachers are paid for a year of teaching, the payroll should remain the same. Also, many teachers have 'helpers', are they needed?
Jerry Majetic December 01, 2012 at 12:00 AM
I don't care what you do or who you are- teachers do a more important job than you. Teaching is the profession that teaches ALL others. This tired argument of "... It's only a 9 month job and all the breaks,etc." is asinine. If it was so easy and so well paid you would all be teachers. What teachers do is special and about so much more than test scores or grades. Education reform is another lie told over and over so that people start to believe it. Public education is not broken. Get out of the way, find out what teachers need by actually asking them and let them teach! As usual people without a clue as to what teachers do are commenting on and legislating about education. We've all been to the doctor, are we medical experts who should tell doctors how to do their jobs? Hell no! Why do people think they know anything about education? [continued]
Jerry Majetic December 01, 2012 at 12:01 AM
80% of what teachers do is not testable by the MEAP or some other standardized test. This fallacy of testing is creating a narrow curriculum that does not turn out well rounded successful people. Comparing our education system to other countries is starting from a false premise. We educate EVERYONE, other countries do not. Their students are grouped and tracked according to ability early on and they test the top track while we test ALL students. It's time to ask the experts- teachers. That won't happen because this is an overt attempt to subvert and ruin public education. Soon only the 1%ers will be able to afford quality eduation. The easiest way to control people is to keep them stupid. That is not a conspiracy theory, it is a reality.
Brittany Dobbins December 01, 2012 at 01:51 PM
Very well said, Jerry. This is a side of the argument that is rarely seen by the general public.

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