Ann Arbor schools face layoffs. How did this rich district get here?

Oct 17, 2024

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?

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No single factor created this crisis, but a drop in enrollment plays a big part.

When AAPS closed up shop for a full year during the COVID-19 pandemic, students disenrolled in droves. From March 2020 to March 2021, the public schools offered no in-person instruction, no access to learning centers, no face-to-face speech services, therapies or literacy supports. Instead, there was Zoom. Lots and lots of Zoom.

Ann Arbor doctors implored the district to reopen. Writing the Board of Education in July 2020, December 2020 and February 2021, they explained how in-person education could happen safely. They warned that extended school closures would take a toll on children, educationally and emotionally, and that harms would persist well past the pandemic. That was clear at the time based on early data, and subsequent studies have confirmed it.

Sure enough, Zoom-school was a disaster for many families. During school board meetings, parent after parent shared stories of pain. Of drowning. Of lost learning as their children sat silently staring at screens. Hardest hit were kids of color and those living with poverty or disability. The public outcry, however, fell on deaf ears.

AAPS leadership ignored calls from parents, pediatricians, and even Gov. Gretchen Whitmer to reopen sooner rather than later.

Families got fed up and left. Some found their way to private schools that opened their doors (safely: these were not superspreader sites). Others turned to charter schools. And still others commuted to neighboring towns — or sold their homes and moved to those towns — to find the education their kids needed. They never came back.

Following COVID closures, there was an effort to eliminate childcare from the public schools. When Ann Arbor’s former superintendent announced this plan in 2021, it set the town on fire. Working parents — especially moms — were outraged. AAPS grudgingly restored some care, but only at a few schools, and only at exorbitant rates.

Community members tried to help the district find better childcare solutions, with private providers offering partnerships and county commissioners offering money. AAPS batted away every outstretched hand.

And more families fled.

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What does any of this have to do with the current budget crisis? From 2020 to 2022, when AAPS shuttered classrooms and shut down childcare, enrollment dropped by over 1,000 students.

When enrollment takes a nose dive, so does per pupil funding ($9,608 per child in this year’s state school budget). In other words, an exodus of 1,000 students comes with a price tag of $9.6 million per year, a huge blow to the budget.

That is a heavy hit for any school budget. Compounding the problem is a rise in staff costs. The past decade saw Ann Arbor Public Schools add 480 new employee positions, including 417 teachers, a 29% expansion of the AAPS workforce. The district recently raised salaries and benefits by $13 million.

Without a doubt, this increased compensation was well deserved. It was not, however, well financed.

The Ann Arbor school system must right its financial ship. Raise the fund balance back to healthy levels.

If it does not, the state will swoop in to assign an emergency financial manager. Contracts could be cancelled, schools closed and buildings boarded up and sold. As the (now defunct) Detroit Public Schools can attest, this is a deeply painful path that is best avoided.

There is no fast fix here. Ann Arbor has exhausted virtually all of its COVID relief aid. By law, proceeds from property sales cannot pay school staff salaries. Administrative bloat can (and should) be trimmed, but that will not be enough. Are there ways to stimulate revenue without pink-slipping scores of teachers?

Boosting enrollment would bring in new dollars. But how to attract families back to this once storied school district? Start by returning to pre-pandemic policies and practices.

Many of the changes that came with COVID were deeply unpopular — and unsuccessful. Course correction is in order and could start in three places:

These changes are all within reach. All things our district has done in years past. Will they help Ann Arbor get its fiscal house in order? We won’t know unless we try.

Lilia Cortina is a parent of one student and one graduate of the Ann Arbor Public Schools. She is also a professor of psychology and chair of women's and gender studies at the University of Michigan.