Clean Audit for AAPS

Ann Arbor Public Schools Board of Education regular meeting (November 15, 2017): Forsythe Middle School, 1655 Newport Rd

The Ann Arbor Public Schools (AAPS) Board of Education (BOE) trustees will vote themselves into executive session at 5:00 PM this evening, citing attorney/client privilege. Executive sessions are closed to the public. The regular meeting begins at 7:00 PM.

Two information items will be presented: the October Budget Monitoring Report and the 2016-17 Annual Audit.

No first briefings are scheduled.

Second briefings include two purchase recommendations. The Physical Properties Department is recommending the district purchase bagged ice melter for a total of $24,438.75 per year for three years. Funding will be provided from the General Fund.  The Purchasing Department is recommending a purchase of 2,857 instruments from seven different vendors for a total cost of $1,998,226. The instruments will be used district wide. Funding will be provided from the 2015 Bond Fund.

Voting tonight will be on the musical instruments and the bagged ice melter purchases.


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Present: President Christine Stead, Vice President Susan Baskett, Trustees Jessica Kelly, Patricia Manley, Jeff Gaynor, and Harmony Mitchell;  Superintendent Jeanice Swift

Absent: Trustee Simone Lightfoot

7:08PM Stead calls the meeting to order.

AGENDA APPROVAL

Stead notes items have been added under Board Action. The new items: Approval of the Freeman School Lease Renewal to Go Like The Wind, Approval of DTE Easement Request, Approval of the City of Ann Arbor Easement Request

There is no discussion on the agenda.

The agenda is unanimously approved.

PUBLIC COMMENTARY

One person is signed up, but she is not present. Stead says that if she shows up, they will work to accommodate her.

ASSOCIATION REPORTS

Ann Arbor Education Association (AAEA): President Linda Carter thanks Swift and her team for their presence at the Elementary Education Caucus. Carter also thanks the Bryant staff for their work on Bryant Pattengill 2.0. Today is National Educational Support Personnel Day. She acknowledges the work of their ESP colleagues. She calls out the ESP folks who have helped her with her work over the years.

Parent Teacher Organizational Council (PTOC): Liaison Steve Norton reports out on the activities of the PTOC. Swift and members of her cabinet attended the first PTOC meeting of the year, giving an overview of the initiatives the district hoped to focus on this year. He would like to make that a semi-regular occurrence.

Mid-October meant officer training provided by the PTOC. 18 people attended each night of the two training offered. The annual launch party also happened in October. The overall attendance didn’t meet expectations, however. They look to increase attendance at those events.

The next meeting is Monday, November 20. The topic is on insurance. It’s a perennial question, so they are hoping to bring together a lot of expertise to address the issue.

Norton addresses the passage of SB584, SB586 – the guns in schools bills. He thanked the Board for taking a strong stance on the issue. He reads from the resolution the PTOC passed last year. The resolution still stands, he says, and they feel it more strongly even now.

BOARD PRESIDENT’S REPORT

Stead mentions the passage of SB584 and SB586. The board’s meeting is to appeal to the governor. The data and the experience in the United States links issues with guns is directly related to the amount of guns we have, she says. The path forward to make America a safer place has to do with legislation. Stead says they will continue to fight legislation like that to keep schools safe places to be.

Stead wishes for families and students enjoy their Thanksgiving holidays.

SUPERINTENDENT’S REPORT

At the start of her report, Superintendent Jeanice Swift draws the audience’s attention to a Steinway piano on stage. It is one of the brand new 200 pianos that are being delivered around the district.

Swift thanks the first responders and others who helped with the fire at A2STEAM this past weekend. One of the hens survived the fire. She thanks the veterinarian at Ann Arbor Animal Hospital who took care of the chicken. The care and medication were provided at no cost by the hospital.

Swift shares highlights from around the district from the STEAM expo at Skyline High School, to a nice letter written about the 8th grade Clague Middle Schoolers, to increased pedestrian safety measures to the Elementary Education Caucus to the Allen Elementary School National Blue Ribbon Assembly.

She closes out by thanking the students, staff, and families of AAPS. “Local is our pathway,” she says. It’s a great time to give thanks for district partnerships and support.

COMMITTEE REPORTS

Stead emphasizes the fact that the public is welcome to attend committee meetings.

Planning: Manley reports out. The committee has not met since last time she reported. They meet again in December.

Finance Subcommittee: Met last Friday and discussed the audit. The next meeting is next week.

Performance: The committee meets tomorrow.

Governance: Meets on Friday at Allen Elementary before the Blue Ribbon National Award celebration.

INFORMATION ITEM: Monthly Budget Monitoring Report – October

Marios Demetrio, Assistant Superintendent Finance & Operations, goes over the report.

  • General Fund Revenues: ~ 26%,
  • General Fund Expenditures: ~24%

Gaynor asks if the General Fund is higher than they expected it to be or if it is just higher than it was last year. Swift notes there was an tax adjustment that the district received that they did not know they were going to be getting.

INFORMATION ITEM: FY17 Annual Audit

Swift introduces the 2016-17 annual audit, saying the process begins in the spring and rolls through the summer into the fall. Laura Claeys from Plante Moran presents. All audit documents are on the district website for sake of transparency.

Swift says it is a “clean audit with no findings.” She says it is a time to be grateful for the improvements made in the district. “We don’t just look at the numbers as numbers,” but they look at them as opportunities, says Swift. There are not many communities that have the same level of local support.

The district is always balancing resources with needs, says Swift. Per pupil funding for 2016-17 is just coming up to the level of funding the district had in 2003. This is not differentiated for inflation.

2016-17 Highlights

  • added behavior interventionists
  • reduced class sizes
  • completed Project Lead the Way to all schools
  • increased employee compensation

Swift says they came out exactly where they thought they were going to, despite the fact that the Board needs to pass a budget blindly before knowing what is coming from the State. Swift also notes that this fiscal year includes the money that went to the Allen Elementary flood remediation.  This FY Moody’s Rating: Aa2

Audit summary: 

  • all school districts are required by state law to have an audit with a fiscal year end of June 30, 2017.
  • as a result of the audit, Plante Moran rendered an unmodified or “clean” opinion.
  • the audit of AAPS’s federal programs had no findings or questioned costs

Highlights: 

  • enrollment continues to grow significantly year-over-year
  • AAPS continues to make investments in the classroom and has achieved the goal of reducing class sizes
  • $4.6M in current year capital investments from the Technology Bond and 2015 Bond funds
  • Sinking Fund millage renewal supported by taxpayers, with $8.2M in the current year capital investments from this fund

Challenges:

  • continual balancing between offering additional programming and gauging the demand for new programs
  • consideration of investments in additional staff and service with ongoing funding challenges
  • despite sizable capital investments this year, infrastructure investment needs to continue

General Fund – Budget to Actual

Change in Fund Balance: started the year June 30, 2016 with a fund balance of $21,508,022. Ended the year with a fund balance of $19,880,752.

  • Fund Balance as % of Expenditures: 8.5%
  • Fund Balance as % of Revenue: 8.5%
  • Days of Operation: 31 (comparatively, that number was 37 days of operation in FY16)

Claeys goes over the Comparative General Fund Balance History. For the district to meet the recommended metric of a 15% Fund Balance, there would need to be ~$35M in the Fund Balance.

General Fund Revenue:

  • $159.7M (69%) from the Foundation Allowance
  • $26.1M (11%) from WISD special education reimbursement
  • $14.3M (6%) MSPERS passthrough
  • [will add in]

Claeys gives a historical perspective on the Foundation Allowance. She also mentions the increase in student enrollment the district has experienced over the past several years.

She also goes over General Fund Expenditures, breaking it down on  spending on salaries, retirement funding, and health related insurance costs.

Key Takeaways

  • district’s continued success is a community and district collaboration
  • for the 4th year in a row, enrollment has increased by the largest percentage in the last decade, resulting in increase in

Future Developments in the School Environment: things to monitor

  • cash flow needs
  • fund balance levels
  • delayed state aid payments
  • health care costs
  • capital repairs
  • cost of utilities
  • state economy and politics

Continue to: 

  • advocate at the state level
  • build fund equity to ensure sustainability of the organization
  • monitor monthly budget reports
  • control expenditures
  • balance long term investments with funding volatility
  • recognize a large portion of the current fund balance was created by one-time transactions – use caution when spending it.

Swift thanks the AAPS employees, the Board, and the community.

Gaynor remarks that if the same organization that recommends a 15% Fund Balance also advocates for better funding for schools at the State level. He echoes Swift’s thanks to the community for voting to approve bonds and sinking fund millages. Much of the sacrifice of keeping the budget aligned has been on the backs of the staff. “It is no small matter,” he says.

He asks her to clarify her remarks that only 5% of the increase in student enrollment comes from outside the AAPS boundary. Swift jumps in to say that given the newest data, the number is closer to 7%. Gaynor says school districts are put in the position of competing with other districts. It doesn’t serve the communities or students as a whole. Swift says 2% of that 7% are children of non-resident employees.

Baskett asks for Claeys to clarify for the public the issue of the 20J funding, which AAPS initially received but was lost in 2009-10. Demetriou says that back in 1994 when Proposal A passed, 20J funding was created to acknowledge the fact that some districts were taxing themselves at a higher rate in order to better fund their schools. 20J Funding was lost in the 2009-10 school year.

Addressing the credit rating of the district, Mitchell says Moody’s looks at the Fund Balance when determining the rating. With three consecutive years of a drop, the district will lose an A in their rating, which will mean the district will spend more to borrow money. She wants to keep this on the radar of the Board.

Kelly thanks families for being patient with the district as the district works through restoring some cuts that were made in earlier years.

Stead says that what would be interesting to see is a chart that shows a historical look back at foundation allowance funding and overlays the trend of retirement and health care costs. The district has no control over the MPSERS cost. Currently, the State provides a passthrough of $14.3M. That is not guaranteed in future years.

There are a lot of unfunded mandates from the State, says Stead. She gives the example of the third grade reading legislation. The district is expected to meet the legislation without any additional dollars from the State.

Stead advocates looking at top performing states, especially Massachusetts. Massachusetts funds their schools at nearly twice the amount Michigan funds their schools.

FIRST BRIEFING ITEMS: None

SECOND BRIEFING ITEMS: Musical Instruments Purchase

Last week, the Board asked for more information on the instrument purchase. They wanted to know what happens to the instruments that are rated 4s, no longer usable by students. Parts are harvested from the instruments, and the remaining instruments will be sold.

A list of all the instruments recommended to be purchased is provided to the trustees. All elementary pianos have been delivered. All secondary pianos will be delivered by Thanksgiving break, notes Robin Bailey.

Kelly thanks Bailey for making sure they get the right instruments in the hands of students, noting that the district is purchasing 1/4 size violins. The district provides every fifth grade student with an instrument to learn on. It is an equity piece so that every student is provided with an instrument.

Gaynor says it is such a crime so many districts have had to cut their music programs. He is thankful AAPS is able to invest in their music program. Baskett thanks the community for making it possible for the district to purchase these instruments.

Stead says they made the conscious decision to not cut the district’s art program back in earlier, leaner years. It is a “huge point of pride” for them.

Swift remembers the day Demetriou came to her with an idea of raising $34M without raising tax rates. She says she gets emotional about it, thinking about what that additional money has allowed the district to do.

SECOND BRIEFING ITEM: Bagged Ice Melter Purchase

There are no changes to the item. There is no discussion.

CONSENT AGENDA

  • approval of musical instruments purchase
  • approval of bagged ice melter purchase
  • meeting minutes approval

There is no discussion.

The consent agenda unanimously passes. 

BOARD ACTION ITEM: Approval of Freeman School Lease Renewal to Go Like the Wind Montessori

Kelly reads the resolution to approve the Freeman School lease renewal to Go Like the Wind Montessori. AAPS has been leasing the building to the Montessori school for many years.

The lease renewal is unanimously approved.

BOARD ACTION ITEM: Approval of the DTE Easement Request

DTE is requesting for an easement at the Balas Administration Building.

Gaynor makes it clear to the public that these are three of five topics that came up at the closed executive session. Executive session is privileged communication between client and attorney. This isn’t secret, as much as it is technically legally responsible, he says. They do their due diligence going through their materials.

The easement is unanimously approved.

BOARD ACTION ITEM: Approval of the City of Ann Arbor Easement Request

The City of Ann Arbor is requesting a permanent easement for sidewalk installation and utilities near Pioneer High School.

Baskett simplifies the resolution for the community. It’s asking the district for their participation in installing a sidewalk along Scio Church Road from Main Street to Seventh. The district would reimburse the City $62,000. It is a partnership between the district and the City. She says the district will bear a small part of the overall expense.

Gaynor recognizes the work of the Transportation Safety Committee that meets to improve pedestrian and bicyclist safety in the city.

The easement is unanimously approved.

ITEMS FOR AGENDA PLANNING

Stead reminds the trustees that the Executive Committee meets this Friday afternoon. They will work to place items on the calendar.

Baskett asks when they will have discussions on safety and protocols for lockdown situations. Swift says they are required to report to the State of Michigan every month. These reports will now fall under the purview of Liz Margolis, newly hired executive director of student and school safety.

Gaynor notes that there will be a newly redesigned elementary report card going out in the next week. Swift says she would prefer to have a little bit of time before presenting to the board.

ITEMS FROM THE BOARD

Kelly recaps the Michigan Association of School Board (MASB) conference in Lansing. She found value in finance and advocacy planning sessions.Kelly will be holding a coffee hour at the Westgate library branch: 10AM on Friday.

Gaynor directs the public to an article from the AAPS District News, asking for their opinion on it.

Baskett says she was glad to have taken a class on social media at the MASB conference. She mentions the Family Cares conference recently held at Scarlett Middle School.

Stead thanks AnnArbivore for being in the audience. Don’t accept a “post-truth world,” she emphasizes. CTN films the meeting and it is linked to on the district website. She thanks me for being at the meetings until the bitter end. She directs folks to annarbivore.com and asks them to support my efforts. **Thank you, President Stead. I appreciate it.**

9:32 PM MEETING ADJOURNED

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