Pontiac— The state has agreed to give the Pontiac School District an unprecedented 10 years to erase its $51.6 million deficit, double the time other financially troubled districts were given to become solvent.
State Treasury spokesman Terry Stanton confirmed the district’s financial plan, which includes workforce and health-care reductions, 10-day furloughs for teachers and requests for two $10 million emergency loans from the state, was approved Wednesday. Stanton said the proposed borrowing must still be approved by the state’s Emergency Loan Board.
State Superintendent Mike Flanagan said Wednesday afternoon no other district has been given a decade for a deficit elimination plan.
“It was a stretch. I’m trying to help it survive. It’s not ideal, but we are hopeful together with Treasury we can get them on the right track,” Flanagan said.
Pontiac’s deficit ballooned from $37.6 million in the 2012 fiscal year to $51.6 million in the 2013 fiscal year. The district needs $60 million for capital improvements to its facilities. According to the state, the district’s deficit is 88.8 percent of its revenue stream.
Don Weatherspoon, a consultant hired by the state to oversee the Pontiac schools’ consent agreement with the state, said the district needs a decade to balance its books, pay off its debt, consolidate more buildings and transform itself into an attractive education option to increase enrollment.
According to documents filed last month with the state Treasury and Education departments, the Oakland County school district expects to spend $1,085 per pupil toward its deficit through the 2023-24 school year. The district recently obtained a $13.9 million loan through a private bank to help pay for daily operations, Weatherspoon said.
State education official have required other districts to eliminate their deficit in five years. The state ordered Detroit Public Schools to erase its deficit within five years, but the latest plan has the district in the black by 2016, which is seven years after DPS filed its initial plan under then-emergency manager Robert Bobb.
Weatherspoon said Pontiac’s “good” tax base, coupled with an academic plan that education officials project will boost enrollment by 1 to 2 percent starting in 2017, would allow the district to turn its finances around.
The district has about 5,000 students, less than half the number it had 10 years ago. About 6,500 Pontiac students attend charter schools.
“Yes, this is unprecedented,” Weatherspoon said of the 10-year plan. “What is the option? What is the alternative? Everybody has to work with one another here and believe.”
Last month, Flanagan refused to give Pontiac Schools the 15 years it originally sought to erase its deficit, warning state lawmakers they might need to bail out the district or dissolve it.
Weatherspoon said Pontiac schools do not need to face the same fate as Inkster and Buena Vista, two Michigan school districts the state dissolved last summer. Those students were forced to move to schools in bordering districts.
“Dissolving the district? I don’t think it’s a realistic alternative here,” Weatherspoon said. “Pontiac has fiscal problems — that’s historical. In terms of the size of the district, if we continue to operate on this plan, it can be saved after some significant right-sizing.”
The loan the Pontiac schools recently obtained was a Tax Anticipation Note, Weatherspoon said. It was approved by the Michigan Department of Treasury. The loan will be paid off in one year and another will be sought at that time, he said.
Pontiac has been on state financial watch list for several years. To avoid the appointment of an emergency manager, the district is operating under state supervision through a three-month-old financial consent agreement.
Other elements of the district’s plan include reducing class sizes, but not until 2018-19. Currently, class sizes average 41 students, with some classrooms containing 50 students or more. The plan calls for reducing the average to 30 students.
Despite losing 6,772 students in the last 10 years — most to charter schools — Pontiac education officials believe they will begin to see enrollment tick up 1 to 2 percent a year.
That growth is based on a new academic plan that calls for implementing a turnaround model next fall at Pontiac High School and replacing 50 percent of the staff.
The model also will incorporate blended learning with project-based learning supported by an online curriculum through Florida Virtual University; students will get Chromebooks.
The district also wants to extend its school year past June, add instructional coaches to every building and create a research/teaching school lab with Oakland University.
Since 2012, the district has reduced its workforce costs by $2.5 million, instituted a 10-day furlough for teachers and obtained $2.5 million in health care reductions.