July 30, 2014 at 9:20 am

Northville school district gets high marks in finance

Northville Public Schools has added students at the rate of 3.5 percent per year since 2008, while statewide enrollment has dropped 11 percent. (Daniel Mears / The Detroit News)

Northville— Enrollment is the driver of school revenues in Michigan. It’s the difference between districts that thrive and those that struggle.

Statewide, the number of public school students in Michigan has declined every year for the last 10 years, the result of a bad economy, a statewide population loss and a dwindling birthrate.

Yet Northville Public Schools, a 7,200-student district in the far western reaches of Wayne County, is bucking that trend. It is adding students, at the rate of 3.5 percent annually since 2008, even as statewide enrollment drops 11 percent during that same period.

Still, growing enrollment alone couldn’t save Northville from nearly sliding into a deficit for the first time in 2009-10, when the state yanked its supplemental funding, called 20j.

District officials opened their books to the community, and asked for help. They got it: Teachers gave concessions, and some lost their jobs; busing and custodial staffs were eliminated for privatization. Taxpayers approved a technology bond and a sinking bond.

Overall, the district reduced its annual spending by more than $3 million from 2010 to 2013.

Today, Northville is among a rare breed of Michigan school districts that can boast balanced budgets, increased reserves and a low debt burden. And it’s still attracting new families and gaining new students.

Five years since heading down that belt-tightening path, Northville Public School’s recovery has caught the attention of a national credit rating agency, Moody’s Investors Service, which last month upgraded the district from A1 to Aa3 — the first upgrade for a Michigan school district since 2009.

Over that same time, Moody’s has downgraded about half of the 235 Michigan school districts that it rates, largely due to financial problems stemming from declining enrollment, revenue losses and little budgetary flexibility to slash expenses.

Teachers accept concessions

To rebuild and avoid deficit status, Northville teachers took concessions, including 68 who left the district through retirement, attrition or layoff. They also agreed to teach more hours and have fewer prep minutes. The union took a 4 percent wage reduction, accepted two furlough days and agreed to eliminate step increases.

The Northville Education Association did not respond to requests for comment for this story.

Ken Roth, vice president of the Northville Board of Education, said Northville reached the place it is today through shared sacrifice by all district stakeholders.

“To be blunt, there are people who no longer have jobs in the district who had worked here for years. Privatization of custodial and transportation were extraordinary difficult decisions, but save a lot of money. In terms of who sacrificed the most, it’s those who lost their jobs,” Roth said.

As a result of the belt tightening, class sizes went up in Northville schools across the board. Elementary students in grades 1-5 saw the average size go from 25.6 students in 2010-11 to 28.4 in 2012-13. In high school, class sizes averaged 30.2 students in 2012-13, after being 27.9 in 2010-11.

Yet even with larger class sizes, more families are moving to Northville and enrolling their children in its public school system.

“If you want to send your children to public schools, Northville and Novi were the schools to send your children to, and Northville is a great place to raise a family,” Courtney Peck says.

The Pecks — Courtney and her husband — left Farmington Hills and had a home built in Novi, in the Northville district, last year. Daughter Caitlin Peck, 6, just finished kindergarten and is going into first-grade.

“It’s worth the investment ... we are here for the long run; we love our neighborhood,” Peck said. Then she vented about one peeve she has with the district: its transportation service, which it privatized to save money.

“One thing I don’t like is the bus service. Our bus driver is great. Any of the substitutes we’ve had are just awful. They are rude, mean to the kids, they don’t know the routes, one time they were a half-hour later and they didn’t notify me,” Peck said. “(Caitlin) has a long bus ride home, a half an hour. She is the last stop. It’s a long day for a kindergartener.”

Academics drive enrollment

Northville superintendent Mary Gallagher said the district’s top-notch academic programs, dedicated teaching staff and reputation as a leading district in the state has fueled enrollment for years. The ACT composite score is 24.3 in Northville, compared with 19.6 statewide.

The district is near capacity in terms of filling student seats, Gallagher said, yet it projects a continued decline in the birthrate and a slight decrease in enrollment over the next five years.

Still, can other districts do what Northville is doing and come out in the black? Roth, who has been on the board for 12 years, says enrollment growth is key to any district’s financial success.

“We’ve worked hard, people have made a lot of sacrifices and we’ve done things that were hard and painful decisions to do. Should every district do what Northville did and your problems are solved?” Roth said. “If this (enrollment) chart was going the other way, we wouldn’t be having this conversation.”

Mike Zopf, assistant superintendent of finance and operations, said the credit upgrade is good news for taxpayers in the district.

“The lower the credit rating, the lower the cost of borrowing, so it’s always good,” he said

The district’s general fund balance is up nearly 400 percent in just two fiscal years, Zopf said, and it has a low debt burden, with plans to retire its $61 million in general obligation debt within 10 years.

“Much credit needs to be mentioned for all of our union groups who recognized we were not on a sustainable path,” Zopf said. “No one wanted to fall into a deficit.”

The district has advantages that elude many others in the state: a healthy tax base and mostly well-off families.

The taxable value for the Northville School District is $2.5 billion and its free-and-reduced lunch population is 6 percent of the district. The median value of a home is $245,300, compared with $128,600 statewide. The median household income is $88,237, compared with $48,471 for the state.

Kevin Knierim is one of those people who would love to live in Northville and send his daughter to its public schools — if he could find a house he could afford.

Knierim is a teacher in Dearborn Heights and knows that a school district’s survival hinges not only on a growing enrollment, but also the sacrifices of its teaching staff. He has taken pay cuts where he works to help the district’s bottom line.

“It’s one of the those things you have to do for your district to survive and some of it is so teachers don’t lose their jobs,” he said.

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Northville Superintendent Mary Gallagher said the district's top-notch ... (Daniel Mears / The Detroit News)
Mike Zopf, Northville's assistant superintendent of finance, said the ... (Daniel Mears / The Detroit News)
Ken Roth, vice president of the Northville Board of Education, said the ... (Daniel Mears / The Detroit News)
Courtney Peck and her daughters Charlotte, 2, and Caitlin, 6. The Pecks ... (Photos by Daniel Mears / The Detroit News)