57 Michigan school districts in deficit, state says

Candice Williams
The Detroit News

Lansing — The number of school districts and charter schools operating at a deficit increased during the past fiscal year and included Michigan’s state-run district for failing schools, according to a report from Michigan education officials.

The Education Achievement Authority was among 57 school districts and charters in the red as of June 30, up from 52 the year before, according to the state Department of Education, which reported the figures Friday to the state House and Senate education budget subcommittees.

The EAA, which has operated 12 direct-run schools and three charters in Detroit since fall 2012, said it was briefly in deficit because of a timing issue with vendor payments that has since been resolved.

According to the state’s report, the EAA ended June with a deficit of $472,258, after ending the previous fiscal year with a fund balance of $6.7 million.

Harry Pianko, chief financial officer for the EAA, said about 10 vendors were late in submitting their documentation for payment, which the authority later reimbursed through a federal grant.

“Because we didn’t get the documentation until year-end cut off, I had to record the expense to last year,” Pianko said. “I couldn’t record the revenue until this year. It was a mismatch of expense last year and revenue this year. ... Because we’re a relatively new organization, getting the vendors to follow these controls is more of a one-time thing. Chances are it’s not going to happen again.”

The state says 55 districts and charter schools still have deficits, while two charter schools on the list have closed. Among the districts and charter schools operating at a deficit are 24 in Wayne, Oakland and Macomb counties.

Oak Park School District, Romulus Community Schools and Redford Union Schools are among the districts that got off the list of districts in deficit, while Garden City Public Schools, South Lake Schools and Warren Consolidated Schools joined it.

Warren Consolidated’s fund balance swung from $6.2 million to a deficit of $2.1 million.

The report says one of the 52 districts that had deficits June 30, 2013, merged with another district, two eliminated their deficits after fiscal year’s end and one charter school closed.

Detroit Public Schools remains on the list and continues operating under an emergency manager, as it has since March 2009.

The district says its deficit grew to $169.4 million, up from the $127 million that it projected as of June 30, and up from $76.3 million as of June 30, 2013.

The state’s largest school district, with about 47,000 students, DPS has struggled for years with declining enrollment, building closures and fluctuating deficits. The district’s deficit was more than $300 million when the state took control nearly six years ago.

“The district’s audited financial statements reflect that the deficit has grown to $169.4 million. We continue to have dialogue with the emergency manager and chief financial officer of the district,” wrote state school Superintendent Mike Flanagan.

The district’s current emergency manager, Jack Martin, is due to leave office next month when his 18-month term, set by state law, is up.

In a statement released by the district, DPS Chief Financial and Administrative Officer William Aldridge said the 2014 fiscal year’s increase in the deficit “reflects the harsh reality of the need to provide robust academic programs, enrichment and safety for students while facing overall declines in revenue.”

The district submitted a revised deficit elimination plan “reflecting both continued enrollment progress and, importantly, salary increases for all employees beginning in 2015-16,” officials said.

The district expects to have a positive fund balance by the 2022-23 school year, according to its revised plan.

The district’s previous plan, approved by the state in August, called for a 10 percent staff pay cut and class sizes of up to 43 students. DPS later rescinded the pay cut and class size increases in the face of protests from teachers, parents and even Flanagan himself.

Districts listed in the report must submit deficit-elimination plans to the Department of Education.

The full report can be viewed at http://1.usa.gov/1JK7aPM.


Associated Press contributed.