A review of the financial state of the Grosse Pointe Public School System from the 2009-10 school year,

1. Grosse Pointe Public School System
Financial Transparency Series
PUTTING THE 2009-10 FISCAL YEAR
AUDIT INTO CONTEXT
NOVEMBER 22, 2010
BRENDAN WAL SH, BOARD OF EDUCAT ION TREASURER

2. What does the Audit tell us (among other things)?
Financial Transparency Series - 2009-10 Year in
Review
2
Provides 3rd party validation of our
financial condition and associated controls
Establishes actual final numbers for the
most recently closed financial year
• As opposed to the adopted budget that projects
what the numbers should be

3. Why might an Audit vary from the Budget?
Some examples to highlight
Financial Transparency Series - 2009-10 Year in
Review
3
• At time of adoption, 2009-10 budget anticipated
20J and higher Foundation Allowance State Aid
• Significant shift of aid recognition from ARRA
and other Federal funds Federal Aid
• Special Ed reconciles past expenditures with
revenues Act 18
• In response to these variances, other
expenditures are often affected
Other
Expenses

4. Formula Driven Hold Harmless Millage Rate
In GPPSS the variables will adjust to yield $1,893/pupil
Counter Balance
Financial Transparency Series – School Funding and Taxes
4
Increasing
Enrollment
Decreasing
Enrollment
Increasing
SEV’s
Decreasing
SEV’s
Downward Millagee
Pressure
Upward Millagee
Pressure
Proposal A self corrects tax rates to ensure fixed per pupil funding

5. GPPSS School Per Pupil Foundation Allowance
Years of flat or nominal increases hit a low point in 2009-10
5
$12,000
$11,500
$11,000
$10,500
$10,000
$9,500
$9,000
$8,500
$8,000
Real Dollars Nominal Dollars
Financial Transparency Series - 2009-10 Year in Review

6. 10 Year History of General Fund Expenditures
2010 budget same as 2005; but 24% lower than 2001 in real dollars
6
$120,000
$115,000
$110,000
$105,000
$100,000
$95,000
$90,000
$85,000
$80,000
Thousands
Real Dollars Nominal Dollars
Financial Transparency Series - 2009-10 Year in Review

7. Local Foundation Allowance Revenue (Per Pupil x Enrollment)
Combined Real Local Homestead & Non-Homestead Tax Revenue lower than 1999
7
$23,100
$25,700
$22,865
$17,962
$23,974
$27,000
$25,000
$23,000
$21,000
$19,000
$17,000
$15,000
Thousands
Real Dollars Nominal Dollars
Financial Transparency Series - 2009-10 Year in Review

8. Combined Local Homestead, Technology and Sinking Fund
In real dollars homeowner tax revenue is 25% less than high-water mark of 2004
8
$20,300
$24,000
$16,319
$18,153
$25,000
$24,000
$23,000
$22,000
$21,000
$20,000
$19,000
$18,000
$17,000
$16,000
$15,000
Thousands
Real Dollars Nominal Dollars
Financial Transparency Series - 2009-10 Year in Review

9. GPPSS Student Enrollment – 1992 to 2011
Has been declining since 2004; but 2010-11 still 10% higher than 1992
9
7,407
8,986
8,186
9,500
9,000
8,500
8,000
7,500
7,000
6,500
Financial Transparency Series - 2009-10 Year in Review

10. State of Michigan and GPPSS Student Enrollment
Year over year percentage change shows GPPSS’ correlates with state’s pattern
10
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
GPPSS State of MI
Financial Transparency Series - 2009-10 Year in Review

11. GPPSS Teaching and Non-Teaching Staff Levels
In Proposal A era districts MUST scale staff to enrollment
11
637
432
9,500
9,000
8,500
8,000
7,500
7,000
6,500
700
650
600
550
500
450
400
350
300
250
Enrollment
FTE Employees
Teachers Non-Teachers Enrollment
Financial Transparency Series - 2009-10 Year in Review

12. Ratio of Teaching and Non-Teaching Staff to Enrollment
Teacher ratio consistent; zero-based approach reduced non-teachers in 2010
12
20.7
25.4 28.3
14.5 14.9 14.9
30.0
28.0
26.0
24.0
22.0
20.0
18.0
16.0
14.0
12.0
Employees to Pupil Ratio
Pupils to Teachers Pupils to Non-Teachers
Financial Transparency Series - 2009-10 Year in Review

13. What Didn’t We Do in Face of Budget Challenge
MI districts have all had tough choices. Our decisions require context.
Financial Transparency Series - 2009-10 Year in Review
13
Close
Elementary
schools
Merge High
Schools
Change high
school bell
schedule
Outsource
Custodian Staff
Cut teachers
mid-year
Substantially
raise class
sizes
Raise
Extracurricular
Partic. Fees
Reduce
Performing Arts
or Athletics
Spend down
Fund Equity
(with no end game)

14. GPPSS 13 Year History of General Fund Equity
As state finances worsened conservative local budgeting was required
14
22.0%
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
Fund Equity in Thousands
Fund Equity Value Fund Equity % of Expenditures
Financial Transparency Series - 2009-10 Year in Review

15. 15
1. State tax
revenue linked to
state economy
2. Foundation
Allowance (FA)
linked to state tax
revenues
3. Local district
revenues linked to
FA and enrollment
This was
the missing
link.
5. New contracts
link staff
compensation to
FA, other variables
4. District staffing
linked to
enrollment
Significance
of the new
contracts:
Staff compensation
was formerly
uncoupled to the
very economic
system upon which it
should have been
primarily dependent.
The new contract
fixes this. We now
have a closed-loop
system.
Financial Transparency Series - 2009-10 Year in Review

16. Summary
16
We are very well-positioned for the short and long-term
Taxpayers enjoy reduced tax and fee burden while
benefitting from a high-performance district
New contract structure enables innovative shared
risk/shared reward model – rapidly being emulated by
other districts (e.g. Ann Arbor, Farmington)
New contract provides ability to leverage strong fund
equity position in a controlled fashion for student benefit
Stable financial position, adjustable to variables beyond
local control, allows for primary focus on the educational
program, not finances
Financial Transparency Series - 2009-10 Year in Review