No state intervention for Hazel Park Public Schools

Review finds no signs of ‘probable financial stress’ in district

By: Andy Kozlowski | Madison - Park News | Published August 27, 2013

HAZEL PARK — After reviewing the finances of Hazel Park Public Schools, a state board has declared there are no signs of “probable financial stress” in the district.

The Local Emergency Financial Assistance Loan Board, part of the state treasury, unanimously made the determination Aug. 12.

The review had been prompted by Michigan Department of Education findings that there might be cause for financial concern in the district.

In the end, the loan board noted the district’s deficit amounted to 8 percent of their total budget — safely below the 15 percent demarcation used by the MED.

Furthermore, the district also showed the board they were paying all of their bills and meeting all payroll, pension and vendor obligations. The school year wasn’t cut short, either, and the board found no inconsistency in the district’s handling of its own finances.

“We passed a major milestone now,” said Michael Barlow, the district’s director of curriculum. “Now, our job is to keep progressing and march forward.”

The deficit
The district has been in the red since fiscal year 2006-07, when the deficit was around $191,500. The deficit grew to about $1.5 million by FY 2011-12. Now, it’s estimated to be $3.3 million at the close of FY 2012-13.

This is largely due to a sharp drop in enrollment — a drop of roughly 350 students between October 2011 and October 2012. Some enrollment was lost at the high school due to families moving out of the district; enrollment also dropped due to a change in vendor programs. The situation was made worse by a reduction in per-pupil allocation from the state, cutting at least $470 per student.

“It was a double-whammy,” Barlow said.

Now, the district with a budget of $41.1 million in FY 2012-13 is still in deficit. Before the drop in enrollment and per-pupil allocation, the deficit had been improving, from 8 percent to 5 percent to 3 percent, Barlow said.

District officials told the state extra time is needed, and they received it.

The plan
To get back in the black, the district devised a five-year Deficit Elimination Plan (DEP). The plan includes negotiating wage concessions and a new health plan; eliminating positions through attrition (retirement, departure), when possible; maintaining School of Choice student enrollment; offering severance packages to help with layoffs; and a 3 percent cut to administration wages.  

For the coming FY 2013-14 school year, staff will be reduced by 16 teaching positions, at least one administrative position, and at least two secretaries, two outreach coordinators, four paraprofessionals and five custodians. The district is also considering the impact of closing another elementary school in FY 2014-15, should it be required to move the district out of deficit.

“That would be an act of desperation,” Barlow said. “That’s certainly nothing we anticipate with relish, and we would do anything and everything to stave that off.”

There will be more revenue by way of a new culinary arts program through a vendor, bringing in new students. The district has also obtained a number of time seat waivers, where students take online classes through HPPS, the district receiving a portion of the per-pupil funding.

Steven Watripont, the district’s business manager, warned about the diminishing returns of continuous cuts.

“We cut everything so tight in years before … that it is going to be tough for us to cut more without starting to affect the education of the kids,” Watripont said previously. “We have to teach these kids, and we want to teach them the right way.”

Time extension
On June 19, the state approved the district for a sixth year on the DEP, ending July 2015. Various contingencies, such as regular budget reports and transparency dashboards, were part of the requirements — “standard operating procedures ... that we normally do anyhow,” as Barlow previously put it.  

Despite approving the extension, State Superintendent Mike Flanagan initiated a preliminary examination of the district’s finances June 26, looking for any signs of long-term instability. The district received the interim report July 8 and was given five days to respond; the district responded in just three days, on July 11.

The report then went to the loan board. Had signs of financial stress been found, a review board would’ve had 60 days to investigate and report to the governor.

At that point, the district would’ve been asked to choose from one of four options: a consent agreement, an emergency financial manager, a neutral evaluation process or Chapter 9 bankruptcy.

Best foot forward
Currently, the district has between 4,000 and 4,500 students. The district is planning to redouble its student recruitment efforts, boosting enrollment by focusing on the features that make HPPS special.

Two such features are the Promise Zone and cutting-edge facilities and technology afforded by two proposals voters approved last August.

The first measure was an $8 million bond to buy new technology and to improve the schools and athletic facilities. The tax levy will be repaid throughout 20 years.

The second measure was a building and site sinking fund, raising roughly $304,340 each year for five years. This money can only be spent on fixing and maintaining existing facilities; it cannot be used for operating costs or other expenses, such as teacher, administrator or staff salaries.

All told, voters approved 3.1 mills between the school improvement bond, and the building and site sinking fund. The district gets $1 for every $1,000 of taxable value, multiplied by the millage rate.

Then there’s the Promise Zone. Made law in 2009 by former Gov. Jennifer Granholm, the Promise Zone allows 10 economically distressed areas, Hazel Park included, to recapture one half of the increase in the state education tax, which does not affect the district’s per-pupil allocation.

The Hazel Park High Class of 2012 was the first to qualify for the promise. As long as they live in the district and graduate from Hazel Park High, students are eligible for two-year college scholarships, up to $2,000 a year, for the equivalent of an associate degree from Oakland Community College.

The amount of the scholarship is determined based on the length of consecutive attendance at Hazel Park Public Schools. The program also takes into consideration other state or federal money received by the graduate, since the program is designed to help those the most who wouldn’t qualify for other funding sources.

All of this has been promoted in advertising, from print and TV commercials, to election-style lawn signs popping up around the perimeter of the school district. Barlow himself spent Aug. 3-4 tending to a lavish display booth in front of Oakland Mall, talking to people about the district. A number of teachers took time to help, as well.

“We’ve also been encouraging our 600 employees to talk to friends, relatives and acquaintances. Surely, between the lot of us, we can come up with a couple dozen students,” Barlow said. “We’re asking everybody to help. We’re all in this together.”