State reviews HPPS as district continues to address deficit
July 17, 2013
HAZEL PARK — At its regular meeting July 15, the Hazel Park Board of Education was briefed by Michael Barlow, director of curriculum, on the district’s ongoing efforts to fix 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 — roughly 500 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 result is the same.
“Revenue, the life blood of the district, is based on the number of students we have,” Barlow said.
The situation was made worse by a reduction in per-pupil allocation from the state, cutting at least $470 per student. In other words, the remaining students are bringing in less revenue.
Now, the district with a budget of $41.1 million in FY 2012-13 is saddled with a projected 8 percent deficit. Before the drop in enrollment and per-pupil allocation, the deficit had been improving, Barlow said. District officials said extra time is needed.
Fixing the deficit
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’s wages.
For the coming FY 2013-14 school year, staff will be reduced by 16 positions, and at least two secretaries, two outreach coordinators, four paraprofessionals and five custodians will be cut, as well. 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.
Steven Watripont, the district’s business manager, also noted there would be additional revenues by way of a new culinary arts program by an outside vendor, bringing in new students.
He emphasized 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. “We have to teach these kids, and we want to teach them the right way.”
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 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 final report then goes to the Local Emergency Financial Assistance Loan Board, a branch of the state treasury department. If they decide the deficit will likely worsen, the governor would then appoint a review team that would have 60 days to report to him.
If the loan board were to conclude the deficit is worsening in the long run, the district would be asked to choose from one of four options: a consent agreement, an emergency financial manager, a neutral evaluation process or Chapter 9 bankruptcy.
A value proposition
In addition to the austerity measures, staff reductions and concessions outlined in the DEP, the district is planning to redouble its student recruitment efforts, boosting enrollment by focusing on the features that make HPPS unique and desirable.
Two such features are the Hazel Park Promise Zone and the cutting-edge facilities and technology afforded by two proposals that 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 over 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, times the millage rate.
Then there’s the Hazel Park 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 who wouldn’t qualify for other funding sources the most.
The district hopes that promoting their strengths will attract new students while the DEP restructures the district for greater cost-effectiveness.
“The administration stands by its commitment that we will emerge out of deficit within the timeframe by 2015,” Barlow said.
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