Ann Arbor school board turns down $500K in ad revenue, authorizes using $383K more from rainy day fund
Courtney Sacco | AnnArbor.com file photo
The Ann Arbor Board of Education on Wednesday turned down at least one revenue enhancement option en route to dipping further into its fund equity, or primary savings account, to fix an arithmetic error and re-balance the 2013-14 budget.
The board, in a 4-2 vote, authorized to use $383,000 more from the district's rainy day fund to adjust the budget, after trustees and school officials overestimated on June 13 savings from forthcoming collective bargaining agreements and did not properly account for the savings expected from charging high-schoolers for a seventh class.
Trustees Simone Lightfoot and Christine Stead voted against the motion to use more money from fund equity and Trustee Andy Thomas was absent.
The board now will use $1.56 million from its savings, bringing the remaining account balance down to about $5.31 million — 2.9 percent of the district's $182 million operating budget.
Stead said she feels like one of the greatest risks the district faces is draining down its fund balance, which is why she did not support the motion. She also was the lone trustee to vote against the budget in the initial vote on June 13.
She said draining down the district's fund balance only leads to a host of future problems, including having to borrow more money to make payroll again next year, having to pay more in interest and fees on that money and having zero capacity to absorb any staffing overages or major budget adjustments like the ones the district has seen consistently in its second and third financial quarters the past few years.
But Trustee Irene Patalan took a different, more positive tone: "I choose to be optimistic and think that, perhaps, we won't be having to take money out of fund equity next year. I believe we are really putting some things in place that we have not done (before) and that will pay off
"This is my new theme, that this is the hardest year because we are putting some things in place that will make it not so painful next year," she said.
According to district officials, the Ann Arbor Public Schools must have at least $16 million in fund equity in order to avoid borrowing to make payroll during the summer months.
Aside from adjusting the amount the district would spend from its savings, there were no changes Wednesday to the budget reductions that were approved on June 13.
The board did discuss a few items that individual members wanted to revisit. However, those trustees in favor of altering something were not able to garner the votes to make it happen. The topics discussed were the tuition preschool programs at Thurston and Allen elementaries, the Pioneer Theater Guild technician position and the electronic billboards proposal.
After the school board decided June 13 against erecting three electronic billboards at Wines Elementary and Huron and Pioneer high schools, Adams Outdoor, the company interested in placing the large advertising platforms at the schools, came back with a counter offer.
The board weighed it heavily before the majority of trustees said thanks, but no thanks.
The offer included an extra monetary incentive. It was for one two-sided billboard at Pioneer High School and a 20-year contract. The billboard still would be erected along Stadium Boulevard, near the Ann Arbor Transportation Authority's bus stop. One side of the electronic sign would face Stadium, while the other side would face Scio Church Road, said district spokeswoman Liz Margolis.
But instead of the $50,000 in revenue per year for the one billboard, the company offered to pay 10 years up front for a total of $500,000 the district could add in revenue to next year's budget.
Lightfoot said she would consider the billboards, but stressed she was concerned that even if the board voted for the billboard, which most trustees deemed an eyesore, the district likely would be in the same place next year facing tough cuts and then what good is it to rest on their laurels?
Stead was in favor of the billboard, saying one of the largest and brightest signs in the state of Michigan is across the street from the proposed Pioneer billboard site, so the neighborhood already is accustomed to seeing the lights from the University of Michigan Big House.
Patalan and President Deb Mexicotte were of the opinion that the board likely would need to consider the billboards and the advertising revenue in the very near future, but that it didn't have to be now.
"I understand the allure and can see the value of the immediate savings ," Mexicotte said Wednesday. "But I'm not in favor of this for tonight. I don't think we need to rush into it. We can look at adding that revenue at any time."
Patalan agreed and said she also would like to see if any other companies would be interested in this marketing site and see if the board could better maximize the amount of revenue it is able to bring in. She said if the board is not hasty, it may be able to add even more money back into fund equity.
"If I'm really going to sell out, then I want to hear from other people first," she said.
Trustee Susan Baskett first said she would vote for the Pioneer billboard but then changed her mind, saying she would not vote for the billboard if the board was not in favor of keeping the Community Education and Recreation tuition preschools at Thurston and Allen.
Baskett wanted to keep the preschool program for another year and give a plan drafted by parents in the community to increase enrollment a shot. However, she was outvoted 3-4.
A group of parents involved in the preschool programs submitted a proposal to the Board of Education for signage and advertising that would attract more families to what they say is a "wildly successful" program and one of the "best-kept secrets" in Ann Arbor.
These families also went out and found a donor willing to contribute $10,000 toward maintaining the preschool program for fall, which would help offset the approximately $70,000 deficit that Rec and Ed officials project the program would be running on if it stayed open, due to the program continuously being under enrolled.
"With the issues parents already have brought to our attention, ... it seems a lot of opportunity has been missed," Baskett said. "It seems we have a well educated, much intended group of supportive families who can turn this around. ... Who is to say that (the families) will not only come back, but bring others with them?"
Rec and Ed Executive Director Jenna Bacolor said the department already notified the 33 previously enrolled families about the board's June 13 decision to discontinue the preschool programs. Margolis also declined the $10,000 donation.
So Bacolor said if the board were to change its mind now, "we've heard from some (families) who have found other placements for their children, so there is the potential for the deficit to be higher since we already took that step of notifying parents."
Stead said she would like to see the board and the district study this tuition preschool program for a year to come up with a "grand, purposeful plan" for bringing back the preschool program in 2014-15 and increasing revenue and enrollment — "versus trying to pull back families in time for next year."
The board did agree to take up the topic of the preschool programs at its next planning committee meeting, when district officials could be available to go through numbers and projections for the program with trustees and active preschool parents and community members. It will be placed on the planning committee agenda in the near future.
One final motion was made by Mexicotte to strike a compromise with the Pioneer Theater Guild on the theater technician position. She moved that the board consider a new proposal made by district officials to restore $25,000 of general fund money for this position. The board voted on June 13 to cut district funding for the position entirely, to the tune of $50,000, making Pioneer Theater Guild responsible for funding the full amount of the position if PTG wanted to maintain it.
Theater Guild members have argued that this technician is essential to keeping students safe when using the old equipment at the Pioneer theater and that this individual also does all of the scheduling for non-theater events using the Pioneer stage, as well. Mexicotte's motion failed 1-5 with little discussion.