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.
Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at email@example.com.
$5,000 is just pennies
Sat, Jun 29, 2013 : 2:11 p.m.
Now that the UM has announced "dynamic pricing for its football tickets", AAPS should do the same for UM football parking at Pioneer. Why can't the school district implement the same marketing strategy on football days to ease the deficits? Let's start thinking outside of the box and maximize the income for using the school assets. We are fighting for the survival of our school's programs. Nothing should be taken off the table if the district can bring some funds for the various programs being eliminated or reduced.
Fri, Jun 28, 2013 : 12:37 p.m.
So a handful of apparently vocal opponents are worried the pristine views on S. Main will be disturbed. Wait until the 24 hour "whoosh-whoosh" starts. But that's OK, wind turbines are "green" and are politically correct.
Fri, Jun 28, 2013 : 12:30 p.m.
Raise our taxes! Please.
$5,000 is just pennies
Fri, Jun 28, 2013 : 4:54 a.m.
Many thanks to the BOE for refusing to allow advertising billboards on any AAPS school campus. Yes, it was revenue but our kids should not be for sale nor should be the environment they visit every day. Instead, let's raise the UM football parking fees at Pioneer. The UM football crowd seems to have very deep pockets which can be tapped to fund our favorite school projects. Why should the UM only get top dollar on football days while the AAPS school district is sinking deeper in debt? Raise the parking rate to $100 a vehicle on football days. Call the extra cost a AAPS licensing fee to park your vehicle. It works for the UM ticket program.
Fri, Jun 28, 2013 : 2:13 a.m.
Well, it WAS raining today...
Fri, Jun 28, 2013 : 2:11 a.m.
Hey the billboards could have been powered with the windmill and called part of the "education of the commuity" . How about ads on the school buses.. like AATA. Next we can have ads for Insurance on the fire engines.
Thu, Jun 27, 2013 : 11:56 p.m.
Any word on giving up the catered dinners?
Thu, Jun 27, 2013 : 10:20 p.m.
I cheer the decision to turn down advertising. Only hope they can hold out against the "anything for a buck" crowd. Just consider the wars about what can can and cannot be put on those ad boards.
Thu, Jun 27, 2013 : 9:40 p.m.
"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…" I can not agree with Ms. Patalan. I don't see anything put in place that is a long term fix. The raises in the Teacher's contract that are built into the step table equal the amount of the pay cut this year. So we are right back to the same point of cutting teachers again next year. There are no work rule fixes, no changes to the staffing levels in the administration, no concrete plans to re-district, in other words no plans that fix the structural issues with how the budget is built. Given the size of the budget, I suspect we will be talking $10 to 12 million in cuts again next year. Oh, yes they intend to put yet another millage on the table to increase revenue from local sources, but that money if it gets voted on is mostly already promised, at least morally. The district took no steps to actually fix any of the union contracts to make the situation in the future any better in the long run, only to take a one-time bite out of the salaries. A bite that the design of the contracts uses up in a single year of automatic raises. I am sorry Ms. Patalan, but I completely disagree with your position, and I will put $20 on the fact that we will be right back here next year. The economy may get a bit better next year, we can all hope, but finding another $750 a student in funding to close the gap, is not going to happen, not at the state, county or local level. And... Of course the way the budget is designed right now if they get it for 2014-15, they will need another $750 a student for 2015-16... And so forth...
Fri, Jun 28, 2013 : 4:02 a.m.
And since retirement funding has not been fixed, this problem will continue year after year. The schools' belief that "someone else" would pay for their generous perpetual benefits turned out to be a pipe dream.
Thu, Jun 27, 2013 : 9:20 p.m.
So if the board as decided to accept the $500K, wouldn't hey have been on the hook for those billboards, like them or not, for the next 10 years? What if they didn't work out, or other problems arose from having hem up? Too bad, they would have been stuck with them for 10 years. This was a one time offer. So what about next year, and the year after that? Lets see that audit take place, so the budget, spending, and shortfalls are clear, and "arithmetic errors" are brought to light. Then educated decisions can be made, not hasty ones in a panic. If there is a group of parents out there that chooses to rom to find a way to keep school pools open, great. Go find some donors and some money. Make a plan.
Thu, Jun 27, 2013 : 10:03 p.m.
the contract was for 20 years, they'd pay 10 up front what happens when they hit a deficit next year? sell more ad space on the lawns and rooftop? no commercialization of public property, especially at a school, no thank you
Thu, Jun 27, 2013 : 9:18 p.m.
I'm glad I don't have kids in that district.
Thu, Jun 27, 2013 : 9:12 p.m.
Danielle - I'm curious as to how much money was spent on the preschool program from construction of rooms to operating expenses vs. amount of revenue brought in, which they have now voted to not continue. When they first asked the community for money to renovate schools to add these facilities, it felt like they were trying to jump in and get a piece of the pie for preschool fees. It was about the same time they charged for full day kindergarten as part of the EDO program back in 2006(?). More market research should have been done to see what demand there was for this program. I remember as a parent back then with young children and in talking to other parents, we would've never considered putting our kids in the AAPS preschool program. Now...years later, what is going to happen to these rooms as they sit empty? Are they being turned in to classrooms or costing the district more money to maintain? Also, I agree with some of the others as to why would the BOE turn down ad revenue for this next year, even if it is a one-time deal. I'm so fed up with all the cuts every year, but it's too late to move, since housing values haven't come back enough to make it worthwhile and my kids will be almost out of the system by then. I just hate to see that Ann Arbor has come to this...the district seriously needs to find streams of recurring revenue, close buildings that are not fully utilized and consolidate services and buildings where it makes sense. More admin cuts can be made too. I hope the redistricting is done in time to help with the following 2014-2015 budget.
Thu, Jun 27, 2013 : 8:42 p.m.
The City of Ann Arbor has for many years fought the good battle to prevent billboard blight. It would be obscene for the Public Schools to reverse the City's efforts. The Adams Outdoor Advertising proposal called for using the electronic billboards for commercial advertising for whoever would buy it. The new University billboard is pretty bad, but at least it will be limited to Athletic Department announcements.
Mon, Jul 1, 2013 : 3:05 p.m.
Anything that helps staff our schools adequately and hence contributes to educating our children is NOT blight!!!
Thu, Jun 27, 2013 : 9:07 p.m.
Oh please, blight? What do you call all the beer-pong cups and garbage strewn around the city by the university students? As long as the AAPS could control the content of the billboards, I'm for the revenue. The new University Billboard is a slap in the face to the AAPS. They spend and spend and we cut and cut. I'd be willing to let our teachers wear Addidas Sweaters if it meant we could keep more of them and lower our student-to-teacher ratios.
Thu, Jun 27, 2013 : 8:39 p.m.
"Margolis also declined the $10,000 donation" Wow, that is all that I can say, Wow.
Fri, Jun 28, 2013 : 9:01 p.m.
The $10,000 was being donated to help the pre-schools and the donor was uncovered by our parent group talking to concerned parents and raising awareness of the need for money to stop the preschools from being shut down. The donor believed in the mission. These are the types of activities recommended in the plan that parents worked to put together in a few weeks because we weren't informed there was any danger to the schools until the decision was pretty much made. If we were able to accomplish that much in such a little time frame, imagine what we could do with more time. People get so tired of folks trolling in the comment section under aliases and muddying the conversation with ill informed comments. Maybe annarbor.com can do a better job of moderating since so many people are affected by these comments. Perhaps our community should demand old school reporting where the media investigated several sides of an issue before posting half the story. These decisions affect real people's lives and I feel sorry for the teachers who are out of work and the students who miss out because no one is forced to look into the details.
Fri, Jun 28, 2013 : 5:39 p.m.
"Objective" - The person I know felt her son needed the extra year to grow more socially. The kid could actually read already and was academically on track but the parent felt it was in the kid's best interest to stay in pre school one more year with teachers and an environment where he was comfortable. That was the parent's choice and actually it's beside the point. Under the assertion that the child had "aged out" then the boy I'm talking about would not have been eligible to participate in the preschool for the two years that he was enrolled. My question is when did the policy change. As for the $70,000, I can actually say I DID look at the numbers, saw a very feasible path to cover the deficit that was being claimed. By my projections, the program was already on track to cover that deficit. I offered to help do what was needed to get there and an extra $10,000 donation with no strings attached made it absolutely more feasible that there would have been a profit next year. This is not a program like middle school pools or something else that affects more students. The difference is this program actually GENERATES REVENUE. As much as I would love for the middle school pools to remain open, I know that no one pays to use them. Parents pay for the preschool program which pays down deficits. It's exactly the kind of revenue generating program the Board has been saying it wants. I also know exactly how much of a "deficit" the program was running....I have the numbers that came directly from RE&Ed. The program actually made over $12,000 and over $19,000 on the two years that preceded this academic year (2010-2012). "Objective" it seems like you are stating opinions without many facts. I've actually done my due diligence before making comments about this issue, which is why I use my real name and not some anonymous internet handle. Can you say the same? You can have your own opinion but not your own facts. G
Fri, Jun 28, 2013 : 1:40 p.m.
Bryan, who keeps a six year old in preschool? Shouldn't they be in all day kindergarten? Was the $10,000 donation contingent on keeping the program going? Certainly if you feel strongly about this Bryan, you can "get to work" finding $70,000 more so the program could potentially reopen the next year. The district has had to make other cuts that affect far more kids than 32 preschoolers. $70,000 extra AAPS dollars could keep middle school pools open. Do you know how many middle schoolers there are? Far more than 32. The preschool has been running at a deficit for something like seven years? Where were the handful of parents that wanted to keep it open before this year? If you owned a business that lost you money for seven years, would you keep it open? No, you wouldn't, unless you had an unlimited supply of money to waste. Th AAPS does not have any " extra" money to spare on a program for so few kids. That's the big picture. The parents of these preschoolers may want to educate themselves on what's going on in the rest of the district.
Fri, Jun 28, 2013 : 3:18 a.m.
I assume the part about the child being "aged out" meant that the donor, after realizing he couldn't cover the whole amount, decided he didn't want to donate $10,000 to a school his child wouldn't be attending anymore. Lucky PTO that gets that family!
Fri, Jun 28, 2013 : 2:14 a.m.
I personally know at least two kids who turned 6 while at the program. Where has this "aged out" business come from???
Fri, Jun 28, 2013 : 2:08 a.m.
How can one donor be expected to cover a whole deficit? Isn't this a tuition-based program? Isn't it someone's job to get people into the program? How about you take the money and get to WORK??! I watched the board meeting. Why didn't the Board even look at the numbers proposed? There were valid arguments made. The Board talks about raising revenue but cuts a potential revenue producing program? What a comedy of errors and another reason people believe education should be privatized. Bureaucrats often make terrible financial decisions.
Fri, Jun 28, 2013 : 1:36 a.m.
Liz - what difference does it make if the donor's child aged out of the program? I'm pretty sure tons of money comes into universities from alumni associations. Seems like you'd literally be looking a "gift" horse in the mouth. Not to mention the fact that choosing to take in billboard ad dollars over taking an "alumni" gift (with no community impact per se) seems a little off balance. I bet that donor would be able to find another preschool program in the area happy to accept the donation. :)
J. A. Pieper
Fri, Jun 28, 2013 : 12:15 a.m.
It's probably just pennies to them, and how can Margolis turn down anything? She's a highly paid communication person for AAPS, that's it, no other skills!
Thu, Jun 27, 2013 : 9:14 p.m.
Thanks Liz, for jumping in here and adding that additional information!
Thu, Jun 27, 2013 : 9:12 p.m.
You have to look at the bigger picture on the preschools. They could be returned at a future time, perhaps if the parent group wants to continue to provide support. But keeping parents dangling, or going back and forth on the issue isn't fair. Parents need planning time, and the ability to find an opening for their child. While people may be disappointed, I agree this was the best decision at this time. There are so many other cuts that are inherent to the new budget, that running the preschool program at a deficit for another year would likely be at the expense of something else. Then parents would complain about that loss. Decisions have to be made, like it or not. Look towards the future, if parents really want to bring the preschool program back, don't wait until next spring, get moving on it now. Have a plan in place so it makes sense and is cost effective.
Thu, Jun 27, 2013 : 8:48 p.m.
The needed donation amount was fully understood by the prospective donor. The donor was not able to donate the entire deficit amount and after discussion both parties decided this was not the best way to donate to a program that would still have a large projected deficit. Additionally this potential donor's child had "aged out" of the preschool program. One sentence doesn't express the facts of the situation.
Thu, Jun 27, 2013 : 8:08 p.m.
So the University can put up three glaring billboards and not a squeak from the community. But when offered a half a million dollars noses suddenly go up in the air. Remember this when the bird killing so-called "green" wind turbines go up.
Thu, Jun 27, 2013 : 8:06 p.m.
I'm with sambra. How dare AAPS turn down 500K and then not be willing to spend 70K to keep already existing and educational pools (learning to swim anywhere, but especially in the Great Lakes states is a necessity) open. We as a community should be outraged about this. And then think about it: after 70K of that 500K is used to make up for the pools, imagine what other cuts could be put back in for the remaining 430K. Seems like simple no brainer math to me. And there are ways to make billboards/electronic billboards less unsightly. You can't expect us the public to not be upset that AAPS would make cut after cut and then turn down an easy source of income.
Fri, Jun 28, 2013 : 3:10 a.m.
Offering to put the billboard in your backyard?
Thu, Jun 27, 2013 : 8:10 p.m.
I'd wager they could have been seen in Burn's Park. We can't have that now can we?
tom swift jr.
Thu, Jun 27, 2013 : 7:55 p.m.
".....I choose to be optimistic ...." This is not the basis of sound decision making as regards financial matters......
Thu, Jun 27, 2013 : 7:46 p.m.
The $510,000 turned down by the BOE would not fix all the problems of AAPS and as pointed out in the article, these are one-time, not ongoing, contributions, however, AAPS needs additional sources of income along with proper accountability and budget management in order to survive. Ms. Margolis should have created a committee to study incremental revenue opportunities rather than saying "I don't think we need to rush into it. We can look at adding that revenue at any time." Perhaps to the BOE $5.9 million seems like a lot of money, but when you consider this is <3% of the operating budget, it should be easy to determine how little that number represents. Fortunately for Ann Arbor four of the BOE positions expire in 2014 providing an opportunity to bring in individuals with the ability to help guide the district toward success rather then continue on the current path.
Mon, Jul 1, 2013 : 9:03 p.m.
And Ann Arbor will vote in more inept people to bring down AAPS once again. Good luck with the superintendent.
Fri, Jun 28, 2013 : 8:14 p.m.
Danielle my mistake as i did mean Deb Mexicotte. Thank you for readying and helping to clarify my comment.
Thu, Jun 27, 2013 : 9:12 p.m.
Bill, just a quick note. The quote you reference in your second paragraph was actually said by Deb Mexicotte as stated in the story. I realize they are both 'M' names so it was probably just a simple mistake, but I wanted to let you know. Thanks for reading and for your comments!
Thu, Jun 27, 2013 : 7:38 p.m.
Somehow this does not jive with the previous article about how intelligent the city is.
Mon, Jul 1, 2013 : 9:01 p.m.
Not by much I am afraid.
Thu, Jun 27, 2013 : 7:18 p.m.
So the board decides to turn down easy money to replace some revenue that could be used to reopen the pools at the middle schools, or to replace funding for lunch time supervisors, etc., just because they feel the billboards won't look nice. On top of that, let's spend more money from the reserves. What's going to happen next year when there is another 10-12 million to cut. So typically Ann Arbor.
Mon, Jul 1, 2013 : 2:55 p.m.
Yeah, I can't say I'm surprised. Tacky billboards! ooooooh! heaven forbid!