Financial benchmark report 2013

www.brendanwalsh.us 1

A Financial Benchmark Report for Select State of Michigan

Public School Districts

Developed by: Brendan Walshwww.brendanwalsh.us

5/4/2014


Report Basics and ExplanationsWhy emphasize proportions instead of dollars?

State of Michigan funding per pupil varies widely. Proportional spend comparison abstract those differences. In the end, every district’s total spend must be in proportion to their unique revenue profile. The proportion figures used here are each districts per pupil spend in each major expense category divided by the districts total General Fund Revenue per pupil. For example, the State of Michigan average revenue per pupil is $9,140 and the state average for Basic Instructional spend per pupil is $4,580. This means the state average proportional spend on Basic Instruction is 51.1% (e.g. $4,580 / $9,140).

What are the benchmark districts?

They are 14 Michigan traditional public schools districts, mostly in southeast Michigan, whose financial and socioeconomic characteristics are similar to one another. School districts and members of these communities generally compare themselves to like districts. As the state promotes a more competitive model of education, comparing districts is essential to a districts understanding of itself.

What data sources are used?

Primarily the State of Michigan’s Dept. of Education’s annual bulletin 1014. In rare instance, I use data provided by the Grosse Pointe Public School System (GPPSS), since this report is oriented to that district. My Financial Benchmark Report covers ten years of financial data, from the 2003-4 school year to last year’s 2012-13.

Any words of caution?

Yes. Guard against jumping to conclusions. For example, a particularly high or low proportional spend is not in itself a good or bad thing. However, consistently spending above your means is unsustainable. This report is best used as a guidance for a district or interested parties to understand how revenue and expense patterns are unique. Using benchmark data cross references district patterns and may help inform financial and educational improvement strategies. Watching your own district’s trend over ten years is equally valuable.

Who are you and why do you create this report?

I formerly served on the GPPSS Board of Education and developed this report to help me understand state and local budgets better. Now it is simply a hobby. I write more articles and share more data on my website, www.brendanwalsh.us. The full report is located there. This presentation is an excerpt with some commentary. This report has no official affiliation with the Grosse Pointe Public School System or anyone other than the author. Research and opinions expressed here are my own.

5/4/2014

http://www.brendanwalsh.us/


Definition of terms used in this report

Basic Instruction The classroom costs related to basic instructional programs. This includes pre-school, elementary, middle and high school .

Added Needs Instruction

The classroom costs of added needs instructional programs offered by the school. This includes special education, compensatory education, and vocational education. special education pupils.

Instructional Support

The costs of pupil support services and instructional staff support services. These include, but are not limited to, speech therapists, guidance counselors, school nurses, and curriculum specialists.

Business and Administration

The total cost of general administration, school administration, business services, central services, and other support services.

Operations and Maintenance

The cost of those activities concerned with keeping the physical plant open, comfortable, and safe for use.

Current Operating Expenditures

The total of Instructional and Support Services Expenditure. It include all expenditures of the instructional programs plus applicable supporting service costs less capital outlay, debt service, community services and outgoing transfers and other transactions

General Fund The primary budget fund for operations of the school system.

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Benchmark Districts Proportional Spend – 2012-13

DistrictBasic

InstructionAdded Needs

InstructionInstructional

SupportBusiness and

AdministrationOperations & Maintenance Transportation Total

Ann Arbor Public Schools 50.3% 12.7% 16.8% 11.0% 10.0% 2.6% 103.4%Birmingam City Schools 52.3% 10.2% 14.5% 10.7% 8.4% 3.5% 99.6%Bloomfield Hills Schools 50.7% 8.8% 12.1% 12.3% 9.1% 4.1% 97.1%Chippewa Valley Schools 55.7% 10.5% 11.4% 11.1% 6.8% 2.8% 98.2%East Grand Rapids Public Schools 62.5% 6.4% 10.3% 12.3% 7.2% 1.1% 99.7%Farmington Public School District 52.2% 11.4% 15.4% 10.1% 7.4% 4.4% 100.8%Forest Hills Public Schools 55.4% 8.9% 10.7% 10.1% 8.5% 5.3% 98.9%Grosse Ile Township Schools 57.3% 10.1% 7.8% 12.3% 10.1% 4.8% 102.5%Grosse Pointe Public Schools 56.1% 12.8% 12.3% 11.3% 9.5% 0.9% 102.9%Northville Public Schools 51.6% 10.1% 7.2% 10.8% 9.1% 3.0% 91.9%Plymouth-Canton Schools 53.3% 10.3% 12.1% 8.3% 9.3% 4.3% 97.6%Rochester Community Schools 50.9% 12.8% 12.8% 10.1% 7.9% 4.4% 98.9%Troy School District 56.8% 11.6% 12.5% 10.0% 6.3% 2.7% 100.0%West Bloomfield School District 52.0% 13.2% 10.8% 10.9% 7.1% 4.3% 98.3%

Benchmark Average 54.1% 10.7% 11.9% 10.8% 8.3% 3.4% 99.3%Michigan Average 51.1% 13.6% 10.4% 12.8% 10.1% 4.4% 102.4%

* Shading indicates highest (red) and lowest (green) proportional spend among the benchmark districts in each category.

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General Fund Revenue/Pupil – 2004 to 2013

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

GPPSS Benchmark AverageState of Michigan

Current Level Change From:

2004 Peak Level of this Period

GPPSS +7.2% -2.4%

Benchmark Avg. +7.5% -2.9%

State of MI Avg. +5.1% -2.6%

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GPPSS General Fund Expense and Revenue per Pupil Trend (with 2014 Estimate)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (Est.)

$9,000

$9,500

$10,000

$10,500

$11,000

$11,500

$12,000

$12,500

Revenue/Pupil Operating Exp./Pupil

Notes

• As the Michigan economy contracted, revenue followed, declining from ‘08 through ‘10.

• District expenses rose at the same time, mainly due to compensation and retirement cost increases.

• GPPSS ran deficits from ‘10 through ‘13, but will run a surplus this year (‘14) and into the future.

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Student Enrollment Trend – 2004 to 2013

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -

2,000

4,000

6,000

8,000

10,000

12,000

8,915 8,356

9,818 10,118

1,734 1,643

GPPSS Benchmark Average State of Michigan (000's)

Change from 2004 to 2013

• Benchmark average grew by 3.1%• Statewide enrollment fell by 5.2%• GPPSS enrollment fell by 6.3%

• N.B.: If GPPSS’ enrollment grew at the benchmark average rate (as opposed to the actual loss), revenues would be almost $10 million higher annually than 2012-13.

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Proportional Spend by Category - 2012-13

Grosse Pointe Public Schools Benchmark Average Michigan Average0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

56.1% 54.1% 51.1%

12.8%10.7% 13.6%

12.3%11.9% 10.4%

11.3%10.8% 12.8%

9.5%8.3% 10.1%

0.9%3.4% 4.4%

Basic Instruction Added Needs Instruction Instructional SupportBusiness and Administration Operations and Maintenance Transportation

Notes

• A single percentage point of proportional spend equates to about $1 million in GPPSS’ budget (or about $120 per student).• Example 1: GPPSS budgets

roughly $5 million more than the state average on Basic Instruction.

• Example 2: GPPSS saves roughly $3.5 million (in relation to Michigan avg.) by not having the same transportation costs as the state average.

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GPPSS Proportional Spend – 2004 to 2013

2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

51.3% 51.8% 53.5% 49.7% 50.3% 55.8% 57.0% 54.1% 57.1% 56.1%

9.4% 8.4% 8.7% 10.8% 11.8%13.0% 13.7%

12.5%13.3% 12.8%9.2% 9.8% 10.4% 9.3% 10.2%

12.6% 12.7%11.8%

12.5% 12.3%10.5% 9.6% 10.0% 9.6% 9.9%

10.7% 12.0%11.1%

9.3% 11.3%13.2% 13.9% 12.8%11.4% 10.6%

10.7%10.7%

9.7%10.3% 9.5%

Basic Instruction Added Needs InstructionInstructional Support Business and AdministrationOperations and Maintenance Transportation


• Basic Instruction up 4.8%• Added Needs Instruction spend

up 3.4%• Instructional Support spend up

3.1%• Business & Admin. Spend up

0.8%• Ops. & Mntc. spend down 3.8%• Transportation spend up 0.5%• Total spend up 8.9%

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Average Teacher Salaries – 2004 to 2013

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

$70,000

$75,000

$80,000

$85,000

$90,000

$66,799

$78,128

$63,431

$72,100

$52,161

$62,530

GPPSS Benchmark Average State of Michigan


• Benchmark group average up 13.7%• State average up 19.9%• GPPSS average up 17.0% (but down

9% from the peak of this report period)

Notes

• Changes up or down in average salary do not necessarily equate to pay increases or cuts for individual teachers.

• GPPSS teacher pay reductions of 2013-14 (not reflected here) are likely to render GPPSS average salary slightly higher than the benchmark average.

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Ratio of Students to Teachers (General Ed.)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 15.0

16.0

17.0

18.0

19.0

20.0

21.0

22.0

23.0

24.0

GPPSS Benchmark Average State of Michigan

Notes

• Ratio is not the same as class size, but can be a proxy for class size.

• Bell schedules (e.g. 6 or 7 period day) are a major factor in this measure. The more student course options, the lower the ratio (generally).

• In GPPSS’ case, a change in one unit (e.g. a change from 20 students to teacher to 21) equates 20 teachers.

• This ratio is massively relevant to district budgets since teachers are every districts’ largest expense.

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Summary Thoughts on GPPSS

5/4/2014

What are the healthy trends?

The district is getting its Instructional Salaries in line with its revenue without cutting staff FTE. This report next year will show the district pays its employees very well relative to the state and in line with its like districts.

Revenue per pupil continues to increase, making up for the reductions of 2008-2010.

Ratio of students to teachers remains very competitive on both a statewide and benchmark level, although both Birmingham and Bloomfield Hills have lower ratios.

Operations and maintenance costs have maintained their control from their peak in 2003-4. This is largely attributable to the district’s Sinking Fund offsetting General Fund spending.

What are the concerning trends?

Enrollment continues to be a major issue, particularly in comparison to other districts. In 2003-4, GPPSS enrolled 1,000 more students than Birmingham. In 2012-13, Birmingham's enrollment surpassed GPPSS’. The district’s rate of student enrollment loss is worse than the state average over this 10 year period.

Despite the district’s steady rise in Added Needs Instruction (from a low of 8.4% in 2005 to 12.8% in 2013, roughly an annual increase of $4.4 million) consumer satisfaction in this are appears to remain low. The rise, like that of Basic Instruction, is more attributable to significant increases in employee compensation. Next year’s report will likely show significant proportional decreases in Instruction and Instructional Support costs.