ANN ARBOR, MI – Ann Arbor Public Schools expects to end the current fiscal year with just 1.5% of its financial reserves in the bank, but has a plan to rebuild that fund balance in the coming year.

The Ann Arbor School Board Finance Committee presented an early look at how the district’s budget cuts will affect its future finances during a June 7 meeting.

A first reading of the proposed $318 million budget will be presented to the full board on Wednesday, June 12. The goal is to build the district’s fund balance from just $4.7 million at the end of June to $16.1 million, or 5.08% of revenue. by June 2025. You can view the proposed budget here.

The district was able to strengthen its financial position for the coming year after it approved a plan to reduce its budget by $20.4 million, including cuts to 141 staff positions to address a projected $25 million budget deficit.

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After two consecutive years with a fund balance of less than 5% and an $8 million reduction in the fund balance to cover the 2023-2024 budget deficit, drastic measures such as those approved by the school board in May had to be taken, according to financial advisor to AAPS. said Marios Demetriou.

“If you don’t do anything, you become a deficit district,” Demetriou said. “Next year, the administration and board must be very vigilant to ensure we stay on the path we are on.”

The presentation of the district’s current financial picture – including the latest amendment to the current budget and the first look at the 2024-2025 budget – is not intended to cause alarm, but to reflect the reality it has faced in recent years. has communicated to the public for several years. of months, said AAPS trustee and finance committee member Susan Baskett.

“This is not fear mongering,” Baskett said. “This is looking at the numbers.”

Demetriou previously noted that the state had projected that AAPS would run a deficit in 2025-2026 if it did not take action to address its financial situation. If the plan is approved by the school board, the district could avoid that, he said.

The plan was approved on a 6-1 vote, with cuts that include eliminating teaching positions in elementary music and other special subjects, elementary world languages ​​and co-teachers in middle and high school bands. Trustee Ernesto Querijero voted against the plan, which can be found here.

The cuts allowed AAPS to reduce expected spending for the coming year to $307 million, down from the $323 million it projects to end the year in 2023-2024.

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Budget assumptions include a total revenue increase of approximately $3.4 million, supported by a projected $5.8 million increase in property taxes, as well as a $241 increase in state funding per student. The budget also reflects an expected loss of 105 students, Demetriou said.

The projected 2024-2025 budget offers a more optimistic financial picture than the current year budget, which is expected to end with just $4.78 million, or 1.5% of total revenues.

The proposed budget puts AAPS on a path to better financial health after making difficult decisions about budget cuts, said Finance Committee member Susan Ward Schmidt.

“That’s why there was such a serious, serious attack on what we were going to do with the budget, because you just can’t keep going down the tubes,” she said. “None of us want to make cuts, but you have to balance your budget.”

A loss of 1,123 students over the past four years, combined with an increase of 480 staff positions over the past decade, are major factors contributing to the district’s budget woes.

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