Grosse Pointe Public School System

Financial Transparency Series

2 0 1 2 - 1 3 F I N A N C I A L STAT E O F T H E D I ST R I C T
P R E P A R E D B Y: B R E N D A N W A L S H , T R E A S U R E R , B O A R D O F E D U C AT I O N NOVEMBER 26, 2012

Key General Concepts

2

Source Data
Michigan Dept. of Education, Bulletin 1014

Compensation
Direct compensation is salary and any additional payments made to employees, governed by contract

School Funding
State dictates per pupil operating revenue
Health care is negotiated locally, but state laws affect Retirement rate (MPSERS) and FICA are non-negotiable locally.

GPPSS Budget Modeling Utility

2008 through 2011 agrees to audit. 2012 and on are projections.

Indirect compensation is net health care, FICA and state mandated retirement (MPSERS)

Employee contracts Key Concepts

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Theme & Intent

Emphasizes total compensation rather than just direct compensation

Triggers & Effect

Agreement with employees that a 10% Fund Equity level is necessary

Implications & Benefit

The districts financial health is protected by the contracts not Fund Equity itself

Shares risk and reward proportionally across all employees

If Fund Equity drops below 10%, compensation is reduced proportionally. Allows the district to make investment decisions guided first by best interests of students, not compensation or budgets

Ties total compensation to school funding variables beyond our control

If Fund Equity exceeds 15%, compensation increases

GPPSS and statewide proportional investment by function

4

Statewide Avg. 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%

Basic Instruction Added Needs Instruction Instructional Support

GPPSS

55.9% 47.4%

Business & Admin.

Operation Maint.

Transport.

(Source: Michigan Dept. of Education)

Per Pupil Revenue and Expenses from 2004 to 2011

Per Pupil
2004 8,915 2011 8,391

Enrollment
Operating Revenues Local State Federal Total Expenditures* Basic Instruction Added Needs Instruction Instructional Support Administration Operations & Maintenance Transportation Total Revenues less Expenditures

GPPSS Statewide Rank 2004 2011 (of 744) (of 788) 32 29

$ $ $ $

3,087 7,524 212 11,028

$ $ $ $

3,362 7,728 557 11,647

82 23 555 42

114 84 655 76

$ $ $ $ $ $ $ ($ 5

5,658 1,033 1,014 1,160 1,458 45 11,043 15)

$ $ $ $ $ $ $ ($

6,507 1,453 1,371 1,294 1,125 76 12,012 365)

28 218 86 300 91 571 42

33 160 56 470 206 608 62

*Not all expenses are listed, but total is complete

(Source: Michigan Dept. of Education)

Good news, bad news story of salary compensation and pupil to teacher ratios
2004
Total Operating Revenue per Pupil $ 11,028 $

GPPSS Statewide Rank 2004 (of 744) 42 2011 (of 788) 76

2011
11,647

Instructional Salaries per Pupil

Support Services Salaries per Pupil Average Teacher Salary Combined Retirement and FICA Rate General Education Pupil to Teacher Ratio Statewide Average GPPSS Average and Statewide Rank GPPSS Rank among same sized districts (47 total)

$
$ $

6,536
2,645 66,799 20.64%

$
$ $

7,448
2,918 80,566 28.1%

18
90 7

26
60 5

22.0 18

23.0 20

144 3

211 3

In 2010, the 76th ranked teacher salary in Michigan was $67,380 (Lakeshore Schools) which is 16% lower than our $80,566 average.
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(Source: Michigan Dept. of Education)

Total Revenue and Expenses per Pupil

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$13,000
$12,500 $12,000 $11,500 $11,000 $10,500 $10,000 2008 2009 2010 2011 2012 2013 2014 2015

Total Expenditures Per Pupil

Total Revenue Per Pupil

General Fund Annual Revenue and Expenses

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$110.0
Annual Rev. , Exp. in Millions $107 $105.0 $100.0 $2.0 $95.0 $90.0 $85.0 $80.0 2008 2009 2010 2011 ($7.6) 2012 2013 2014 ($0.1) ($3.2) ($3.1) ($3.9) $5.0

$6.9

$8.0 $6.0
Annual Delta in Millions $4.0 $2.0

$96 $0.0 ($2.0) ($4.0) ($6.0) ($8.0) ($10.0) 2015

Total Revenue

Total Expenses

Annual Delta

Projected Total compensation by employment group as percentage of total General Fund expenditure
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95.0%
90.0% 85.0% 80.0% 75.0% 5.5% 3.1% 4.4% 4.0% 5.2% 3.0% 4.6% 4.1% 5.4% 3.1% 4.6% 4.2% Technology Exec Admin NIS Parapros

70.0%
65.0% 60.0% 55.0% 50.0%

TA's
Clerical Plant Bldg Admin Teachers

65.7%

66.1%

66.8%

2012

2013

2014

Ratio of Employees to Blended Student Enrollment

8% workforce reduction from 2008 through 2012
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30.0 Ratio of Employees to Students 28.0 26.0 24.0 22.0 24.7 23.4 24.4 26.2 26.0 26.1

8,700 8,600 8,500 8,400

25.8

20.0 18.0
16.0 14.0 12.0 10.0 14.2 13.8 14.1 14.3 14.3 14.3 14.3 14.3

8,300 8,200
8,100 8,000 7,900 7,800

2008

2009

2010

2011

2012

2013

2014

2015
Enrollment

Student to Teacher Ratio

Student to Non-Teacher Ratio

Includes General and Special Education Teachers

Student Enrollment

26.5

General Fund Equity total value and as % of General Fund Expenditures

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$25,000
$20,000 Fund Equity (in $000s) $15,000

25.0%
20.0% 15.0% Fund Equity as % of Expenditures

$10,000
$5,000 $0 2008 2009 2010 Value 2011 2012 2013 2014 2015 % of Expenditures

10.0%
5.0% 0.0%

Cost represented on Per Pupil basis by Category

Small margin of expense over revenue is amplified by student count
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$14.0 $12.0
$1.7
$1.8 $1.2 $1.6 $1.9 $1.2 $1.7 $1.9 $1.2 $1.9 $2.0 $1.2 $1.7 $2.4 $1.6 $1.5 $2.3 $2.1 $1.2 $1.1 $1.5 $2.0 $1.1

$10.0
Per Pupil ($000s) $8.0 $6.0 $4.0

$1.2

$7.4

$7.8

$7.7

$7.2

$7.4

$7.1

$6.5

$6.3

$2.0
$0.0 2008 Direct Comp. 2009 2010 2011 2012 2013 All Other 2014 2015 Health Care Retirement/FICA Revenue/Pupil

Major expenses per pupil as a % of revenue per pupil

Retirement cost escalation is clearly our biggest problem
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Direct Compensation 100%

14%

Health Care

MPSERS/FICA
15% 20% 10% 13%

Other

13% 15% 10%

14% 15% 10%

16% 17% 10%

80%

13% 20% 10%

13%
17% 9%

15% 9%

17%
9%

60%
40%

60%

62%

63%

60%

63%

60%

20%

55%

53%

0%
2008 2009 2010 2011 2012 2013 2014 2015

Retirement costs are a function of state set rate applied to salaries. Salary reduction is only way to reduce retirement costs.

Average total compensation per employee

and average total compensation per employee % change from 2008
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$120.0
Avg. Total Compensation in Thousands $100.0 $80.0 $60.0 $40.0 $20.0 $0.0 2008 2009 2010 $16.4 0%

7.3% 4.9% $21.7 $21.5 $19.0

8%
Difference from 2008 baseline 6%

$16.4 $16.9 $18.5 2.3% 2.1% 0.9%

4%

$18.7

2% 0% -2%

$67.3

$68.0

$68.7

$66.9

$68.4

$66.0 $60.0 -5.8%

$58.9

-4%
-6% -8%

-7.2% 2011 2012 2013 2014 2015

Direct Comp.

Health Care

MPSERS/FICA

Change from 2008

Change in per pupil revenue vs. change in average total compensation per employee against 2008 baseline
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8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -2.1% -3.8%

7.3%
4.9%

2.3%

2.1%

-4.9%

-4.8%

-4.8% -5.8%

-4.8% -7.2%

-6.0%
-8.0% 2009 Revenue/Pupil 2010 2011 Avg. Total Compensation 2012 2013 2014

2015

Potential Employee Compensation Changes in the Context of our Communities' Changing Economy
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Change in Median Household Income (2000 to 2010) Grosse Pointe City Grosse Pointe Farms Grosse Pointe Park Grosse Pointe Shores -15.7% -18.2% -7.8% -18.0%

Change in Per Capita Income (2000 to 2010) -30.9% -16.5% -17.8% -10.5%

Grosse Pointe Woods Harper Woods

-16.4% -26.8%

-19.7% -32.1%

Source: U.S. Census Bureau, American Community Survey via Southeast Michigan Council of Governments (SEMCOG, www.semcog.org)

GPPSS: Striking the right balance

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Current Path
Salaries scale proportionally to revenue No change in student to teacher ratio 10% projected reduction in direct compensation over three years

Without
Large class sizes Reduced programming

Outsourced custodians
Higher student fees Schools of Choice

Grosse Pointe Public Schools operates at a structural surplus

We should still investigate other options

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Enrollment Added Needs Instructional Costs Basic Instructional Costs Staff Development / Substitute Costs

GPPSS loss of students is out of alignment with like districts, even those not reliant on School of Choice.

GPPSS cost per pupil rising dramatically higher/faster than benchmark and state average.

GPPSS dramatically out of alignment; salaries, ratios/schedules, programs should be evaluated

Currently this is a $1M annual expense. There has got to be a better way.