Mismanagement Often to Blame for School District Financial Troubles
Flint Community Schools lost students but continued to overestimate revenue
Flint Community Schools received $5,400 more per student than the nearby Grand Blanc school district in 2011-12, yet Flint has been losing money for three years while Grand Blanc balanced its budgets.
School districts in deficit often are in the red not because they aren't getting enough money, but because they don't manage their finances well.
Flint received $13,757 in 2011-12, which was more money per pupil than any of the other 30 school districts and charter public schools in Genesee County. In fact, the only two districts in deficit in Genesee County in 2012-13 were the two districts that received the most money per pupil in 2011-12, according to the latest financial data from the Michigan Department of Education. Flint Beecher also was in deficit and received $12,720 per student, second to Flint.
Pat Sorenson, a senior policy analyst at the Michigan League for Public Policy, said Michigan’s "recent economic development strategies have created … public schools with large deficits."
However, Flint Community School’s problems are tied to employees costs, a drop in student enrollment and the district's failure to address it, according to financial documents provided by the district and the state of Michigan.
Flint acknowledged what caused its deficits in the 2012 deficit elimination plan it submitted to the state. The district cited reductions in student enrollment and rising employee costs despite staff reductions. The first point cited by the district in how it planned to eliminate the deficit was to "Increase financial accountability for all levels."
The district projected an increase in revenue despite significant drops in enrollment.
In 2007-08 the district lost 1,147 students, going from 16,824 to 15,677 in one year. The next year, the district lost another 1,698 students.
However, in 2009-10, despite enrollment reductions of 7 percent and 11 percent the preceding two years, the district projected in 2009-10 that it would get an increase of $4.4 million in general fund revenue.
Instead, the district's enrollment trend continued downward as the district lost another 1,785 students and received $24.2 million less than it had budgeted in 2009-10. That resulted in a nearly $5 million deficit in the general fund.
The district consistently over projected revenue by an average of $17.3 million per year — or 10 percent higher than it received in general fund revenues — from 2008-09 to 2011-12.
And while the district was losing students to charter public schools and schools of choice, it didn't downsize its staff to match the drop in enrollment.
From 2007-08, the district saw its student enrollment go from 15,677 to 9,511 in 2011-12, a 39 percent drop. Yet, overall full-time jobs in the district fell 13 percent, going from 2,602.65 full-time equivalent workers to 2,275.6 in 2011-12.
During those four years, the district eliminated about 1 of 3 teaching positions, but the number of paraprofessionals and non-instructional workers (such as bus drivers, secretaries and food service workers) increased between 2007 and 2012.
"District mismanagement is what creates districts with large deficits," said Audrey Spalding, director of education policy at the Mackinac Center for Public Policy. "More money will not fix the core causes of Flint's financial trouble. The district is spending irresponsibly and failing to react appropriately to student enrollment decline."
Flint Interim Superintendent Larry Watkins Jr. did not respond to a request for comment.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.