ANN ARBOR, Mich. (Michigan News Source) – Ann Arbor Public Schools is draining its savings despite near record-levels of revenue as inflation and increased costs in health insurance and the pension system are the leading causes.
The district received an update on its finances at the Nov. 6 board meeting.
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The district’s Fund Balance, which is its reserves, had dropped from a high of $22.3 million in 2021 to $7.14 million in 2024.
The district’s health insurance provider – MESSA – is going to increase its rates by 16%, causing the district to look at ways to reduce health insurance costs.
The district’s contribution to it employees’ retirement pension system has increased from $50.1 million in 2019 to $73.1 million in 2024.
The district was in the red by $5.9 million in 2024 despite budgeting that year for a surplus of $6.5 million.
The district found itself in red ink despite record levels of revenue.
General Fund revenues have increased from $256.4 million in 2019 to $316.6 million in 2024. The 2019 revenue increases to $314.5 million when adjusted for inflation which gives an insight into how much inflation has eaten into the district’s budget.
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Ann Arbor Public Schools stated in the documents that it devoted much of the federal pandemic funding to employees’ compensation. The cost of employees’ salaries and benefits has increased from $197.8 million in 2019 to $233.6 million in 2024.
The district’s enrollment has been flat over the past nine years. The district had 16,844 students in 2014-15 and 16,764 in 2023-24. Enrollment peaked at 17,962 in 2018-19 but like most school districts, Ann Arbor has seen a drop in the number of students post-pandemic.
The district said, “Passage of the 2024-2025 budget placed our district on a sustainable fiscal path so we can move beyond state oversight and reporting requirements while maintaining a healthy fund balance,” said Andrew Cluley, the school district spokesman in an email to Michigan News Source.
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