Mich. school district deficit list cut to 23

After almost a decade of financial hardships, a state takeover and the closing of its high school, the Highland Park School District appears to be hanging on by a thread.

The community is down to two K-8 schools — one of which is run by charter operator The Leona Group — and officials expect they will drop one school later this year.

The bulk of Highland Park’s property tax revenue goes toward paying off longstanding debt that totals $7.8 million, according to the district.

Declining enrollment, cuts in state aid and years of deficits have landed Highland Park on the state’s watch list. It is one of at least 23 school districts in Michigan projected to end fiscal year 2016 with a deficit. Last year, there were 41 school districts on the list.

Seven of the districts on the 2016 list will have deeper debt than the previous year, according to the Department of Education. Among those were Detroit Public Schools, which is expected to reach $515 million; Mount Clemens Community Schools with a projected $1.4 million deficit; and South Lake Schools with a projected $1.3 million deficit.

Even districts such as Utica are faced with financial pressures. School officials say they have to transfer $10.5 million from a fund equity to plug a $19.3 million deficit. Utica also made cuts to technology, staffing and other areas to make up for the remaining shortfall.

Assistant Superintendent Stephanie Eagen said declining enrollment has forced the school district to make budget cuts to avoid going into debt. Utica lost nearly 200 students last year and expects to lose 1,600 in the next five years.

Officials are currently planning teacher layoffs and a restructuring of the elementary English Language program to keep the district afloat in next year’s budget, Eagen said.

Steven Schiller, Highland Park’s fifth emergency manager since 2012, said he expects it will take about 13 years to pay off the district’s debt. That deficit includes emergency loans and utility payments.

In early 2012, when the state stepped in, the district had an $11 million deficit, and enrollment had dropped 58 percent between 2006-11. Highland Park essentially created a new district and had the old district collect property taxes and service past debts.

Gov. Rick Snyder is proposing a similar plan for DPS. He wants to split the district into two entities, using the old district to pay off outstanding debt while a new debt-free district focuses on education.

Bill DiSessa, a spokesman for the Department of Education, said school districts across the state have seen their enrollment numbers plummet. In some cases, families leave communities in droves because of a lack of jobs, Disessa said.

And since Michigan funds schools on a per-student basis, districts are forced to operate with less money. So they cut programs, lay off employees and consolidate services among other strategies, Disessa said.

Some schools aren’t able to make the cuts fast enough.

“We do work with districts to eliminate their deficits, but we do not dictate whether they cut salaries or have layoffs,” DiSessa said.

Districts with a five-year deficit, or those that are projected to have one, qualify for additional resources from the state Department of Treasury under the early financial warning legislation, DiSessa said.

Treasury loans are also available, he said.

“There are some districts that continue to lose students every year, so it’s unfortunately a downward spiral of fewer students and fewer dollars coming in from the state,” DiSessa said.

Highland Park closed its high school in 2015 because of low enrollment.

“Our biggest problem is that we are losing revenue,” Schiller said, adding that there are fewer homes and families are fleeing Highland Park for other communities.

Starting next school year, the Highland Park district’s total revenue will drop from $1.5 million to $1.3 million.

The city’s population also fell to 10,375 in 2014, according to the U.S. Census Bureau. In 2000, there were 16,746 residents in Highland Park.

City administrator Cathy Square said Highland Park’s population and tax base have been dwindling since Chrysler closed its plant and moved to Auburn Hills in 1992.

Chrysler’s departure caused the city to lose nearly $30 million in tax revenue. After that, residents and businesses gradually started leaving the city. Many families wanted to live in communities where there were more jobs and access to goods and services, Square said.

Today, the town’s tax base totals about $10 million, she said.

“It’s just like Detroit, people move, they want newer homes, they want to be in newer communities,” Square said. “... They want choices and various options for their kids.”

Schiller said he expects the Highland Park district will cut its ties with George Washington Carver Academy this year, leaving just one school in the district— Highland Park Renaissance Academy which is operated by the Leona Group. Overseeing one school is more efficient, he said, since the district only has four employees.

“My hope is that we can continue to stabilize the (school) that we have here,” Schiller said. “We don’t have as much money to operate with. But we continue to get good teachers and we are still offering a great education program here.”

Mayor Hubert Yopp said approximately 2,000 children are bused out of Highland Park to schools in Detroit, Inkster and other communities with school of choice.

High school students in Highland Park are able to attend Detroit Public Schools due to an agreement between the two districts, Schiller said.

Yopp said the dwindling school district has limited his ability to grow the town.

“No one is going to move into Highland Park if there isn’t a school system,” he said.

Pontiac and Hazel Park school districts will cap this year off with reduced budget deficits after making significant cuts.

Hazel Park’s debt will drop to $6.4 million this year. In fiscal year 2015, the district had an $8 million deficit which was down from initial projections of $11 million.

Superintendent Amy Kruppe said Hazel Park laid off 120 staff members last spring and remaining employees took pay cuts.

The district also started outsourcing its food service and transportation with the Ferndale school district to save money.

Kruppe said the loss of students has taken a toll on the district’s finances. Enrollment dropped by 9 percent this school year leaving Hazel Park with 3,500 students.

“Our board made bold steps last year when we realized it was taking a larger turn for the worst and the board worked with all the unions and everyone took incredible salary reductions,” Kruppe said. “We are being really smart about how we are doing things.”

The Pontiac school district is projecting a $31 million deficit, Superintendent Kelley Williams said. The district’s deficit has decreased since 2013 when it was $51 million in debt.

Williams said staff members have made concessions. Teachers took a 12 percent pay cut and principals took an 8 percent pay cut. Since then there has been a pay freeze in place.

Pontiac also sold 16 vacant buildings and accrued $3.5 million.

Williams said enrollment in Pontiac suffered and so did the budget as the public school district lost many students to charters.

The district was “not making the immediate adjustments with staffing and closing buildings,” Williams said.

Williams said she expects the Pontiac district will be out of a deficit in 14 years.

nterry@detroitnews.com

(313) 222-6793

@NicquelTerry