A Financial Benchmark of the Grosse Pointe Public School System

Pupil Count

The Basics: District enrollment has stabilized, but hovers near its 9 year low and threats loom. We’re still the 28th largest districts in the state (out of 796). Our trend compares favorably to the state’s annual loss of about 2% of students every year. In contrast to benchmark districts, Grosse Pointe has stopped the heavy bleeding, but we’d rather be like Birmingham and Forest Hills in regards to their steady student enrollment growth.

The Upshot: We should not expect substantial harm or gain relative to enrollment. The school’s enrollment is merely reflecting local community trends. Grosse Pointe is getting gradually smaller and older. This is a problem that must be addressed collectively.  

Pupil to Teacher Ratio

The Basics: If you value a lower ratio of students to teachers, GP has done well in this category in comparison to both the benchmark and statewide samples. To put GP’s position in perspective, if our ratio were equal to the benchmark group average, we would cut 40 teachers. This is the alternative to salary reductions.

The Upshot: This is an astounding figure. The district has avoided laying off teachers while most other districts have done so by increasing class size or closing schools. But as will be seen below, this comes at a price.  

Average Teacher Salary

The Basics: Grosse Pointe teachers are the sixth highest paid in the state, 10% higher than the benchmark average and 22% higher than the statewide average. Bloomfield Hills’ revenues are 23% higher than GP’s, yet GP pays its teachers 17% more than Bloomfield.  

The Upshot: Recalling GP’s favorable teacher ratio, having among the highest paid teachers in the state creates a massive financial challenge. This is the simplest explanation of why the new contract models will be delivering pay reductions.  

General Fund Revenue

The Basics: Over this report’s nine year span, the district’s revenue per pupil hovers around the average and is 5% lower than the high water mark. Total revenue, however, is far lower as decreasing enrollment created a $6 million annual loss. Rising expenses and lower enrollment are bigger problems than flat or moderately reduced state aid per pupil.    

The Upshot: In this time span, the district lost over 10% of its revenues, yet instructional salaries increased by 20% and state mandated retirement costs increased by 40% or $4 million. Rising salary and retirement cost in the face of lower state aid and lower enrollment was the root cause of the district’s financial distress. (See the 2012-13 "Financial State of the District" for more details.)

Instructional Expenses

The Basics: With increasingly higher instructional salaries and lower student to teacher ratios, it’s no surprise that the district is near a record high here. We allocate 70% of our revenue to instruction related expenses. Nine years ago it was 60%. Last year Bloomfield Hills allocated 57% to instruction, but recall their salaries are 17% lower than Grosse Pointe’s. 

The Upshot: While admirable, and unusual, to allocate such a large percentage for instruction, the rate of the cost increase (20% in nine years) relative to 10% revenue reduction is unsustainable. This is why districts across the state are either cut teaching staff, reduce pay, or some combination thereof.  

Non-Instructional Expenses

The Basics: This covers administration, operations and maintenance, transportation and other support resources. Grosse Pointe’s proportional spend in these categories is slightly lower than the benchmark group and 15% lower than the statewide average.  

The Upshot: In contrast to Instructional Expenses, this cost has been flat for nine years. While popular among some to believe that non-instructional expenses are the root cause of financial distress, the data simply does not support that conclusion.  

Summary

The Basics: The benchmark report is a statistical representation of what the district’s financial strategy has been. By aligning employee compensation to state revenues and fund equity levels, the inevitable has happened. Employee compensation is being adjusted downward while employee jobs, and thus district programs, are preserved.  

The Upshot: The district will run a budget surplus of over $3 million annually and fund equity will return to the agreed upon 10% within two years. Our teachers will remain among the highest paid in the state and the district has a solid financial foundation to make proper investment decisions to better serve the students and community.