Despite record funding for Michigan schools, arrogant incompetence and misspending in Ann Arbor Public Schools is forcing layoffs as part of $25 million in budget cuts for next school year.

Jazz Parks, interim superintendent, wrote in a recent statement an undisclosed budget shortfall revealed during an audit last year stems from an increase of 480 staff over the last decade, as student enrollment dropped by 1,123, and “well-deserved and well-earned raises” for staff.

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“As a result of these factors, our district is facing multi-year budget shortfalls that must be addressed immediately,” Parks wrote. “According to the financial analysis, the district will need to cut approximately $25 million from the 2024-25 operating budget to comply with state and Board of Education requirements.”

A breakdown of federal COVID relief funding in Michigan shows AAPS received an extra $30.5 million from taxpayers in recent years, including more than $19.5 million in the last round of funding.

At the same time, the district’s state funding allowance increased from $9,530 per pupil in the 2021-22 school year to about $10,609 in fiscal year 2023-24. When that funding was at $10,102 per pupil in fiscal year 2022-23, AAPS received more than $177.5 million from state taxpayers, according to the district’s most recent audit.

The audit showed that despite the influx from taxpayers, AAPS’ fund balance as a percentage of expenditures dwindled from 8.2% in 2021 to 4.1% in 2023, below the threshold to trigger an “early warning” from the state after two years.

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The school board’s targeted fund balance is between 6% and 15%, according to MLive.

The AAPS audit shows the district would need about $64.5 million in the bank to meet the statewide average fund balance as a percentage of expenditures of 20.3%, or more than $47 million to hit the district’s 15% fund balance target.

At the end of fiscal year 2023, the balance was $12.8 million. The district’s total general fund revenue in 2023 was $310.3 million.

“Cost containment and improved efficiencies will need to continue to be a focal point for the organization in order to yield positive financial results,” auditors wrote.

The audit notes the district “invested the one-time federal and state funds into health and well-being of students and staff, and competitive pay.”

That spending came despite warnings from federal officials and financial experts about using one-time money on recurring expenses like salaries, which can create legacy costs that may be impossible to sustain.

The district’s unfunded pension liabilities, the audit showed, have increased from about $50 million in the 2019-20 school year to $78.5 million in the 2022-23 school year. Health insurance coverage, which the district capped at $13,961 per teacher in 2023, is now at $25.4 million, up from $24 million in 2020.

“Despite our best efforts, the magnitude of the budget challenge we are facing will require us to make staff and program reductions,” wrote Parks, who blamed the situation on her predecessor, former AAPS Superintendent Jeanice Swift.

Swift resigned in September after a video surfaced of a bus aide slapping and restraining an autistic 7-year-old, which prompted calls from the public for her termination, the Detroit Free Press reports.

First steps to unravel AAPS’ financial mess will include “reducing central office and administrative staff positions,” as well as “freezing hiring,” Parks wrote.

The district will also be “conducting in-depth reviews of all central office, district and school budgets for efficiencies and cost savings” while officials are “renegotiating contracts with vendors to identify cost savings on contracted services.”