An Independent Review

of GPPSS Finances
Following the 2015 Audit
Brendan Walsh
www.brendanwalsh.us

Disclaimer and
Notes
Brendan Walsh served on the
Grosse Pointe Public School
System Board of Education from
2005 to 2013.

This report and those like them are developed by the author
alone.
The author has no official affiliation with the Grosse Pointe
Public School System (GPPSS) other than as a resident,
taxpayer and parent of students.

He served as President from

2006 to 2008, Vice President in
2009, and Treasurer from 2010
through 2013.

All data used in this report are from the GPPSS annual
financial audit reports or publicly available district reports.

He resides in Grosse Pointe

Park, Michigan and maintains a
website where he writes about
issues relating to the GPPSS.

In reference to years, since a school (fiscal) year spans two

calendar years, the latter year is the year of reference. (e.g.
The Audit of the 2014-15 school/fiscal year is referred to as
2015)

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2015 GPPSS General Fund Audit Summary

2015 district revenues
exceed spending by
$1.9M, which was $400k
worse than planned in the
original budget (June of
14) and $1.2M better
than the final budget
(June of 15).

$99.6

$99.2

$99.3

$99.3
$98.7
$97.7

$97.3

$95.4

$ in millions

The $1.9M surplus is

welcome, but almost $2M
worse than the 2014
results. Since revenue in
both years was about the
same, spending
increased by about $2M.
Total Revenue

Total Expenses and Transfers

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GPPSS General Fund Revenue vs Expenses and Transfers

($ millions)

$110.0

Revenues exceeded
expenses for the 2nd
straight year in 2015
following 4 straight years
of shortfalls between
2009 and 2013.
Annual revenue loss is
driven mainly by student
enrollment reduction.
Cost reductions of 2014
were the result mainly of
the contract mandated
staff salary reductions.

$105.0

$100.0

$95.0

$90.0

$85.0
2005

2006

2007

2008

2009

Revenue

2010

2011

2012

2013

2014

2015

Expenses and Transfers

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GPPSS General Fund Revenue vs Expenses per Pupil

Representing revenue
and expenses on a per
pupil basis normalizes
figures relative to
enrollment reductions.
Revenue per pupil has
increased from 13 to 15,
but most of that flows to
state managed school
employee pension and
retiree healthcare costs.
2015 saw a 4.3%
increase in expenses per
pupil against only a 2.2%
increase in revenue per
pupil an unwelcome
trend

$13,000

$12,500

$12,000

$11,500

$11,000

$10,500

$10,000

$9,500
2005

2006

2007

2008

2009
Revenue

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2010

2011

2012

2013

2014

2015

Expenses

Instructional vs. Non-Instructional Expenditure per Pupil

$9,000

As enrollment drops,
Instructional expenses can
be somewhat contained via
staff reductions (less
students to teach);
however, non-instructional
expenses tend to scale up
a dangerous trend.
Non-Instructional expenses
increased 7.6% per pupil
from 2014 to 2015. This is
the main reason the
budget surplus dropped by
nearly $2M year over year
from 14 to 15.

$8,000

$8,025
$7,633

$7,545

$7,619

$7,948

$7,814

$7,983

$8,006
$7,340

$7,527

$7,000
$6,732
$6,000
$5,000
$4,000
$3,703

$3,787

$3,857

$3,983

2006

2007

2008

$4,384

$4,120

$4,134

$4,003

2009

2010

2011

$4,236

$3,986

$4,291

$3,000
$2,000
$1,000
$0
2005

Instructional

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2012

2013

2014

2015

Non-Instructional

GPPSS General Fund Year on Year Changes by Major Category

The $3.8 million surplus of
2014 dropped by almost $2M
in 2015. Pupil Support
Services, Basic Instruction
and Business and Central
Services spending all
increased substantially.
Added Needs instruction
spending dropped by over
$600k while revenue
increased by over $300k.
Of these, Pupil Support
Services merits the most
scrutiny. $1M represents a
15% increase in spending in
that category.

Year on Year Cost

Increases ($2.9M total)

Year on Year Rev. Increase or

Cost Decrease ($0.9M total)

Athletics; $162,777

Revenue; $313,191
Business & Central Services;
$622,179
Basic
Instruction; $974,808

School Adm.; $140,543

Pupil Support Services; $1,000,920

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Added Needs Instruction; $616,595

GPPSS Ten Year Student Enrollment Trend

Student enrollment
continues to decline,
down 8% from 2005
and about equal to
enrollment in mid1990s.
Enrollment loss
brings revenue loss
as Michigan public
schools are funded
on a per pupil basis.

8,965
8,888

8,899

8,853

8,561
8,416

8,391

8,416

8,356

8,347
8,188

Enrollment loss translated

to 2015 revenue per pupil
amounts to a district
revenue loss of $7.6
million annually.

2005

2006

2007

2008

2009

2010

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2011

2012

2013

2014

2015
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GPPSS General Fund Equity from 2005 to 2015 (in $ millions)

In 2015 Fund Equity
increased for the
second year in a
row, but by $1.9M
less than 2014.

$20.2 $20.1
$18.2
$16.9
$15.4
$14.2

$13.8
$11.7

The 2016 budget

projects a $1.5M
surplus followed by
a $2.5M surplus in
2017.

$9.2
$7.7
$6.3

$5.8
$2.0

*Projections

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Review of how Fund Equity lost $18M between 2009 and 2013

Orange categories
worked to increase fund
equity. Job reductions
were the biggest factor
here.

Gray categories
decreased fund equity.
State aid per pupil
reductions and enrollment
loss were biggest factor,
along with retirement cost
increases.
All categories added
together equals a loss of
$18M.

$30.0
$20.6
$20.0

$10.0
$4.0

$3.1

$2.3

$0.0

($1.4)

($2.8)

($3.4)

($9.9)

($30.4)

($10.0)

($20.0)

($30.0)

($40.0)

All figures in $ millions.

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Numbers in millions

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GPPSS General Fund Equity as a Percentage of Expenditures

Fund Equity now

exceeds 2012
levels and is on
pace to nearly
reach the 10%
target by the end
of the current
(2016) budget.

19.7% 19.4%
18.0%
16.6%

16.5%
14.0%

14.0%
12.3%
9.6%
7.9%
6.1%

6.0%

2.0%

* Projection

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11

Fund Equity % GPEA Contract Spec. vs. Actual / Projection

14.00%

2015 ending Fund Equity is

within the 1% target as
specified by the GPEA
(teacher) contract. 2016
projects to be below the
GPEA contract target, mainly
attributable to state
mandated retirement rate
increases above projections.
Regardless, 2017
projections exceeds GPEA
contract targets.
Compensation reductions or
other adverse cuts are not
necessary to meet the
mutually established targets
based on current
projections.

11.53%

12.00%

12.30%
11.62%

9.60%

10.00%
8.87%
7.90%

8.00%
6.00%
4.00%
2.00%
0.00%

2013

2014
Contract Specification

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2015

2016*

2017*

Actual / Projection*

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 The overall financial trend is positive and covenants with

employees and the taxpaying public appear on track.
The district continues to outpace nearly every other Michigan
district in compensation packages and ratio of students to
teachers.

Summary
Comments

Spending increases in 2015 over 2014 particularly in noninstructional categories - dissipate opportunity for investment
in areas like technology. This needs scrutiny.
Expense control will be at a premium the next two years as
employee contracts call for salary increases above step and
lane increases.
Enrollment loss continues to be a huge problem for the
district and really the Grosse Pointe communities.

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