Detroit Public Schools FY 2005 Adopted Budget June 30, 2004

Goal of the Detroit Public Schools * Improve Student Achievement. ■ Create a Safe School Environment. ■ Enhance Parental and Community Involvement. ■ Transform the District into an Effective and Efficient Organization. DPS FY 2005 Adopted Budget

We develop and implement the budget to support the District’s goal of improving student achievement and performance. DPS FY 2005 Adopted Budget

Important Information About This Adopted Budget We are proposing BALANCED BUDGETS for all funds of the District. DPS FY 2005 Adopted Budget

Millage Rates Operating mills (non-homestead) Debt Service mills (homestead and non-homestead) Important Information About This Adopted Budget

Approximately 89% of our General Fund Revenue is derived from the State Foundation Allowance which is totally dependent on the blended student count. (Blended = 80% Fall and 20% Winter Student Count) DPS FY 2005 Adopted Budget

This Budget has been developed and balanced with the following assumptions: ■ Required staff reductions will be implemented (2,100 to date) ■ Labor contract negotiations will provide assistance ■ Class size requirements are maintained DPS FY 2005 Adopted Budget

This Budget has been developed and balanced with the following assumptions (Cont.): ■ No adverse Legislative changes ■ All state funding levels will remain constant ■ Second Chance program projections are not included ■ The full impact of the early retirement incentive projections are not included We will continue to refine both revenue and expenditure budgets as new information becomes available.

K-12 Student Blended Trends State Aid F.T.E. Membership continues to decline: DPS FY 2005 Adopted Budget FY 99FY 00FY 01FY 02FY 03FY 04 Projected FY05 173,848168,213162,693159,694157,003150,415144,538 Decline-5,635-5,520-2,999-2,691-6,588-5,877 Decline % 3.2% 1.8%1.6%4.1%3.9% (Blended = 80% Fall and 20% Winter Student Count)

We are forecasting a two year loss of 12,465 funded pupils in the State Aid Membership count resulting in an estimated State Aid revenue decrease of $89,498,700 over Fiscal Years 2004 and Revenues FY2004 and FY 2005 DPS FY 2005 Adopted Budget

The State does not assist large school districts with declining enrollment. Unlike smaller school districts, the state does not allow larger school districts to average declining student counts over multiple years. Therefore, the impact of declining enrollment is felt immediately. Revenues FY 2005 General Fund DPS FY 2005 Adopted Budget

State Aid Per Pupil Funding is projected to remain at $7,180 per pupil the 2002 – 2003 level. There have been no increases for the past three years. This amount is based on DPS retaining the $15 million supplemental funding for the reform legislation. Revenues FY 2005 DPS FY 2005 Adopted Budget

The total General Fund Revenue has declined from the previous year by $37,224,189. Major Decreases Include: State Aid Property Tax General Fund Revenue FY 2005 DPS FY 2005 Adopted Budget

Description FY 2004 Estimated Revenues FY 2005 Projected Revenues State Aid Property Tax $ 934,933,874 81,170,963 $905,163,095 72,971,468 Investment Earnings Charter Schools 859, , , ,048 Medicaid Other Revenue 7,000,000 21,044,230 7,819,079 20,818,268 Durant5,930,443 Total$1,051,244,590$1,014,019,401 Revenue Analysis DPS FY 2005 Adopted Budget

General Fund Revenue Distribution $1,014,019,401 DPS FY 2005 Adopted Budget

FY 2005 Est. % of Total State Aid$905,163, % Property Tax72,971, % Investment Earnings 900, % Charter Schools417, % Medicaid Reimbursement 7,819, % Other Revenue20,818, % Durant Settlement5,930, % Total Revenues$1,014,019, % DPS FY 2005 Adopted Budget General Fund Revenue Summary

Amount% of Total Salaries$ 528,141, % Benefits206,551, % Purchased Services77,912, % Textbooks25,274, % Supplies17,000, % Capital Outlay11,430, % Utilities34,857, % Telecommunications9,425, % Other Expenditures2,187, % Interest3,910, % Transfers95,308, % Total Expenditures1,012,000, % DPS FY 2005 Adopted Budget General Fund Expenditures

DPS FY 2005 Adopted Budget Page 18

DPS FY 2005 Adopted Budget Total instructional expenditures are 61%

The amount shown for transfers ($95,308,000) reflects the need to transfer money to other funds within the District. A significant portion of the transfer ($72,700,000) is dedicated to the Special Education Fund. This amount is needed to remain compliant. Expenditures FY 2005 General Fund DPS FY 2005 Adopted Budget

Description FY 04 Estimated Transfers FY 05 Projected Transfers Fund 21 Athletics$ 2,608,200$ 2,608,000 Fund 22 Special Ed. 41,617,210 72,700,000 Fund 89 Risk Related Activities 14,168,17120,000,000 Total$ 58,393,581$95,308,000 Transfer Detail DPS FY 2005 Adopted Budget

Budgeted FY 04Projected FY 05 Salaries$621,216,032$528,141,921 Fringes202,174,686206,551,520 Purchased Services103,664,48777,912,374 Textbooks27,000,00025,274,344 Supplies23,878,58917,000,000 Capital Outlay3,833,16311,430,443 Utilities33,600,00034,857,581 Telecommunications11,000,0009,425,940 Other Expenditures10,335,1062,187,878 Interest3,334,5003,910,000 Transfers108,694,96895,308,000 Total Expenditures$1,148,731,531$1,012,000,001 DPS FY 2005 Adopted Budget Budgeted Expenditure Comparison

Description FY 04 Beginning Fund Balances FY 05 Ending Reserves Reserve for repayment of delinquent taxes Undesignated $1,443,182 $2,000,000 $2,459,238 $4,459,238 Beginning Fund Balance Analysis / FY 05 Ending Reserves DPS FY 2005 Adopted Budget

Description RevenueExpenditures Fund 12 Designated Special Purpose Grants $292,725,560 Fund 13 Adult Education$ 12,790,195$ 4,030,835 Fund 21 Athletics$1,608,000 Fund 22 Special Education$223,700,000 Fund 25 Food Service Fund 26 School Athletic Activities $ 51,702,559 $ 1,000,000 $ 51,702,559 $ 1,000,000 Other Operating Fund Information/ Projections DPS FY 2005 Adopted Budget

Description Beginning BalanceRevenueExpenditures Fund 31 Bond Redemption $43,750,473$110,832,337$116,300,000 Fund 41 Durant Bonds$5,400,000$200,000$5,600,000 Fund Bonds$498,571,663$4,500,000$300,517,000 Other Fund Projections DPS FY 2005 Adopted Budget

Description RevenueExpenditures Fund 88 Employee Self-Insurance $165,000,000$164,003,344 Fund 89 Risk Related Activities $ 20,000,000 Other Operating Fund Projections DPS FY 2005 Adopted Budget

This budget has little if any flexibility. Minor changes in receipt of revenues or minor increases in expenditures will require mid-year adjustments, typically in November and February. Expenditures FY 2005 General Fund DPS FY 2005 Adopted Budget

Organizational budget discipline must be enforced if we are to resolve the current budget deficit the District is facing. Increased use of the budget controls within our financial system will be utilized to ensure this is accomplished. Expenditures FY 2005 General Fund DPS FY 2005 Adopted Budget

Actions Taken Budget for purchased services, supplies, equipment, travel, and consultants were reduced by $43.8 million Includes 33% reduction of Aramark maintenance management contract. Extend mowing and school cleaning cycle time Reduce overtime by approximately 15% Changed to building substitute model DPS FY 2005 Adopted Budget

Adjustments to the second semester staffing Tiering the busing to reduce transportation cost Closed five schools Deferring building maintenance, will do safety and health repairs as needed Reduce the textbook adoption Shorten the athletic season to minimum requirement Reduce property, casualty insurance expenditures DPS FY 2005 Adopted Budget Actions Taken

DPS FY 2005 Adopted Budget Legislative Efforts To increase preschool funding under the Michigan School Readiness Program. Exploring the possibility of spending 31A At Risk money on security operations

Additional detail and budget comparisons will become available as the legislative, labor negotiations, and budget amendment processes continue. The Adopted Budget has been posted on our web site. The site will be updated once the Final Budget has been adopted. DPS FY 2005 Adopted Budget