1. 1 GRPS Legislative Brunch Monday, February 21, 2011

2. Refresher on GRPS 3rd Largest School District in Michigan –18,500+ students –86%+ free/reduced lunch –25% Special education –20% English language learners –43% African American / 30% Hispanic / 23% Caucasian 2 nd Largest Employer in Grand Rapids; 10 th Largest in West Michigan –3,000+ employees (1,400 teachers) $283 Million Annual Expense Budget

3. GRPS Success Story Reforms and Rightsizing Redefine GRPS GRPS gaining state and national attention as a “model” for educational improvements and right sizing reforms Significant Academic Gains –5 consecutive years of academic improvements (Increased AYP; MEAP scores) –Nearly doubled # of Schools Meeting AYP - up from 26 to 49 –Nearly quadrupled # of Schools Earning “B” Grade or Better –5 schools earn statewide recognition for “turnaround success” Cutting Edge Instructional Reforms –Since 2007, implementing national renowned “effort based learning” model –Driving systemic changes through district

4. GRPS Success Story Reforms and Rightsizing Redefine GRPS Innovative New School Choices –Public-private partnerships: Amway, Spectrum, Steelcase, MSU Med School, GRCC, GVSU, Rockford Construction, Triangle, Progressive, Michigan Tech, etc. –“Centers of Innovation” Safe Schools Even Safer –New technology, relationship building, and training –Reduced number of major incidents for 5 consecutive years New State of the Art Learning Environments –2004 School Construction Bond –11 new state-of-the-art elementary and middle schools –8 green built; 5 LEED certified; largest number in Michigan

5. GRPS Success Story Reforms and Rightsizing Redefine GRPS Sound Fiscal Management –GRPS CFO voted School Business Official of the Year –Approved and balanced budget on-time –Grew fund balance GRPS a Leader in Service Consolidation & Collaboration –Food Service: GRPS manages food service for East Grand Rapids, Grand Rapids Christian, and some Grand Rapids Catholic Schools –Special Education: In partnership with KISD, GRPS manages center-based special education programs for all KISD school districts –Public Safety Training: Thanks to a federal public safety grant, GRPS manages public safety and crisis training for area public and private schools –City of Grand Rapids/GRPS Partnership Agreement

6. Challenges: High School Reform Not just a GRPS issue; it’s nationwide High school achievement and graduation rates unacceptably low –District Graduation Rate: 52% –Comprehensive/Theme Schools: 76% (1% above state average) –Alternative Schools: 33% Students not adequately prepared for post-secondary challenges of global world

7. GRPS Budget Overview By Lisa Freiburger, Deputy Superintendent of Finance and Operations

8. Fiscal Responsibility A History of Hard Decisions 10 Years of “right sizing” reforms, cuts, school closures, and consolidation –Nearly $70 million in budget reductions –Closed or consolidated 20+ buildings and programs –Privatized transportation and substitute teaching –Eliminated administrative, teaching and other positions –Purchases postponed (text books, technology, academic support) –Special education services restructured –Negotiated wage and benefit concessions –Enrollment decline from 25,663 in 2001 to approximately 18,500 today

9. Fiscal Responsibility A Decade of Budget Cuts 1999-2000$6.5 million 2000-2001$3 million 2001-2002$8.5 million 2002-2003$10.3 million 2003-2004$9 million 2004-2005$5.6 million 2005-2006$9 million 2006-2007$2.8 million 2007-2008$1.05 million 2008-2009$1.57 million 2009-2010$5.66 million 2010-2011$6.85 million 2011-2012*$25 million

10. Financial History: Shrinking Numbers Fewer students and declining fund balance YearStudent Count Fund BalancePercent of Expense 99/0025,978.04$ 16,644,0527.84% 00/0125,625.05$ 7,671,0443.39% 01/0224,632.54$ 10,116,8494.58% 02/0324,144.33$ 13,862,0146.21% 03/0423,426.35$ 14,240,0606.42% 04/0522,592.24$ 13,726,7656.00% 05/0621,722.00$ 13,731,6796.45% 06/0721,025.64$ 13,157,3296.18% 07/08 08/09 19,915.32 19,364.01 $ 12,095,061 $ 9,715,488 5.50% 4.48% 09/1019,105.84$ 15,684,4777.37%

11. Employee Health and Retirement

12. 2011-2012 Revenue Projection Based on Governor’s Budget Proposal DescriptionAssumptionVariance EnrollmentApprox. 400 student loss($3 million) Per Pupil FoundationAdditional $300/pupil cut($5.6 million) Other State FundingLoss of Small Class Size (37 teachers K-3 rd grade; increase elementary class sizes) ($3 million) Other State Funding***Elimination of Sec. 22b Discretionary Payment (Special Education Hold Harmless; Durant Settlement) ($3.4 million) Other FundingElimination of Categorical Funding (Bilingual, Declining Enrollment, and GRAPCEP); Act 18; Other ($1.45 million)

13. 2011-2012 Expense Projection Based on Governor’s Budget Proposal DescriptionAssumptionVariance Salary IncreasesEstimated at 3%; Accounting for step change ($2.9 million) Health Insurance Increase Estimated at 20%($2.6 million) Retirement Rate Increase Rate increased to 24.46%; up from 20.66 ($2.75 million) Other IncreasesUtilities, transportation, transfers, other($800,000) One Time ExpensesTextbooks and Debt Payment$4.2 million Loss of ARRA IDEA (Fed Stimulus Special education) Salary and benefit expenses back to General Fund ($1.9 million)

14. 2011-2012 Projection Based on Governor’s Budget Proposal Projected Use of Fund Balance $(1.8 million) Total Revenue Decrease$(16.45 million) Total Expense Increase$(6.75 million) Projected Operating Loss$(25 million)

15. Issues of Concern GRPS Disproportionately Cut $300/pupil cut largest of decade Poorest districts with highest needs students and declining enrollment hit hardest with cuts above and beyond the per pupil reduction –Elimination of Class Size Reduction –Elimination of Bilingual Categorical –Elimination of Sec. 22 Special Education Hold Harmless*** –Elimination of Declining Enrollment Categorical Raid of School Aid Fund violates intent of Proposal A –Voters approved dedicated funds for K-12 public education

16. Michigan Public School Facts There are 775 school districts in Michigan (2008-2009) GRPS is the 3 rd largest school district GRPS is: Bottom 31% in state revenue (ranked 534 th ) Top 12% in total revenue from all sources (ranked 89 th ) Top 36% in average teacher salary (ranked 282 nd ) Top 21% in total spent on instruction (ranked 161 st ) Source: MDE – Most recent data available – 2006/2007, published May 2008