By Harold C. Ford
‘You’re definitely not going to be in excellent financial shape for a long time.” – Holly Stefanski, assurance manager, Plante Moran
Flint Community Schools (FCS) can expect a rosier financial picture in the short-term due to an infusion of Federal COVID relief funds and debt relief, according to an audit report by the accounting firm Plante Moran.
However, unless affirmative measures are undertaken to address systemic shortcomings — particularly declining student enrollment – by 2024 FCS will likely circle back to a familiar bleak financial profile that has existed for nearly two decades.
A second report by Plante Moran Cresa, an auditing firm that specializes in real estate, indicated that “FCS has a 10-year capital need of $174 million for its 11 schools.”
The reports by Plante Moran and Plante Moran Cresa were presented to the Flint Board of Education (FBOE) Dec. 15, 2021 at its combined committee of the whole (COW) and regular board meetings.
Revenue cut in half over a 10-year period
Plante Moran representatives Holly Stefanski, assurance manager, and Donna Hanson, partner, told the FBOE that FCS revenue has been cut nearly in half over a 10-year period. Revenue fell during that time from about $147.8 million to approximately $89 million as of June 30, 2021.
Concurrently, expenditures also fell in the past decade from about $153.1 million to about $64.4 million
“The most significant factor that drives the reduction (of FCS) revenues has been the steady decline in student enrollment,” Stefanski said. (See Plante Moran Cresa report below.) “Student enrollment is the primary driver of state funding.”
“The district has just been pinched year, over year, over year (by declining student enrollment),” Hanson said.
However, the short-term financial picture for FCS is rosier now due largely to two factors:
- The arrival of Federal COVID relief funds: “There was a significant amount of Federal funds deployed to the school districts in the state of Michigan in response to the pandemic to support public schools,” said Hanson.
- Debt relief: The proportion of FCS revenue being applied to the district’s considerable debt has significantly shrunk since passage of a financial stability bond proposal by Flint voters in March 2021.
COVID relief/ESSER funds
COVID relief funds are primarily being provided via three waves of ESSER (Elementary and Secondary School Emergency Relief) funds “to support … (a) response to and recovery from the COVID-19 public health emergency,” according to the U.S. Department of the Treasury website.
As of June 30, 2021, FCS had spent: $9,322 of $9,450 ESSER I funds; $1,274 of $2,269 of CEER & ESSER/Equity funds; $18,005 of $44,238 ESSER II funds; and $0 of $99,424 ESSER III funds.
Hanson reminded board members, “This [COVID relief funding] is not recurring funding.” The Plante Moran representatives advised the FBOE that it has a “three-year window” until 2024 to use COVID relief funding provided by the Federal government.
Also, ESSER funding is reimbursement-based: spend now; and shortly thereafter seek reimbursement.
The FBOE was also advised that COVID relief funds come with restrictions: they cannot supplant “general operating costs.” In Aug. 2021 the board was advised by Ayunna Dompreh, FCS executive director of finance, “They [the federal government] highly, highly discourage using these funds for new construction.”
Hanson told the board, “Prioritize what is most important” in determining how to use the infusion of federal funds.
Chris Del Morone, newly-elected assistant secretary-treasurer, reminded board mates at their subsequent Jan 12, 2022 meeting to draw a distinction between what is “wanted” and what is “allowed” with regard to ESSER funds.
In March 2021, Flint voters passed a proposal to restructure the district’s 4-mill bonding rate: 2.82 mills – an increased proportion – would be applied to more quickly reduce the district’s burdensome debt.
[A mill is one-one-thousandth of a dollar and, in property tax terms, equal to $1.00 of tax for each $1,000 of property assessment.]
FCS officials have endeavored to reduce a massive debt that began with a nearly $20 million loan taken out by the district in 2014.
“You’re not paying interest on top of interest anymore,” Stefanski said, “The refinancing helps tremendously.”
However, Stefanski cautioned against unwarranted optimism. “You’re definitely not going to be in excellent financial shape for a long time,” she said.
“This year there is a tremendous opportunity to utilize the additional (covid relief) funds in a strategic manner that can have long-term effects to the district,” said Hanson.
During a face-to-face meeting with Pontiac School District (PSD) officials in Nov. 2021, Kelley Williams, PSD superintendent, told the FBOE: “You’re in such a beautiful position … Get that EDEP (Emergency Deficit Elimination Program) done. Get those ESSER dollars spent.”
Gill Garrett, PSD board president, told the FBOE: “Use this as an opportunity to help change your culture, to help guide who you are. We’re not getting this moment back.”
PLANTE MORAN CRESA
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Buildings need attention
Plante Moran Cresa (PMC) representatives Nicole Blocker, vice president, and Paul Wills, partner, bluntly told the FBOE that FCS would need $174 million in the next decade to properly maintain the 11 school buildings that currently house its students.
Their findings were detailed in a report titled “Capital, Pupil Enrollment, and Utilization Assessment Report.” The “critical need(s) [1-3 years], deferrable maintenance [4-6 years], property enhancement [7-10 years]” for Flint’s 11 school buildings would carry a staggering price tag of $171,399,088, according to the report.
The projected 10-year costs for each of Flint’s school buildings, according to PMC:
- Brownell: $11,650,096
- Doyle/Ryder: $10,272,579*
- Durant–Tuuri-Mott: $20,556,920
- Eisenhower: $9,495,358
- Freeman: $11,733,922
- Neithercut: $11,887,194
- Pierce: $10,601,128
- Potter: $14,231,142
- Holmes: $22,648,968
- Accelerated Learning Academy: $9,919,749
- Southwestern: $38,402,032
[*The Doyle/Ryder building is currently closed as black mold remediation is underway. Doyle/Ryder students are currently housed in the Potter building where efforts to mitigate a bat infestation were undertaken at the end of calendar year 2021. Both buildings required roof repairs.]
Apparently, students will not return to the Doyle/Ryder building until August, 2022 “if all goes well” according to FCS Superintendent Kevelin Jones in comments he made to the FBOE Jan. 12, Steps toward reoccupation of the building include selection of a company to do repairs, purchase of materials, and getting approval from the FBOE to move ahead.]
The PMC report prompted Del Morone, newly-elected assistant secretary-treasurer, to ask, “Why would we spend that every ten years when we can build new ones? That’s money that’s being taken away from curriculum.”
East Village Magazine reported in August, 2021, that the eleven FCS buildings housing students in grades K-12 collectively averaged 70 years old.
The opening dates and ages of FCS buildings based on information provided by the Flint-based Sloan Museum are: Southwestern, 1959, 63 years; Holmes, 1962, 60; Neithercut, 1961, 61; Potter, 1952, 70; Doyle/Ryder, 1901, 121; Durant-Tuuri-Mott, 1922, 100; Pierce 1952, 70; Brownell, 1963, 59; Eisenhower; 1966, 56; Freeman; 1951, 71; Accelerated Learning Academy (formerly Scott) 1961, 61.
Collectively, Flint’s buildings have 792 years of wear and tear and their average age is now 71 years.
The average age of about 84,000 school buildings in the U.S., according to a Nov. 2017 report in Education Week, was 44 years since construction or, at present, 49 years.
Danielle Green, just elected the board’s new president on Jan. 12, declared five months ago on Aug. 18, 2021, “All our buildings gotta be renovated.”
FCS infrastructure shortcomings and needs – HVAC systems (heating, ventilation, air conditioning), electrical grids, hydration stations or smart water fountains, internet capabilities, outdated plumbing, crumbling athletic facilities – and how to pay for upgrades in those areas have been the subject of EVM reporting for several years.
Nonetheless, a $200-million-plus offer by the Flint-based Mott Foundation to rebuild or renovate all of Flint’s schools is nowhere to be found on FBOE agendas since its existence was first announced in April, 2021.
Shrinking student population, underutilized buildings
According to PMC, the overall FCS student count dropped from 7,653 in 1990 to 4,607 in 2020.
PMC projects a modest increase in FCS K-5 enrollment from 1,573 in 2020-21 to 1,630 in 2026-27. However, grades 6-8 enrollment is projected to decline from 609 in 2020-21 to 427 in 2030-31 while grades 9-12 enrollment is projected to drop from 620 in 2020-21 to 287 in 2030-31.
Based on the above numbers reported by PMC, FCS enrollment is projected to decline from 2,802 in 2020-21 to 2,344 in 2030-31. Loss of students in recent years has led to underutilization of FCS buildings at three levels:
- Elementary school level: 69 percent utilization (capacity for 906 additional students)
- Middle school level: 66 percent utilization (capacity for 202 additional students)
- High school level: 63 percent utilization (capacity for 308 additional students)
Recommended building utilization, according to a “state qualification standard,” is 85 percent.
PMC representatives suggested “rightsizing the district.” They told FBOE members the district only needed four elementary schools. FCS currently operates eight elementary buildings: Brownell; Doyle/Ryder; Durant-Tuuri-Mott; Eisenhower; Freeman; Neithercut; Pierce; and Potter.
Southfield-based Plante Moran is the 13th largest auditing firm in the U.S. with a net revenue of $797,726,000 according to 2021 report by Inside Public Accounting. The company employs more than 3,000 people and has 27 offices in Michigan, Ohio, Illinois, Colorado, and in Mexico, India, Japan, and China.
The next meetings of the board will be Feb. 9 (committee or the whole/COW) and Feb. 16 (regular meeting). Meetings start at 6:30 p.m. at Accelerated Learning Academy (formerly Scott School) at 1602 S. Averill Ave., Flint. Meetings can be accessed remotely; visit the FCS website under “Leadership” for details.
EVM Education Beat reporter Harold Ford can be reached at email@example.com.