DETROIT — Detroit Public Schools had a budget surplus of $43 million at the close of the 2010-2011 fiscal year, achieved by spending cuts, debt refinancing and additional federal revenue, The Associated Press reported in an article published by the Lansing State Journal. It was the first surplus in four years, according to AP.

The district cut expenditures by about $98 million, mostly due to lower student enrollment that allowed for fewer teaching jobs and building closures, AP reported. It also spent less on support services and debt interest. In all, the district’s deficit has dropped from $327 million to $84 million, AP reported.

“We are moving solidly in the right direction,” emergency manager Roy Roberts said in a statement, according to AP. William Aldridge, the district’s chief financial officer, said the district now is tracking revenue and expenditures monthly, and requires managers to justify all spending, AP reported.

Supporters may point to the district as a positive example of Michigan’s new emergency manager law, AP reported. Roberts used his authority to institute a 10 percent pay reduction and require employees to pay 20 percent of their health care premiums, AP reported.

“I think he qualifies as a good example of how an emergency financial manager would work,” business turnaround expert James McTevia told AP.

Emergency managers also are in place in the cities of Flint, Benton Harbor, Ecorse and Pontiac, AP reported, and the state recently announced it will begin reviewing the city of Detroit’s finances.

SOURCE:

Lansing State Journal, "Detroit school district able to cut $243M from deficit," Dec. 3, 2011

FURTHER READING:

Mackinac Center for Public Policy, “Mackinac Center Recommendations Found in New Financial Emergency Legislation,” March 17, 2011

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