Financial Difficulties

Since a large portion of a district’s state funding is based on student enrollment, as a result of these enrollment declines, Highland Park lost significant amounts of state revenue. During the 2011-12 school year, Highland Park received $10 million from state taxpayers, down from $26 million in 2007-08.[10] This $16 million (or about 61 percent) decline in state revenue accounted for the vast majority of the district’s decline in total revenue over the period.[11]

However, reductions in total district spending did not decrease proportionately. Even though total district revenue declined each year from 2007-08 to 2011-12, Highland Park spent more than it took in each of those five years.[12] The most dramatic case of overspending was the 2010-11 school year when the district spent 16 percent more than it received in revenue.[13]

Not surprisingly, as Graphic 1 shows, total district expenditures throughout this five-year period were not reduced sufficiently to deal with the district’s declining enrollment. While student enrollment dropped by 74 percent since 2007-08, total expenditures fell by 53 percent.[14]

Graphic 1: Enrollment and General Fund Expenditures in Highland Park, 2007-2012

Graphic 1: Enrollment and General Fund Expenditures in Highland Park, 2007-2012 - click to enlarge

Source: Michigan Department of Education, Bulletin 1014 and National Center for Education Statistics, National Public Education Financial Survey.

The failure to cut expenditures in proportion to enrollment losses made Highland Park one of the highest-spending districts in Michigan. The district spent about $18,800 per full-time student in regular attendance during the 2011-12 school year — only six of Michigan’s 518 school districts with more than 100 students spent more per pupil. Detroit Public Schools, in comparison, spent $14,881 per pupil.[15]