Detroit Public Schools Hits First Budget Surplus Since 2007

After almost five years of ever-increasing deficits, Detroit Public Schools is finally back in the black after recording a $43 million surplus for the last school year, writes Jennifer Chambers at The Detroit News.

Factors such as a 10 percent enrollment drop, federal stimulus money and belt-tightening measures all played a part in helping the district reduce spending by $98 million in 2010-11. But despite proudly announcing their first surplus since 2007, the Michigan Department of Education warned that the district could slip back into the red this year.

"DPS continues to have a substantial budget deficit and current monthly reports indicate this year's deficit is continuing to grow," department spokeswoman Jan Ellis said Monday.

The district is still under state control after going into receivership, and after announcing the surplus for last school year, the Emergency Manager Roy Roberts acknowledged that DPS still has a lot of work to do:

"I'd love to tell you the war is won. The war is not won," Roberts said.

"Detroit Public Schools is a $1.2 billion business that needs to be run like a business. If you don't run it like a business, you will be in a horrible position."

According to documents filed with the state, the schools board is projected to spend $93 million more than it budgeted this school year in classroom instruction. But officials dispute the figure, saying that it's outdated and when reconciled with the $45 million in vacant positions, the overage for instruction will be closer to $30 million, DPS spokesman Steve Wasko said.

But the district is not out of the woods completely. DPS will have to account for the cost of hiring more teachers for higher-than-expected enrollment this fall and summer schools. And it must be noted that DPS is not getting any stimulus funds because the program expired.

"We are not going to get a whole bunch more money. … We are going to have to do the job with the resources we have," said William Aldridge, DPS' chief financial officer.

There is still about "half a billion" in debt obligations related to the district's two bond sales. They were sold at an interest rate of 4.7 percent and will be paid off during the next 10 years, essentially deferring a large chunk of the district's deficit, Aldridge said.

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