Ann Arbor Public Schools: Audits & Budgets

[Shadowninja]

📜 From the Desk of Lady Budgetdown

As part of our continuing review of Ann Arbor Public Schools, I went through the district's available budgets, budget amendments, 2025 annual financial report, and Single Audit.

And this one is a little more complicated than a simple "good" or "bad" financial story.

First, the audit itself deserves to be stated plainly:

Ann Arbor received an unmodified audit opinion. The auditors reported no material weaknesses, no significant deficiencies, no material noncompliance, and no federal-program findings or questioned costs. The district also qualified as a low-risk auditee.

So the interesting story is not an audit finding.

It is what happened to the General Fund.

AAPS ended 2021-22 with approximately $19.68 million in General Fund reserves. By the end of 2023-24, that had fallen to approximately $7.14 million, a decline of roughly $12.5 million in two years.

Then came a major turnaround.

During 2024-25, the General Fund increased from $7.14 million to $21.64 million, an increase of approximately $14.5 million in a single year. Actual expenditures came in about $3.9 million below the final amended budget, while total revenue actually came in about $836,000 below budget.

That distinction matters.

The district itself says the improvement was driven largely by reduced staffing costs and purchased services, and the audit specifically notes that budgeted wage and benefit costs were reduced because of a reduction in staff FTE.

And that brings me to one question I think deserves more attention.

While staffing costs were being reduced, General Administration and School Administration together finished about $315,000 above the district's final amended administrative budget.

General Administration finished approximately $261,000 over the final budget, while School Administration finished about $53,000 over.

There is an important piece of context here: those same administrative categories still finished approximately $1.6 million below the district's original 2024-25 budget.

So I am not saying that Ann Arbor cut teachers in order to spend more on administrators. The records available today do not support that conclusion.

But I am saying this:

The district says staffing reductions were part of the savings that helped rebuild the General Fund, while administrative spending ultimately exceeded the district's final amended administrative budget.

That makes the staffing breakdown worth examining very closely.

Once MI School Data is back online, I want to see exactly where those FTE reductions occurred, teachers, administrators, paraprofessionals, support staff, or some combination of them.

Because the answer matters.

Looking ahead, Ann Arbor's financial picture also remains worth watching.

The June 2026 amended budget projected a General Fund balance of approximately $20.29 million at the end of 2025-26. But the newly approved 2026-27 budget projects $312.77 million in General Fund revenue against $317.04 million in expenditures, which would reduce reserves to approximately $16.02 million, a planned draw of roughly $4.27 million.

There is also a completely separate capital story.

AAPS reported approximately $432.3 million in outstanding general-obligation bonds at June 30, 2025, up from $283.6 million the year before as the district continued its voter-approved capital program. Those bond dollars and restricted capital funds should not be confused with money available for General Fund operations.

My key takeaways

✔️ Clean 2025 audit

✔️ General Fund fell from roughly $19.7M to $7.1M in two years

✔️ General Fund then rebounded to $21.6M in one year

✔️ District attributes much of the improvement to reduced staffing costs and purchased services

✔️ Administrative spending finished above the final amended administrative budget, though below the original budget

✔️ 2026-27 currently projects another roughly $4.3M draw on reserves

✔️ $432M+ in outstanding bonds belongs to a separate voter-approved capital program and should not be confused with operating dollars

The audit tells us Ann Arbor's financial reporting was clean.

The budgets tell us the district has been through a significant financial correction.

And the next question is one the numbers available today cannot completely answer:

Who absorbed the staffing reductions that helped produce that correction?

That is the piece we'll come back to when the staffing data becomes available.

With receipts and respect.

Data compiled and visualized by Lady Budgetdown using publicly available records.

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