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"It's the whole story of Detroit. They lost half of their enrollment, with half (of the students) going to charters and half leaving the city. That district imploded," Arsen said. "They lost students so rapidly, on such a massive scale, they couldn't make cuts fast enough. That enrollment was tied to an equal drop in revenue."
Citizens Research Council's Thiel concurs. "Equally important, or maybe even more important, is what is going on with enrollment. The foundation grant depends on enrollment. It's the foundation grant times enrollment that equals the operating budget. Even in years when the foundation grant goes up, if enrollment goes down, the total operating budget goes down."
He said there are many forces beyond district controls, from the state's contraction, the Great Recession leading to a population decline.
"There are economic and demographic causes that are driving down the enrollment numbers on a statewide level," he said. In addition, he said, the number of type of education providers, "specifically, school choice, the state policy to allow choice and to increase the number of choices, not just in charter schools and public schools, but between districts, has compounded the problem. In the last 20 years, we've made the ability to move between districts practically seamless, and with that, the dollars are completely portable. The dollars are tied to the kid. Concurrently, with that we've allowed new actors – charters, cybercharters, strict discipline academies – the number of these schools have expanded exponentially. The number of kids in the pie has been shrinking, and at the same time, the pie is being sliced into many more pieces."
Arsen elaborates on how the problem compounds itself. "When a district loses enrollment and revenue, their costs don't decline by an equal amount. Declining enrollment districts, their administrations and their boards, they are facing choices about increasing class sizes, cutting services, or decreasing their fund balances – which puts them on the edge."
It is not only poor city districts, like Detroit or Pontiac, facing these troubling choices. "Suburban districts are facing these choices across the state," Arsen said. "Affluent districts as a whole can offset this by accepting non-resident students, so they're better positioned."
Bloomfield Hills is an open enrollment district of choice, on some school years, while Birmingham and Rochester are not. The question in some closed districts, Arsen and others point out, is "do we really want these students? Will they lower our test scores?"...continued on page 8