Although Governor Jennifer Granholm decided not to reduce per pupil funding in her proposed budget for this year, Lake Orion School District Superintendent Dr. Craig Younkman said her proposal is based on a lot of uncertainty.
“I fear it’s too optimistic,” he told school board members on March 12. “We still might see some executive cuts and we’ll still need contingency plans for September and October.”
School board members in February discussed cutting almost $4 million from the 2004 budget and warned another $1.5 million might have to go.
“The proposal is better than we anticipated, LO Financial Director Jillynn Keppler said. “But it will still impact our budget.”
Lake Orion receives $7,759 from the state for each pupil. That will stay the same under Granholm’s proposal.
The retirement rate in the governor’s new budget would also stay at 12.99 percent. That rate not changing would save the school district $400,000 in an estimated increase.
“However, if the economy and market don’t pick up, we’ll see large increases in the following years,” Keppler said.
According to Younkman, the governor’s proposal is based on an assumption that there will be real revenue growth.
The assumptions are the state will receive a 5.3 percent increase in sales tax and a 4 percent increase in income tax revenues; certain tax “loopholes” will be closed, some bonds will be financed at a lower interest rate; and new lottery games must generate $50 million.
“Without all of these falling into place, the budget won’t work,” Keppler said.
It wasn’t all good news coming out of the governor’s office. School districts’ per pupil funding is based on a blended student count — 20 percent of the prior year’s February count and 80 percent of the current year’s September count.
The proposal would change it to 50 percent/50 percent. “This proposal helps districts with declining enrollment and hurts those with increasing enrollment like Lake Orion,” Keppler.
If the 50/50 formula had been in place for the 2002-03 blended court, the school district would have had almost 100 students less and lost $769,227 in revenue. The change in counting students will force the school district to reduce its budget by $800,000.
Adult education funding would be reduced by 75 percent in the proposed budget. That means Lake Orion’s adult ed budget would drop from $155,00 to $39,000.
“We’ll probably have to end it (adult it),” Younkman said.
MEAP scholarships will drop from a value of $2,500 to $500.
The school district must have a balanced budget by June. Younkman isn’t optimistic that enough information will have come from the state by June. “The legislative process is long,” he said.
Because of so many assumptions, one time revenues, and the legislative process, school board members are not discounting they may still have to trim over $5 million from next year’s budget.