By Meg Peters
Review Co-Editor
Depending on perspective, Lake Orion is a moderately cheap place to live when it comes to contributing tax dollars to the school district.?
Out of 28 communities in Oakland County, Lake Orion ranks 16 in the percentage of local property taxes paid to education.?
In other words, the percentage of taxable value in the community in relation to the amount that goes to support Lake Orion education ranks 16 among Oakland County schools.?
At the high end is Bloomfield Hills which ranks first, generating about $578,931per student in taxes. Lake Orion raises about $213,861 per kid, and at the low end is Clarenceville raising $45,980 per student in the 2013-14 school year.?
‘Every community contributes to some degree or level, and I’m not trying to downplay what the community here in Lake Orion contributes, but what the community contributes to the education in this community is pretty moderate, compared to other districts in Oakland County and especially our neighboring communities,? Assistant Superintendent Rick Arnett told board members last Wednesday.?
The data
Lake Orion’s current estimated taxable value is $1.693 billion.?
Homeowners pay 7.491 mills to Lake Orion Community Schools for debt service. Businesses pay both the debt service mills and the 18 operating mill tax, bringing total contributions of everyone to about $13.4 million, about 17 percent of the district’s total revenue.?
Compared to the neighbors, about 50 percent of Bloomfield’s district revenues come from their local taxes, Troy is at 31.9 percent, Avondale is at 26 percent, Rochester is at 21.3 percent, Clarkson is at 18.6 percent and Oxford is at 14.3. Hazel Park is the cheapest. Resident property owners supply 8.6 percent of the district’s budget. The county average is about 28.6 percent.?
‘Our local revenue is significantly lower than a couple of our neighbors and across the county we are very low,? Arnett said.?
One of the reasons is that other districts have more bonds or sinking funds than Lake Orion, Arnett said.?
Bloomfield Hills just used a sinking fund for their new high school, for example.?
In relationship to the number of students the district has and the revenue each student generates, Arnett makes another comparison.?
‘When we line us up in achievement, we are playing with the big boys who receive significantly more funding than we do, who have a significantly larger tax base and who expend more in other categories, where we can go back to basic instruction and we’re right there in the top five of the county.?
Expenditures
Arnett also argues that Lake Orion has been very fiscally responsible.?
‘We are at minimum at the county average, and in most cases below the county average, in spending in those critical areas,? he said.?
About 48.81 percent of operating expenditures go to basic instruction (county average is 48.73 percent).?
Other areas that typically come into question concerning budget is administration.?
School administration, like building principals, makes up 5.76 percent of expenditures with county average at 5.50 percent, ‘one quarter of a percent higher than the county average,? Arnett said.?
General administration, such as the central office administration, accounts for 1.07 percent of total expenditures, with the county average at 1.21 percent. Lake Orion is also below county averages for the business office and operation maintenance, and above averages for transportation and other support, like paraprofessionals in the classroom.?
Current talks amongst administration is privatization of transportation, where costs are higher because of transportation to the focus schools.? ?
The catch
Even if fiscally responsible, Lake Orion cannot provide the same level of education with its current revenue intake.?
Either that means generating more money or seriously cutting some of its unique programs and teachers.?
Although the district has been talking about closing a school due to less enrollment, which wouldn’t happen for another couple years, it would only bring in about $450,000 to $500,000 per facility.?
That brings some of the educational programs’like the new grade six foreign language program’and even the expense of the district’s focus schools into question.?
The middle school concept is also costly along with the high school’s robust block scheduling.?
‘We’re going to have to make some cuts somewhere in programs, or find ways to generate additional revenue.?
Sinking fund
The district has been researching the possibility of a sinking fund.?
After Arnett’s presentation to school board members last week, Assistant Superintendent of Business and Finance John Fitzgerald introduced a hypothetical timeline for a 0.9 mills tax levy if the board chooses to turn to voters.?
If passed, 0.9 mills would generate about $1.5 million a year for ten years.?
The sinking fund would address some of the district’s capital needs and pick up many of the costs that were shifted to the general fund after the 2012 bond failed.
About half would be used on building updates including replacement of several HVAC and chiller systems. The other half would qualify for about $750,000 spent annually from the general fund on energy bonds and installment purchase agreements the district took out when the 2012 bond failed.?
Trustees voted 4-2 to move forward with the sinking fund timeline.?
Sinking funds cannot be used on instruction or salaries, and are purely driven to fund capital needs.?
Fitzgerald said the energy bonds and IPAs were structured specifically ‘to be able to be used by a sinking fund in the future.?
Arnett said his recent presentations were both to educate the school board on the district’s financial benchmarks, and also to help them decide if a sinking fund was appropriate or not.?
In the end, Superintendent Marion Ginopolis said, ‘Even without a debt, I would still ask for a sinking fund.??
The district is faced with a $1.9 million deficit walking into 2016-2017.?
‘As a school board I know that you worry about what are people going to say, and I know you all have your own people you represent. I’m going to remind you, you only represent 8,000 students in this district, so any decision you make should be unrelated to what people are going to say. It’s about what you believe is best for 8,000 kids.?
Arnett agreed.?
‘The bottom line is, when you have a financial problem, the first thing people want to know is where you are spending the money wrong. For me, as an outsider just hired into the district, this district is putting money into the right areas at the right levels compared to what 28 other districts in this county do.?