Schools budget $90k surplus for next year

By Meg Peters
Review Staff Writer
For the first time since 2012, the Lake Orion School District is ‘on paper balanced? for total revenues and expenditures in the general fund.
The Lake Orion school board approved the proposed 2014-2015 budget at the previous board meeting when officials heard the good news: the general fund will be up about $90,000.
The state officially adopted district 2014-15 budgets July 1.
Total proposed revenue for Lake Orion’s general fund in 2014/15 is $79,574,232. Total budgeted expenditures are expected to be $79,484,968, (about $2 million more than the 2013-14 final budget) leaving an $89,264 surplus in the general fund.
The general fund balance as of June 30 is $8,131,462, about 10.2 percent of expenditures.?’It is used to account for all other financial resources not allocated for by another account. Other fund balance accounts budgeted for fiscal 2015 include the food service fund ($391,000), community service fund ($566,124) debt service fund ($536,350), capital projects fund ($108,796) and the internal service fund ($100,165).
Revenues
Revenue is funded in the district by three main sources: state aid from the School Aid Fund, forecasted property tax revenues and grants.
The total number of students entering into the school system, however, dictates the main pot of funding.
Although the trend in enrollment history has been on the decline over the last four years’down 83 students in 2014, 124 in 2013, and 68 in 2012’the forecast for next year indicates a net gain of 134 students, all schools of choice kids.
The 134 student figure is a compilation of actual resident students, which is budgeted to decline by 85, and 218 schools of choice students budgeted to enroll.
‘The biggest wildcard is going to be the schools of choice count,? Assistant Superintendent of Business and Finance John Fitzgerald said.
As of today, 277 students have applied for the program, which was just this year expanded to include pre-kindergarten through eighth grade students. Of those 277 students, administration budgeted for 218 to enroll, or about 75 percent of the total applicants, to take a fairly conservative approach.
?’We budgeted for 75 percent because we know 40 of those students are already attending Lake Orion but are moving out of district this year but their parents want to keep them here,? Fitzgerald said.
Student enrollment for fiscal year 2014-15 will bring in about $63,309,178, determined by the foundation allowance granted to each student, which is expected to be $7,927 next year, $50 more than last year.
Lake Orion’s foundation allowance is funded by both the state and a local non-homestead tax levied on commercial properties, and is expected to increase per student by a net $18 next year (not the seemingly $50) due to other categorical reductions.
The state funds about 80 percent of the general fund and paid $6,961 per student in state aid last year, with the district filling in the other $916 per pupil funded by the non-homestead tax.
A renewal for the authorization to request 20.25 mills levied on non-homestead property only will be on the November ballot. The state does not backfill lost revenue if voters reject the non-homestead proposal, which has not been renewed in ten years.
Expenditures
The district made cost avoidance strategies after the February budget amendment and determined a nearly-$1 million deficit predicted for 2015 if avoidance steps weren’t taken in the final budget amendment process.
While the minimal increase in student funding and enrollment played a part in the nearly $90,000 surplus for 2015, the district’s three-year teacher contract with the Lake Orion Education Association comprised most of the $1 million cost avoidance, Fitzgerald said, saving the district roughly $700,000.
The district has budgeted for $42.6 million to be paid in salary and wages for 2015. The next closest expenditure is $27.2 million allocated for employee benefits.
Other proposed total expenditures include $16.6 million in current debt service fees, $9.6 million in purchased services, supplies and materials, $3.6 million in capital outlay, $1.5 million in electric and natural gas utilities, $1.6 million in transfers to other funds, and $1.1 million in the dues, fees and other category.
Another cost avoidance mechanism was the district’s position with healthcare, which will not include any new coverage next year, Fitzgerald said. Any teacher or employee who wishes to expand their coverage will pay the additional costs.
‘All areas had cost avoidance issues, especially the health care piece of it because that’s spread across all functional areas of the budget,? Fitzgerald said. ‘Had we not made the changes to the health care caps, what the district expense side will cover, those would have gone up about $200,000, and they were scheduled to go up. Through negotiation and work in terms of the bills side of the house, they’ve all been held flat.?
The first budget amendment last November included all of those costs, which the district mitigated with health care reform and the schools of choice strategy to include pre-kindergarten through eighth grade.
‘The SOC strategy will hold at least until more of the kids come in through the new housing in the district to actually be in the seats of the schools so we can start re-growing our student population,? Fitzgerald said.
The next budget amendment will occur in the fall.