It’s good news and bad news coming from the school district’s administration office.
The good news first. The Lake Orion School district received $600,000 from Oakland Schools for special education funding. That money will cover a possible three fourths of a million dollar shortfall this school year. (Local school administrators anticipate a $75 to $150 allowance drop per student in 2003-04.
“This year, we’ll probably balance (the budget),” LO School Superintendent Dr. Craig Younkman told school board members on Oct. 8.
Also, over $3 million in reductions were made by the school board earlier this year to arrive at this balanced budget — largely non-instructional.
The bad news is Michigan isn’t in the strongest financial shape right now due to a weak economy and 94.4 percent of the school district’s revenue is controlled by the state.
Of that revenue, 14.6 percent is non-homestead property taxes passed directly on to the school district. The state deducts that amount from the per pupil allowance and the balance is the funding it supplies directly to the school district.
Lake Orion currently receives a per pupil State Aid Allowance of $7,759. It didn’t decrease as expected earlier this year, according to Dr. Younkman, due to the state using almost $1.5 billion in one-time fixes.
But that will probably change. Younkman said when the state closes the books this year it will be one billion dollars in the red.
Because school districts’ revenues are so closely tied to the state, its financial condition is critically important. Michigan’s revenues have dropped because employment growth has declined, unemployment has risen and monies collected from various tax has decreased.
Michigan’s income tax collections from non-salary income (interest earnings and capital gains) dropped over $500 million in three years.
And it doesn’t appear that the economy is about to improve. State revenues since May have been weak — especially July and August, according to Younkman.
“Under Proposal A, we can’t ask for operationally monies locally,” he added. “Remember, the State Aid Act only guarantees our 1994 level of revenue. It’s increased 30 percent, so up to a 30 percent decrease is possible.”
Other factors that will probably influence further reductions in the school district include an increase in the retirement contribution rate, increase in energy costs, increase in health insurance and a probable reduction in categorical funding.
The retirement rate will be held at 12.99 percent for 2003-04, but could go as high as 16 percent in 2004-05.
“All districts will have to face this,” Younkman said.