I am pleased to report to our community that the Lake Orion Board of Education approved the District’s balanced budget for the 2016-17 school year at its regularly scheduled meeting on Wednesday, June 22. As has been publicly discussed, the School District had to address a projected budget shortfall for next year primarily due to Michigan’s declining student enrollment and continued funding cuts from the State. In addition, insurance and retirement benefit costs continue to rise.
WHAT HAS THE DISTRICT DONE TO ASSURE A BALANCED BUDGET FOR 2016-17? Over the past few months, the following measures have been taken to assure the Lake Orion School District has a balanced budget for the 2016-17 school year. (These have been referred to as Phase 1 reductions.)
• Made district-wide personnel reductions
• Secured salary concessions from District employees
• Secured cost savings from various employee bargaining units
• Changed healthcare and dental insurance plans to generate cost savings
• Outsourced the technology department functions to Oakland Schools
• Reorganized the District’s transportation department and made cost reductions
• Restructured the District’s athletic department and made cost reductions
• Partially restructured the District’s middle school program and staffing
• Increased revenue through Schools-of-Choice and Shared Time Services
• Explored privatization of transportation and food services. (After careful evaluation of both functions and reviewing vendors proposals, it was determined that any anticipated cost savings through privatization would not occur at this time. In addition, employee concessions were realized.)
WHAT DO YOU ANTICIPATE AS REVENUE AND EXPENDITURES FOR 2016-17? The following summarizes our budgeted revenue and expenditures for next school year:
o 2016 – 17 General Fund budgeted revenue $79,739, 204
o 2016 – 17 General Fund budgeted expenditures $79, 583,268
o Net operating surplus $155,936
WHAT IS THE DISTRICT PLANNING IN PHASE 2 TO AVOID ANY POTENTIAL DEFICIT? Having now completed Phase 1, the next few months will target Phase 2 areas of alignment of facilities and improvement in efficiencies:
• Maximizing building capacity, which will most likely involve closing and/or repurposing a school(s)
• Redistricting our current students into the remaining schools
• Revisiting the District’s program offerings and content to ensure that all students have enhanced curriculum opportunities.
WHAT HAS THE DISTRICT DONE TO REDUCE ITS CURRENT DEBT? In addition to pursuing various ways to right size the School District and cut costs, the School District has actually reduced its debt significantly over the past five years. Much of the original debt incurred was from construction of four instructional buildings to accommodate the community's population growth in the 1990’s (Lake Orion High School, Paint Creek, Orion Oaks and Oakview.)
• During this period, we have reduced outstanding voted and School Bond Loan Fund debt by $61.6 million.
• The School District’s total estimated debt at the end of this month will be $125.7 million.
• In addition, through a series of debt refinancing moves over the past four years by the School District, $16.2 million in savings and cost avoidance have been realized to the benefit of taxpayers.
WHAT IS THE DISTRICT’S EXPECTED FUND BALANCE AT THE END OF 2016-17? Another key consideration to assure the financial health of the School District is the fund balance. The district auditors recommend and the School Board is committed to a fund balance of ten percent of total expenditures. In 2007, our fund balance stood at 18 percent. The financial challenges of recent years have forced us to use a portion of the fund balance to balance the budget. At the end of the 2016-17 school year, we project a budgeted fund balance of $5,858,602. This represents 7.4% of expenditures. Through continued careful budgeting and restructuring of the School District, we expect to return the fund balance to ten percent by 2018.