By Megan Kelley
As students and staff of Lake Orion Community School’s begin their final month of schooling before summer vacation, the board of education prepares to wrap up an unprecedented school year and look toward what could potentially be a strange start to the 2020-2021 school year.
“It continues to be a fluid process…There’s been changes almost every week. I think that’s very important,” said Assistant Superintendent of Teaching and Learning Heidi Mercer. “The goal is to be fully ready in the fall, should we need to be, starting day one online…hopefully that is not needed but we will be ready if that is the case.”
However, the idea of having to continue online learning into the 2020-2021 school year is relatively minor compared to the potential hurdles the district may have on the horizon as it relates to enrollment and funding.
Treasurer Jake Singer informed the board of potential changes in the 2020-2021 revenue due to possible changes in state aid.
Several state laws may come into play in the near future that could cause LOCS to lose state school aid funding, the district’s primary source of revenue, according to Singer.
First, the state of Michigan, by law, cannot run a deficit in the school aid fund.
“They can only distribute amounts which equal the funds they have on hand. Lake Orion’s per pupil foundation allowance of $8,529 for the current school year was contingent upon the state having enough revenue to cover that allowance,” said Singer.
“If the state school aid fund comes up short, state law requires that the available funds are prorated. This means some formula would be developed to determine how much the remaining state aid payments from the states current school year will be reduced.
“The states fiscal year ends on September 30, so some or all of the cash impact for the current school year proration will likely hit the LOCS budget starting July 1, 2020.”
The second state law that comes into play pertains to the states “Rainy Day Fund.” According to Singer, current state law allows only 25 percent of the Rainy Day Fund to be used in any one fiscal year.
“With a current balance of just over a billion dollars, the state could utilize $250 million for this fiscal year and about $200 million for the next fiscal year. The school aid fund is not the only state budget item under pressure so there is no guarantee that any money from the Rainy Day Fund would go to K-12 education,” Singer said.
“Additionally, the shortfall in the school aid fund is projected to be much higher than the projected $250 million, which the Rainy Day Fund could contribute. From the local LOCS perspective, current approved 2019-2020 budget amendment projects a roughly $7.8 million fund balance at the end of our current fiscal year. This represents an amount equal to 9.3 percent of LOCS expenditures.”
Ultimately, if the current foundation allowance dropped to zero and no modifications were made to the district’s spending budget, the LOCS foundation allowance would drop by almost $1 million and would lose about $750,000 for every additional $100 cut to per pupil funding, said Singer.
To put this information into perspective, Singer quoted state officials.
Kurt Weiss spokesperson for the State of Michigan Department of Technology, Management and Budget said, “Devastating cuts to education and other key priorities are a real possibility.”
According to Singer, Michigan Senator and Chair of the Senate K-12 Appropriation Sub-Committee Wayne Schmidt has told school officials, in recent meetings, to prepare for the worst budget in decades with a possible cut of 20-25 percent in per pupil allowance for 2020-2021.
A 20 percent cut would give LOCS a loss of about $1,700 per pupil or about $13 million for LOCS, said Singer.
Additionally, due to the nature of this pandemic, Assistant Superintendent of Human Resources Rick Arnett also informed the board that they have received fewer School of Choice applications than they had originally expected which could impact staffing.
“We’re already seeing with our schools of choice enrollment that we just opened, a significantly lower number of applicants than we would traditionally see. I anticipate we will probably see a higher number of SOC student not returning next year for a number of reasons. I think depending on which model we see, you may find, and I would bet that, we may have some families who will still not be comfortable sending their kids to school,” Arnett said. “We’re really trying to plan for the unknown, be as prepared as we can…we want to be able to start the year in whatever capacity it is without missing a beat and being as prepared as we can, there’s just so many unknowns at this time. But we’re doing the best we can to ensure that we’re as ready as we can be, no matter what it looks like.”