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Schools seek creative ways to finance repairs

October 02, 2013 - By Meg Peters

Review Staff Writer

The $33 million in projects the 2013 LOCS bond failed to finance have not disappeared, but have been categorized into "critical-criticals."

Administrators went through the project list and identified $8 million in projects that "just have to get done," Superintendent Marion Ginopolis said. "So we had to look at some creative ways to fund the $8 million in projects that aren't going to kill the instructional program."

Every project that will be paid for will be funded by the schools' general fund, which is about $1 million lower since the start of school, or just under $8 million, about 10 percent of LOCS total expenditures.

One option is to use installment purchase agreements where the school would pay back a total amount borrowed in yearly installments. For $8 million in projects, that would be about an $800,000 hit to the general fund per year.

Another option is using energy bonds, which have to be used for very specific projects tied into upgrades or enhancements that will make the buildings more efficient.

"Those are options that do not have any impact on our community," Ginopolis said.

The installment purchase agreements would be used for safety and security upgrades and the technology infrastructure tied into that, including level one security purchases like door hardware and video cameras and two-way communication systems. It would also cover upgrades to the districts servers and control data in the CERC building.

Some loose equipment, such as computers and lap-top carts, would also be installment purchases. "Every school is going to get something in that," Ginopolis said.

The energy bond would fund roof replacements, heating and cooling system updates and some of the technology that runs the upgraded energy systems, electrical projects and infrastructure.

No decisions have been made yet regarding these options, and are still being reviewed by the board. Next Wednesday, October 9 administration will be bringing very specific costs and finance options to the board, and by the end of October will have a decision.

Administration is also considering a sinking fund millage that would be proposed to voters in November 2014.

A sinking fund millage is different from a bond issue in that the bond issue is a lump-sum amount the district borrows and pays back through selling bonds. The sinking millage is a limited property tax, using more of a pay-as-you-go method to fund building remodeling projects as they are completed.

"Once you've got your district where it needs to be and fixed up then it (a sinking fund) continuously allows you to keep it up," Ginopolis said, "so we don't get into the position where this district has been in with the two failed bonds. There has not been anything happening in terms of being able to get done what we need to get done."

Because state funding, or lack there of, is geared more towards instruction and the hands on operations of teaching, building remodeling and technology enhancements are left to be paid by the schools themselves, or the taxpayers.

State Representative Brad Jacobsen said with the slow growth in economic activity there could be more state funding for schools October 2014 (the fiscal year began Oct 1), but questions whether or not that will be significant enough to pay for the failed bond project.

"Really what the school district, village and township really need to look at is the change in property assessment because that's really where they are going to get more money for the bonds," he said. "With Proposition A that was passed a couple years ago, it can only creep up a little bit."

He said the school board does not have many choices for funding.

"Either you cut other projects, cut other funding from one area and move it over to make those improvements, or go for a millage increase, but they tried that and it failed, or go for one for a lesser amount, or for specific items," he said. "It's not just Lake Orion Schools, or schools, cities are also having to cut back services because there is less money coming into them."

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