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Schools borrow to make $8.5 million in upgrades



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November 06, 2013 - The Lake Orion school board approved up to $8.5 million in an energy bond and two installment purchase agreements (IPAs) at the board meeting October 23.

It's not akin to the $33 million bond they petitioned for in August, rather the tip of the iceberg when it comes to the "critical criticals": the must-do safety, security and technology renovations and updates to the district, according to Superintendent Marion Ginopolis.

Not to exceed $5.3 million, the energy conservation bond will cover projects that are energy saving. Replacement roof work at ten facilities totaling $3.01 million, CERC facility renovation at $550,000, and Heating, Ventilation and Air Conditioning (HVAC) energy controls and lighting upgrades for $850,000 are just a few examples.

The IPAs, which function like a mortgage, are capped at $3.2 million. The first IPA will cover much of the security enhancements at all the schools, while the second IPA targets the technology upgrades. Desktop and laptop computers for $744,500, interactive projectors for $525,000, and phone system upgrades at $213,750 will be some of the first projects, along with security card reader door access systems for $125,000, and alarms, motion detectors and door contacts for $250,000.

Neither the energy bond nor the IPAs require voter approval because payback is coming directly out of the schools general fund every year for the next ten years. That's about $800,000 a year.

As of June 30 the general fund contained $9,738,776.

"It's [the general fund] part of the state fund, our funding per pupil, this is our operating budget which is what we pay salaries and all of our supplies and materials, everything that we use," Ginopolis said. "That's why you bond so you're not using your operating funds. If we took $33 million out of our operating funds, we'd have to close down."

"It's a large chunk of dollars," Assistant Superintendent of Business and Finance John Fitzgerald said.

$800,000 is equivalent to the cost of ten full-time mid-career teachers.

"It will, of course, put a lot of added pressure on our current operating deficit," he said.

The energy bond will likely have a higher interest rate because it does not have dedicated debt service revenue behind it like a voted bond does, he continued.

"So the bottom line is that's $800,000 less that we have to spend on instruction," Ginopolis said.

The district is already planning revenue increasing actions.

One idea recommended is to extend the Schools of Choice (SOC) program. This year the program for grades kindergarten to second grade raked in 59 students, or around a half million dollars in state funding. If approved, the SOC program would extend in fiscal 2015 for Young Fives through eighth grade.

Young Fives are another potential way to increase revenue.

"Right now 17 of our Lake Orion kids are going to Clarkston's Young Five program because we don't have one here. That's 17 kids that we could have in the schools," Ginopolis said.

That's $133,090 in state funding.

Generally speaking the Young Fives' program is a pre-kindergarten class for four-year-olds. Currently to enroll in kindergarten, students have to be five years old by November 1. Fiscal year 2015 requires kids to be five before October 1, and fiscal 2016 will require five years of age by September 1.

"It's a short term resolution to increase our enrollment," Ginopolis said.

Enrollment was down by about 148 students this year, or nearly $1.4 million in state funding, but the schools of choice students helped offset it by the students and money they brought in.

"It's for revenue purposes as well as meeting student's needs, so there will be some kind of twist that we come up with so people will want to come to Lake Orion for Young Five versus Clarkston," Heidi Kast, Assistant Superintendent of Curriculum, Instruction and Assessment, said.

To help fund the remaining $25 million in renovations and enhancements the August 6 bond failed to do, the district might consider proposing an additional bond next November.

"That's up to the board. It really depends. There's no other way to get these things done, but we really have to make sure that we have the community on board, I don't want to go through another failed bond," Ginopolis said.

"The biggest issue from the 'No' people was the debt, and what people have to understand is, this has been a growing community over the years and we do have debt, but the debt is the result of building a new high school, two elementaries and a middle school. We do have a debt, but we've also paid off some of our debt, and we'll be paying off more of our debt. Nobody wants to be in debt but I don't know a school district that isn't," she said.

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