January 29, 2014 - By Meg Peters
Review Staff Writer
Every few years Michigan school districts renew their 18-mill non-homestead levy, and the time has come for Lake Orion Schools.
The district will ask voters either in the August or November primary election to renew the state mandated 18 mils, which is not $18 million, on non-homestead property, including industrial, commercial, some agriculture properties and second homes.
Primary residences and qualified agricultural property are exempt.
When Michigan voters passed Proposal A in 1994, Michigan school funding was reshaped. A large portion of funding was shifted from local property taxes to a state education tax on non-homestead property, and an increased sales tax.
Under Proposal A, the 18 mil non-homestead tax must be levied in order to obtain the full amount of State Foundation Grant funding, a school's foundation allowance.
Lake Orion Schools, as all public schools in Michigan, obtain most of their funding from their Foundation Allowance, or their per-pupil funding.
As of today, the LO district receives $7,877 per pupil, representing 78 percent of the district's revenue.
If the levy is not continued, Lake Orion would lose around $7 million annually, or about $925 per student, bringing the per-pupil allowance to $6,945 per student.
Per-pupil funding is generated from two different sources, the first being the local 18 mils collected from the non-homestead levy. The other 22 percent is local, county, and federal funding.
A bulk of the state-aid funding is generated from the State Education Tax (SET), a component of Proposal A that levies the SET tax at a six-mill rate on all real and tangible personal property, according to the Michigan Department of Treasury.
The SET tax and Michigan sales tax are the biggest revenues for state-aid, "along with a slice of all the sales tax, profits from the lottery and other sources," according to Assistant Superintendent of Business and Finance John Fitzgerald. "So that's when they say that the foundation allowance is guaranteed by the states. But the state assumes we are levying our 18 mils, so if we don't renew that renewal, were going to be $7 million short," he said.
Lake Orion's last non-homestead millage was approved in May, 2004, and the district is asking for another 10 year renewal. The current millage expires with the 2014 tax levy.
Fitzgerald said that although this is not a new tax, administration is apprehensive.
"Based on recent history, we're concerned. If it did not get passed, we would immediately attempt to rerun another election on it. We're not assuming anything but it has always been supported," he said.
Because the election would either take place during the August or November primaries, it would not cost the school district anything because of scheduled elections.