It’s a rainy day in the economy, and Lake Orion’s local governments and schools seem to have the dough to weather the storm.
The township, village and school district all have healthy fund balances, or ‘rainy day? funds, money stashed away during good times for when things go sour.
All totaled, $28 million in tax dollars are in Orion fund balances.
By far, the schools have the largest amount.
As of June 30, 2008, the Lake Orion Community School District had a fund balance of $18,532,625. Their revenue was $76.3 million and $72.7 million in expenditures for the fiscal period; the fund balance was 25.5 percent of the expenditures, a high figure compared with other districts like Clarkston at 7 percent and Oxford at 13 percent.
‘Our intention is to keep the most stable environment for our children and staff,? said Jillynn Keppler, assistant superintendent of administrative services.
Superintendent Ken Gutman was quick to point out that the fund balance money was not cash in a savings account.
Instead the money is used to maintain basic operations such as payroll and supplies in periods between receiving state funding.
With the state education system facing a ‘budget cliff? in the next fiscal year, much of the fund balance will be used up.
Currently, Lake Orion receives $8,302 per student in state foundation allowance. In 2010, the state just announced that it will cut funding as much as $500 per student, or $4 million total, according to Jillynn Keppler, assistant superintendent of administrative services.
Add that $4 million to this year’s $877,000 loss and next year’s $7 mil deficit, and the schools? $18.5 million in fund balance dwindles drastically in just two years.
Gutman said the balance could be closer to 15 percent this same time next year.
‘It disappears very quickly, especially in economic times such as these,? he said.
As of December 31, 2008, Orion Township had a general fund balance of $6,073,781, which is around 102 percent of the $5.8 million in expenditures. Independence Township’s fund balance is 8.6 percent of expenditures and Oxford Township is 25 percent.
Supervisor Matt Gibb said the reason Orion Township’s fund balance is such a high percentage of its expenditures is because of the explosion in development in the last two decades.
As subdivisions came in, the township made money on permits and fees, money they stashed away. Treasurer Alice Young said she keeps the money invested in money markets and CDs to get the best interest.
The money is slated to be used on projects like the widening of Baldwin Road. The township board recently used around $500,000 from their $3.9 million capital improvement fund for preliminary work on the project, which they have $2.5 million earmarked for.
The township is also planning to use the money for an amphitheater in Civic Center Park.
Most importantly, the township has enough money for general operations as revenue begins to slow to a trickle in a down economy, according to Gibb.
‘If we don’t change our patterns, we’d burn through our fund balance in two years,? Gibb said. ‘If we can avoid raising taxes, we’re going to do it.?
Right now, the Village of Lake Orion’s fund balance holds $451,756, or 29 percent of the village’s yearly expenditures. After the coming fiscal year, estimates have it at $429,925, or 27.6 percent.
With revenue forecasts around $1,533,817 (down nearly $100,000 from 2008) while expenditures are at $1,555,648, the village plans on using money from fund balance to make up the difference.
The village won’t have to make sweeping budget cuts, according to Village Manager Paul Zelenak, but it’s making small sacrifices across the board.
For example, in the coming year, there won’t be any capital improvements or purchases like new software or police car cameras.
Terry Stanton, public information officer for Michigan Department of Treasury, said the state provides no specific fund balance requirement.
‘While the state does not set or mandate parameters for a fund balance, the amount is used in the fiscal scoring process,? Stanton said.
However, it uses fund balance information when calculating local municipalities? fiscal health, he said.
‘It’s just one factor,? he said. ‘These local units are funded through property taxes–the expenses are increasing statewide and the revenues are not. We do look at fund equities as an indicator of fiscal stress.?
Other factors include changes to population, tax revenues, government spending and long-term debt.