School Board Considers Millage Proposal to Fund Building Repairs, Improvements

In this era of school funding cutbacks and escalating expenses, discussion of a sinking fund has come into focus for .

A sinking fund is established by a school district or municipal entity and can be used to pay for construction, repairs, physical improvements and building enhancements.

A recent capital needs assessment identified nearly $20 million in needs across the Royal Oak School District, including roof replacements, parking lot renovations, technology infrastructure improvements, window and door replacements, and heating/cooling system upgrades, according to Superintendent Shawn Lewis-Lakin.

Lewis-Lakin has been meeting with a variety of community members for the past year to reach a formal recommendation for a 1 mil 10-year sinking fund proposal.

"We're looking at accessed values and our current debt millage needs," Lewis-Lakin told the Board of Education at its July meeting. "As we look at those things - based on a preliminary analysis - we're fairly certain we can begin reducing our debt millage in 2013. The effect of that would be to reduce the net impact of a 1 mil sinking fund to be about 0.39 mils."

Translated into dollars, for the average Royal Oak taxpayer it would cost about $30 initially and would decline as the district's debt millage declines, Lewis-Lakin said.

The superintendent hopes to bring a formal recommendation before the board at its Aug. 9 meeting. If approved, the sinking fund millage will be placed on the November ballot. If passed by voters, it will provide $2.2 million annually for needed projects.

Sinking fund questions and answers

The following information was provided by the School District of the City of Royal Oak:

Question:  Why is this request being made now?

Answer:  A capital needs assessment completed this past year identified nearly $20 million in capital needs across the district. The largest single item is roof replacements; the district has approximately 870,370 square feet of roof.  A schedule for roof replacement needs to be established and funded.  Technology infrastructure, parking lots, doors, windows, and heating/cooling systems are also critical need areas.  In an effort to maintain programs for students, expenditures for meeting such needs have been deferred over the last several budget cycles. If we continue to postpone necessary investments in our buildings and parking lots we run the risk of having much higher costs in the future.

A sinking fund has been under consideration by the Board for several years.  Out of concern for not placing an undue burden on taxpayers, the Board postponed making the request until it was possible to begin lowering the debt millage.

Question:  How will my taxes in 2013 be different than this year if this is approved?

Answer:  According to the latest numbers available, the median sale price for a home in Royal Oak was $137,420. In 2013, the debt millage levied by the school district is projected to decline by 0.61 mil; this decline would partially offset the 1 mil sinking fund increase.  The net effect would be a 0.39 mil change in school taxes. The result would be that the average taxpayer would see a tax increase of $26.80 per year in 2013 and 2014.  Because of continued projected reductions in the debt millage, the rate would begin to decline in 2015.

Question:  Why can’t you just keep doing what you’ve been doing without asking for more funding?

Answer: Over the past 10 years, Royal Oak Schools have implemented over $9.5 million in reoccurring budget reductions to balance the budget.  Central administration has been reduced by 50 percent; overall administration has been reduced nearly 40 percent. Transportation, custodial and maintenance work has been privatized. Faced with daunting declines in revenue, the district has prioritized students and instruction. This has included reducing General Fund expenditures for building renovations and improvements, causing needed work to be deferred. Continuing to delay necessary work – for example, roof replacements – puts the district at risk of incurring even more significant costs. Without a dedicated revenue stream to fund such needs, expenses will need to be paid out of general revenues, reducing funding available for students and classroom needs. 

Question:  If this is approved, how do we know the revenue will go towards the intended purpose?

Answer:  A Building and Site Sinking Fund (BSSF) millage provides dedicated revenues that by law may only be used to make infrastructure improvements and repairs to a school district’s facilities. Pursuant to State Law, the expenditure of BSSF millage proceeds must be audited, and the proceeds cannot be used for teacher, administrator or employee salaries, or other operating expenses.  

A Building and Site Sinking Fund (BSSF) millage will allow the district to meet capital improvement needs on an ongoing basis. This will prevent such needs from accumulating to the point where the district might need to assume additional debt and incur interest costs.  

Question:  I don’t have any children attending Royal Oak Schools.  What would I support this?

Answer:  A recent Brookings Institution Study looked at the correlation between student achievement and home values. This study found that home values near high achieving schools are on average 2.4 times higher than near low-scoring schools. Strong schools benefit not only the students who attend them but all residents of the community

Question:  Why the November elections date?

Answer: Planning for building improvement projects requires considerable lead time. To take advantage of the summer break for such work requires that planning begin the December prior to the next summer. Also, we believe this is an issue of such importance that we want to be sure as many people as possible participate in the election and November elections tend to have the greatest turn out of voters.

Question:  What about the revenue from the sale of former school properties?  Can’t that be used for the needed improvements?

Answer:  Property sale revenues are segregated into a dedicated building and site improvement fund. These revenues have and will fund building improvements, specifically those to which the Board committed in 2005.   Property sale proceeds are funding mechanical (heating and cooling) renovations at Oakland Elementary School (summer 2012) and the development of a fiber Wide Area Network to connect school facilities (summer and fall 2012). Property sale revenue is one-time revenue and is thus not the long term answer for meeting ongoing capital needs.    

Question:  Do we need all of the facilities we now have?

Answer:  Over the past year, the Board analyzed our current and future property needs. Based on five year enrollment projections, the change to all-day kindergarten classes district-wide, and a commitment to provide services for our students with special needs in our district, the board determined that we will continue to need our current six elementary buildings, the middle school, the high school, and the Churchill Center into the foreseeable future.

Question:  Isn’t enrollment continuing to drop?

Answer:  Our five year enrollment projection forecast declines in 2012-2013 and 2013-2014, but after that enrollment is forecast to be stable.

Question:  What are the plans for the Lockman Building (Keller West) and Administrative Offices?

Answer:  The Administration Building is being actively marketed. While there are parties actively exploring the site, a purchase agreement is not in place as of this time. When the Administrative Building is sold, administrative offices will be relocated to the Churchill Center. Proceeds from the sale would fund the necessary renovations at Churchill. The Lockman Building (Keller West), which would require millions of dollars in renovations to be used again for K-12 classrooms, will be razed to provide additional green space at Keller; this is one of the projects which would be funded with sinking fund revenue. 

Question:  Are you concerned that both the City of Royal Oak and the School District will be asking voters to approve millage at the same time?

Answer:  Citizens understand that strong schools and strong city services make Royal Oak the desirable community that it is. Each entity, the school system and the city, has a responsibility to provide information and options for citizens.