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School millage proposal, sinking fund on Nov. 5 ballot

By: Maria Allard | Grosse Pointe Times | Published October 29, 2019

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GROSSE POINTES — When voters go to the polls Nov. 5 to vote in city races, they also will be asked to vote on two Grosse Pointe Public School System proposals.

School officials have been out in the community explaining the details of both proposals and reassuring residents that the millages are not new taxes. They are what taxpayers already have been paying. As per school officials, both ballot proposals combined make up approximately 25% of the district’s budget.

The first millage proposal is an operating millage restoration and extension, a homestead and nonhomestead operating millage, that was first approved by voters in 1995. The millage has two components; one of them is the homestead millage (7.8763 mills) that is levied on primary residences and allows the school district to receive its full funding allowance from the state. The homestead millage is what homeowners pay on their principal residences. The homestead millage has been in place since 1995.

The other component, the nonhomestead millage (18 mills), is levied primarily on rental properties and businesses. The state requires school districts to levy this millage to ensure that they receive their full state aid funding. Nineteen mills is requested so that with Headlee rollbacks of up to 1 mill, the full 18 mills can be levied. According to the Michigan Municipal League, Headlee requires a local unit of government to reduce its millage when annual growth on existing property is greater than the rate of inflation.

The Grosse Pointe operating millage restoration and extension would raise approximately $22,283,000 in the first year, if voters pass it. Revenue from the millage funds program costs, textbooks, technology tools and other instructional materials for GPPSS students.

The second millage proposal is a 1-mill sinking fund proposal that was first approved by voters in 2004, and that expired with the 2019 levy. If approved, the sinking fund proposal will extend and restore the sinking fund, allowing the school district to use sinking fund proceeds for expanded purposes, including security and technology equipment. The district’s proposal is a 1-mill, five-year request.

The sinking fund proposal, if passed, will generate approximately $3 million of the $10 million annual cost to maintain GPPSS school facilities. As per the district’s website, the sinking fund is used to keep school grounds and buildings safe and in good condition. It is not intended to finance major projects.

A sinking fund cannot be used for staff salaries and benefits. A sinking fund is a pay-as-you-go method of generating tax revenue. Sinking funds are usually five-10 years in length and are capped by law at 3 mills.

“Recent changes in Michigan legislation permit new uses for sinking funds, such as security and technology. The district is asking voters for the same 1 mill it has every year since 2004, for an extension of five more years, but under the new state guidelines for use. Sinking fund revenue would be for priority projects outside the scope of the bond,” district Community Relations Specialist Rebecca Fannon said in an email. “Every year the district must spend approximately $10 million dollars to maintain our buildings and grounds. The sinking fund provides approximately $3 million of that. Without the sinking fund, all $10 million would all need to come from the general fund, which would mean additional reductions in people and programs.”

According to Fannon, one of the most common questions asked about the proposals is, “Why does the ballot language say ‘increase’ if these are reauthorizations?”

“‘Extension’ and ‘increase’ are the two words that seems to draw the most concern. The ballot language must say ‘increase,’ because when the millage expires, the rate sets back to zero and voters must say whether they will ‘increase’ from zero to what they had been paying,” Fannon said. “‘Extend’ refers to the amount of time that the millage would be levied, as in ‘Will voters extend the levy for five years?”

The average homeowner is being asked for 1 mill for the sinking fund and 7.8763 mills for the homestead millage. The owner of a home with a sales value of $200,000 — with a taxable value of $100,000 — will pay $100 for the sinking fund and $788 for the hold harmless millage if both are renewed. Those figures are per year.

If the operating millage restoration and extension proposal is not approved by voters, the district’s budget would have to be reduced. If the sinking fund ballot item is not approved, it will cause a loss of approximately $3 million annually. According to Fannon, if the proposals don’t pass, district officials could put them on the May ballot.

The polls will be open from 7 a.m. to 8 p.m. on Tuesday. There will be no school Nov. 5; staff will be in professional development.

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