The Lake Orion school district is challenging excessive fees charged by Orion Township for tax collection. After trading new proposals the two sides are not close to reaching a resolution.
Superintendent Heidi Mercer and Andrea Curtis, assistant superintendent of Business and Finance, addressed the Orion Township board on May 4 and voiced concerns that the district is overpaying for tax collection services by the township.
“This is a concern that we have tried to address privately, but the township’s actions have forced me to address this publicly,” Mercer told the board. “The township board has imposed excessive fees on all of the entities it collects taxes for. As far as we understand, we are the only entity that has not conceded to the unreasonable fee increase.”
Last year the district entered into the one-year agreement to pay the township $256,054 for collection of its summer property tax levy, an increase from $64,000 the prior year.
“The district accepted the township’s cost figures last year because the information available and the time constraints imposed by the tax collection cycle left little opportunity for negotiation with the township board,” Mercer wrote in a letter to the township on April 23.
Orion Township Treasurer Matt Pfeiffer said that what the district have been paying for collection services does not meet the necessary costs.
“The reference to prior fees of approximately $64,000 annually also requires context,” Pfeiffer wrote in a response to the Lake Orion school board. “While that figure may reflect historical practice, it does not account for the fact that operational costs, including staffing, technology, compliance, and infrastructure, have increased consistently over time. The absence of prior adjustments or formal cost allocation methodologies does not eliminate the existence of those costs today.”
The township also contracts with Rochester and Pontiac schools, Oakland Community College and the Oakland Intermediate School District for tax collection. Pfeiffer said none of them have contacted him with any financial issues and they have all signed new three-year contracts with the township.
The district and the township have engaged independent third-party analysis to justify their positions, with administration fees being a main point of contention.
In an April 10 letter to the treasurer, Mercer said their research showed a tax administration fee of .75% is “not supportable”.
Pfeiffer responded.
“Across Michigan, many municipalities charge the full 1% administration fee authorized under state law,” he said. “Based on the district’s levy, that would equate to approximately $341,000 annually to LOCS. The township’s proposed structure ($264,000) is below that level and grounded in actual operational cost analysis, not arbitrary benchmarking.”
The Orion Township treasurer has made a contract offer to the school district and the issue will be on the May 18 board meeting agenda.
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The treasurer said he was not willing to waive administrative fees to the school district and have township residents cover the cost.
“When you say we don’t want to pay for this service we want you to raise taxes on all of the taxpayers in the township by about $500,000 to cover it so we don’t have to pay for it, I have a real issue with that,” said Pfeiffer.
Pfeiffer said he “begrudgingly” made a new offer prior to the district three days before Mercer and Curtis came before the township board.
He said the township offered a one-year agreement at .25% administration fee – instead of the previously agreed upon amount of .75%. The offer also included a commitment to undertake a new cost study and share those results.
“I gave them exactly what they told us they wanted and rather than accept that, they responded with a contract that had several language changes to it and essentially created their own contract and I will not accept it,” said Pfeiffer. “They have a contract with the exact dollar amount they asked for in the same format that they signed last year and they refused to sign that. I am not going to let another entity write a contract for the township.”
The superintendent made the position of the district clear in her letter to Pfeiffer.
“LOCS cannot execute the proposed agreement for 2026 given the facts that are now available. As such, we will anticipate that our property tax levy will be billed to the taxpayers as part of the winter tax collections,” Mercer wrote.
By shifting district tax collection to the winter tax roll, Curtis said the district will need to issue tax anticipation notes to fund operations for the remainder of 2026, which includes payroll and essential educational services.
“While this will result in interest costs, these costs are expected to be significantly less than the quarter million dollar fee demanded by the township,” she said. “Our job is to protect classroom instruction and student resources so borrowing funds at a lower cost are the steps we now need to take due to the treasurer’s actions.”
The treasurer said a decision needs to be made before the next board meeting on May 18.
“Just as they are responsible for their 6,000 students and all their staff, I am responsible for the tax collection and the tax dollars of 40,000 residents,” said Pfeiffer.