Montclair Schools Boast Another Strong Surplus
District has benefited from a drop in health insurance claims.
Just two years after school officials were reluctantly discussing the closure of schools and the laying off of staff, Business Administrator Dana Sullivan outlined what's likely to be another healthy budget surplus this year for the school district.
Although the numbers are still only projections, Sullivan announced at Monday night's school board meeting that the district could wind up on June 30, 2012 with a surplus of $13.9 million.
However, she and others emphasized that the number is misleading.
For example, school officials said that up to $2.5 million is going into a capital reserve fund and up to $500,000 is going into the maintenance reserve fund. In addition, some $4.7 million already has been claimed in the 2012-2013 budget.
The remaining amount, about $3.5 million, is what will be used in the 2013-2014 budget.
"It doesn't mean taxes will come down but it does mean we can spend on education and we likely won't have to raise taxes next year," said School Board Member Shelly Lombard.
"This is all good news in that we can roll over $3.5 million and hold on to what we have in services and not cut anything," she said.
However, she warned, the school board still doesn't know how the ongoing contract negotiations with the union will turn out.
Sullivan summed up the financial picture like this: "The fund balance is projected at $13.9 as of June 30, 2012. $4.7 mill will be used for tax relief on July 1 in the 12-13 budget, $3.0 million will be transferred to capital and maintenance reserves. That leaves a balance of $6.2 on July 1, 2012. $3.5 of that amount will be used for tax relief in the 13-14 budget and $2.7 will be held in reserves as recommended by the State."
Sullivan emphasized that a healthy capital reserve fund serves a valuable purpose in that it provides money for capital improvement projects such as new roofing without bonds having to be sold.
In general, the district is benefiting this year from a $2.4 million drop in health benefit costs due to a lower number of claims. In addition, the district is also benefiting from students returning from out-of-district placements, reducing tuition payments by $900,000. And the district also has trimmed costs in areas such as transportation by $500,000.
Sullivan added that the district has only recently been told that it would receive nearly $2 million in state aid.
School Board Member Norman Rosenblum noted that the goal is to have smaller surpluses in the coming years but with a comfortable cushion.
Sullivan has often explained that the district's "fund balance" is defined as the accumulated difference between revenues and expenditures.
Back in November 2011, Sullivan also had reported one of the largest surpluses in recent memory— $5.7 million—to stunned members of the Board of Education.
She said the money would be applied toward property tax relief as required under state guidelines.
After announcing the huge surplus in November, school board members said at the time that—if they'd known school costs were trending lower than expected—they might have made different decisions during contentious budget meetings in late 2010 and early in 2011.
Indeed, the size of the surplus left over from the 2010/2011 operating budget was nearly double the $3.2 million surplus the district reported the year before.
Previously, residents pleaded, yelled, and cried at the podium during school board meetings, anxious that schools might be closed and that health benefits might be taken away from classroom aides.
(Schools weren't closed but health benefits were taken away from most aides.)
Overall, the school board made more than $3 million in cost reductions to programs, services, and staff to get to a $110 million budget last year.
But, by what school board members said, they might not have made such drastic cuts had they known about the surplus.
"We are surprised at the size of the surplus," said Shelly Lombard last year, who was board president at the time.
"Last year we went through a painful process and lots of high drama," she said. "We might have done things a little bit differently had we known this."
On Monday night, Lombard warned that the district still faces uncertainties such as how much state aid it might get and also what might happen with a new labor agreement being negotiated with the 1,100-member Montclair Education Association that represents its teachers and school employees.
Once again, Jim Zarrilli, a classroom aide at Mount Hebron Middle School, was on hand Monday night to deliver another emotional plea for the restoration of health benefits to aides.
He said that a tragic mistake had been made, a mistake confirmed by the growing surplus highlighted at Monday night's board meeting.
"The clock is ticking for us as we financially bleed to death," he said.