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District Reports Nearly $6 Million Surplus To Stunned School Board Members

Board members says they might have made different decisions earlier this year if they'd known

Dana Sullivan, the Montclair School District's business administrator, reported one of the largest surpluses in recent memory— $5.7 million—to stunned members of the Board of Education on Wednesday night.

She said the money would be applied toward property tax relief as required under state guidelines.

The presentation signaled the start of the district's budget process—a process that got off to a bizarre start Wednesday night.

After announcing the huge surplus, school board members said that—if they'd known school costs were trending lower than expected—they might have made different decisions during last year's contentious budget saga.

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.

Last year, residents pleaded, yelled, and cried at the podium during school board meetings, anxious that schools might be closed and that health benefits would be taken away from classroom aides.

(Schools weren't closed but health benefits were taken away from 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 School Board President Shelly Lombard.

"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."

Sullivan started out her presentation Wednesday night by explaining that the district's "fund balance" is defined as the accumulated difference between revenues and expenditures.

She said that the 10 areas that generated a surplus in the 2010/2011 budget include:

—Out-of-district tuition $1,521,000 (not as many students went to school out of the district)

—Salaries $1,375,000 (41 people retired)

—Supplies and texbooks $273,000

—Health insurance and employee benefits $224,000

—Transportation $467,000

—Miscellaneous revenue $242,000

—Legal fees $82,000

—Extraordinary special aid funds $805,000

—Utilities and buildling maintenance $571,000

—Other areas of the budget $156,000

Sullivan said that the total increase to the current surplus, which was already about $2 million, is $5.7 million.

"It's impossible to budget a $110 million budget to the penny," she said. "We've been watching every penny and every purchase order.

"We haven't made purchases for anything not absolutely necessary," she added.

But School Board Member Robin Kulwin asked whether the district might be "cutting off our nose to spite our face."

"We've been cautious with copying at schools. Why wouldn't we want to use some of that money for textbooks?" she asked. "Have we become frozen educationally?"

But Sullivan told the board that it's impossible to predict exactly what's going to happen with the budget early in the year, when the school board typically begins hashing over budget line items.

"I can give you estimates," she said, noting that the budget year runs from July to June.

She noted that "a lot of this [surplus] played out at the end of the year."

Like other school districts throughout the state, Montclair finalizes its budget in March, forcing board members to plan ahead on a wide range of line items such as heating that can be impacted dramatically by price swings.

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.

In other school news, Superintendent Dr. Frank Alvarez reported that most school buildings are in good condition except for a few fallen limbs following the weekend's snowstorm.

He said he decided to close Montclair schools both Monday and Tuesday because of concerns over safety and students who walk to school.

He added that attendance was normal on Wednesday and that delays in transportation totaled no more than five or 10 minutes.

Alvarez said he can't recall ever having to use snow days so early in the year, noting that the district already has used two of its three budgeted snow days for the year.

For more on this issue, read Montclair Patch on Thursday.

Melinda November 03, 2011 at 02:26 AM
So are the aides going to get their health insurance back?
Shelley Emling (Editor) November 03, 2011 at 02:30 AM
I'm not sure as the budget process is just getting started.. but I would guess it's a possibility...
Mara Novak November 03, 2011 at 03:13 AM
EXACTLY my thought!
Montclair's Own November 03, 2011 at 11:24 AM
While this is obviously better news than expected, this is disheartening on a number of fronts. Firstly, how many people lost their livelihoods and their ability to support their spouses and significant others due to the taking away of healthcare? How often were the public employees (schools and otherwise) demonized for being greedy and selfish and unwilling to give back, causing such tension in the district? And last, but certainly not least...think about how many students that are currently sitting in over-sized classes where their own personal needs aren't being met because this district cried poverty when there was no crying that was needed. This is a shame, because ultimately, it's the students who have suffered due to this.
Right of Center November 03, 2011 at 12:49 PM
1 million should be left as a reserve for the BOE and the rest should go back to the township to cover shortfalls in the 2012 budget.
Randel McMurphy November 03, 2011 at 01:43 PM
Not sure this has ever happend before.....I agree with ROC!
tryintosurvive November 03, 2011 at 02:08 PM
I agree with that also. How abount giving back even more to ensure that our taxes do not get increased again.
ira shor November 03, 2011 at 02:11 PM
Good morning all--the huge BOE surplus is either disgraceful mismanagement or disgraceful manipulation. Either way, the supposedly "transparent" budget process Mrs. Lombard boasts about is anything but transparent. Last year's budget conflicts were obviously unnecessary. The removal of health care from aides and the threat to replace them with cheap labor were unnecessary threats and cuts. Such prolonged public dispute without material need only undermines the schools and the town. The business manager Dana Sullivan should resign or be removed as should Mrs. Lombard. This revelation of a huge "surprise" surplus means they are not serving the children, the teachers, or the families who count on public officials. My son's class now has 28 students and no teacher aide; teacher aides do not have healthcare, shameful in a town known for civility and quality education....Respectfully, Ira Shor
ira shor November 03, 2011 at 02:17 PM
Ms. Emling--You were asked if the BOE will now restore health care to the aides and you answer you are not sure. I respectfully submit that it is your responsibility as a professional journalist to find out, to ask follow-up questions and not to wait for online comments to nudge you. The abusive treatment of our teacher aides is a blot on the BOE's record on which many town families have not yet closed the book...Ira Shor
Stuart Weissman November 03, 2011 at 02:33 PM
The majority of the surplus should be used to pay down the bonds on the new school.
Stuart Weissman November 03, 2011 at 02:35 PM
And I agree with IRA. As is too often the case in Montclair, no one is manning the bridge, or they are in the bridge, but not paying any attention to the controls and gauges.
Dude November 03, 2011 at 03:13 PM
I agree that the cuts to aides were ideological moves more than they were financial ones. However, school budgets are a tricky thing and this surplus is more complicated than people think. It wasn't so much the case of crying poverty when poverty wasn't needed -- I mean it was, but the surplus isn't evidence of that. That was evident prima facie. This surplus - the size of it - is an anomaly. For example, you don't always get 41 people retiring in a year. That's rare. The existential threat to the profession and the downright evil tactics of our governor (aided by the legislature) made a lot of people retire earlier than they may have, and some of those decisions come after February. Also, reporting 2012 retirement by 9/1/2011 was incentivized by the BOE, so there is less uncertainty about retirements, and less surplus will occur after February of this school year because of that alone. (cont.....)
Dude November 03, 2011 at 03:14 PM
You see, you make an ESTIMATED budget Feb-March for the following school year and vote on it, while you're still zeroing out (freezing) your STATED budget for the year you're in given your predictions for the second half of the school year. Then, in July you report the ACTUAL budget (what actually happened, what actual expenses/revenues there were for the year - which usually won't match either the estimated or the stated budget). the you get an auditor in, and that report doesn't come until it's jut about time to start the whole process over again. Also, by law, you can't run a deficit. For all the talk of "run it like a business" and "get private sector folks on the board and the working groups" schools simply DO NOT, SHOULD NOT, and CANNOT run like businesses -- by letter and spirit. Were perhaps the estimates TOO conservative? Maybe. Is there an overall ideology/philosophy problem? YES - but that's fairly independent of this issue. School spending across the country needs to increase dramatically, period. The BOE actually cutting property tax last year was criminally negligent, immoral, and shortsighted (as are people like RoC who just murmur "tax cut" in their sleep it's so faith-based). That's true no matter the surplus. (cont.....)
Dude November 03, 2011 at 03:15 PM
I don't necessarily support removing Ms. Sullivan. She's doing what school BAs do-- conservative estimates, don't use surplus for spending (especially in politically rough times, etc. The BOE on the other hand was laughable. In an effort to guarantee no tax increase with certainty, avoid bad politics in the spring budget process, and save face in what is an embarrassing situation of "having too much money" because most of the public (and they themselves) don't understand school budgets, they are clearly positioned Ms. Sullivan (and her reports/estimates) as a scapegoat so they could say "gee we didn't know" or "gosh we maybe woulds done something different." Bulls**t. (cont....)
Dude November 03, 2011 at 03:15 PM
To clarify a few things: 1. the BOE can apply to the county for permission to take money out of this surplus and restore aides' healthcare right away....they will argue "gee gosh it's not sustainable" - well neither is crumbling physical pllant, huge class sizes, poor technology, and underpaid staff. Anything is sustainable if you tax people responsibly high. 2. you can't just take money from a school budget and give it to the township for municipal budgets - I'm pretty sure there are laws/regulations preventing that, and 3. to tryintosurvive, et al. - it IS tax relief right now...w/o permission from the county to spend any of it, it moves forward as a revenue line-item next year, essentially as 'already paid taxes" i.e. the BOE is already able to ask for 5.7 million less in taxes (That doesn't mean school taxes will go down - it means they have a 5.7 million cushion before they have to ask for anything).
Stu's Wife November 03, 2011 at 03:24 PM
Fasten your seat belts folks. In addition to the Bullock bonds that Stu mentions, the board is also going to have to deal with a likely 20% decline in ratables after the reassessment goes through. It will be interesting to see what they want to do with that.
Sara Santora November 03, 2011 at 03:55 PM
I agree with Ira. Last year felt like the BOE was screaming fire in a crowded room. Now class sizes are huge, and aides are few. We've already seen an aide come and go in one of my kids classes. There are far less of the more experienced aides that are in it for the long haul. Yet the BOE keeps chipping away. If it's now the BOE's job to look out for property taxes, who is looking out for the schools?
MC November 03, 2011 at 04:01 PM
Was interesting to learn that the BA does not provide the Board with a monthly variance/future month projection report. While I am not a public finance person, I would imagine that having this type of information -- even with assumptions, caveats and estimates -- is key to good decision making. It is what many of us have to do in our professional lives and what everyone does when managing our household budgets. It seemed to me that this information/analysis is much more valuable that the pages and pages of bills paid, etc that included are part of the Board's monthly business. Does anyone know how other Districts or public institutions deal with reporting and forecasting variances? Patch, can you ask reporters in other towns in your network? The BA seemed to suggest that this information is difficult to gather and not as helpful as one might think it is for decision making.
A. Gideon November 03, 2011 at 04:07 PM
This number represents a combination of savings over the budgeted expenses and revenues in excess of those budgeted. This includes revenues like federal stimulus money. If it gets spent on salaries or such in one year, what happens the next year? Someone used the phrase "tax people responsibly high". As long as we're forcing people out of town, why not simply increase taxes 10% or more every year? Is that sufficiently high? After all, it doesn't matter that we've people in town that have been out of work since the Bush administration, others that haven't seen a raise in that time, etc. Similarly, a big chunk of savings came from retirements. As the teacher population "ages", the salary line-item goes back up. And this doesn't even take into account the new MEA contract to be negotiated. As several board members expressed toward the end of the meeting, this isn't "found money". It's really a loan floated by the taxpayers to the district. The business administrator overestimates costs so as to avoid the impermissible deficit, and this overage is paid by taxpayers. The district is required to use this as revenue in 2012-2013, so it's as if we paid some of our taxes for that year a couple of years early. There's plenty of room for argument as to whether the district's BA is *too* conservative, padding too much. But ignoring the time value of money, the largest problem this causes is an inability to manage. [Continued] ...Andrew
A. Gideon November 03, 2011 at 04:17 PM
[Continuing] For example, let's assume - since it did occur - that the BOE mandates that Central Office cut its budget by 10%. What if the CO budget is already padded by 10%? That lets the budget be "cut" with no real effect on spending. The BOE is effectively neutered. How can the BOE - or the citizens, for that matter - make any real choices or effect any real changes in that type of environment? Someone above is blaming Mrs. Lombard, but she and the rest of the board are more disempowered by this than anyone. More, it was the working groups set up by last year's BOE under Mrs. Lombard that uncovered, and forced the district to admit, this excessive surplus. W/o the changes imposed to the budget process last year, we all - including BOE members - would still largely be in the dark. Presumably, we'll see further changes to bring the budget creation process under control. But this disclosure is a sign that we're moving in the proper direction of greater transparency and greater control of our district's budget. ...Andrew
Robin Hoffman November 03, 2011 at 05:12 PM
From Dude's comments above, I get that it's not a simple thing to "spend" the surplus. So specifically, where does this now leave the aides without benefits? I still think if there's no decision/announcement shortly re: restoring the aide's benefits, time to mobilize and show up at the next BOE meeting. They do a helluva job for a less-than-livable wage at the moment. Time to support each other when it's everyone that's suffering right now. You may need it next. Let's get up off our whiny butts, Montclair!
A. Gideon November 03, 2011 at 09:09 PM
"I get that it's not a simple thing to "spend" the surplus." Rather the opposite. Excluding an amount which is about 2% of the budget, the district is *obligated* to spend the surplus in the next budget (in this case: 2012-2013). The money is used as revenue, thereby offsetting revenue from taxes. That's why it should be seen as "prepaid tax" (or, alternatively, as a loan to the taxpayers against taxes not yet collected). ...Andrew
Roberta Bernhard November 08, 2011 at 04:02 PM
Reading everyone's comments is interesting. It seems budgeting of school monies is a complex process; and many resources are tied together and at stake. However, it boggles my mind that so much money has suddenly appeared. How does that happen? (That's a rhetorical question.) With that said, if and when the money is spent, it most certainly needs to go to paying a living wage for teacher aides and providing them with benefits; as well as necessary training. In addition, class sizes need to be reduced. When students are taught in this way-with more individualized attention-students' academic and social success only increases. Bertie

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