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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.

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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