The Montclair School District’s balance sheet will end the year well in the black.
A financial audit report presented to the Board of Education on Monday by Nisivoccia LLC, a certified public accounting firm, found that the district will close the year with a surplus of $13.9 million.
The large surplus was the result of conservative budgeting, cost cutting and a host of unanticipated funding, said Raymond Sarinelli, CPA and partner of Nisivoccia.
The district operating costs are lower than they have been in years. Last year’s total costs were about $118 million, which is down from $120 million in 2011, $136 million 2010, $128 million in 2009, and slightly up from about $116 million in 2007-8.
“The costs of operating the district have been reduced,” said Sarinelli. “The district basically operated in 2012 more at the level of 2007 and 2008.”
The district banked $230,000 last year from utility costs due to a warmer than usual winter. Another $1.9 million was the result of lower health costs due to eliminating aides from the health plan and cutting other positions.
Many special education students were also brought back to the Montclair schools last year after the district began providing those services. As a result, the district saved $1 million in tuition costs and an additional $150,000 in transportation costs.
While the district may end the year with this surplus, much of it has already been set aside for future purposes.
The district’s state mandated emergency fund is $2.9 million, and another $5.7 million will be used for educational expenses in the 2012-13 school year. Capital projects will be funded with $1.5 million from the surplus, and the district’s Maintenance Reserve Fund will take another $500,000.
The district will also use $3.2 million of the surplus in the 2013-14 school year, which MacCormack noted will help tax payers
"Therefore, we will have to raise $3.2 million less in taxes than we would have otherwise,” wrote MacCormack in a press release.
The district was also overcharged by its food service provider, Chartwells, and is owed approximately $395,000. Sarinelli noted that these funds were not originally budgeted for, so they will contribute a one-time boost to the budget when they are recovered.
“They know they owe you money,” said Valerie Dolan, principal of Nisivoccia, about Chartwells.
“I believe a significant amount of that amount will be recovered in two years,” said Sarinelli.
While the district has a high surplus now, Sarinelli warned it will not be a yearly theme.
The board will now anticipate many of these surplus funds and thus allocate them in the future, such as the $1 million saved in transportation and another $700,000 in extraordinary aid.
“Next year, ... your surplus is going to start to go down, and will continue to go down because you’ve taken action to make it go down,” said Sarinielli.
The board must budget differently in the future so as not to “crash and burn,” said Sarinielli, by relying on an unanticipated surplus. He expected future budgets to level out at about $2.5 and $3.2 million.