Refresher Course on the BOE Budget

(updated 11/16/09)
There's been some confusion on another local blog about our district financing.

Some posters said something like, “the district isn’t allowed to put aside money for future capital improvements, because they’re not allowed to end the year with any extra money.”

Other posters countered that the NJDOE says any district can put aside money for capital improvements.

They're both correct…

It is true that a district is not allowed to end its year with a surplus of more than 2% of its total budget. Any surplus beyond 2% must be returned to the voters as tax relief. So that could explain the first poster’s not-allowed-to-save-money statement.

It is also true that a district may budget to put money into a capital reserve account, creating a fund that is accumulated for a “rainy day.” That would be in line with the info the other previous poster got from the NJDOE.

The truth is, this district established a capital reserve fund in 2000. I don't know the exact history of deposits since then, but I do know the fund currently has $1,187,144 in it. (Last year we used money from this account to do some repairs on the 1919 roof at RHS.) In recent years, the district has not been able to budget additional funds for capital reserve, nor have we been able to end the year with as much surplus as in the past. In fact, last year, when developing the budget for this year, the district had to take funds from surplus and apply them to the revenue side, and even then we still had to cut $2.5 million from the budget in order to remain under the state’s cap. The idea of planning to put aside millions of dollars in a capital reserve fund sounds great, but where will that money come from? It would have to come from current programs in our operating budget. Not only that, but can you imagine voters approving cutting several million dollars from the operating budget and setting it aside for some unknown purpose at some unknown future date? Me neither.

(And, yes, it's true that we could choose to add a second question to our annual budget votes, and ask for more tax money to place into a capital reserve. Based on the statistical history of second questions, that doesn't seem too likely, either.)

I know there’s some chatter that the district’s budget is huge or inflated or wasteful. But how many people are looking at the facts (rather than feeding off each other in anonymous blog posts)?

If you really look at the expenses in the district you would quickly see the cost centers: Salaries and Benefits are 75% of the budget (teachers, secretaries, administrators, lunch aides, special education aides, substitutes, etc.), with the remaining 25% going to (in no particular order) transportation costs (busing for special education, regular education, athletics and some RHS extracurricular programs like Speech and Debate), tuition costs (special education out of district, vocational schools, Bergen Academy), custodial and maintenance services, grounds and fields, technology (lease purchase of computers, this year installation of new phone system), professional development and curriculum development, extracurricular/athletics, supplies, maintenance and capital projects, related services for special education (ABA therapy, some OT, PT, Speech, sometimes evaluations by outside psychologists and neurologists when required due to evaluations, IEP and out of district placements), insurance (other than health), legal services, auditor, architect (every capital project requires engineering or architect drawings as required by the state), utilities, phone charges, textbooks, and books for libraries. (I might be missing something.)

If you take a look at the comparative spending guide on the NJDOE web site, Ridgewood’s costs per student are less than the average cost for districts over 3500 students. Compare our costs to Northern Highlands and the other regional high school districts, or Millburn, Montclair, Teaneck, Paramus, Fair Lawn. Our ratios for students and teachers to administrators is higher (meaning we have fewer administrators) than other districts in our size range.

One more thing — school districts are highly regulated by the state. The new accountability standards (215 pages long!) effective last year require us to get state approval for most things that we do, and our budgets are reviewed each year by the state (county superintendent). Our administrative costs are below what the state allows. The county superintendent also approves contracts for our superintendent and two assistant superintendents. Our budget and contracts are in line with all rules and regulations as dictated by the state. As a matter of fact, our auditor will be reporting to the Board the audit of the 2008-09 budget Monday night and the district is being monitored next month by the state under QSAC (a new monitoring system in which districts are monitored every three years).

Sorry for such a long post, but I thought the details would be helpful.

The last thing I want to say (at least for tonight!) is this: This referendum is not a case of, “oops, we forgot to take care of the buildings.” Our budget pressures (thanks mostly to salaries/benefits) combine with 11 old buildings to make it virtually impossible to take care of these types of major capital improvements within the regular budget. In recent years we’ve spent around $2 million every year on capital projects and maintenance…but that doesn’t go very far.

Anyone who has paid close attention to the budget over the years knew this day would come. Personally, I'm thankful it came when interest rates are low, construction costs are low and the state of New Jersey still has it's last few million dollars to grant.)