The South Orange-Maplewood Board of Education has agreed to hold an extra meeting in February to discuss the possible impact of using "banked cap" to plug — at least in part — an estimated $2.7 million budget gap in the 2013-14 budget year.
(Currently, South Orange-Maplewood has $1.5 million left on its banked cap that it did not use in previous years that it can use to raise the tax levy over the state mandated 2% cap, $960,000 of which will expire if not used.)
The BOE decided on the extra meeting after a presentation by School District Business Administrator Cheryl Schneider on Monday night. The special meeting would be a hypothetical exercise in what programs and jobs could be saved by using the additional tax levies that would be raised by using all or a portion of the banked cap. No action would be taken at the meeting.
See the district's power point of the budget presentation here.
Discussion of the banked cap came after a detailed explanation of projected revenues and expenses for the 2013-14 budget year by Schneider.
At the 2% cap rate allowed, the district would be able to raise $103,998,642 in tax levies toward the 2013-14 budget; however, Schneider predicted that $2 to $3 million more would be needed after all other estimated outside revenue sources had been accounted for.
The district is assuming that state aid will be flat — although the exact amount will not be known until Feb. 28. The district is assuming that state aid will constitute 3.55% of the budget or $4.075 million. This is an increase from two and three years ago, but a far cry from 10 years ago when state aid constituted 7% of the budget. The district has been advised to count on 75% of federal aid as compared to last year.
Schneider noted that the district had worked hard to rein in spending in budget categories that had been rising at high levels, including health benefits (through contract negotiations) and special education (by trying to keep more students in district and lowering the number of students classified through early intervention).
The district has also found efficiencies in recent years by outsourcing certain jobs and services — including custoridal, security, food, and paraprofessionals. Schneider noted that there was a $1.5 million savings alone through contracting for custodial. Outsourcing paraprofessionals also saved $1.5 million per year.
Schneider said that the $2 to $3 million shortfall would necessitate trying to find further efficiencies in programs considered "variable costs" as well as cutting 20 full-time positions.
However, she explained that the district can utilize $975,328 in banked cap available through 2013-14 (after which it expires) and $506,833 through 2014-15.
The banked cap allows the district to levy that amount in taxes above the state-mandated 2% cap.
Schneider noted that the district was working to create a budget with constricted revenue sources even as enrollment continued to increase; enrollment is expected to peak in 2014-15.
"Variable" costs that will be looked at for cuts or efficiencies include:
- speical education scheduling efficiencies
- in-district special education services/programs
- technology efficiencies (centalized printing - online progress reports, report cards, attendance)
- general education scheduling efficiencies (looking at class size)
- support staff efficiencies
- transportation efficiencies (courtesy busing)
- centralized professional development
- centalized summer programming
- continued intitiatives to conserve energy
Schneider noted that debt service is outside of the operating budget — and, therefore, the 2% cap. At $3.890 million, debt service will bring the tax levy rate to a 2.47% increase overall.
Board of Education members were loathe to raise taxes further but felt that they needed to at least get more information on the potential impact of utilizing banked cap.
Sandra Karriem said, "This is very sobering," but noted that, with more than $900,000 of the banked cap set to expire, "we ought to be considering what would $500,000 save."
Jeffrey Bennett said that, even if banked cap was used, he felt that the full tax increase should be less than 3%.
Madhu Pai called the possible application of banked cap "tremendously painful."
"Do we have to look into banked cap?" Pai asked, saying she felt that she did not have enough information.
Chair Beth Daugherty assured Pai that holding a special meeting was not asking board members to commit to using the cap, but rather to spend time to prioritize cuts "so we can look at them and tell [Superintendent Brian Osborne] how much to prioritize."
Andrea Wren-Hardin seemed to be the board member most adamantly in support of using banked cap. "We can't give our kids a thorough educaion at a 2% cap," she said. "The state of the district report showed that years of focus and discipline and work can lead to results that we can see. I do not want us to jeopardize and stall results that we need to meet our district goals. I have to support using some banked cap."
Wren-Hardin added, "I'm also keenly aware that now that we have changed our elections, we are the ones looking at the education of our children as well as the budget cap."
Added Lynne Crawford, "I really don't want to see an increase in taxes, but I really don't think we have a choice."
Wayne Eastman said he was concerned that such a process would create "a not very good dialogue in terms of this program or that program." Daugherty said she shared his concern. "But what is different," said Daugherty, "is that as a Board we have the discipline to follow the Superintendent's priorities" — which, she pointed out, are now guided by the district goals.
After the special meeting (which will probably happen on or around Feb. 20), the BOE will meet again at its regular meeting on Feb. 25. Next in the budget process, the district will receive its state aid notice on Feb. 28. On March 4, the BOE will meet to consider and adopt the preliminary budget to send to the Essex County superintendent for approval. The district has tentative presentations scheduled with the Maplewood Township Committee on March 5 and with the South Orange Village Board of Trustees on March 11. These meetings will be followed by a regular BOE meetsing on March 18 and then a BOE public hearing and action on the 2013-14 school tax levy on March 27.