Breaking Down the School Budget Situation

With Bernards schools losing around $5.5 million dollars from the state in withheld funds and aid cuts, balancing an already tight budget has become the most pressing challenge of the Board of Education.

Over 100 residents attended the board meeting on Wednesday, March 24, 27 of whom voiced their thoughts and concerns on the potential cuts, tax increases and related school matters that are affected by the funding gap facing the schools.

The situation was described by Board of Education finance committee chair Lou Carlucci as "striking a balance" between setting a tax increase that will be acceptable to voters and cutting school programs. The higher the taxes, the fewer cuts, and vice versa.

Breaking Down the Numbers

The school district lost $3.88 million dollars in state aid for the 2010-11 school year.

To recoup the lost money, the board has three options: 1) use surplus money, 2) increase property taxes, 3) cut programs. The board predicts that pursuing a four percent increase in property taxes (approximately $293 more per household) would cover the general increases in school costs for the 2010-11 school year, such as healthcare costs, salary increases, etc.

To recoup the money, the board will need to find approximately $3.9 million from taxes over the cap, program cuts or surplus funds. Below is a breakdown of the tax situation, new revenue / surplus options and programs being considered for elimination, along with a short explanation and the positives and negatives of each option.

The challenge facing the board is to select a combination of the factors below that 1) add up to $3.9 million, 2) would be palatable to voters, 3) avoid, if possible, a massive funding cliff for the 2011-12 school year.

In addition to finding the $3.9 million that the district has lost in state funding, the board also recommends rebuilding a surplus base to protect against unforeseen costs and the expected budget gap for the 2011-2012 school year.

Finding $3.9 million

Tax Increases – savings $0 - $3.9 million

• Explanation: the board will need to increase taxes by $293 per household to cover increased budget costs, all funds raised above that amount could be used towards filling the gap left from the state aid cuts; for each $100K raised above the base four percent increase in taxes, each household would pay approximately an additional $4-5 dollars; the following combinations represent the tax increases in percentages and increase per household along with the amount of the gap caused by the state aid cuts that could be filled
  Percentage Increase            Increase per Household              Gap filled
               4.00%                                       $293                                       $0
               4.72%                                       $316                                        $500K
               5.43%                                       $338                                       $1 mil
               6.15%                                       $361                                        $1.4 mil
               6.86%                                       $384                                       $1.9 mil
               7.41%                                       $401                                       $2.4 mil
• Positives: the higher the taxes, the fewer program cuts are needed to balance the budget, recouping higher amount of taxes now creates larger tax base to draw from for 2011-12, which could be helpful if Gov. Christie's proposed constitutional amendment to limit property tax increases to 2.5 percent of the previous year passes in the fall, more taxes potentially could be used to raise money to put aside as surplus to soften the funding cliff for 2011-12 and create an emergency reserve fund
• Negatives: places burden on the taxpayers; if voters view increases as too high they could vote to reject the budget, putting it in the hands of the Township Committee, which cut an additional $965K from the budget the last time the scenario played out in 2005-06, according to Board of Education President William Koch (the highest tax increase since that time was 5.6 percent in 2006-07)

New revenue / surplus money – savings $1.5 - $2.5 million

• Explanation: the board was told to expect a $1.5 million in extraordinary aid from the state for the 2010-11 school year, but that number is not guaranteed, the board also predicts that they will have $1 million left over in surplus from their unusually large extraordinary aid payment in 2009-10 that they could put toward the budget
• Positives: covers up to $2.5 million of the $3.9 million gap, fewer program cuts and tax increases necessary
• Negatives: risky, not guaranteed money, depletes schools surplus almost entirely, no money for emergency capital outlays, creates huge funding cliff (potentially up to $2.8 million) for 2011-12 school budget

Contract negotiations – savings unknown

• Explanation: the school board is currently in negotiations with the teacher's union over teacher contracts, pay scale, etc. The district could potentially negotiate savings through this process
• Positives: financial, shares the burden, fewer program cuts and/or tax increases
• Negatives: less competitive teacher pay, potential to lose teachers

Ridge High School eight-period day  – savings $360K

• Explanation: Ridge currently offers nine periods each school day, switching to eight would result in fewer classes taught each semester, meaning fewer teachers and a predicted savings of $360K
• Positives: fewer periods allow the school to stretch the period length of the core subjects of English, math, science world languages and social studies to 50 minutes per day, resulting in a total of 40 minutes of increased instructional time in those classes per week, longer periods allow for more varied instructional strategies
• Negatives: lunch shortened to 30 minutes each day making it more difficult for students who use lunch periods for music sessions or other school work; fewer opportunities for high school students to experiment and try new classes of interest; hamper student's abilities to meet the fine arts and practical arts graduation requirements without taking online courses, several residents and board members believe that an eight-period day would severely limit the opportunities of students interested in music and the arts

Ridge High School program reductions – savings $160K

• Explanation: cutting Japanese, American Studies and offering fewer levels of Spanish
• Positives: financial
• Negatives: reduced course offerings, more classes online vs. with course instructor

William Annin 6th grade world language – savings $136K

• Explanation: cutting the sixth grade world language program
• Positives: financial
• Negatives: reduced course offerings

William Annin 7th grade world language – savings $136K

• Explanation: cutting the seventh grade world language program
• Positives: financial
• Negatives: reduced course offerings

William Annin extra sections – savings $360K

• Explanation: consolidation of different sections of the same class into one section, for example, eliminating one of the two sections of middle school English
• Positives: financial, fewer teacher salaries
• Negatives: larger class sizes, less attention per student

William Annin 8th grade communication arts – savings $144K

• Explanation: cutting the eighth grade communication arts program
• Positives: financial
• Negatives: reduced course offerings

Guidance – savings $40K

• Explanation: consolidating guidance services, potentially laying off some guidance counselors
• Positives: financial
• Negatives: more work for guidance staff, heavier case loads, class registration process could be altered to be less guidance focused

Half -day kindergarten – savings $400K

• Explanation: switching the current kindergarten schedule 9 a.m. - 3 p.m. to a 9 - 11:15 a.m. model, not a true half-day of class, one teacher can teach two sessions, a morning and afternoon class, meaning fewer kindergarten teachers needed, saves money
• Positives: financial
• Negatives: basically only a two hour program, less academics and preparation for first grade, hardship for parents who must find alternate care for their children during the afternoon hours

Elementary declining enrollment – savings $200K

• Explanation: declining enrollment allows the district to offer the same services more cheaply
• Positives: financial
• Negatives: none

Administration cuts – savings $100K plus $134K already cut for 10-month supervisors and elementary assistant principals

• Explanation: cutting administration staff and/or operating budget, 10-month supervisors replace 12-month supervisors, elementary assistant principal positions eliminated
• Positives: financial
• Negatives: closed offices in the summer for two months, fewer office supplies, less staff development offered, loss of institutional knowledge with cuts

Retirement breakage  – savings $125K

• Explanation: senior teachers retire and are replaced by younger, less expensive teachers, unknown how many will leave the schools, potential savings up to $125K
• Positives: financial, new teachers and ideas in system
• Negatives: loss of long-term teachers to retirement, new unproven

Pay to Play – savings $100K

• Explanation: parents of students participating in extracurricular activities must pay a fee for their students to participate
• Positives: financial, puts the financial burden of extracurriculars only on the families who participate rather than spreading it evenly among all families
• Negatives: financial burden for families of students who participate in many extracurricular activites, some students might potentially not be able to participate if programs are not free

Special Education cuts – savings  $475K

• Explanation: move away from the one-to-one model for autistic programs, lessen the use of instructional aids in classrooms
• Positives: financial
• Negatives: autistic educators believe one-to-one model is most effective, two-to-one model more difficult to implement, particularly in situations where children need extra attention or could be potentially injurious to themselves or other students, fewer special ed support in classrooms