15 Sep 2014
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Middletown School Budget Adopted With 2 Percent Tax Increase for Residents

The school board reversed a plan to utilize what is known as "banked cap" to address a pending $5.5 million pending pension liability, which would have resulted in a 3.6 percent increase in the tax levy.

Middletown School Budget Adopted With 2 Percent Tax Increase for Residents Middletown School Budget Adopted With 2 Percent Tax Increase for Residents Middletown School Budget Adopted With 2 Percent Tax Increase for Residents

The Board of Education approved a final budget Monday night by a 7-2 vote that includes a 2 percent increase in the tax levy.  

It was a reversal of direction from the previous meeting, when the Board had been moving towards a final budget that would have also included the use of “banked cap,” which could have resulted in a 3.6 percent increase in the 2014-2015 tax levy.

When school district budgets are increased by less than the 2 percent state cap in one year, they can exceed the 2 percent cap in a future year. If they don’t spend the savings, the banked cap expires in three years.

The board was considering claiming a portion of its banked cap in order to satisfy a $5.5 million pending pension liability assessment from the New Jersey Division of Pensions and Benefits. The assessment is related to a sidebar agreement to MTEA employment contract from 2007, but the district was not notified of this assessment value until last February.

On April 29, the board learned its first appeal was unsuccessful and revised its proposed budget.

On May 5, the 9-member board attempted to adopt a budget utilizing banked cap, but with only four affirmative votes and not a 5-vote supermajority due to absences of two board members, the motion failed. 

An unusual second public hearing was held on May 12, attended by 75 people. The Board of Education voted to return back to its original March budget, address the pending liability in the future, while pursuing a second appeal with the state, a process which could take up to two years.

“The hope is that we can work through this process and win in the appeals process and have this number lowered -- and in meantime be as fiscally responsible as we can be,” said Schools Superintendent William O. George.

George noted that although the Board is allowing $2 million in banked cap to expire, there is still $2.5 million in banked cap remaining for use in the next two years. 

Business Administrator Amy Gallagher said the 2014-2015 school budget general fund, funded by state aid and tax levy, is now $151,457,238, with $128,779,398 to be raised through taxation.

Debt service, funded through state aid and a separate tax levy that was approved by prior public referendum, is now $5,479,255, with $4,080,945 to be raised through taxation.  

The amount of the 2 percent tax levy increase is $2,525,086. The estimated district school tax rate is estimated to rise 3 cents per $100, to 1.355. 

The typical Middletown homeowner with a house assessed at $375,600 would pay $99.59 in new taxes to support the operating budget, and $15.52 more in new taxes to support debt service, for a total of $115.11 annually.

The March 19 budget summary on the district website sets aside $1.2 million for 20 new full time personnel positions and 9 new stipend positions. 

In response to a question by a member of the public at the May 12 meeting, Superintendent George said the new positions would be implemented “as needed.”

“If we don’t need all 20 of those positions, or if we need all 20 – we are going to be fiscally responsible, as responsible as we can be while trying to hit all our goals.”

The budget also includes $700,000 in new math curriculum adoption for grades K-5.

Voting yes on the budget were board members Robert Banta, Vincent Brand, James Cody, Michael Donlon, Ernest Donnelly and Gerald Wexelberg and Board President Susan Griffin.

Voting no were Board Vice President Leonora Caminiti and member Joan Minnuies. 

Both Caminiti and Minnuies questioned whether proposed projects in the 2014-2015 budget – such as a $300,000 centralized supply distribution building recommended by the Facilities Committee – were the best use of taxpayer funds, and whether more savings could have been achieved.

“We should save the money out of this year’s budget so we can put it towards the bill when it comes to fruition,” said Minnuies, referring to the looming $5.5 million assessment. “We don’t owe this money yet, but I do believe we’ll have to pay the bill. I do believe it’s going to face us.”

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