Township: School District 'Fleecing' Taxpayers by Keeping Budget Surplus

The Barnegat Township Committee is taking the Barnegat Board of Education to task over allegations that the board purposely inflated its surplus by overbudgeting in lean economic times, and is demanding that extra funds be returned to taxpayers.

The full committee held a press conference Wednesday morning to lay out its claims. Committee members said the board increased its surplus by more than $2.9 million in fiscal year 2010/2011. By examining the board’s latest audit, the township said, it found the district’s fund balance grew from $106,271 on June 30, 2010, to $3,013,695 on June 30, 2011.

The board grew the surplus through “a planned under run of the budget,” township officials said, quoting directly an internal board analysis of the schools' audit.

The township said that in a year when taxpayers were saddled with a significant property tax increase, the board increased its reserve funds by 70 percent, and according to its most recent audit now has excess surplus of $1.4 million. And since then, officials said, the board has “nickled and dimed” the township, seeking breaks on utilities and extra help funding a special officer for the middle school.

“Having reserves is a good thing, but when you increase reserves by 70 percent in one year, that raises a red flag,” said township Administrator David Breeden. 

Committeeman and former mayor Jeff Melchiondo called the stashing away of surplus "blatant fleecing" of taxpayers. “They owe every resident of this township reimbursement,” he said.

Barnegat Schools Superintendent Karen Wood fired back with a press release issued on behalf of the board, saying the township’s “inability to manage their own finances has caused them to ‘point the finger’ at the only viable funding source in Barnegat – the Barnegat Township Schools.”

Wood said the portion of total property taxes going to the school district has decreased significantly since 2008. At that point, school taxes were responsible for nearly 61 percent of residents’ tax bills, she said. In 2010, it was down to 53 percent. 

“That means the portion of property taxes earmarked for the schools is less every year over the last three years,” Wood said. It’s not the school budget that’s contributing to tax increases, she said, it’s the township.

Wood said the district had indeed been setting aside funds in recent years to build up reserves.

“Whenever you do a budget, whether it’s a school budget, a township budget or a personal budget, if you’re smart, you save some of it.” The state restricts just how much school districts can save from year to year, she said – no more than 2 percent can be allocated to reserve funds.

“We budgeted responsibly and absolutely within the letter of the law,” said Wood. And if they hadn’t, she added, they would have been in trouble when the at the just days before the school year began last September. The district would have been required to bond to cover the costs of mold cleanup and remodeling, she said, which have exceeded $700,000.

“They say we put it aside for a rainy day,” she said. “And guess what? It rained cats and dogs on us over Labor Day weekend.”

She also said the district has been an open book when it comes to financials. Everything was reviewed when voters defeated the schools budget in a referendum.

“They had all of our information in the spring of 2010,” she said. “Why are we just hearing this now?”

But Mayor Al Cirulli said the township felt blindsided when the recent audit revealed the surplus, and officials felt they needed to come out with the details.

“The appearance is (they) hid this,” he said. “I really feel like we got used.”

Township officials said the fact that the district was able to put away so much in surplus means there wasn’t a good faith effort on the part of the Board of Education to cut back.

“We’re running leaner than they are by far,” said Melchiondo, but when it comes to complaints over property taxes, “we’re the ones that catch all the flak.”

Breeden echoed the concern that the township was shouldering the burden of cuts in tough times. 

“We want to work with the Board of Ed,” he said. “However, the relationship has to be a two-way street, a sincere, true partnership. And the $20 million organization should not be supporting the $50 million organization. And that’s the way we feel.”

But Wood said it’s unfair for the township to direct blame at the schools. “We don’t set the property taxes, they do,” she said. “It’s not always because of the schools.”

She said the board would discuss the issue and the township’s claims further, and would be ready to answer questions from the public at its next public meeting on Tuesday, Jan. 17 at .