School Board President Clears Up Confusion Over Surplus

At last week's Board of Education meeting, the volunteer Budget Working Group painted a financial picture of a district with a surplus even greater than $5.7 million—as much as $11 million as of June 2011.

The presentation came just weeks after Business Administrator Dana Sullivan stunned the board—and the public—by announcing a massive surplus in a district that was toying with the idea of school closings only a year ago.

All this has sparked a great deal of confusion among Montclair residents seeking to understand what the surplus means for them and the district.

Now, School Board President Shelly Lombard is seeking to clear up some of the confusion by answering a series of questions related to the district's financial state.

For example, what will the district do with the surplus? Does the district really have $11 million? What will happen to the classroom aides who lost healthcare benefits last year? What does the surplus mean to taxpayers?

Here's what Lombard had to say:

(1) Regarding the surplus, we are still trying to determine exactly how it can be used.

(2) Some of the headlines about the surplus have been a bit misleading. We did have $11 million as of 6/30/2011. But that $11 million is made up of:

     —$2.1 million which is the 2% of budget that the state recommends we always keep for emergencies. This was expected and not a surprise.

     —$3.2 million which is the surplus that will be used in the 2011-2012 budget. This was not a surprise.

 ·    —$5.7 million which is the excess surplus that was created because expenses for the 2010-2011 school year came in below revenue. This was a big surprise.

It is not clear that we could have used this money in the 2011-2012 budget even if we had known about it back in February. But it's a data point that should have been shared with the board.

We also plan to follow up on recommendations made by the budget working group so we will be in a position to avoid such surpluses in the future.

(3) People misunderstand what is happening with the aides. The school board is not asking them to reopen their contract....THE STATE OF NEW JERSEY has said they have to reopen their contract. The day after we learned about the surplus, [school board members] Leslie Larson and Robin Kulwin met with CO to see what could be done for the aides. It is my understanding that there are three rules that impact our ability to do anything for them:

• ANY change to any part of union employees' compensation requires that the contract be opened and changed.  
• The state has said that if any contract is reopened, the employees under that contract must immediately make the new state mandated contribution to their healthcare. We got around this last year by using a "sidebar agreement".
• But in July, the state said that districts can no longer do sidebar agreements ... districts and unions MUST agree to reopen the contract. 

The reason is that the state doesn't want people using side agreements to get around the new rule that employees contribute 2% to their healthcare. For example, our employees pay 0.5%.  

So before we can do ANYTHING for the aides, it is my understanding that Montclair Education Association employees have to decide if they are willing to reopen the contract. We are not hiding behind our lawyers ... just stating the facts. We emailed the MEA about this weeks ago ... it should not have been a surprise when they heard it last Monday night [at the most recent school board meeting].

(4) I have gotten some criticism for emphasizing "sustainability". But sustainability doesn't just benefit taxpayers; the biggest benefit is to our students who are our first priority. Salaries and benefits are 83% of our budget. For the past few years, salaries have been going up 3.5% to 4% a year and health care costs have been increasing almost 10% per year. With the tax cap at 4% (now 2%), that left NO room for us to invest in our schools (more SAC's, more technology, etc). As a result, taxes kept going up and, as I kept pointing out last year, we still had to cut programs and services ... librarians, elementary world language, Student Assistance Counselor, Writers Room, health & wellness, etc.

Eventually we would have had to deal with healthcare costs in a way that is sustainable. However, if we had known about the coming surplus, maybe we could have taken more time and come up with a different, less drastic solution. We wouldn't have been making decisions in a pressure cooker-type environment. The same thing holds true for restructuring the schools.

(5) I can't tell the town council what to do but I wouldn't suggest that they relax! 

• The school district could have some big expenses that could offset the impact of the $5.7 million surplus, namely the charter school, the loss of state aid, and/or an increase in teacher salaries and healthcare costs. So both the school and the town should be focusing on developing sustainable budgets.
• A one-time surplus doesn't mean the budget is now sustainable. It just means that revenues exceeded cost in a given year. I am not suggesting that we should not incur any recurring expenses like restoring benefits to the aides (or better cafeteria food or whatever). But we need to anticipate how we will pay for those things after the $5.7 million is gone.