The Story Behind Those Now – Vanished Budget Surpluses

****UPDATED AND EXPANDED

Dear Readers,

Below is an expanded version of comments on the budget audit made by district parent, Christine McGoey at the Montclair Board of Education meeting on Monday, November 17, 2014:

The Story Behind Those Now-Vanished Budget Surpluses

If you are a parent like me, you might have thought that the large, reported school budget “surpluses” in past years represented extra money we just didn’t need for our schools.

But that is not the case. Those surpluses you have been hearing about fall into a category called “Excess Surplus.”

As auditor Raymond Sarinelli from Nisivoccia, LLP has explained in the past, it is “Excess” because under state law, school districts are only allowed to carry a modest surplus capped at 2 percent of their budgets. The 2 percent amount is referred to as “Unassigned Fund Balance.”

In my house we call that rainy day money. Any funds in excess of the 2 percent cap are required to be used for tax relief in future years.

You can read more about that here.

Excess Surpluses are signs of an improperly constructed budget. According to Sarinelli who presented the Annual Budget Audit at the November, 17 2014 BOE meeting, the BOE had been working on leveling out the budget. The BOE had a “goal” to get away from the past “fund balance spike” that had “gone over the top” and to get to a “glide path.”

The goal in school budgeting is to have close to zero Excess Surplus, and maintain appropriate “Fund Balance Amounts.”  In simple parent translation, the goal of the BOE budget should be to spend money allocated for schools on school expenses, and shoot for a rainy day fund that does not exceed the 2% cap.

Out in the audience, I was looking at the “Excess Surpluses” the auditor was highlighting.

In June of 2012, Excess Surplus was $4.7 million.

In June of 2013, the Excess surplus hit $3.2 million.

In June of 2014, it was $2.2 million.  By June 2015, it will be zero.

According to prior Nisivocca audits, these Excess Surpluses had come down from a high or “spike” of $13.9 million surplus for school year 2011-12.

This spike was preceded by an $11 million surplus in 2010-11, the school year in which the BOE considered school closures, fearing a “budget crisis” that did not materialize.

These weren’t monies the schools and children did not need, but monies the sitting BOEs withheld and chose not to use.

You might remember that those were the years during which our children’s schools lost over a hundred experienced teachers, paraprofessionals in classrooms, guidance and support personnel, Writer’s Room, world language, and elementary instrumental music, to name a few things I recall. Those were the days in which support for our younger children’s education became dramatically different than that provided to children in prior years–and still is.

And while it is true that under the advice of auditors, the BOEs have slowly decreased Excess Surplus through some phased in spending and forward budget allocation, it is also true that millions have been lost to our schools.

Meanwhilethe rainy day Unassigned Fund Balances presented were as follows:

In 2012, $2.8 million. In 2013, $2.2 million. But in 2014, only $779,641.

Sarinelli pointed out that last year’s budget created a “dip,” and now he said the budget needs to reach a “glide” path, avoiding spikes and dips and getting to “horizontal.”

So how did we get to a dip?

The budget created last year spent all income from revenues, plus the Excess Surplus, plus $1.4 million of the rainy day money, and taxes were raised 4.1%.

Where did the money go?

A significant amount went to PARCC testing and CCSS gear up.

It’s hard to tell how much, because those expenses are spread throughout the budget, in everything from material purchases and professional development, evaluation costs, hardware and software purchases, wiring, and maintenance.

The district has glossed over PARCC spending saying that tech updates were needed anyway, and a complete plan for tech spending related to the PARCC was never presented at budget meetings, although the public and certain BOE members requested it.

During the budget process, Brian Fleischer said Montclair needed upwards of $1 million for technology upgrades, but did not separate out the PARCC related costs.

Fleischer spoke about a $500,000 overhaul of the district’s network to the Board of School Estimate. He admitted the plan for purchasing devices was still developing, that the district owned devices sufficient for PARCC, but expressed a preference for purchasing better devices.

Well after the budget had passed in August, the new district technology director Barry Haines described a three-year tech plan to the Montclair Times, including the purchase of 1,000 Chromebooks and staff computers, among other things.

At the BOE meeting on November 17th, Sarinelli stated the District had made an additional Unbudgeted Expenditure on tech in the amount of $860,000.

To date in this budget year, Montclair seems to have spent around $1.86 million on tech for a district of 6,761 students.

In comparison, it was recently reported that the Tom’s River Regional District, serving 16,574 students and three high schools as of 2013 has spent $1,040,000 for PARCC testing. (2,160 Chrome books at a cost of $715,000, upgrading the district’s wireless network at $250,000, and $75,000 to update the memory within the school’s existing desktop computers.)

During Budget Workshops last year, community members and I repeatedly commented that the large PARCC and CCSS expenditures were too high. We argued they would put too much strain on the budget, and might force cuts in important areas later.

We didn’t want to pay so much for questionable PARCC tests, unproven curriculum and evaluations. We wanted our people back and our schools fully staffed.

We urged the BOE to go slowly. To spend minimally. What if the PARCC proves to be an unsuccessful test, if CCSS is a flash in the pan? (So many states have dropped out of the PARCC consortium that its numbers are less than half the original, and more districts are seeking waivers and delays due to concerns about the test).

We asked , how about requesting a paper PARCC, not needing massive new, computer purchases that will quickly become obsolete and require expensive bandwidth capable of carrying simultaneous testers? (There is a paper PARCC, but Acting Commissioner Hespe has resisted allowing its use except for special accommodations–which proves it is possible.)

What about yearly maintenance and expensive carrying fees going forward, we asked?

We begged the BOE to prioritize spending for learning and to join other districts in protesting the huge expenditures we were being required to make for the unfunded state mandates of PARCC and CCSS.

 Now, to get our rainy day fund to 2% where it should be, Sarinelli said the upcoming budget would have to set aside around $1.4 million.

The Superintendent has already warned at the MHS taped meeting that we may be facing some cuts and will have to make choices.

Let’s make sure that going forward we come together as a community to insist on the importance of fully funding our schools.

Let’s take a cue from the Watchung parents who demanded smaller kindergarten classes and got them. And the parents who demanded world languages and started a foreign language comeback for our schools.

Let’s stand for our schools and not be intimidated by calls for cuts that leave our schools underfunded and understaffed, and our children last among our citizens.

If we really want to get to “glide” as Sarinelli has advised, then our budgets should be solidly based on what we know works, small classes and full staffing, rich curriculum and support.

And we should insist on keeping those things in place, year to year as a solid foundation for our schools.

And when state mandates come that pressure our budget, kids and schools, let’s make sure our BOE speaks up for our community and stands for what our children need.

* The hard copies of the 138 page audit done by the firm of Nisivoccia, LLP were not available, but the auditor supplied a limited number of copies of page 138, showing the surplus amounts, which was discussed at length.

** You can read about my family’s experience taking the PARCC, and I hope you will consider taking the PARCC for yourself.

—Christine McGoey

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