A combination of declining tax relief revenue and $4.4 million in estimated spending increases is going to complicate the 2011-’12 budget process for WW-P school officials, who gave residents a preliminary look at the budget on January 25.
The spending increases — particularly because of increases in contractual requirements, benefits, and money the district will have to send to the charter school — will already require the district to make cuts. By state law, school districts are only able to increase the tax levy by a total of 2 percent, which limits the district to a maximum possible increase of $2.7 million it brings in collectively from residents.
Officials discussed preliminary numbers associated with the general fund portion of the budget — and not the special revenues and debt service — on January 25. Currently, the district estimates that the tax levy portion of the budget will increase from $136.9 million in 2010-’11 to $139.6 million in 2011-’12 (the $2.7 million, or 2 percent increase), while revenue from surplus will decrease by $3.7 million, from $5.8 million in 2010-’11 to $2.1 million in 2011-’12.
The total general fund portion of the budget — which makes up about 90 percent of the overall budget — is estimated to decrease from $146.3 million to $145.5 million.
School officials did not provide a specific breakdown that shows the impact on individual residents in either West Windsor or Plainsboro. They also have not yet released specific details on line items associated with revenues and expenditures. “Things are fairly unspecific this early in the process,” said Larry Shanok, the assistant superintendent for finance.
However, Shanok warned that the days of cutting only programs that would not impact the classroom are gone. “We are cutting out things that get closer to affecting people, both in the classroom and in other activities outside of the classroom,” he said.
According to Shanok, under the district’s contractual obligations with teachers and staff, terms call for salary increases of 3.38 percent in the upcoming school year. While not required, members of the district’s collective bargaining units can choose to negotiate with district officials to save the district money when it comes to their salaries. As of now, that has not happened.
During last year’s budget season, the school board approved contracts with the WW-P Education Association, which represents 875 employees, including teachers, school nurses, guidance counselors, athletic trainers, occupational therapists, and physical therapists, as well as the WW-P Administrators Association, which represents 39 principals, directors, and supervisors.
Salary raises were frozen for the first six pay periods — a 12-week period beginning September 1, 2010, for the two unions. The teachers’ contract, which was set to expire in June, 2011, was extended to the 2011-’12 school year. That year teachers will receive a 3.38 percent increase.
“There are contracts and those contracts do call for changes,” said Shanok, who presented the data at the January 25 board meeting.
At the same time, officials are anticipating they will have to budget $800,000 to be sent to the Princeton International Academy Charter School, scheduled to open in September. The charter school will be the first public school in the state to offer a dual-language Mandarin-English immersion program. The charter school will serve residents of the Princeton Regional, South Brunswick, and West Windsor-Plainsboro Regional school districts. In its first year, PIACS will offer instruction for kindergarten (60 students) first grade (60 students) and second grade (50 students), and will add a grade each subsequent year.
It is estimated that the district will have to send a total of $1.2 million for the WW-P students who will attend the charter school, but officials budgeted $400,000 of that money last year. The district’s obligations for benefits for its staff are also projected to increase by $800,000.
Every year, the district tries to offset the impact to taxpayers by taking a portion of the unused revenue from prior years and applying it to the current budget. In June, 2009, the tax relief fund was at $4.6 million. In June, 2010, the district only had $2.1 million in surplus to put toward tax relief for the upcoming year.
Additionally, school officials estimate the $3.1 million in state aid provided to the district will remain flat after it took a $7.6 million cut in the prior year that left officials scrambling to make cuts to meet the shortfall and stay within cap. Shanok said there is a possibility that the district could also see a decline in state-funded Social Security for certified employees and other state-funded budgetary considerations. The district will also be faced with increases in the state-run health premium costs program.
As the district has been preparing its 2011-’12 budget, it has been examining its shared services. Currently the district participates in the School Alliance Insurance Fund, which provides a savings in its liability and workers’ compensation costs. It also participates in the Middlesex Regional Education Services Commission. “We’re in with them for a variety of co-op items,” said Shanok, who said that over the last two years, the district has benefited from group purchases of electric and natural gas. The district also participates in joint services with both townships, including township recreational activities that are done in coordination with the district.
Shanok also pointed to reductions the district made in its 2010-’11 budget. Last year, the district made reductions of five supervisory positions and 3.5 secretarial positions. It also realigned its Buildings and Grounds services and brought in Aramark to handle those operations.
It also reduced capital spending from $1.5 million to $1.25 million, reduced printing costs, reduced charter school allotment (down to the $400,000 previously mentioned), reduced central office and classroom supplies, and reduced its staff and increased class sizes. It also reduced travel and workshops.
The district also reduced field trip funding, K-4 health teachers, elementary computer teachers, and eliminated a mini-team to reduce the number of middle school teaching positions. The district also restructured support teachers, reduced its Outdoor Education program, reduced middle school and high school sports as well as under-subscribed programs, and reduced bus routes.
Overall, the district reduced the total number of administrators from 49 to 44 and the number of teachers from 877 to 856. The district also reduced the number of non-certificated staff members from 402 to 276.
Since the 2002-’03 school year, the district has seen an overall enrollment increase of 12 percent, said Shanok. Accordingly, the district increased its certified teachers to meet the enrollment increases. However, the district began reducing that number with last year’s cuts.
As part of ongoing cost reductions, Shanok said the district is looking at increasing its shared services, looking at in-district special services, and bringing in revenue from the first phase of its solar project, which put solar panels at both high schools.
The first phase of the solar energy project at WW-P was approved by voters as part of the 2009 budget.
With regard to special services, Shanok said that over the last few years, the district has brought in eight special services programs in district to prevent them from having to go outside district, which also reduces costs. “Burgeoning special services costs is an area being examined across the nation,” and not just in WW-P, he said.
Shanok also explained that the district will go out for referendum for the second phase of its solar project, placing solar panels at seven of its schools. The panels would be paid for through the issuance of no-interest tax credit bonds from the federal government’s Clean Renewable Energy Bonds program.
The project would require a bond referendum on the ballot in April’s school board elections. Officials are estimating that they will need to ask voters to approve $6.4 million in bonds for the project.
In the summer of 2009, the federal government approved the allocation of $7.6 million in federal tax credit bonds to cover the solar panel projects at seven of its schools. The allocation, however, comes with an expiration date of two years, and to be able to take advantage of the no-interest bonds, the district will need to take action before the summer.
Because solar energy prices have dropped since the time of the award, WW-P estimates it will only need the federal government to issue $6.4 million of the $7.6 million in bonds available to WW-P.
To get the referendum on the ballot, however, school officials will need to seek approval from the state. Shanok said at the meeting that although the district has applied to the state to put the referendum on the ballot, it has not yet heard back, and the deadline is approaching.
District officials say that the amount of money brought in by the solar panels will outweigh the money spent. Over the first 12 months of operation after installation, Shanok said the district would see positive cash flow in energy savings, sale of solar renewable energy certificates, and in debt service aid. The project would bring in about $400,000 in revenue during that year.
As reported previously, the district will save in energy costs as well as receive extra credit beyond what it saves on electricity by sending extra electricity back to the power company for distribution. By doing that, the district will receive solar renewable energy certificates, which can be sold for income. That money can be used to offset costs in other areas of the general budget.
Officials also previously said that while there will be debt generated from issuing bonds for the project, the district will keep to its promise of keeping the annual debt service levy at or below $11.1 million — the promise it made to voters before going out for the $27.5 million building referendum in 2006 for improvements to the district’s schools.
As officials prepare for further meetings on the budget, board member Todd Hochman, who voted against the contracts approved by the board last year, said he still thought the move was “ill conceived and short-sighted,” especially since the contracts avoided the new legislation that was passed after the contracts were adopted (and thus, grandfathered in). The new legislation requires contributions from public employees to their health benefits to be part of new contracts.
The approval of those contracts “makes it incredibly difficult to go under this cap,” he said.
“Every year, we seem to slice and dice to fit under this cap,” he added. “This year we were promised a tool kit by Governor Christie. Instead, he’s given us an empty box. Absent this, I am very fearful for the future.”
West Windsor resident Pete Weale criticized the board for failing to disclose more of the numbers to the public prior to the meeting. “How can you run a budget without showing your numbers?”
Board President Hemant Marathe applauded the previous efforts of the board members in coming up with a budget, especially given the short time frame last year.
In response to some residents who have suggested that the board manage its budget like a business, Marathe said: “I would love to be JP Morgan to be bailed out; I would love to be Goldman Sachs to be bailed out,” he said.
“Every year, we have had a surplus, and we have not spent it,” he said, adding that in the private sector, surpluses at the end of the year are spent.
Weale clarified he was not asking the board to mirror the private industry, and that his comments were not criticism. He just asked that the board provide more information.
Debbie Baer, the president of the West Windsor-Plainsboro Education Association, said that “this is a district that has, as much as possible, gathered itself together and stuck together.” She said she believed the district could do the same this year.
She also said the $1.2 million that has to be taken out of the district’s own budget to be allocated for the charter school is making a huge impact on the budget process. “This is a designer school; this is a school of preference,” she said.
