I am writing this to correct some misstatements and misrepresentations made by Mr. Quentin Walsh in his letter in the February 17, 2012, issue of the WW-P News and in his frequent appearances before the Board of Education, the Plainsboro Township Committee, and the West Windsor Township Council.
Mr. Walsh takes issue with the school district’s budget surpluses and use of reserve funds. Let me begin by explaining the process. Each spring the school district prepares a budget for the following school year which, once approved by the voters, sets the revenue and spending for that year. School districts cannot increase taxes mid-year and do not have access to lines of credit. If expenses are underestimated, a district can be forced to cancel student programs and services mid-year. If expenses run lower than budgeted, the district will finish the year with surplus funds.
For example, as I write this, the preliminary budget for the 2012-’13 school year contains about $1.2 million as WW-P’s contribution to the PIACS charter school should it open in September 2012. If that school does not open, this money will wind up as part of the year-end surplus. Alternatively, the board could have chosen not to budget for the charter school and, if it does open, deal with the effect of the budget shortfall on the educational programs of our students later.
A responsible board will conservatively estimate its future expenses while maintaining a control on actual spending during the year. For most people, that is considered good planning and management.
Yet Mr. Walsh views budget surpluses as money needlessly taken from the taxpayers and, as proof, has come to board meetings with historical data showing year-end budget accounts with large balances. Waiting until the end of the year to second-guess budget decisions made 16 months earlier is easy. Predicting the future is much more difficult –– unless you are not concerned with the consequences of being wrong.
The state permits school districts to retain a portion of the year-end surplus –– about 2 percent of its annual budget –– for operating purposes. Any money beyond that amount is labeled “excess surplus” and must either be reserved for a specific use or be used the following year to reduce the property tax levy, which the state refers to as “tax relief.”
The NJ Department of Education recommends the use of reserve funds to allow school districts to set aside money for large expenditures and possible emergencies. WW-P maintains several reserve funds, the most significant of which is the Capital Reserve Fund. This fund supports the district’s over $200 million investment in buildings and facilities. Without this reserve, major repairs would have to be funded either through the annual budget, which is subject to cap limitations, or through a bond issue and its associated interest expense.
Mr. Walsh portrays contributions to this and other reserve funds as money not returned to the taxpayers. That assumes WW-P’s taxpayer-owned facilities will never need to be repaired or replaced. Again, a prudent board must plan for future expenses and not risk long-term financial stability for a one-year gain.
WW-P’s Community Education provides the public with recreation and adult education programs, along with our popular Extended Day Program for working parents. The school district operates it as an enterprise fund, which means that no tax money is used and, by law, any surpluses generated cannot be used to directly subsidize the school district’s tax-supported funds.
Historically, the board of education has viewed Community Education as a public service and has only charged the public enough to cover the direct cost of its operation with the intention to break even each year. Any surpluses generated are used to offset years that may run a deficit. We do not, for example, bill the public for heating a building that was going to be heated anyway. To say that users are getting a “free ride,” as Mr. Walsh does, is like saying that users of a library are getting a “free ride” for using something that their tax dollars have already paid for.
In recent years, Community Education has generated a total surplus that, in the board’s judgment, can cover its needs for the near future. Therefore, in 2012-’13 we will invoice Community Education for some indirect costs, which the law does permit. This way some of that surplus can be used to reduce the upcoming year’s tax levy, but only to the extent that it does not jeopardize the long-term sustainability of the services it provides to the public.
By contrast, at township hearings on last year’s defeated budget, Mr. Walsh urged both townships to apply the entire accumulated surplus to last year’s budget as a one-time savings –– with no mention of what to do in the following year when there is a zero balance in this fund.
West Windsor-Plainsboro schools are well known for the high academic achievement of their students. The residents of both townships should also know that their school system is being run in a financially sound manner as evidenced by lower-than-average per-pupil costs and the fact that WW-P is one of only nine school districts statewide with a AAA bond rating.
Anthony Fleres
Mifflin Court, Plainsboro
Chair, Finance Committee WW-P Board of Education
The above letter represents the writer’s opinion and not that of the Board of Education.
