Pinelands Regional School District Calls for 2-Percent Tax Increase

Layoffs Also Used to Balance Budget
By RICK MELLERUP | May 08, 2019
Photo by: Ryan Morrill

Little Egg Harbor Township — It is a pretty safe bet to say most taxpayers who live in the constituent municipalities of the Pinelands Regional School District won’t be happy with the district’s tentative 2019-20 budget, which had its first public hearing at the April 30 meeting of the PRSD Board of Education. The owner of a $200,000 home in Little Egg Harbor Township will pay $30 more in district taxes for the 2019-20 school year as compared to the 2018-19 period. Meanwhile, the owner of a $200,000 home in Eagleswood Township will see their secondary school tax bill increase by $85. Bass River Township residents will have the largest tax increase, with the owner of a home valued at $200,000 having to shell out an additional $96 to support Pinelands.

The residents of Tuckerton, however, will smile, at least a little, because their secondary school tax will actually decrease – the owner of a $200,000 home will pay $20 less this coming year.

Tuckerton taxpayers benefited from an $11,795,631 valuation increase from $407,199,800 in 2018 to $418,995.431 in 2019.

Eagleswood’s valuation dropped by $3,818,011 as compared to 2018 while Bass River’s fell by $1,871,602. The larger increase for Bass River taxpayers can be attributed to that township’s having a smaller total valuation of $170,388,798 as compared to Eagleswood’s $230,485,689.

The PRSD 2019-20 budget, including $3,631,069 in debt service related to the $53,645,527 package of three referendum questions approved by district voters in January 2017, will be $37,790,991 That’s up $676,601 from 2018-19.

PRSD Business Administrator Nick Brown, Superintendent of Schools Melissa McCooley and the board of education – especially Budget Committee members Karen Poklikuha (chairwoman), Betti Anne McVey, Stephen Kubricki and Thomas Williams – worked hard to keep the tax increases at a minimum. A full-time media specialist and an industrial arts teacher were laid off, as were a part-time speech teacher and a part-time audio visual broadcast teacher. Shared services agreements, especially the sharing of McCooley, Brown, Director of Special Services Erin Lichtenwalner and an evening maintenance supervisor with the Little Egg Harbor School District as well as a health benefit plan choice resulting in stable year-over healthcare costs, were also credited as important cost-savings measures in Brown’s presentation at the April 30 meeting.

Brown and Co. will have an even more difficult job when crafting the district’s 2020-21 budget.

“To be quite honest, I’m concerned,” Brown had told the BOE at a meeting on April 10. “I’m going to break those concerns into two buckets, this year’s problems and next year’s problems.

“So I’m going to give you a quick overview real quick. Like other schools in the region, Pinelands is faced with this: declining revenues through the loss of state aid, rising costs, which we’re all dealing with – a lot of salary and health benefits – and stagnant enrollment. For this upcoming budget we’re facing RIFs (reduction in force, a.k.a. layoffs) to be able to balance the budget for ’19-’20.

“Of primary concern is that our cash and reserve balances are extremely low relative to the size of our budget. Our total reserves are down 71 percent since 2013; our unassigned fund balance is down 21 percent in that same period. Those two things – your unassigned fund balance and your reserves – are your financial flexibility. We have none.

“I want you to also consider that the change in fund balance, the constant decreasing of our fund balance, indicates that we’re losing the ability to fund operations and handle these things when they come by unexpectedly.

“So this year’s problem is that there is less than $1 million left in the budget. We’ve covered health benefits and salaries for our staff for the rest of the year; we have our obligations covered. But there’s less than $1 million of the $32 million left in the budget unspent.

“I wanted to share with you, too, that one of the BA’s (business administrators) in a school district from central Jersey sent out a survey. We had 50 school districts respond to it. In that survey they asked some simple questions – what’s your operating budget and what are all your reserve balances – and I want to give you an idea where we stand in this unofficial survey of 50 schools. Of them, our total operating budget was 28th out of 49 schools; we were near the middle of the pack. Our total reserve balance was 39th out of the 49 schools that participated in the survey. Our ratio of reserves to our operating budget – which is very simple, total amount of reserves divided by the operating budget – was ranked 40th out of 49 respondents in the survey.

“I am offering to you that – this evidence is from our audited financials, this isn’t debatable – we are in a tenuous financial state. We’re RIFing this year to make the budget; the picture next year is concerning.

“So our contractual obligations next year will increase by a minimum of $800,000; that’s salary and health benefits assuming the contractual raises and the 4-percent increase for health benefits. Our tax levy (increase), if we go to 2 percent (the state cap), is $400,000. So we can raise revenue 400K, but our costs are going to go up 800K. Then you factor in the $85,000 we’re going to lose in state aid and we start the ’20-’21 budget cycle down over half a million dollars, (even) if we go to 2 percent.

“There’s a chart in there (a packet of information Brown had given to board members) that shows the actual tax levy versus 2-percent tax levy going from (20)13 and looking forward. I’m going to suggest – and I know this is not a popular opinion with taxpayers anywhere or with anybody on the board – but we need to bank more, the district, to be able to sustain operations, need to be able to bank on consistent revenue of 2 percent of the cap. The only way out of this hole is revenue. We can’t cut our way here. This is not a spending problem; this is a revenue problem. I wanted to make sure that we express this to the board and to the public so they understood the nature of our finances.”

If the tax increases (other than Tuckerton’s) seem high this budget that’s because the BOE – as a way of thanking residents for supporting the referendum questions – had raised the local tax levy by only 1 percent, 1 percent, and 1½ percent the past three budgets. Those days may be over.

The final public hearing regarding the PRSD 2019-20 budget will be held on Wednesday, May 15, starting at 7 pm in the junior high school media center.

— Rick Mellerup

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