Accountant advises Board of Ed it’s ‘over-budgeting’ expenses
GERMANTOWN—The Germantown Central School District is economically the healthiest in the state, said June Nelson in a prepared statement during the Public Comment portion of a December 11 standing-room-only Board of Education meeting. Ms. Nelson, a sixth grade teacher, is president of the district teachers’ union, the Germantown Teachers Association.
About a dozen teachers attended the school board meeting, many wearing festive red sweaters and all of them sporting a hand-made paper badge, “894 Days,” a reference to how long they have worked under an expired contract.
The district’s health insurance costs the same as it did in 2011, said Ms. Nelson. The district’s unexpended surplus has increased to $2.1 million, or 19% of the budget, she said.
“What we propose is reasonable and fair,” said Ms. Nelson, referring to the union’s offer. “We ask that you accept our last offer.”
In an email to The Columbia Paper after the meeting, Superintendent Susan L.S. Brown wrote, “Although I do not ordinarily respond to public comment at board meetings, I feel compelled to make a statement due to the importance of this matter.
Saying she is honored to have worked with the teachers since 2005 as principal of the Germantown Elementary School, Ms. Brown wrote that she has been “working diligently to find a way to settle the Germantown Teachers Association contract” since she was appointed superintendent of schools in September. “The district is still working toward the goal of arriving at a fair yet fiscally sustainable agreement and hopes that the Association will partner with us toward that end,” she wrote.
Eric Mortenson, president of the school board, noted that board members are not allowed to comment publicly on contract negotiations. “Personally, not speaking for the board, I felt uncomfortable just moving on to the next item of business after [Ms. Nelson’s] statement,” he said Monday. “But as I understand it, board members cannot comment. It was not a purposeful action to ignore the teachers, but a purposeful effort to do the proper thing.”
A financial statement presented by district accountant Raymond G. Preusser, CPA, at the start of the meeting appeared to support Ms. Nelson’s statement. The district has an operating surplus of $602,000 plus $1.1 million in restricted reserves and $2.5 million set aside “for no specific purpose, well over what is allowed,” said Mr. Preusser.
He said that under state law the only way the $2.5 million can be retained, he said is in a capital plan, if the voters approve, or in a plan to reduce taxes. Taxes cannot go below a 0% increase, but “as long as the board establishes a plan, you can stretch” use of the unexpended funds over years of tax relief, he said.
Mr. Preusser, whose firm has served as the district’s accountants for the last three years, said that he had continued his analysis of how the money flows. “Looking at your expenditure report, the district expended only 98% of its budget last year,” he said, resulting in three years running that budgets, built higher than what the district needed, resulted in surpluses. The surplus total for those three years is $1.8 million, said Mr. Preusser.
“You’re over-budgeting to meet the expenses you have,” he said, “so you’re taxing unnecessarily to cover that.
“If you take the same three budgets and compare variances,” he said, “ you underspent by $4.8 million.”
The board must be more diligent and start questioning why this is happening, said Mr. Preusser. For example, he said, “You shouldn’t be so far off on your employee benefit section. In 2013 that was your largest variance–$400,000.” Once a salary is set, he noted, Social Security is a set rate. The Teachers Retirement System sends out its rates a year ahead of district budget time.
District revenues were “right on,” said Mr. Preusser, but expense numbers “have to be matched to some kind of evidence behind them.” He suggested that the board begin developing three-year budgets and eventually work with five-year budgets.
Asked why he hadn’t made the situation clear in previous reports, Mr. Preusser said that he had, but that he had reported percentages only, and now he was presenting numbers.
In May 2012, the board proposed a $13.9 million budget with a 5.2% tax levy, well over the 2% cap mandated by the state. That budget, which used $668,308 in reserve funds, was defeated. A new budget, $13.7 million with a 1.75% tax levy and $1 million in reserve funds, passed in June. In July the board restored the faculty positions it had cut or reduced.
This year, the board proposed—and the voters approved—a $13.5 million budget with cuts in the categories of instruction, transportation and community service. The amount taken from reserves was just under $500,000.
“The district is prepared to work closely with the state comptroller to develop a plan to ensure that budget estimates and reserve balances are reasonable and that reserves are in accordance with statutory requirements,” Ms. Brown said in her email.
The audit report was “what I have been expressing to my fellow board members for the past three years,” said Mr. Mortenson. “It’s exactly what I thought it was, and it’s important that we develop a good plan for the funds.
“We can use the surplus for tax relief or a capital project,” he continued. “We have a list of building repairs that need doing, and we’re organizing a public committee to review those repairs. If the repairs prove necessary, it’s always best to pay for them rather than borrow. I look forward to working with the public committee to come up with a wise plan for the funds.”
In other business, the board:
•Approved the removal of a “collapsing, abandoned chimney” from the school roof
•Learned that the Facilities Committee had met and drafted a letter to invite community members—specific groups and all parents—to join a Community Facilities Committee
•Heard a presentation from Erin Cannan, director of the Center for Civic Engagement at Bard College, and three Bard students, about the Bard Branches program, which mentors students in Germantown with activities in Germantown and on the Bard Campus.