Last month, the Hopewell Valley Regional Board of Education approved the preliminary budget for the 2021-22 school year by a margin of 7–2.
The board is required to submit the preliminary budget to Mercer County for review. A public hearing on the county-approved budget is scheduled for April 26 (via Zoom), after which the board is expected to vote on the final budget proposal.
This budget is significant because it will not increase in the local tax levy for the upcoming school year. That is despite the fact that the district’s general fund will grow by 1.75% from 2020-21, from $77,175,998 last year to $78,526,578 this year.
The district was able to maintain the total local tax levy at its current level of $82,168,163 by applying some of the current year’s budget surplus toward its debt service.
By paying down some of the district’s debt in advance, the board will be able to decrease next year’s debt burden by the same amount that the general fund will go up.
Although the district is proposing a flat tax rate for 2021-22, residents of Hopewell Township and Hopewell Borough will still see a slight rise in their school tax levy for next year. That has to do with the way the county calculates each municipality’s tax burden, however, and not in this case because of any decision made by the school district.
The Community News spoke with Thomas Smith, Hopewell Valley superintendent of schools, a week after the passage of the preliminary budget. In our discussion we touched on a number of issues pertaining to the budget, the district, Covid-19, and other related topics.
The Q&A has been lightly edited for length and clarity.
Community News: Let’s take a minute to talk about the current school year and the unprecedented challenges that the district has faced during the pandemic. What are some things that the district got right?
Thomas Smith: I think our screening protocols and really setting up our programs, I think we got that right. The schedule the way it was set up, the way it was rolled out, I think we’ve done well. Our ability to share information with the community, sharing each case and being transparent with our practices and protocols, that all seemed to work out.
And our teachers have been phenomenal. They’ve been really creative and inventive in working with our students. And it really helped us, the e-learning days we did a few years ago when there were snow days and we had students do school remotely. I think that really helped us pivot this year. Students already knew the drill.
CN: Anything that you think could have gone better?
TS: I think we could have done better on a couple things. One I think was sports, and that wasn’t necessarily our fault, but the lack of information coming from the state was frustrating. Although we did a good job, we were always waiting to hear what the governor was going to say and how we were going to have to pivot.
The biggest takeaway from the pandemic I think is there are some kids who are really thriving through this. I think we have to acknowledge that the flexibility of remote and hybrid learning has really played well with some kids. And we have seem some other real positives, like with parent teacher conferences being done virtually this year. Parents have said that was great and really convenient and we may continue to do that going forward.
CN: A lot of residents are interested in understanding how such unusual circumstances have impacted district spending. Are there areas where spending has fallen below budget in 2020-21?
TS: Yes, especially with our benefits package. We have moved to self insurance in our health care and that has been huge for us. In some years that’s a $16 million annual cost, and some years it’s been a double-digit increase in the budget, and for the last two years it’s been zero because of our move to self insurance.
Transportation is another big one. We’re still running a lot of our typical runs getting kids to and from school, just with fewer kids. But we’re not making athletic runs, we’re not doing trips and tours and taking kids to Model United Nations and things like that. So there’s been a huge savings in transportation, and also in heating and cooling, because we haven’t rented out our buildings all school year. There’s been a loss of revenue, but we’re also not heating and cooling all our buildings until 11 o’clock at night.
CN: What about areas where you have had to go overbudget, were there many unanticipated costs this year?
TS: To keep our class sizes low (during the pandemic), we added additional staff, that was an unanticipated cost. Personal protective equipment, air filters, air purifiers, plexiglass dividers, all of those things were unintended expenditures.
CN: The preliminary budget for 2021-22 comes with no increase in the tax levy from the prior year. When you were working with the board on this budget, what factored into your decision not to increase the burden for taxpayers?
TS: We didn’t need to. We’re very concerned about the impacts on our taxpayers. We recognize that over 80% of our budget is funded by local taxes. If we can avoid a tax increase, we’re going to take it and make sure our residents know that at the same time that we’re trying maintain the excellence in our schools. Because one of our biggest budget burdens (health-care benefits) came in at zero, we were able to strike a budget with a tax levy of zero.
CN: You are proposing to use some capital reserve funds to service some debt ahead of schedule as a means of keeping the tax levy unchanged. Can you briefly explain how this works and why it is possible for the district to do this?
TS: The debt service is like our mortgage. Because we do have some savings from this year because of Covid and the impact that it had, that gave us the ability to pay down that mortgage this year. And next year we have the debt service from the Timberlane renovation falling off. So we anticipate two years of savings for the community.
CN: A budget that you’re happy with, that does not increase to the tax levy, sounds like a win for taxpayers and the district if it can be done. One might have expected the board’s vote to be unanimous but two board members voted against it (Debra O’Reilly and Andrea Driver). What did they tell you, or what do you think they wanted to see in the budget that wasn’t there?
TS: Part of that is there’s a feeling that we should reduce spending on the general fund side. It’s really about looking at two years, three years out. Some folks thought we should reduce the general fund spending, take the savings now and increase the budget next year using banked cap if we need to.
There were others who felt we should retain our spending authority going into next year, because there’s a lot of uncertainty, and then if we don’t need those monies, we can reduce the budget next year.
But exceeding 2 percent, using that banked cap is absolutely a lightning rod in this community, and something we only want to do if it’s an absolute necessity.
CN: Can you talk about some areas where the district has been able to trim costs from the budget this year?
TS: It’s more than in the past year. We’ve been cutting costs in some areas for years. As our enrollment goes down,* we’ve been reducing staff. We’ve tried to do it through attrition. As someone retires, we just don’t replace that position, rather than letting people go.
We’ve also done that with admininstrators. We’ve reduced our number of administrators in the past few years.
Going forward, the savings for health insurance can’t be overstated. It’s just huge for us. And we’ve moved toward virtualization, moved toward a Google platform all of our storage. Our email is stored through Google (in the cloud).
We used to have rooms and rooms of servers that had to be replaced every so often, we’ve moved away from that.
CN: There was a meeting in March between the school board, the administration and local municipal leaders. In that meeting, council and committee members asked the district to consider putting even more of the capital reserve toward this budget, which would not only keep the tax levy level, but actually lower taxes for 2021-22. Did the board consider the option of using surplus to actually reduce the tax levy in 2021-22?
TS: Yes, but one of the things we’ve learned in the past is, when you have the majority of your budget going up year to year, and then you use surplus toward the general fund, you end up having to make that up year after year. In the past, we painted ourselves into a corner with these low budgets when our costs were increasing. So there came that day of reckoning a couple years ago when we had to dig ourselves out of a hole.
We were asked if we could get the tax levy lower by using surplus from this year in the budget, and we did discuss that. But then you’re going back to that bad habit that we broke of using of surplus to balance the budget. We’re still using it, just not as much as we were.
Say we would have had to make $3 million in cuts to get everybody to go down below zero in terms of their tax levy. Making that reduction would have a detrimental effect on our future ability to spend, or it would mean eliminating programs or services, neither of which we wanted to do.
We’re trying to maintain excellence in our schools and make our cuts where we can.
CN: At one of your recent meetings you introduced an additional $344,000 to the budget under “regular instruction” to adjust for an unanticipated injection of state aid. The district has said this will be put aside for learning loss remediation due to Covid.
Can you talk about the district’s plans for remediation and summer classes? When will you know you have to do it and how will it be implemented?
TS: There’s two things there. We got additional state aid, but we also got Covid funding from the federal government. Covid funding is specifically earmarked for one-time costs — HVAC upgrades, putting in things like mental health programming, getting schools reopened and also remediation and acceleration.
We’re applying those monies toward our summer programming and bringing in mental health supports for students and staff, and also doing some HVAC upgrades. Although we did a lot of them through our last referendum, we still want to improve our systems.
CN: How will learning loss remediation work, exactly?
TS: We are finalizing it now. We want to roll it out in April, K through 12, expanding special educational programs, doing general education. Even kids who want to stretch and take upper level courses.
We don’t want anyone to have to suffer because of changes due to Covid. We’d like to do it in person, but we recognize there’s going to have to be a remote component. We have to recognize that some people are not ready to come back yet.
CN: The CDC has recently said that in schools it is safe to reduce the standard social distance between people from six feet to three feet. Presumably, you set up the budget for 2021-22 expecting the social distance guideline to be six feet. Will this have an impact on the budget and your plans for next year?
TS: We put in about 20 teachers to keep our class sizes low this year. We don’t expect those teachers to come back, so the answer is yes. We expect there to be some change, but we’re not going to have the same number of staff as we had this year.
CN: Even though the school district has proposed a budget with no increase to the local tax levy, taxpayers in the township and in Hopewell Borough will nonetheless see their taxes rise for reasons that are beyond the district’s control. Can you explain why that is?
TS: What it comes down to is, they have fewer people paying taxes this year than last year. We have to ask for X number of dollars from the township and this year that number doesn’t change for us. But they have had a big decrease because Bristol-Myers Squibb left, and with them out of the equation, that number has to be picked up and spread out over all the residents.
In Pennington, they have actually added ratables in the past year, so their tax levy is staying at zero, or actually even going down a little.
CN: Is there anything else you wanted to say about the budget process?
TS: We are trying to be very good stewards of the taxpayers’ monies. We want to make sure we are providing our students and our residents with a great educational experience. We know many folks have moved into this area because of the school district, and we want to make sure that we are keeping up and continuing our programs and our successes.
I live in New Jersey, I understand the tax structure and that’s something we don’t control. But we try to make the best decisions we can while providing the best programming for our kids.