Surplus For Leb Schools: $1.94 Million to Go Back to Taxpayers
Lebanon — A litany of unexpected savings has resulted in a school budget surplus of more than $2.2 million, most of which will be funneled back to taxpayers.
Lebanon School District Business Administrator Jim Fenn said that the final return to the voters — about $1.94 million — will be paid in adjustments to the tax rate in the fall. The current tax rate is $10.83 per $1,000 of assessed value, or $2,708 on a $250,000 home.
The surplus money, which is emerging as a bone of contention among some involved in the school budget process, stems from the 2013 fiscal year’s budget of $37.5 million. The 2014 fiscal year budget, which began July 1, is about $39 million. About $300,000 of the surplus money is being spent on projects around the district such as drainage upgrades to the Hanover Street School playground and upgrades to security cameras.
Fenn pointed to more than a dozen reasons for the unanticipated money, with the largest contribution a result of more than $600,000 in health insurance savings. Additionally, tuition revenue came in at nearly $375,000 more than expected, and the district spent about $379,000 less on hiring-related costs than it had previously anticipated. Other savings, such as reductions in the electricity rate and adjustments to staff benefits, have also contributed to the surplus.
The leftover dollars are nothing new for the district. Budget surpluses have topped $1 million in every year but one since fiscal year 2006, and have come in at more than $2 million since fiscal year 2011. Fenn said that the surpluses have “crept up” in recent years, but contended that was a result of larger budgets in part, and also the challenge of having to project revenues from 18 months in advance.
“It’s actually pretty good budgeting,” he said.
But not everyone is applauding. Former School Board member Al Patterson, who failed to win reelection in March and has taken issue with budget surpluses in the past, described the most recent surplus as “insane.”
“In my eyes, it’s deceitful,” Patterson said. “It’s deceitful to the taxpayers. Why do you take something that you don’t need?”
Patterson said his biggest concern is Lebanon residents living on fixed incomes who are struggling to keep up with their tax payments and for whom every rate increase means another expense.
“For them, it was an increase,” he said. “And it wasn’t even an increase that was needed.”
Fenn argued that a having a budget surplus is necessary because it functions as a financial cushion for unanticipated expenses and revenue shortfalls. He also took issue with the term “surplus,” preferring instead to use the term “fund balance,” because the former implies that the money isn’t needed. Patterson called that argument “malarkey.”
“That’s just a fancy way of saying, ‘We’ve got extra money,’” Patterson said. “ ‘We didn’t need it, and we got caught.’ That’s what that is saying.”
School Board Chairman Jeff Peavey said he sees merit in both sides of the argument over surpluses, which he said are understandably part of the budgeting process but also need to be reined in.
“Believe me, it’s something that’s going to be looked at very heavily when we do budgeting this coming year,” Peavey said. “I think you’re going to find it much more scrutinized.”
He said that School Board members will try and do a better job of finding places to cut ahead of time to avoid budget disputes like those seen in January, when some School Board members joined in an unsuccessful last-minute charge to cut the budget by large, block amounts ranging from $250,000 to $600,000 spearheaded by board veteran Hank Tenney.
Tenney and other board members at the time were told by Superintendent Gail Paludi that there was no room in the budget for the cuts they were looking for unless they were prepared to lay off staff.
School Board Vice Chairman Bob McCarthy said he has struggled with the surpluses in the four years he’s been on the board.
“There are fixed costs that there’s nothing you can do about, but to me, to have such surpluses, I don’t think that’s right and I don’t think that’s fair,” McCarthy said. “I just question what we can do to hone this in so that we don’t have such big discrepancies, and that’s something I’ve been wrestling with since I’ve been on the board.”
McCarthy said he was alarmed at first at how high the surplus is, but was comforted in part by Fenn’s explanation of what led to the situation. He said his top priority as a board member is to ensure that Lebanon’s students get a good education, but his other main concern is protecting taxpayers.
“There are a ton of people on fixed incomes,” McCarthy said. “You don’t want this tax rate going up and down and cause them any more hardship than they’re already going through.”
Ben Conarck can be reached at firstname.lastname@example.org or 603-727-3213