Dire Straits for BOE?

Feb. 26, 2025 - On Monday, Holmdel’s school district published a newsletter that stated that Holmdel schools are at a financial crossroads.  Specifically, it mentioned that the BOE and school administration are considering several options that included (a) eliminating courtesy busing*, (b) implementing a “subscription” (i.e., paid busing) for courtesy students or (c) keeping courtesy busing but eliminating 10 positions to pay for it.  The newsletter mentioned that courtesy busing costs $600,000 to $800,000 annually and the BOE has proposed to the Holmdel Township Committee for a $1 million “investment” for the 2025-26 school year.

It appears that the bleak picture painted by the BOE newsletter was an attempt to pressure the Holmdel Township Committee to agree to the request for $1 million.  At Tuesday night’s Township Committee meeting, BOE President Chris DiMare and several BOE members were in attendance along with concerned parents to make public comments in support of the $1 million request.

The argument for the $1 million request is the fact that the Township is receiving sizeable PILOT (Payment In Lieu of Taxes) payments that are not part of the normal property tax base that BOE’s tax levy would apply to and, therefore, depriving BOE of funds.

2% CAP

What may be under the radar is a self-imposed condition: the BOE is preparing a “not-to-exceed” budget.

Before 2012, school districts held their board elections in April and their annual school budgets were subject to approval by voters every year.  That changed in 2012 when then-Governor Chris Christie signed into law that allowed school board elections to be held in November.  Along with that move (from April to November elections), school districts were allowed to increase their budget by up to 2% without the approval of voters.  (Note the CAP was 4% before it was amended to 2%.)

However, it is important to remember that, when necessary, a school budget can increase above this 2% “CAP” provided that voters approve it in a referendum.  Holmdel did this with the 2020 referendum for a $40 million bond issue.

2024 Failed Experiment

In March of last year, as part of the 2024-25 budget process, the BOE budgeted $4.5 million for student transportation even though the school district incurred a cost of $5.3 million in the 2022-23 school year and $5.1 million in the 2023-24 school year, respectively.  The rationale was the moving of the start time for the high school would result in more efficient busing routing and lower costs.

Parents may painfully remember the disastrous busing logistical nightmare at the beginning of the school year in September that persisted for weeks.

Was it a coincidence that the then-president of the BOE was up for re-election and the budget was hitting the 2% CAP and the desire not to seek voter approval for a budget that exceeds a 2% increase?  Were parents and students the collateral damage of that decision?

2024 State of Holmdel Presentation

Before last year’s budget preparation, there was a “State of Holmdel” presentation at a March 2024 Township Committee meeting.  The main points were: (1) spending has increased commensurate with PILOT revenues - $26 million in PILOT revenue since 2018 alongside with spending increase of $26 million cumulatively, (2) there is not a lot of discretionary spending in the Township’s budget, and (3) the debt servicing has spiked to historically high records.

The takeaway point is that Holmdel Township needs to exercise budgetary restraint now to prevent a problem in the out years.

Final Analysis

It is great to see that the two governing bodies (Holmdel Township Committee and Holmdel BOE) work together collaboratively.  For the most part, the financial assistance that the Holmdel Township Committee has provided to the BOE thus far is within the Township Committee’s purview.

Paying for security officers in schools ($250,000) can be argued as part of public safety that the Township is responsible for.  Similarly, while it will help with traffic congestion to the schools, the money for improving traffic around Crawfords Corner Road and Longstreet Road (the entrance to Holmdel HS and Satz Middle School) is part of road work that is the Township’s purview.  The lighting for the field behind Satz Middle School is an exception.

However, the Township Committee and our school board are two separate governing bodies whose members are independently elected with different focuses and priorities.  Each governing body has a separate budget that they are responsible for and each has its tax levying power for raising revenue.

The BOE has painted a bleak budget picture but it does have options.  The BOE can have a budget with an increase that exceeds 2% CAP.  It just needs approval via a vote by Holmdel residents.

In addition, there are “carve-outs” or exemptions for healthcare costs that are not subject to the 2% CAP.  According to NJ DOE records, Holmdel BOE 2024-25 budget showed a budgeted amount of $12.7 million for “Personal Service-Employee Benefits” versus an estimate of $10.4 million for the 2023-24 school year or an increase of more than 20%.  It was not clear whether that was taken into consideration in determining the last year’s CAP.

Stay tuned.  It will be interesting to see what the Township Committee will decide after announcing last year that it must be fiscally prudent.

* Courtesy busing is free busing provided to students who live within 2 miles (for grades K-8) or 2.5 miles (for grades 9-12).  Under state guidelines, this is the responsibility of parents.