Ronald Sanasac, assistant superintendent for business administration and the board secretary at Howell Township Public Schools, recalls going to board of education meetings as a resident years ago.
He ultimately won a seat on the board, serving 12 years. “I was sometimes the guy in the audience yelling, and then I became a board member and found out I should not have been yelling,” he said.
For many school board members who previously attended meetings as members of the public, that may be a common feeling. Moreover, as board members, they may find themselves trying to address debate about the board’s role in school operations — particularly school finance.
Tammeisha Smith, a member of the Knowlton Township Board of Education in Warren County, as well as the New Jersey School Boards Association’s vice president of finance, said board members can get an overview of their role by reviewing School Finance 101 (www.njsba.org/news-information/parent-connections/school-finance-101/) on the NJSBA website. “That is a great place to get started to understand a budget, to learn how to work with your business administrator as a board member, and for when you start preparing your budget for the next fiscal year,” she said.
Another best practice is “not getting into the weeds of every single invoice,” she said, noting that is not the function of individual board members. “That is why you have a business administrator,” she said. “But you do need to make sure you are working effectively with them, because it is their job to make sure the district is budgeting appropriately, taking advantage of grants and resources available and making sure there’s an adequate budget to run the business of the school district.”
Kerri Wright, a longtime member of the Chester Board of Education and a lawyer who specializes in education and employment law who was named the New Jersey School Boards Association’s 2021-2022 Board Member of the Year, said school board members should have a good idea of where the district is in terms of the set budget. “For example, have we had any added expenses; have we experienced any additional savings or increased costs over what we included in the budget?” she said. “There are a number of items that go into a district’s budget that are estimates. Board members should follow up throughout the year on how the board is doing relative to those estimates/projections.”
She noted that a board’s relationship with its business administrator is critical. However, it’s important to “be respectful and remember that this person does not work for you individually.” She added, “It is important to remember that he or she has a full-time job, and board members should be respectful of that when requesting data, documents, or analysis.”
Alix Hayes, a member of the Ocean Township Board of Education in Monmouth County as well as the vice president of legislation for the Monmouth County School Boards Association, recommended asking questions. “If you’re uncertain what terms or documents or numbers mean, ask your business administrator or superintendent after you get meeting agendas for clarification and data, if needed,” she said. “Be as prepared as possible. It’s OK to admit when you’re not a budget expert and to consider the solid expertise of your business administrator.”
Look at the Big Picture After leaving the Howell Public Schools Board of Education, Sanasac had the opportunity to begin working for the district in 2004.
When it comes to school finance, one of the first things board members should do is get a handle on the big picture, which includes how the school district is funded, he said.
For instance, in some districts, local taxes fund a small part of the budget. Other school districts don’t rely as much on state aid.
That comes into play when proposing a budget, as a district that receives a large portion of its funding from the state would not enjoy a huge payoff even if it increased property taxes by the maximum 2%.
“To make it simple, if a district gets 50% of its funding from local residents and 50% from the state, a 2% increase in the tax levy is only a 1% increase in the amount of money,” he said “You are only raising the levy part, and that can only go up 2%. There can sometimes be a giant misconception, with some assuming that if you had a $100 million budget last year, it could go up to $102 million the next year. It is only the local tax levy that can go up 2% — not the whole budget.”
For “a mid-level suburban district” like Howell, in the current environment, as an S-2 losing district and considering factors such as inflation, labor settlements exceeding 2%, other constraints on revenue and an increasing educational demand, it can’t afford not to seek the statutorily allowed annual 2% increase in the levy, Sanasac said. “Otherwise, we would be digging ourselves a hole we would never get out of,” he said.
A big part of the budget is typically spoken for before you ever put pencil to paper, he said. “You have a contract that says what you pay teachers, what benefits they get, etc.,” he said.
No matter what, board members should keep their focus on the students, according to Smith. “Everything else should be secondary,” she said. “We have to pay teachers, have insurance, etc. — but all of those things should not outweigh what we deliver to the students.”
While virtually all board members have that mission in mind, Smith has run into some who have other motives, she said.
For instance, while there is nothing wrong with looking at serving on a school board as a possible nonpartisan steppingstone to a higher political office, she once found out a candidate was running in a bid to secure more school contracts for minority vendors.
“I got that,” she said, “But once again, the purpose of being on the school board is first and foremost to support students and public education,” she said. “It’s not about whoever is getting a contract — that should not be the priority.”
In carrying out its mission, board members must look at the big picture, including whether the district can afford to operate as it wants, and if not, what steps it needs to take to get there.
“Do we have the ability to increase services, curriculum and classes and maybe other things, such as arts and music?” Smith asked. “Or is our budget so tight based on lack of funding from the state and federal level that we have to cut programming?”
A board member must also consider larger trends, such as whether enrollment is increasing or decreasing as that will affect future budgets, Smith said.
It’s important to look at multiple years of data when reviewing proposals, Hayes said. “Context is so important — and not just the obvious numbers,” she said. “What’s changed since last year? What’s the expenditure trend over the past three or five years — or even beyond? If there is a new social studies curriculum purchase on the table, having answers as to ‘What does the staff think of this new program?’ are helpful.”
In terms of securing additional funding over the long term, that is where an organization like NJSBA can be so essential as it advocates on behalf of schools, Smith said.
The Annual Report The main thing board members should concern themselves with regarding the Annual Comprehensive Financial Report is whether the auditor has recommendations, Sanasac said.
“If there are no recommendations, that means a professional, peer-reviewed body is saying your district is being run well,” he said. “A clean annual audit is a pretty good signal.”
Not all red flags should be cause for alarm, he said.
For instance, a district may have received funding from the United States Department of Agriculture to provide students with meals during the pandemic — and it may have an overage in its food service account. An auditor may flag that as it’s not supposed to be a profit center, but it’s explainable, he said.
A board member should generally pay more attention to the school’s monthly reports than the audit because the audit looks back, Sanasac said. Keeping tabs on what the school is doing on a monthly basis generally holds more significance, he said.
“If I was giving a one sentence recommendation to a new board member, I’d say, ‘Check the cash,’” Sanasac said. “If the cash matches the board secretary’s report and the treasurer’s report — as long as it is true and not fake as there is always the possibility of fraud — then you are in a good position,” he said.
Some board members may wonder about petty cash, which might be a factor if a district wants to adjust what it’s giving to an administrator. But there needs to be a certain level of trust between the board and personnel, he said. “If you are going to pay someone $150,000 per year to run a building, are you going to question their judgement on how they spend $25 and ask for an explanation for every receipt?” he said. “If so, there is an issue there. If someone asks for there to be an increase in petty cash, you have a discussion.”
Communicating with Residents Prior to 2012, the annual school election for New Jersey’s boards of education was held in April and included a vote on the proposed district budget. With the vast majority of boards having moved their election to November, a budget vote is only required of those districts still holding April elections. But all boards of education must hold a public hearing on the proposed budget.
One of the most important tips Sanasac has for board members is to engage with the community — and that means keeping them informed about the budget throughout the process.
Howell stands out as its board includes a finance committee with three board members and three citizens who have the same input and voting authority with respect to the committee’s recommendation to the full board. “The committee meets sometimes twice a month during budget time, and citizens are allowed to discuss everything the board is doing. From what I understand, we are the only district in the state that has board members and citizen members collaborating equally,” Sanasac said.
Regardless of how a district comes up with its budget, at public hearings, Sanasac said board members should focus on answering top-of-mind questions from the public, including:
- How much money does the district need?
- Where is it getting it from?
- Why does it need the money?
- How much will it cost residents?
- Why can’t it be less?
It’s important for board members to step back and let the business administrator do their job in terms of preparing the budget and presenting it to the public, according to Smith.
One area that board members may be able to provide some direction, Smith said, is by looking at how much money was allocated to certain areas in the past and how much was used. A district may find a shortfall in one area is covered by an excess in another, she said.
“I would also say as grants and opportunities become available, make sure your business administrator is on top of it and taking advantage of it if your school qualifies,” she said. When you secure opportunities, you’ll be able to stretch the money in the general fund, she said.
In Howell, historically the business administrator explains the budget to the public in a livestreamed presentation that is posted online for later viewing, Sanasac said. “I hate to use the word ‘transparency’ as some overuse it, but it really is key,” he said.
It can be challenging to find the right balance, he said, as when you try to explain the budget in detail, some members of the public may complain that you are using jargon or talking above them. The flip side, of course, is if you are scant on details, you may also be criticized, he said.
The budget hearing is an opportunity for the board to learn more about the community’s expectations for the district, Wright noted. “Board members have to be careful when communicating with the public individually, but collectively can engage with the public through presentations of the budget to various groups,” she said. “For example, a presentation can be made to the local municipal governing body to keep that relationship strong or with a local taxpayers group. When individuals in the community are engaged and understand what goes into the budget and what items are fixed mandated costs, it may help to gain support for the school district (and dampen any resentment of the perception of high taxes).”
It’s important to engage your business administrator throughout the process, Wright emphasized. “He or she is a critical component of your district’s financial well-being and can assist in crafting messages to the community,” she said.
Hayes, who noted that she’s only been a board member for one official budget season but attended almost every meeting for three years prior to being elected, said budget presentations and documents should be on a district webpage “and not buried in a spot that takes someone 12 clicks to get to it.” She added, “In addition, whenever there is any lengthy report or document, there should be a one-pager that sums everything up in plain, easy-to-read and understand language. Legalese, budget-speak, or education-dominant phrases should be avoided. Tell parents what you’d like to do, how you hope to implement/pay for it, how it will affect their child’s education and the timelines. Posting a spreadsheet-heavy packet online can fall flat, in my opinion. Have a glossary of finance terms, infographics, etc. If you want input and ultimately buy-in from families and taxpayers in your district, you have to make sure the message is accessible.”
It’s great if you can provide budget documents in several languages if you have a diverse district, she said. “In addition, I have been impressed attending in-person school meetings across the state that have translators on hand,” she said. “If we want to engage all stakeholders, a board really should make purposeful efforts to reach various populations.”
Wasteful Spending Board members may have grandiose plans about eliminating wasteful spending, but the reality is that most money goes to salaries and insurance, Sanasac said.
One area where a board may be able to do some good is by exploring energy savings improvement projects, Sanasac said.
“This can be huge,” he said. “A good question you can ask is what projects can you pursue that would save energy. It can be penny wise and pound foolish to avoid replacing that $100 light when it’s using $90 in electricity per month. Think about whether you can find a better solution, whether it’s in the kitchen or throughout the building.”
It’s also important to look at areas such as transportation, trash pickup and other services, he said. “Do you have GPS on your buses to make sure they are not idling too long?” he asked. “Can you invest in being more efficient?”
You must keep striving to work toward solutions, Sanasac said.
“I make a joke that I have 100 good ideas a day and pursue 50, and once a year one comes through. But you have to keep trying because it is that one solution that might change things,” he said. “We do maintenance in our bus garage for two other districts. We provide school transportation for another district. We have a shared service with the town to pick up trash at all our buildings. It is things like this that I think will give us more capacity to put funds into the classroom.”
Sometimes, you can uncover money in unexpected places, Sanasac said. He noted that he has an administrative assistant get updated prices on seemingly minor items such as pencils on a weekly basis. Some may think that is excessive, but a small price differential can make a huge difference given how many pencils the district uses, he said. Cutting back on paper can also pay big dividends, he said.
Asked how a district might eliminate wasteful spending, Wright suggested, “Request that the district utilize zero-based budgeting, which is a method that calls for all expenses to be justified each year rather than simply increasing the budget by a specific percentage.”
Hayes noted that creative business administrators like the ones from her district have pooled their purchasing power with other districts to curb costs. “It just makes sense to team up in departments like transportation, busing food service, maintenance/janitorial, etc.,” she said.
The Impact of COVID-19 As to how COVID-19 has affected school district finances, it depends, Sanasac said.
Some districts spent a lot of money putting plexiglass around every student desk and had to shut down anyway. Other districts may have navigated the pandemic differently and find themselves better off, he said.
“The response to COVID has certainly made our job very different in terms of keeping track of grants,” Sanasac said. “In general, we are preparing the budget in the same way, but sometimes we have had to have remote meetings instead of meetings in person.”
When schools have had to shut down, they’ve no doubt saved some money on utilities and such — and maybe received a rebate from their automotive insurance company — but that has probably offset needing to buy items such as disinfectant and masks, he said. “At Howell, we continued to pay every employee. We paid bus drivers that didn’t drive buses and custodians that didn’t clean buildings,” he said, noting that they, in turn, continued to contribute by helping with lunch distribution and other tasks to help the district and the community.
Asked about the pandemic, Smith expressed dismay with the notion she’s heard in some circles that residents should get a tax refund if their schools closed their doors.
“The schools were not desolate — we still had to maintain the schools,” she said. “We can’t just close the doors. They still require maintenance and upkeep.” They also needed to be ready to reopen quickly, she said.
“But those are the types of things that can come up where the business administrator has to address the public about the district’s responsibilities,” Smith said, noting that teachers and staff still needed to be paid while students were receiving virtual and/or hybrid instruction.
“You also need professional cleaning crews, air purifiers, UV lights and all these extra materials to ensure safety while in school,” she said. “There is a lot going on behind the scenes.”
Hayes noted her district expects to lose a significant amount of funding over the next several years as a result of the school funding formula — and an injection of money from COVID-19 relief funds has been a positive, albeit temporary, benefit. “In terms of purchasing power and supply-chain problems exacerbated by the pandemic, some capital improvement projects are more expensive than they probably would’ve been — and ordering new school buses is certainly a more costly endeavor than two years ago as prices for buses have increased,” she said.
There’s an old saying in the school board community, that school board matters concern the two things that people care about most: their children and their money. So, it’s not surprising that the budgeting process would capture the attention and interest of your public.
NJSBA Finance Resources NJSBA has an array of resources to help board members navigate school finance, including its School Finance 101 page, which provides an overview of the school funding formula, the components of an adequate budget, types of aid and more. You can also take advantage of “A Board Member’s Role in School Finance” chapter in “Fundamentals of School Board Membership.”
Thomas Parmalee is NJSBA’s managing editor.
