Our operating budget (spending) has been declining for the past two years from $60M in FY 2009 to $55.8M in FY 2010 and finally a proposed budget of approximately $54M this year (FY 2011 started on July 1st).

Table 1 shows the reduction from 2009 to 2010. The cuts have been primarily through reduction of services, layoffs and furloughs.  Revenues (Table 2) other than taxes have also decreased. For instance state aid has been cut by $1.2M this year.  We are also getting less interest on our investments and less from “adds and omits”.  “Adds and omits” is the money we get in taxes from new construction that is completed in the middle of the tax year.  The big bonus about these taxes is it all goes to the municipality and is not shared with the Board of Education or County. 

Because of the nature of “adds and omits” when new construction is at high volume then there is a lot of money.  When construction falls off so does the money.  During the subprime mortgage boom there was a lot of construction and the Township would collect about $2.5M in surplus taxes a year.  When construction crashed this dwindled to $500K.  During the “fat” years government grew in employees and services. 

There are three ways to make up for the lost revenue.  The first is to raise taxes. The second is to cut spending and the third is to use surplus money that has accumulated over the years. There are of course consequences and limitation to all three. 

The consequences to raising taxes are obvious but there are also limitations.  Several years ago the state limited municipal tax increases to 4%/year.  The problem was that expenses, first and foremost healthcare costs, were rising faster than 4%. It appears that the state will limit tax increases to 2% (2% cap) so we will not be able to tax our way out of this situation.

The second option, cutting spending, continues to be utilized, as mentioned above. The cuts made over the last two years have resulted in layoffs, which impact the local economy, the providing of services, and consequently the quality of life in our town.

The last option is to withdraw from our savings account (accumulated surplus).  The limitation here is this money is finite and we are running out, just as any family bank account would if they are spending more than they are earning. Figure 1 shows one scenario graphically.  It shows what will happen to the remaining surplus assuming the Township gets concessions (salary, furlough, healthcare, etc.) from the employee unions.

The bar on the left represents the proposed $52.1M budget (this is a working number and will likely change). It is divided into the amount collected in taxes (assuming a 2% yearly tax increase) $30.3M, State aid $4.7M, all other revenue and money taken from the remaining surplus. Over 12% of the budget comes from the remaining surplus and we are using 40% of the remaining surplus to “balance” the budget.

The second bar (Current Surplus) shows the remaining surplus prior to this next year and the third bar (Surplus 2011) represents how much remains in the surplus at the end of the year. $7M however is what the manager estimates as the absolute lowest safe level of the surplus needed to prevent cash flow problems. Bar “Surplus 2013″ demonstrates that there will be NO money in two years.

Unfortunately even this bleak picture is optimistic because to date we have no enforceable concessions from the unions. (Some salaries will be frozen because contracts are under negotiation). Figure 2 shows what might happen to the surplus without the concessions which increases spending to $54.1M.  Clearly, in this more realistic scenario, even after we have laid off staff and cut other services we will run out of money after this year. 

Conclusion

Over the 7 years that I have been involved in politics, I have prided myself in speaking the truth good news or bad. The truth is that there is no quick happy ending to this story.

That said, Franklin Township is in better shape than some of our surrounding communities because we still have surplus. We will see what happens to less fortunate towns in the year to come. The Council will continue to work with our unions towards fair but reasonable contracts reflective of our economic circumstance. Better times will come, but until they do, we must all be willing to tighten our belts, understand that services will have to be altered and in some cases cut.

Hang in there.  If you write me please read my policy on publishing your comments. This is the time we need to be honest with  each other and operate in an environment of fiscal responsibility and basic fairness.

Dear Mr. Seto and BOE:

Please pass the following on to the association leadership:

If teachers forgo their 4.75% raise, Council would be in the position to take action to both reduce the burden on the taxpayer and restore teacher’s jobs along with educational programs.

Thank you.

Sincerely,

Mayor Brian Levine and Councilman Phillip Kramer

We also spoke to the press to inform them of the letter.

Teachers’ raises have been the subject of many conversations I’ve had recently.  The teachers I’ve talked to have almost uniformly acknowledged to me they would be willing to take a reduction in their raises/pay freeze to save fellow teachers’ jobs and to prevent programs from being cut from school.  Also uniformly they point out that when they took a job as a teacher they knew they would never get a lot of money but they thought they had a guarantee of a steadily increasing salary and a solid pension.  If they express any reluctance in a wage freeze they seem not concerned about the immediate loss of wages but the effect it would have on their pension.

The administrators union has agreed to a two year freeze (though all the money will be used to save jobs, not to reduce taxes or save educational programs).  The support staff (e.g. maintenance workers) have stated they will follow the lead of the teachers.  If support staff froze their pay it would save less than $200K.

If teachers were to freeze their salaries it would save $2.4M.  One could propose a scenario where ½ would go to reducing taxes and half would go towards retaining teachers/educational programs.

So far the teachers association (the press has call it a union but teachers will tell you it’s an association) has not agreed to this.  Time is slipping away.  At this point in time, Council is planning to vote on the school’s budget at its next meeting on May 11^th but it is possible, if needed, to have a special meeting at a later time.  The deadline, by law, to submit to the state is May 19^th.

My question is, “Why have we not heard from the association? Is this a decision of association leadership or the rank and file?” I’d like to hear from teachers especially.  Has your leadership approached you? If not, why not?  Have you approached them? 

If they have approached you, then when did they do so? What options have they given you?

Three final points:

   1) The letter was from the Mayor and myself.  We are only two people.  We can not speak for the entire council.

   2) Thank you to those that submitted to the last blog.  I posted a number of the comments. I’ve also changed the comment rules.  If you reply I will assume you read them.

   3) The information passed to the voters was that the budget on the ballot was $1.2M above cap.  It turns out it was $2,049,000 above cap or 1.9%.  Please don’t look for a conspiracy or a cover up. I absolutely do NOT believe the information was intentionally kept from the public.

Those are the rules and practices, what are the practicalities? I expect to hear the following points.  This list is in part from things I’ve heard stated at BOE meetings. Please don’t try to read my mind from the list. I’m not advocating or opposing any of these. I’m not even saying if they are true or not. Nor am I indicating that there is no need to state them since I’ve already heard it, many Council members have not heard them.  I’m simply compiling information for my purpose below.

• The slim margin of the defeat (34) or about 1/2% (atually with provisional ballots its 24).
• High salaries of some administrators
• The importance of sports
• The importance of the arts
• The amount that has already been cut from the budget
• The Governor
• Teachers forgoing their raises
• Teachers paying part of their health benefits
• The administrators have made salary concessions
• The economy/ lost jobs/ fixed incomes

My purpose

I’d like to hear from you.  I’d like people to write in and tell me what you would do if you were on Council.  But more important than what you would do is your reasoning.  This is not a scientific way to poll so I will not be counting opinions, rather I’ll be looking for novel insights into the situation. I’m not looking to be convinced as much as taught. Enough disclaimers, let’s hear from you.

BOE Candidates (opinion)

My initial intention was to, because I’m a Council member, not endorse candidates.  There is however a campaign sign at the end of the driveway and people have been calling me to ask my opinion.  Thus there is no secret who I’m supporting so I might as well come clean.  This year I’m supporting lines 1, 2 and 5: Seamon, Lewis and Ramos.

All five candidates are intellectually competent and I believe will work hard in the position. Rich Seamon was on the Board before I was involved with TUF.  I got to know him after he left the Board.  I found him to be open-minded, intellectual, and he often asked me tough questions that made me think.

I’ve known Tom Lewis for years but not as well as Rich. Tom has been involved in youth sports for sometime and goes to Council meetings when specific items are being discussed.  He has a non-aggressive way of thinking  and acting which I think would be useful in trying to unite a BOE that is so split that it is difficult to conduct business.

I did not know Mr. Ramos until he decided to run.  He is soft-spoken and intelligent. He too will work well to heal the BOE. He also understands what it takes to run a business which I think would be very useful on the Board.

I’ve known Shirley Pietrucha for several years.  Prior to her election to the BOE she worked with me to champion open government. For that reason I supported her last time she ran.  Unfortunately I’ve been disappointed in her, especially this year as she served as BOE President. My opinion is that she has not been open with what should be public information.  For instance she still runs the meeting as did Ms. Nagy.  During the public session there is little to no opportunity for the public to interact with individual BOE members.  Ms. Pietrucha will allow only herself and staff members to address the public directly.  In fact I’d say Ms. Pietrucha has been less flexible in that regard than her predecessor.  Thus I can not support her. In addition I’ll reference my dispute with her about budget information as an example of her attempts to sequester information.

Ms. Presley is clearly an intelligent and well spoken woman.  She is clear in her ideas and would likely accomplish a lot.  The reason I’m not supporting her has to do with my views.  I see the need for strict separation between church and state.  Ms. Presely has stated that she believes this has gone too far in this country and that the 1st amendment’s purpose was to keep government out of the church but not to keep the church out of government.  Combining that with her position as a decon in a church, I become a bit leery.  This is not, to my mind a minor point, there have been a number of church-state issues in the Supreme Court with regard to schools. If however you believe as she does I’m sure she can serve competently on the Board.

BOE Budget (what I consider are the facts)

And then there’s the budget…  In this case I will stay with my initial inclination and not state my opinion on the budget.  The main reason is that as a Council member, if it fails then I will need to decide on any changes to be made.

As most know by now the state has cut its funding to our district by $6.3 million.  Because of that, despite an increase in the levy (taxes) the budget has been cut by almost $3M. much of the details can be found on the BOE website. Everyone received a copy of the BOE publication the Focus and dispite a little propaganda in the way it’s presented it does a good job of presenting the numbers and the areas cut.  I suggest you read the material and make an informed vote.

Phil

“Time of Decision” is the current zoning statute that allows municipalities to adjust local zoning ordinances in reaction to unexpected applications.  Current law allows a municipality to change the zoning ordinance after a developer has submitted an application. But both the Assembly and the Senate have passed a bill that would change the law so the developer is only required to follow the laws  in effect when they applied for the project.

Franklin has used “Time of Decision” recently with applications for churches along scenic corridors (Grouser Rd and Cortelyous Ln).  In my opinion these were excellent uses of the “Time of Decision” rule.

Churches are a good example because the are special cases.  According to law they are allowed in any zone. This makes the task of regulating their construction extremely difficult because it’s impossible to think of all the situations that could come into play in the many different zones in town.

In these cases scenic corridors were an issue because a large institutional church (20,000 sqft) would have changed the nature of the areas.  No one had thought of a 20,000 sqft church on Cortelyous Ln before the application was submitted.  The Council then passed ordinances that would require 1) churches in residential areas to have twice the acreage  of the zoning and 2) the maximum size on a scenic corridor was limited to 5000 sqft.  This stopped one church and the other has become significantly more conforming to the neighborhood.  Had there been a time a “Time of Application” rule we’d now have a 10,000 sq ft church on Grouser and a 20,000 sq ft church on Cortelyous.

Granted one could argue that “Time of Decision” is contrary to Article 1 Section 9 of the US Constitution stating, “No Bill of Attainder or ex post facto Law shall be passed.”  But that clause pertains to a past action and prohibits government from making a law after an action was committed thereby retrospectively making it a crime.  “Time of Decision” is different because it involves passing a law to prevent an action, the building of an  unsuitable project.

Assemblymen Egan and Chivukula voted for the change to “Time of Application” and Senator Smith did not vote.  The bill is now on the desk of the Governor.  He can sign or veto it. If you agree with me and wish the law to stay “Time of Decision” then call or write Governor Christie’s office to ask him to VETO S-82/A-437.

The Hon. Chris Christie,
Governor, State of New Jersey
PO Box 001
Trenton, NJ 08625
609-292-6000

On March 18^th the BOE (Board of Education) met to vote on the draft budget for the 2010-2011 School year.  While they had been preparing for it for months, they did so without knowing how much state aid they would be getting this year.  On March 17^th they learned that the district was losing $6.3M in state aid.  By the end of the March 18^th meeting they approved a budget that is $3M lower than last year but exceeds the 4% cap by $2.5M, thus will require a waiver.  They expressed that they did this because they found the cuts required to keep the budget within cap as unacceptable.

DETAILS

Prior to learning the details pertaining to state aid, they made state mandated cuts including kindergarten 25 paraprofessionals and 2 custodians. Had they not cut these then the County Superintendent would have not only cut the positions but also reduced the budget by the corresponding amount. They also eliminated adult education as a result of a loss of state funding for that program.

On March 17^th at 4:00 PM they received the information that their state aid would be cut by 4.99% of their current budget resulting in a loss of $6.3M or 38.4% of our prior $16.7M state aid allocation.  Thus staff had 24 hours to present a budget to the financial committee so it would be ready for the March 18^th BOE meeting.  Given only 24 hours Superintendent Edward Seto stressed that this is only a draft budget.  The items that they have listed as cut may change.  (As you will see later they have already changed.)

A mandated calendar drives this rapid schedule.  The school district must present their preliminary budget to the County Superintendent by March 22^nd yet they didn’t know the amount of state aid until after the Governor’s speech on March 16^th.

At the March 18^th meeting the BOE presented three budget scenarios.  All scenarios were designed to meet the limitation of increasing the tax levy by no more than 4% (a 4% cap).  The difference in the scenarios is the amount of concession that unions will allow mid-contract.

Scenario 1 – Unions will forgo all contracted raises this year (a $2,460,474 savings to the budget).

Scenario 2 – Unions will forgo ½ of the contracted raises this year (a $1,230,237 savings to the budget).

Scenario 3 – Unions will take all contracted raises this year and make no concessions ($0 savings).

The reason for three scenarios is that the unions are reviewing the request and the BOE will not know the decision until the 25^th or 26^th.

Below is what will be cut under each scenario.  Please see the detailed presentation.  The headings in this list are abbreviated.  For instance, “Special Ed” does not mean the elimination of all special Ed.

Scenario 1 – Total cut $2,956,192

• Administrative Reductions $784,502
• Special Ed $207,604
• Academic Coaches $147,150
• ½ high school position and 2 middle school positions $125,950
• Deferring maintenance projects $153,875
• Performing Arts After-School Programs $19,235
• Performing Arts in School Programs $242,640
• After School Busing $292,454
• Athletic Program Specific Reductions $101,723
• Reduce electives at the middle school $369,082
• Reduce the Gifted and Talented Program by raising entry criteria $237,800
• Reading Recovery Program Efficiencies $118,900
• Bunker Hill Environmental Program $179,632

Scenario 2 – Total cut $4,268,478

• All cuts listed in scenario 1 – $2,956,192
• Busing – Eliminate several routes affecting the middle school – $421,740
• 7 Computer instructors and TV Production Coordinator – $477,403
• Reduce middle school schedule from 10 periods to 9 – $388,789

Scenario 3 – Total cut $5,480,631

• All cuts listed in scenarios 1 & 2 – $4,268,478
• Reduce from full to half day Kindergarten – $730,650
• Further reductions in sports, arts and other after-school activates – $481,503
• Remove all Courtesy Busing K-12 – $424,000 (But not until year 2011-2012)

All scenarios assume a 4% cap increase on the general fund portion of the tax levy.  To the average homeowner, with a house assessed at $323,059, that translates to a tax increase of $159.06.

Many members of the public expressed angst about what was slated to be cut.  Some suggested other places to cut.  Doreen Healy noted that personnel working in the summer are paid as much as $42/hr to unpack boxes thus suggesting an efficiency savings.  She hoped that some of the student plays could be reinstated by making them self sufficient. Finally she also expressed that she did not see any of the suggestions made by the public through hundreds of emails in the budget cuts.  Superintendent Seto replied that some suggestions were in fact incorporated in this draft budget.

All BOE members stated that they found the cuts to education unacceptable.  They considered voting “Yes with protest” to the budget.  BOE members Burns and Beals presented the idea of adding $2.5M above cap to the budget.  Increases over cap up to the amount equal to the cut in state aid ($6.3M) can be considered by the County Super and the Commissioner of Education.  The board approved that motion and gave staff authority to workout the details.

At this point the budget and cuts now are in the hands of the County Superintendent, the unions and eventually the voters.  On March 31^st all the data will be in and the BOE will finalize the budget.  It will go to the voters on April 20^th.  The municipality is also calling upon unionized staff to make concessions.

The comments are the comments of Phillip Kramer alone and do not reflect the thoughts of the Council.  I attempted to write this without opinion or bias.  This article is an attempt to relay the facts.  I’m not expressing approval or disapproval on any of the about events.