2012 Financial Audit Reveals Collingswood Schools ‘in Very Good Shape’
Public school accountant Robert Stewart reports that even in a 2 percent cap world, Collingswood is taking steps to maintain its fiscal accountability.
Despite the constraints of a 2-percent cap world, the Collingswood public school district maintains a strong financial position—or at least as strong as the law allows, reports public school accountant Robert Stewart, CPA, RMA.
Stewart is a partner in the accounting firm of Inverso and Stewart, which provides independent financial auditing services to some 22 school districts in New Jersey, including Collingswood.
At Monday’s Board of Education meeting, he reported that the district is doing everything it can to maintain its financial stability, and that a number of its cost-saving measures seem to be paying off. That’s good news for taxpayers and parents of school-age children.
“They seem to have all their ducks in a row right now,” Stewart told Patch Tuesday. “They’re doing a lot of things that are really helping their balance sheets, such as shared services, and that is helping the financial situation in Collingswood.
“I can’t give them enough credit,” he said. “They really have done a good job with planning for the future and controlling the fiscal management of the district.”
Budgeting under the 2-percent cap
State regulations limit the amount of surplus a public school district may legally carry to 2 percent of its total budget, Stewart said, which puts a very real limit on rainy-day funds (in the case of Collingswood, the figure is about $559,000). Any amount collected in excess of that 2 percent may be reserved for capital projects or unforeseen tuition increases; if those reserves aren’t spent within two years, they must be refunded.
It’s a strategy that certainly avoids creating monolithic slush funds at taxpayer expense, Stewart said, but it also doesn’t leave schools much wiggle room in the event that something goes really wrong.
“If you have costs that go higher than that [2 percent due to] tuition, health benefits or emergencies],” Stewart said, "if a district doesn’t have the funds to be able to do that work, then what they have to do is hold back on giving money towards costs that would help the kids.
“It could hurt updating computer systems or kids going on field trips or whatever type of money they have in their budgets,” he said. “A lot of school districts get hit with costs that they’re not able to plan for because the budget won’t allow them to do it.”
Last year in Oaklyn, for example, Stewart pointed out, the second floor of one of its schools collapsed.
“That’s a heck of a drain on your surplus, and you get into financial challenges,” he said.
Keeping spending steady while cutting costs
To stave off such pitfalls, the borough tries to hold its spending steady year over year, Stewart said—so although additional state aid and tuition revenues drove up the total fund balance of the district from $5.450 million in 2011 to $7.074 million in 2012, “financially [Collingswood is] in very good shape,” he said.
“They spent the same percentage of their budget in 2012 as they did in 2011, but because the percentage was higher, the balance was higher,” Stewart said.
Collingswood complies with state requirements to reserve money for encumbrances (bills that are paid after the fiscal year), tuition increases and capital reserve projects, which can only be undertaken after the state approves its capital facilities plan, Stewart said.
In the 2012-13 budget, that means that $420,000 is likely to be refunded to taxpayers and another $430,000 in 2013-14.
“They’re being very fiscally responsible,” Stewart said. “They know that they have this money, they know they have to give it back to the taxpayers, so they have it set up in a plan that they can do it without having a tax rate that goes haywire.”
As compared with other similarly sized school systems, Collingswood is in a very favorable financial position, Stewart said. Part of that is because the district receives students from other municipalities, which brings in other revenues that enable it to stay in the black. Another factor is the number of shared-service agreements Collingswood has established with other school districts in the area, which also helps cut costs.
Beyond that, he said, the rest of it turns on good fortune and better planning.
“They’re very financially stable,” he said. “They have a good financial management team that plans for the future as much as the state allows them to plan.