On January 28, 2013, as the newly inducted President of the Millburn Township Board of Education, I gave a presentation on the finances of the district. While it was budget season, the presentation wasn’t about the budget. It was intended as a look at several strategic issues facing the district including health care costs, surplus, and tax rates, among other issues.
But it began with a look at an issue we almost never discussed at board meetings, and that was our existing debt. I observed that a key reason we never discussed the existing debt is that it isn’t part of the annual budgeting process. When the taxpayers approve a bond referendum, they are committing to having the funds required to pay principal and interest each year automatically appropriated. And since the total debt service was only about 7% of the total budget, it just didn’t get a lot of attention.
But one slide in particular is worth noting. It showed the annual debt service costs – both principal and interest - from the 2012/2013 fiscal year all the way out through the 2027/2028 fiscal year, when the last bond then outstanding would be retired. The point I wanted to highlight was that starting in the 20/21 fiscal year there would be three outstanding bonds fully retired in the next five years, culminating in the 24/25 fiscal year. Overall debt service would drop from $4.6 million to $1.7 million. About this situation I commented “I know it seems like an eternity to talk about something that far into the future, but for those with very young children this is the situation that will unfold while your children are attending Millburn Township Public Schools.”
Well here we are seven years later and the fiscal year 20/21 is upon us. On January 28 the Millburn community is being asked to vote on a $20.5 million bond referendum known as C&MP – the Capital and Maintenance Plan. I am writing this op-ed in support of the referendum and asking the voters to vote yes.
When I was on the BOE, we sometimes heard from the community that they wanted to see our long run strategic plan. In addition, both ongoing maintenance and the need for facilities expansion and spending in support of our academic program were regularly on our docket. The C&MP referendum (along with possible future referenda) is an elegant strategic maneuver by the current Board to take advantage of the circumstance of the maturing bonds in order to meet both our maintenance and expansion needs. It is just the sort of thinking we want from our elected leaders.
By timing the referendum to coincide with the extinguishment of a current bond, they will raise the funds for a series of critical infrastructure needs with no increase in the total debt service. In addition, the availability of funding from the state to cover a substantial portion of the debt service, makes the economics even more compelling. While the stated amount of the referendum is $25.6 million, the effective cost to the taxpayers after accounting for the impact of state aid is likely to be about $18.0 million, a 30 % effective “discount.”
Any organization, whether a large public corporation or a school district, needs to make investments to maintain its competitiveness. No matter how good you are, if you stand still, others will pass you by. A school district with eight large and old structures and a reputation for being one of the best public school districts in America is naturally going to need to make periodic larger investments to maintain its physical facilities. But it is also going to want to invest in its academic program too.
In 2016 there was a referendum approved by the voters that accomplished a few key goals. First, it resulted in the repurchase, at a very attractive price, of the Washington School, which was then converted into a central fifth grade. By freeing up several classrooms in every elementary school, it created critical capacity for possible increases in school enrollments. With several large residential developments on the docket in town, we are likely to find that not only will we need that capacity, but we may need to add additional capacity depending on how events unfold.
Second, it allowed for the creation of “the MILL” – the Millburn Innovation Learning Lab. Also known as “maker spaces,” these collaborative learning environments are being established in academic institutions at all levels and are critical for us to keep pace with 21st Century learning advances. Our world-class robotics program now has a suitable space, whereas previously they were operating in the balcony of the auditorium. Surely our students deserve better than that.
The current referendum addresses a further set of priorities. Critically needed improvements and capacity expansion at the middle school, security vestibules at all of our elementary schools, and a variety of other projects covering eight different buildings are all included in the proposal. Given recent events around the country it is hard to imagine any project more critical than enhanced security, an issue we have been discussing for many years.
When all is said and done, the impact on the budget is modest. I mentioned that in 2013 the debt service was about 7% of the budget. Assuming this bond is put in place, the debt service for 2021 will be about 5.6% so years of paying down debt has left us in a good fiscal position. Further bond maturities in the next few years will allow for the flexibility to address capacity and other needs with follow-on referenda again without increasing debt service.
I applaud the current board for thinking strategically and applying some finesse to both move our district forward and manage our finances in a responsible manner. I encourage the voters to vote yes on C&MP on January 28.
Jeffrey Waters served on the Millburn Board of Education from 2008-2014 and was President in 2013 and 2014.