Politics is local and we can have the most impact on our school boards

Your superintendent is the highest paid, most powerful public official in the municipality. Do you know his name?

Elected board members, although well intentioned are easily led by their paid employees; teachers & administrators.

Do you know what they're all doing? Well here in New Jersey they represent at least 60% of your property tax bill and budgets grow at an astounding compound rate each year.

Wednesday, December 29, 2010

Hey Board Members! Control Costs; Don't spend revenue you'll never see.

For the past few months the RTBOE focused on a revenue solution to financial difficulties, resulting in approval of a capital project to install 2,493 solar panels with a peak output of 245W –line20 of the below worksheet. Listen to board member Diane Power explain.

After multiplying the average daily sunlight available to a stationary, south facing solar panel at Latitude and Longitude coordinates for Rockaway Township (lat. 40.9, long. –74.5), it appears the system will generate 847 Mega Watt hours and Solar Renewable Energy Certificates annually. (SREC are marketable energy rights). See line23 below.

SREC can be sold in several states but the New Jersey market provides the highest prices (click here for prices on listed markets). So my analysis assumes all will be sold here.

Further, SREC sales prices plus commissions must always be less than the Solar Alternative Compliance Payment that utilities are required to pay if the state’s renewable energy standard is not met through the purchase of SREC.

Finally, the alternative payments (SACP) decrease 3% per year to account for expected declines in the cost of solar going forward.

Given these assumptions, the project’s 5-year revenue stream will be $2.6 million while the project winning bid totaled $2.5 million.

For the skeptical, to yield $1.3 million profit, my price estimates would have to be 50% higher; an impossibility given legislated reductions in SACP.

I also estimate 5-year energy savings of $860,000. Based on 54% of $300,000 electric bill with annual increases of 3% for 5 years – line 30 above. Business Administrator, James Verbist is hoping for 100% electric savings but that seems unlikely since the district’s maximum electricity needs will fall in the least productive months –line 9 above.

These numbers aren’t dismal but clearly they are not revenue streams for which the board is hoping.

I think it’s time for the board members to address the obvious cost problem and stop praying for revenues that will never receive. Page 2 of the district’s annual report (CAFR), student enrollment has declined an average of 1.6% annually for the last 5 years. On the other hand, payroll cost increased 4% annually over the same period.

In the last two years the district suffered operating losses totaling $4 million (see highlighted numbers below), the governor is unable to support the current cost structure at previous levels and local taxpayers defeated the last budget submission.

To further complicate matters, Salaries for all six principals and the business administrator approach or exceed the superintendent salary cap for a district this size ($155,000).

The board needs to remember these realities as they approach teacher contract negotiations and a new budget season.

No comments:

Post a Comment