BY ELAINE VAN DEVELDE
Staff Writer
EDISON — In his annual State of the Township speech, Mayor George A. Spadoro commended his administration for frugal municipal budgeting while challenging the Board of Education to find a cheaper way.
After word got out about the Jan. 31 speech, School Administrator Daniel Michaud said he understood the mayor’s motive to spare taxpayers.
But he also questioned how it would be appropriate for the mayor to manage the school district’s fiscal business.
Spadoro said in the speech that county and municipal governments had kept their tax rates stable. He called on the Board of Education to do the same and offered a method.
“While the board has certain cost increases it can’t avoid, its recent policy of paying for capital improvements out of its operating budget cannot and should not continue,” Spadoro said. “It only makes fiscal sense for the board to pay for its long-term improvements over time, equitably sharing the cost between current and future residents.”
The mayor is suggesting that the board stop paying as it goes for capital improvements — 40 percent of which are funded by the state — and pay for them on credit over 20 years with bonds, Michaud said.
“He is saying that we should cut $5 [million] to $5.5 million out of our $7.7 million operating budget expenses every year for the next five years and, instead, pay for capital projects over time,” Michaud said. “Now, we’re paying for it in that current year’s budget, so the debt is gone that year. He wants us to bond it over a 20-year period, then we would have to pay for the bond every year for the next 20 years instead of a shorter term.”
In the end, Michaud said the savings in the mayor’s plan would be about 2 cents on the school tax rate a year for five years. But taxpayers would be paying a point every year for the 15-year bond loan, he said.
Spadoro said in the speech that his plan, which he proposed take place in the form of a ballot question, is one which would “make fiscal sense over the long run and offer immediate relief to taxpayers.”
Yes, taxpayers will see immediate relief, Michaud said.
But, contrary to the mayor’s claim, the bonding translates into each taxpayer ultimately paying 15 more tax points (or cents) per $100 of assessed property valuation on their tax bills that they would not normally pay.
“We have not made a final decision,” Michaud said. “But I will say that this proposal seems unique in that school boards usually function independently of the governing body. The mayor discussed the idea with each board member independently about a month ago and the board is seriously considering the idea and weighing its merits and detriments.”
Michaud added that the board has a good relationship with the mayor and council that he does not want to see suffer.
He noted some compromises for savings that the two entities have already agreed on.
“We share services as it stands,” Michaud said. “For instance, the township uses our schools for latchkey programs that bring in money for the town.”
There are also other services bartered between the two entities, such as some basic maintenance, he said.
Michaud said that one part of the mayor’s speech could have been easily misunderstood.
Spadoro, in his speech, called on the Board of Education to “capitalize on state grants to pay for 40 percent of the improvements for school infrastructure — before this state grant program expires.”
The mayor said that “it would be tragic to watch school systems throughout our region receive hundreds of millions of dollars of state grants for future capital needs and not have the Edison school system take full advantage of this program.”
That assertion made it appear as if Edison schools have not pursued state funding, Michaud said.
“In truth, we have gone out for 76 projects, and have six or seven more in the works since the Educational Facilities Construction and Finance Act passed in 2002,” he said. “Through Dec. 31 of 2004, we have received approval letters from the state for $8.4 million in funding that has been approved, and $5.4 million has already been sent to me.”
Funding from the state Facilities Construction Finance Act pays for 40 percent of all renovation projects. However, the poorer districts known as Abbott districts, receive 100 percent of the cost on all upgrades, he said.
“We’re not an Abbott district, so we just don’t qualify for 100 percent,” Michaud said. “But we have absolutely pursued all funding. It’s just that we are simply not eligible for as much as other districts in some instances.”
In the end, when comes to how the school district puts its budgets together and how capital is raised, the board wants to be independent of the governing body, as it always has been, Michaud said.
But out of respect for the good relationship the school board has with the administration, the board will take a look at the mayor’s suggestions, he said.
“We want to put a budget together in a way that is fiscally responsible for the taxpayers,” Michaud said. “If we do decide not to implement the mayor’s suggestion, I hope he will understand that the decision was not made lightly.”