Report calls relationship profitable
T.J. Furman and Frank D’Amico
LAWRENCE — An accounting firm last week told the Lawrence Township Board of Education the district’s arrangement with Washington Township’s high school students is beneficial to Lawrence taxpayers.
A report prepared by the firm of Druker, Rahl & Fein, of West Windsor, says the relationship with Washington, in which that town’s ninth- through 12th-graders attend Lawrence High School, saved the average Lawrence homeowner $64.68 in the 1998-99 school year.
Projections by Druker, Rahl & Fein anticipate that number to rise to $172.01 by the year 2004-05, when the contract between Washington and Lawrence ends.
The report also indicated solving the Lawrence district’s space crunch by not accepting Washington students and borrowing a smaller amount of money would be more costly to taxpayers than — or at least as expensive as — accepting Washington’s students and building to accommodate them.
“Based on this analysis, it seems very clear to me that it is very advantageous to the district and to the Lawrence taxpayer to continue this sending/receiving relationship,” Superintendent Claire Sheff Kohn said.
The board approved the study at a meeting in September and gave Druker, Rahl & Fein four scenarios in which to examine the financial benefit of the sending/receiving relationship:
‡ Scenario 1 assumed termination of the sending/receiving relationship at the end of the contract in 2005 and a capital improvement bond of $13 million to remedy the district’s need for space in its intermediate and middle schools, which do not serve Washington students.
‡ Scenario 2 assumed continuation of the arrangement after 2005 and a capital improvement bond of $20 million for school expansions.
‡ Scenario 3 assumed continuation of the relationship and a capital improvement bond of $30 million for school expansion and the construction of a new middle school, in which case the high school would use the existing, neighboring middle school.
‡ Scenario 4 assumed continuation of the relationship and a $56 million bond referendum for the construction of a new high school and the reconfiguration of other buildings.
The firm’s estimates scenario 1 would cost the average Lawrence residential taxpayer (with property assessed at $150,000) $209.57 to cover the cost of repaying the bonds. Scenario 2 would cost the taxpayer $93.15 annually. Scenario 3 would cost $143.65 and scenario 4 would cost $212.54, only $2.97 more than terminating the relationship.
“Under all of these scenarios, the cost to the taxpayer of maintaining the sending/receiving relationship with Washington Township and financing these proposed expansions appears to be less or substantially comparable to the cost to the taxpayers of severing the relationship,” Dr. Kohn said. “They are still a benefit even if we build. By having them leave, it is not an advantage to the Lawrence Township taxpayers.”
According to the report and Dr. Kohn, that benefit arises from the tuition payments that come from Washington Township, which this year will reach approximately $2.3 million.
Dr. Kohn said the difference between the cost and the benefit is due to services that Washington taxpayers help pay for now, but that could not be eliminated if the relationship was terminated.
“We benefit financially because what it costs us to educate them is less than what we bring in tuition,” explained Dr. Kohn, who begins her new job as superintendent in Princeton on July 1. “There is a margin of profit, so to speak. We get to enjoy programs and services that otherwise the Lawrence taxpayers would have to pay for or we would have to cut.
“We’ve got a superintendent. We’ve got to have a superintendent. We have a high school principal. We’re going to have a high school principal. We’ve got a guidance director. We have a football team. We have the spring musical. We have a lot of things that we’re going to have anyway, whether or not (Washington students) are here.”
The “profit” to Lawrence taxpayers from the arrangement with Washington is projected to be just under $1.29 million this year, according to the Druker, Rahl & Fein report. In 2004-05 it projects that number will increase to just less than $2.89 million.
Despite those numbers, Druker, Rahl & Fein found that Lawrence is charging Washington Township the correct tuition.
The benefit only will increase as time goes on, according to the accounting firm, because of the fast rate of growth in Washington Township.
According to Druker, Rahl & Fein, the number or Washington high school students is expected to increase 109.7 percent in the next five years, from 237 to 497. The number of high school students from Lawrence is expected to climb only 10.5 percent over the same time period, from 1,084 to 1,198.
The percentage of Washington students in the high school would go from 17.9 percent to 29.3 percent, in that case.
In the end, Dr. Kohn said the decision to remain in the relationship truly is in the hands of the Washington Township Board of Education.
Dr. Kohn said state regulations make it very difficult for Lawrence to terminate the arrangement if Washington wanted it to continue.
The Washington Board of Education has formed a task force to investigate its options once the year 2005 arrives. The task force has formed four subcommittees to investigate four possibilities: remaining with Lawrence, sending high school students to another district, forming a new regional school district with a nearby municipality or building a high school in Washington.
The task force is scheduled to report in June. Dr. Kohn thinks it would be difficult for the Washington district to build its own high school, given two bond referendums in the 1990s to build Pond Road Middle School, and to modify Pond Road and expand Sharon School.
“They have two major obstacles there,” she said. “The first is debt capacity. They already have exceeded their debt capacity. They had to borrow capacity from (Washington) township. The other major obstacle they have is that it’s really hard to offer a full, comprehensive high school program with 500 kids.”