School District's Reserve Budget Busto

Should the find itself in a precarious position needing to make emergency repairs, or accommodate a special education student transferred to the district, well, too bad. There’s no money for that.

At its Board of Education meeting Tuesday night at the , an auditor said a review of the district’s finances shows that Red Bank has zero in its reserve fund, leaving it no wiggle room should a conundrum requiring a monetary solution present itself.

District auditor Robert Allison began his presentation by commending the district and Business Administrator Annie Darrow for maintaining the most thorough – and correct – financial records he said he’s ever seen. But, as precise as the district’s records are, surely they identified the same problem Allison said the board seriously considers amending before its next audit: finding more money.

The state allows school districts to keep two percent of its budget, in Red Bank’s case approximately $293,000, in a surplus, or reserve, fund. The reserve fund can be used for emergency situations, but not for things like teacher’s salaries or other general expenses, meaning it’s safe to keep stowed away. In an effort to balance its budget and combat cuts in state funding, however, the borough’s school district allocated all of its reserve funding to other line items.

“All of your money is spoken for,” Allison said. “I’d like to see you guys get to your full reserves. You have a lot of sweating going on.”

Darrow said it’s the district’s intention to earn back its surplus funding to avoid the kind of what-if situations Allison warned of. An auditor for other school districts in the area, Allison said most maintain surpluses of more than 2 percent of their annual budgets. If possible, that’s the safest bet, he said, as it gives the district access to considerable reserve funds, which simply get rolled into next year’s budget if they exceed the 2 percent cap.

When it comes to the budget process, where programs are cut and positions throughout the district are often at risk, it’s tough to keep money left over, even if it’s the prudent thing to do.

“The district has budgeted very conservatively over the past few years. We did have an emergency reserve, but that was gone with the budget cuts,” Darrow said.

The district’s 2011-12 budget was . It included an increase of less than 2 percent over the previous year’s budget, keeping it under the state-mandated cap. To keep the increase under 2 percent, the board put off several maintenance concerns it had hoped to address. Considering the need for repairs on school properties throughout the district, having nothing available in case of emergency has been difficult for the borough.

Darrow, though, said the board is committed to having some kind of reserve funding available in the future.

“A lot of (getting our reserve back) depends on freezing our spending,” she said. “There are things that come up that can’t be helped and we need to be prepared.”