Holmdel School Budget To See First Tax Rate Increase In 2 Years

HOLMDEL, NJ — After two years of tax rate decreases, the Holmdel Board of Education budget for this year expects to see a tax rate increase of 3.88 percent, driven primarily by much higher transportation costs and health insurance rates, the district explained.

The board recently approved a preliminary budget that, as with all districts, is now being reviewed by the Department of Education at the county and state levels. School budgets had to be presented for approval to the county Department of Education by March 20.

The budget is considered a "not to exceed" budget, meaning the tax rate may decrease if other savings are found, but it cannot increase.

The district is planning a final hearing on the budget May 3, according to district Superintendent Dr. J. Scott Cascone.

According to a slide presentation on the budget, which you can access here, the total amount of funds to be raised by local property taxes for 2023-2024 budget, including debt service, is $61,515,723, up 3.88 percent from last year's total of $59,219,063, or an increase of $2,296,660. Debt service declined by 13.19 percent in the budget because one bond is being retired.

As explained by Business Administrator Michael R. Petrizzo, CPA, that means an estimated total school tax rate increase of $1.1036, or $474.14 a year on the average residential assessed value of $906,602. That translates to $39.51 a month for schools portion of a tax bill for a property assessed at the average rate. Municipal and county taxes, among others, are added to a total property tax bill.

Regarding transportation costs, Petrizzo said that even with strong negotiations on a contract for transportation services, the costs went up $1,672,414, a 49.60 percent increase from last year. For the 2023-2024 school year, the line item is $5,044,498, up from $3,372,084.

A bus driver shortage and rising gas prices contributed to the increase, Petrizzo said during the presentation.

The second largest expense increase came from employee benefits, such as health insurance and other required costs such as pension and workers compensation costs. For 2023-2024 the cost is $12,666,288, up from $11,491,041 last year, or a $1, 175,247 increase - 10.23 percent.

One big savings in the expense budget was a decrease in the costs for out-of-district services, including for those students attending the county vocational school system or special education programs. Those costs decreased by 13.46 percent or a $205,140 savings.

In fact, Cascone said Holmdel is seeing a decrease of 52 students in the number of those applying to the county vocational system (28 students).

Instructional costs only increased 1.19 percent, due to nine retirements and "backfilling" with existing staff. But some staff additions were made to support certain areas. The total 2023-2024 instruction budget is $28,362,217, compared to $28,029,531 last year, an increase of $332,686.

On the revenue side of the budget, among other sources of revenue, Holmdel again benefitted from equalization measures with a 15.15 percent increase in state aid.

The district this year will receive a total of $4,725,189 in state funding, or a 15.15 percent increase over last year's allocation of $4,103,461, according to state figures.

Cascone said the $621,728 in extra funding was welcome news.

What is referred to as "S2," a 2018 state aid equalization law determined which districts were underfunded or overfunded with state aid. The district had been underfunded by the state, so this is the third year of the boost, he said.

For two years, the extra aid helped the district achieve the "negative tax impact," he explained recently.

Plus, he said, the district has been able to save approximately $2 million in a "bank cap" when the district was below the 2 percent budget cap in previous budgets. So that can be used to at least partially offset some extra costs.