By Rebecca Nussbaum
For the 2011-2012 school year, the school is running nearly a $2 million surplus in the context of a $65 million budget, an outside Certified Public Accounting firm and the Business Office said. Chief Financial Officer Rob Levin said small budget surpluses are typical because of the school’s conservative accounting.
However, this year’s surplus is larger than usual.
“The secret is that [the tuition] probably could have gone up a little bit less this year,” Levin said.
Because the Business Office didn’t “cut it to the bone” last year, they have flexibility in making the 2012-2013 budget.
“All the indications are that we left ourselves enough that we shouldn’t have to do anything drastic this year,” Levin said.
But budget surpluses are helpful in more than cushioning future budgets. The school is a not-for-profit organization, so surpluses don’t go to any individual. They are invested in the school itself, and the interest is put into reserves to offset potential deficits.
“It’s not ‘Oh my god, the school made almost $2 million last year, they’re off to make money,’” Levin said. “No, we made two to three percent and we’re banking it for a rainy day.”
One particular “rainy day” was the 2008-2009 school year when the school ran a $2 million deficit because they advanced money for the Middle School Modernization Project and suffered when the financial crisis hit nationally.
However, the school was able to handle the curveballs because of their prudent accounting, Levin said.
“We didn’t cut teachers’ salaries, we didn’t fire anybody and we didn’t jack tuition up,” Levin said about the 2008-2009 school year. “Our job is to be the buffer.”
”You can’t always be break even or [have] a deficit,” he said. “You need it to be a zero sum game. Some years, the sine curve has to be above ground.”
The school is still building back reserves depleted during the 2008-2009 school year.
Much of this saved money goes toward the “renewal and replacement” program, where money gets invested each year to keep resources, such as fields, roofs, computers, school vehicals and weight room equipment, safe and up to date.
One example of “renewal and replacement” in action is the replacement of the turf on the Ted Slavin Field this summer. Although the field is only replaced every eight years, the school charges itself close to $100,000 annually so that when it’s time to replace the field, the money exists.
“We’re putting the money aside ahead of time based on what it’s going to cost,” Levin said.
In addition to “renewal and replacement”, reserves are used toward self-insurance, Levin said. After much thought, the school decided to insure themselves for earthquake damage, as opposed to buying insurance from a private company.
“We decided in the long run that we’re better off setting aside our own money,” Levin said. “If we self-insure a lot of things, there can be a lot of surprises [built into the budget],” he said.
Today the Business Office completed an intermediate deadline for the 2012-2013 budget, and they remained true to their conservative accounting principles.
“We don’t care about one quarter or one year,” Levin said. “We’re willing to do something smart long-term that may look stupid in any given year.”