Lakewood Schools' auditor says poor state aid makes finances 'tricky'
LAKEWOOD – Lakewood Schools’ financial situation remains “a little tricky” due to its reliance on state loans, according to an independent accountant who presented the most recent audit for the district on Wednesday.
Matthew Holman of HFA Accountants submitted the annual review to the Board of Education, giving high marks to the district’s financial management and ranking its fiscal oversight as “excellent.”
Prior to the meeting, Holman stressed that district leaders are forced to rely too much on state loans due to an inadequate state aid funding formula.
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“It is a little tricky with all the loans that are outstanding,” Holman said, referring to Lakewood’s $123 million state loan debt. “It is a balanced budget, but only with the state loans.”
Holman pointed to what he deemed inadequate state aid for the nearly 6,000-student district, which has been a source of contention for years.
“To me, it is a state funding formula issue,” he said. “Lakewood is a one-of-a-kind school district, it does not fit like any other school district.”
Holman and other critics claim the state funding formula does not provide enough support for the district because it does not take into account costs related to transporting and providing other services to nearly 50,000 nonpublic school students.
Instead of increasing state aid, the state Department of Education has regularly loaned millions of dollars to the district dating back to 2014-2015 when $4.5 million was borrowed.
Last fall, the district borrowed another $50 million, bringing its current debt to about $173 million.
Holman revealed that more than half of the district’s cash fund balance, $32.6 million, is set aside for loan repayment this year.
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“Without (the loans) it would be detrimental, you would have a hole in the budget,” Holman said, adding that the state aid “needs to be reviewed and updated.”
School district officials did not respond to requests for comment.
In his report to the school board, Holman praised the district’s financial oversight, calling it “very good.”
“The audit as a whole was excellent,” Holman said. “That hasn’t always been the case. About six or seven years ago we had a number of recommendations and they worked hard to get them done.”
But Holman stressed that the district needs to see a better state funding approach because it cannot rely on loans and a mounting debt.
“Eventually, it will have to get changed,” he said. “The state is using it as a one size fits all and I don’t think Lakewood fits into that.”
More: Lakewood Schools borrow more money from New Jersey than any other district
Holman is not alone in his thinking.
A three-judge appeals court issued an order last fall directing the state education commissioner to provide a plan to improve Lakewood funding by April 1, 2024.
The order stems from the nearly 10-year-old Alcantara lawsuit filed by attorney Paul Tractenberg and Lakewood High School teacher Arthur Lang on behalf of a group of parents that claims Lakewood is underfunded.
Last summer, an internal review by State Auditor David Kaschak determined that the Lakewood School District suffered from “severe fiscal distress” and would benefit from additional aid. He also suggested the state create a new funding category for the district.
Joe Strupp is an award-winning journalist with 30 years’ experience who covers education and several local communities for APP.com and the Asbury Park Press. He is also the author of three books, including Killing Journalism on the state of the news media, and an adjunct media professor at Rutgers University and Fairleigh Dickinson University. Reach him at jstrupp@gannettnj.com and at 732-413-3840. Follow him on Twitter at @joestrupp
This article originally appeared on Asbury Park Press: Lakewood Schools: Auditor latest to demand better state aid formula
