1. Facts, Trends & Discussion WMRHSD 2015-2016 Budget

2. Disclaimer The WMRHSD Board of Education (“BOE”) has NOT endorsed this event or any information or perspectives expressed during this event I am expressing my personal perspective and analysis, NOT that of the WMRHSD BOE I am sharing ONLY information that is already in the public domain, having previously been disclosed by the BOE or sourced from 3 rd parties independent of the WMRHSD or its BOE.

3. The Big Picture Worrisome Trends Continue – Despite a 3.3% enrollment decline from last year … – District taxes are increasing by the full “2% Cap” – Structural Financial Problems Limit District Flexibility Rapidly growing costs outside District control (34.5% of total budget), not as bad as usual this year – Special Education – up 9.4% yr/yr (historically 13.2%/yr) – Employee Healthcare – up only 0.4% yr/yr (historically 10-15%/yr) Stagnant State Financial Aid (unchanged from 2014/2015), which accounts for about 10% of total budget – Yet <= 0% budget growth elsewhere “Regular Education”/Co-Curricular/Athletics spending DECLINING 1.5% Transportation spending DECLINING 2.9% – Unfairness Continues and Gets Worse Every Year Spending discrimination against WMM continues Taxing unfairness against WMM communities gets worse – Taxes again going up in all 4 Mendhams and Chesters, but down in Washington Township

4. Taxes YearMBMTCBCTM&C’sWT 2015$6,509$9,876$2,022$9,560$27,969$13,655 2014$6,508$9,499$1,518$9,515$27,040$13,759 2013$6,087$9,172$1,310$9,765$26,335$13,740 Total Dollars ($000’s) – Operating Budget ONLY Yr/Yr % Change YearMBMTCBCTM&C’sWT 2014  20150.02%3.97%33.26%0.47%3.34%(0.73%) 2013  20146.92%3.56%15.84%(2.56%)2.68%0.14% Dollars Per Pupil ($000’s) YearMBMTCBCTM&C’sWT 2015$20,665$24,030$21,292$16,441$19,942$10,448 2014$19,312$22,194$16,589$16,463$18,850$10,237 2013$18,992$20,270$18,326$16,101$18,149$10,152

5. Historical Financials* YearWMMKidsWMCKidsDistrict & Other Total 2015/16 Budget$22,5911,360$23,7191,271$5,542$51,852 2014/15 Actual$22,2191,405$23,7341,317$7,074$53,027 2014/15 Budget$22,5821,425$23,3841,326$7,061$53,027 2013/14 Actual$20,0921,425$22,0011,339$8,241$50,334 Spending ($000’s) Financing ($000’s) YearWMM Towns KidsWMC Town KidsOther Sources Total 2015/16 Budget$29,4951,360$14,4011,271$7,961$51,852 2014/15 Actual$28,5471,405$14,5261,317$9,950$53,027 2014/15 Budget$28,5471,425$14,5261,326$9,950$53,027 2013/14 Actual$27,8571,425$14,5351,339$7,946$50,334 * All costs, including those for operations and debt service, included in spending and taxes by school

6. Historical Financials* YearWMMWMCDeltaEqualizedTotal $ Shift Required to Equalize 2015/16 Budget$16,611$18,662$2,051$17,602$1,347,542 2014/15 Actual$15,814$18,021$2,207$16,882$1,500,044 2014/15 Budget$15,847$17,635$1,788$16,709$1,227,820 2013/14 Actual$14,100$16,431$2,331$15,229$1,609,305 Spending Per Pupil Taxes Per Pupil * All costs, including those for operations and debt service, included in spending and taxes by school YearWMMWMCDeltaEqualizedTotal $ Shift Required to Equalize 2015/16 Budget$21,687$11,330$10,357$16,684$6,804,623 2014/15 Actual$20,318$11,029$9,289$15,824$6,314,530 2014/15 Budget$20,033$10,954$9,079$15,657$6,235,755 2013/14 Actual$19,549$10,855$8,694$15,337$6,001,771

7. Spending in Schools (excluding Administration)

8. Structural Financial Challenges “2% Cap” in annual tax increases, without voter approval, which is unlikely because of: – declining enrollments – persistent unfairness of tax burden distribution (Mendhams and Chesters finance about 35% of WMC, in addition to 100% of WMM) State aid is stagnant (about 10% of District revenue, not increasing) Capital Reserves have been exhausted, so are no longer available to offset tax increases 35% of budget comprised of costs outside of District control AND GROWING at 13- 15%/year – Special Education growing at 13.5%/year (up “only” 9.4% this year) – Healthcare growing at 12-15% per year (up only 0.4% this year, because of increasing employee contribution, but rapid cost increases will resume in 2 years) RESULT: “Regular education,” co-curricular and athletic programs must suffer budget cuts each year to stay within “2% cap” – “Regular Education” spending down 1.6% – Co-Curricular/Athletics spending down 0.8% – This hurts almost all students, including 90% of those with IED’s It’s Bad Now, but it is Expected to Become More Severe in 2 years – District will resume paying 100% of annual healthcare cost increases

9. Avg Spending per Pupil* YearWMMWMC$ Shortfall% ShortfallWMM Shortfall 2015/16 Budget$16,164$17,354$1,1907.4%$781,633 2014/15 Actual, est$15,381$16,758$1,3779.0%$935,537 2014/15 Budget, adj $15,421$16,380$9596.2%$658,572 2013/14 Actual$13,665$15,167$1,50211.0%$1,036,974 2012/13 Actual$12,927$14,720$1,79313.9%$1,250,388 * Operational costs ONLY (not including debt service on building construction debt). The WMRHSD administration has been tracking school-specific spending since the 2005/06 school year. In every year, per pupil spending has been significantly higher at WMC than at WMM.

10. Avg Spending per Pupil* 2015/16 Budget vs 2014/15 Budget CategoryWMM% Change (yr/yr) WMC% Change (yr/yr) Delta% Diff Regular Education, including facilities & grounds $8,7560.8%$9,1545.1%$398(4.5%) Regular Education, excluding facilities & grounds $7,6020.5%$7,8865.1%$284(3.7%) Special Education$3,17923.0%$3,2186.6%$39(1.2%) Co- Curricular/Athletics $8792.5%$9464.9%$67(7.7%) Transportation$975(1.1%)$1,2413.9%$265(27.2%) Empl Healthcare$2,3863.7%$2,7126.1%$326(13.6%) * Operational spending ONLY (does not include debt service spending per school)