(Updated) In Your Opinion: Franklin Schools Business Administrator Needs A Sharper Pencil

By Skip Schaeffer, Somerset. 

Updated: Schaffer wrote this to the board after its Nov. 20 action:
Thank you Dr. Seitz, Ms. Biesiada, and Board of Education members for choosing to pull the vote on Item B-06 from the agenda in last night’s meeting. I commend you for your willingness to further evaluate additional suppliers for the district’s natural gas requirements in order to save as much money as possible. I will make myself available to you at any time to answer any questions you might have or provide you with additional info. I also recommend that you contact John Calavano to answer any questions you may have about his decision process in this area over the last four years.

Original column:
To the Board of Education:

Item B-06 on the Board of Education’s Nov. 20 agenda proposes to lock the Franklin Township School District into a contract for 3 1/2 years for natural gas with ACES (Alliance for Competitive Energy Services.) ACES is one of several co-op buying associations that school districts traditionally have used to aggregate their buying power in order to receive lower prices on many items that make up a district’s budget. One common prevailing belief is that school districts are required to purchase budget items from co-op organizations sanctioned by the New Jersey School Boards Association. That is simply not true. A second common prevailing belief is that the rates that ACES (or MRESC or any other co-op organization) procures for its members are the lowest available in the market. Again, that is simply not true. Passing this agenda item at this time will likely result in increased natural gas expenses for the district for the duration of this contract. I’ll explain below.

I have regularly been attending BOE meetings for the last 10 years. Every year the biggest problem for the Board has been to develop a fair and balanced budget. There used to be no caps on how much a Board could increase a yearly budget. Now you are all aware that there is a yearly 2 percent cap. You are also aware that the yearly 2 percent cap is basically eaten up by salary increases, health benefit cost increases, insurance increases, etc. Your job in delivering a budget gets more difficult every year. You can not afford to bypass or ignore any area of savings available to you.

I do consulting work in the energy industry for commercial businesses. Six or seven years ago, in an effort to see if there was a better way for the district to purchase its energy needs, I reviewed the relevant public information available to me – energy bills for the district, contracts/bids/agreements from ACES, MRESC, and other NJSBA co-op organizations, etc. In several cases I found that the savings claimed by using these co-op programs were, in fact, not being realized by the district. Energy is a volatile industry and the typical contracts from the co-op associations were too long in length (some five years) and vulnerable to market price fluctuations. I brought several of these cases to the attention of Asst. Supt. for Business John Calavano. He agreed with my analyses but at the time could take no corrective action because the district was locked into contracts with ACES.

Prior to the energy contracts coming up for renewal, Mr. Calavano researched the statutes and also discussed with Mr. Russell Weiss, the district’s attorney from Parker McKay, on whether the district was required to use the NJSBA co-op organization’s bids and contracts. Mr. Weiss confirmed that there was no such requirement. As long as the district could find energy rates that were below the awarded bids from the co-ops, (Statute 18A:18A-5-(7) – the supplying of any product or the rendering of any service by a public utility, which is subject to the jurisdiction of the Board of Public Utilities), the district was free to use those energy suppliers. I then contacted a couple of energy brokers that I represent and put them in contact with Mr. Calavano. Information on annual natural gas usage requirements was given to the brokers and they proceeded to go out to their multiple energy suppliers with two goals: to offer rates to the district that were below the prevailing contracted bid rates from ACES or any other NJSBA co-op, and to not exceed a contract length of two years so as to provide the district with as much flexibility as possible. Any chosen supplier would know that after two years they would have to earn the district’s business all over again. I acted as a facilitator in the process. I put two parties in contact with one another. I did not get involved in any rate or contract negotiations between the brokers and the district. The rates from the brokers were either going to be lower than the ACES rates or not. The product, natural gas, is a commodity service.

I’m able to report that four years ago my brokers were able to source multiple natural gas bids that were lower than the ACES rates and Mr. Calavano chose the lowest one. For the last four years (two separate contracts with two different suppliers, I might add) the district has purchased its natural gas needs at rates averaging 10-12 percent lower than any ACES bid. Annual savings in the area of natural gas has conservatively averaged $60,000 to $70,000 a year for the district for the last four years.

Passing Agenda Item B-06, despite the proven success of the last four years, returns the district to the old school, old fashioned, time worn assumption and method of automatically trusting some co-op organization to procure the best solution for the district. This method may be “easy” and “convenient” in that no thought or effort is expended in carrying it out, but it is no longer valid. New creative ways have to be used to provide budget savings. For this agenda item to be recommended by Ms. Biesiada, an interim district employee who has been here all of two months, shows that she does not have a vested interest in Franklin’s long-term future or annual budget woes. I believe it is irresponsible and foolish. ACES does not provide the lowest rates available and this proposed contract handcuffs the district for far too long in length.

Every year the Board wrestles with a lot of the same budget issues: should we outsource our paraprofessionals, should we outsource our maintenance, custodial, and security staffs? You have resisted these actions so far because you have pledged your faith and concern with the people that hold these jobs. How do we provide additional training for our teachers and additional educational opportunities for our students? Again, your concern is always dedicated to these people. Passing this agenda item will make it harder to serve these people. Passing this agenda item will show the community that you value a co-op organization over these people. The next time the outsourcing public discussion comes up, how will the Board explain that it did not do everything in its power in order to find money to pay its own people?

In next month’s building referendum vote you will be asking the community to trust you and invest $85 million additional dollars in the district. At a recently held referendum info meeting at a senior community it was reported that “many residents did not trust that the school board would use the money wisely . .” Another reported quote was “When you do this, we are concerned that you do it properly and you put the money into the students and the books and the teachers.” How would this audience feel about the Board ignoring an annual average savings in natural gas of $60,000 to $70,000 a year and valuing a co-op association business more than its own students, teachers, and community residents? Why would this audience and the rest of the township trust the Board’s financial budget decisions in the future? For the Board members that will be returning in January 2015, how will you explain to the public and press in December’s BOE meeting a decision to automatically award a contract to a co-op organization that has been proven not to provide the lowest rates available to the district? Would you call this leadership?

At last week’s Board meeting Interim Supt. Dr. Seitz announced that all ethics complaints against Board Vice President Eva Nagy had been dismissed by the state. Afterwards it was reported that Mrs. Nagy stated that she “knew from the beginning that the charges had no merit.” And another quote: “As one who tries to follow policy and law, and being a certified board leader, I do know what the law is,” Nagy said after the Nov. 13 meeting. “I would not blatantly disregard something. I always do my research before I act.”

Two months ago you bid farewell to Mr. Calavano and applauded him for a job exceedingly well done for the district over the last 17 years (17 straight years of county/state/national administrator awards!) Like Mrs. Nagy, Mr. Calavano obviously knows school policy and law and would not blatantly disregard something. He always did his research before he acted. He was clearly dedicated to the district. He was open minded enough to consider non-traditional ways to save the district money. He valued the people he served over a co-op organization. And his actions were all legal and approved by the district’s attorney firm, not to mention voted on and approved by the Board for the last four years. By passing this agenda item you totally dishonor him and his efforts on behalf of the district. You become incredible hypocrites.

My recommendation to the Board is to vote to reject this agenda item and direct the interim business administrator to explore less expensive energy alternatives to ACES. It’s proven that better solutions exist. I also recommend that the Board hire a new permanent business administrator as soon as possible. Someone who will have a vested interest in Franklin’s future. This temporary interim person clearly does not. How many other areas of the budget will she negatively affect with worn out practices? What would a prospective new permanent Supt. think about coming to a district where the top business administrator wastes his budget dollars? This is not rocket science, folks. Ms. Biesiada has two numbers to choose from. One is significantly higher than the other. How does she justify to Franklin district employees and the people of Franklin Township that she is automatically choosing the higher one? Right now she’s the “chief financial officer” for the district – and this is the best she can do?

Budget dollars are tighter every year. The people of Franklin Township deserve better.

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