Montville board warned reserves may fall; officials plan options for 2026-27 budget

Montville Township Board of Education officials warned Monday that the district's reserve position is likely to decline and that leaders must consider options ahead of the 2026-27 budget cycle.

An unnamed finance presenter reviewed the district's equity as of June 30, 2025, saying the district held "a little shy of $16,000,000" in savings, representing about 15% of annual expenditures. Using current-year estimates of roughly $92 million in revenues and $95 million in expenditures, the presenter said the district could record about a $2 million operating gap this year. He added a hypothetical capital project example — a $4.7 million kitchen renovation and a $1 million roof replacement — that would further reduce capital-designated funds and push unrestricted reserves down under $1 million in a worst-case scenario.

"We don't have any more one-trick ponies to try," the finance presenter said, urging the board to begin proactive budget planning. He said the district has historically used guidance from Standard & Poor's and cited a target range of roughly 5% to 13% equity-to-expenditures as a practical marker for bond-rating concerns.

Board members pressed for specifics. One member asked, "What are what's the minimum on the reserves that we have to keep in order to maintain our bond rating?" The presenter recalled a prior S&P conversation and said the bottom acceptable range had been in the roughly 5% range, with the district previously running closer to 13% in better years. He recommended meeting with bond counsel and financial advisors to evaluate current market conditions and financing options.

Trustees and administrators discussed timing and public engagement. Several members urged the board to avoid rushed cuts and to present deliberative options to the public rather than making reactive program reductions. The board agreed staff will return in January or February with more detailed, granular options for the 2026-27 budget, including potential referendum or financing choices if needed.

The board noted other factors complicating long-term planning: the 2% cap on tax levy increases, rising personnel and benefit costs, and uncertainty about state aid under an incoming governor. One board member said changes from the new governor are unlikely to affect the 2026-27 budget immediately, but could influence planning for 2027-28.

The board's finance discussion concluded with a commitment to further analysis, meeting with bond counsel and preparing a set of options for public review in early 2026.

The board approved its consent agenda later in the meeting and continued committee reports and personnel business.