Proposal would take tax rate back to what it was in the 2021-22 school year
OCEAN CITY – The proposed Ocean City School District budget would raise taxes 5.4 percent, but here’s the kicker: it would take the tax rate back to what it was five years ago in the 2021-22 school year.
Presented Thursday evening, March 26, at the Ocean City Board of Education meeting by Business Administrator Timothy E. Kelley, the proposed 2026-27 budget comes in with a 1.1-cent tax rate increase, which would cost the owner the average $650,000 home an additional $71.50 a year.
The proposed tax rate would be 21.5 cents per $100 of assessed valuation. That comes after the current budget raised taxes 2.5 percent. The current tax rate is 20.4 cents per $100.
Unlike most local school districts that have seen their tax rates skyrocket as the state drastically reduced state aid, the Ocean City School District (OCSD) had its aid not only remain stable, but increase a bit.
Although taxes would be going up for the second year in a row, it would match the tax rate in the 2020-21 and 2021-22 school years, when it was 21.5 cents, the same as what is proposed. The district actually lowered the tax rate to 19.9 cents per $100 for three consecutive years starting in 2022-23.
Like the municipal tax and the Cape May County tax, the OCSD benefits from Ocean City’s ever-rising ratable base. In the past year, ratables rose $175.8 million to $13.125 billion.
However, the two biggest factors affecting this budget are employee benefits and state aid. The former increases the budget while the latter is what has helped keep the budget relatively stable over the past number of years.
The biggest change in general fund appropriations that goes beyond the cost of teaching is employee benefits, which are rising nearly $1.5 million over this year to $10.52 million from $9.06 million.
Although that is a hefty jump, it actually is better than many districts and especially light compared to districts forced into the state health care plan.
“This section is what kept me up at night most of the budget season,” Kelley said. Health insurance costs are rising about 20 percent, which is average to a little less compared to other districts. The state plan, he said, is rising 35 percent this year. The district left that plan, the “insurer of last resort” for school districts, about six years ago.
Still, the benefits increase is the largest expense jump in the entire budget, Kelley added, beating salary increases.
Before getting to what has helped mitigate staff salary increases, there is that state aid factor.
Ocean City dropped in regular state aid in three categories – transportation aid from $323,601 to $322,294; special education aid from $1.035 million to $1.009 million; and security aid from $222,393 to $202,341. Those three state aid reductions total just over $47,000.
However, the district’s School Choice aid rose by $77,025 to $3.396 million.
When the district made the choice to embrace School Choice in a big way years ago, a program that attracts as many as 192 students a year from across South Jersey districts, it was rewarded with one category of state aid that was promised to be maintained. The state essentially picks up the tab for Choice students who enroll in the OCSD.
If the district did not have School Choice aid, it probably would have lost that amount of state aid, putting it a similar boat as other neighboring districts.
Kelley did point out that tuition revenue from the district’s sending-receiving relationship with other districts, notably Upper Township and Sea Isle City, has been increasing over the past four budgets, but with fewer students in those districts, that’s going to negatively impact the revenues going forward.
In this year’s budget, tuition revenue for the 615 students is $12.3 million and is projected to be $13.77 million in the 2026-27 budget, when there will only be 585 students. Although the revenue figure was basically steady from 2024-25 with 638 students being sent to Ocean City to the 615 this year, Kelley explained this year’s budget and the proposed budget in this category factored in prior-year tuition adjustments.
The tuition is adjusted after the fact to account for more exact costs for the tuition and also for the number of students who actually were sent to the district.
For the proposed budget, Kelley said a decline of 10 students sent to the district, there will be a $210,000 revenue loss ($21,000 per student).
District has reduced staff by 18 positions
For staffing costs, the 2026-27 budget shows regular programs instruction increasing from $16.11 million to $16.78 million and special programs instruct rising from $3.65 million to $3.69 million.
Kelley said over the past two years, the district has eliminated 18 positions through attrition – staff leaving or retiring. The district cut six positions this year and is planning on cutting 12 more in the new budget.
The business administrator took pains to explain the district is not out to eliminate jobs. “We’re trying to do it responsibly through attrition,” he said.
Every time a teacher is retiring or resigning, the district looks carefully at the position to decide whether it’s needed. As an example, he said with the decline in students, if there were four sections of third grade, can the district reduce that to three sections, needing one fewer teacher? That is done, Kelley said, provided the impact on the remaining students is not detrimental.
He pointed out that the 12 eliminated positions account for $780,000 in salary savings alone. With benefits, there is an additional $40,000 savings per full-time equivalent.
Overall, total appropriations in the general fund would go from $47.5 million to $49.8 million. The amount to be raised by taxes would rise from $26.33 million to $28.16 million. General fund revenues fall from $51.19 million this year to $49.84 million.
With the new tax rate, the average homeowner would pay $1,397.50, that $71.50 increase over the current $1,326.
The proposed school district budget now goes to the county school board for review. A budget hearing on the budget is expected at the April 30 meeting when the school board will vote on it.
Taxpayers also contend with the municipal budget and the county budget.
Ocean City’s proposed municipal budget would raise the tax rate 2.41 percent from 57.2 cents per $100 to $58.58 cents. The county tax rate is decreasing again in the proposed budget, dropped 0.9 cents to 16 cents per $100.
– By DAVID NAHAN/Sentinel staff
At top, Ocean City School District Business Administrator Timothy E. Kelley, who presented the proposed 2026-27 budget March 26.
