By Sunayana Prabhu
HOLMDEL – As budget season begins, the Holmdel Board of Education (BOE) faces a deepening financial crisis.
While many numbers remain in flux, district officials have projected a budget shortfall of up to $6 million and are now exploring cost-cutting measures, including the outsourcing of custodial services.
Meanwhile, a grassroots nonprofit, Save Holmdel Education, has launched an online petition to push the township committee to share at least 30% of its PILOT (Payment In Lieu of Taxes) revenues with the school district to help avert staff cuts.
The BOE must adopt and file its tentative budget with the state by March 20.
The budget overview for the 2026-27 school year was presented by Deborah Donnelly, the business administrator, during the Committee of the Whole meeting Jan. 21. Donnelly told the board members that rising costs and shrinking savings have put Holmdel “on the edge” financially.
Donnelly said the anticipated budget shortfall for the 2026-27 school year is between $3 million and $6 million, depending on whether the district chooses to absorb all the increased costs. Employee health benefit premiums have spiked by nearly 30%, transportation costs have increased nearly 4% and salaries have gone up an estimated $1.3 million across the district, adding to the estimated budget deficit.
The estimate already assumes the maximum allowable tax levy increase under the state-mandated 2% cap.
According to Donnelly, outsourcing custodial services could save about $1.3 million annually.
The school district currently has a 27-member custodial staff that maintains the school buildings and grounds. These include electricians, masonry experts, landscapers, janitors and others. Including salaries, health benefits, pensions, overtime and related costs, the district spends about $3.3 million a year on the custodial staff. Privatizing custodial services would cost about
$2 million.
Several residents and other stakeholders urged officials to find alternative revenue sources rather than outsourcing custodial services. During the Jan. 28 school board meeting, Denise King, who represents both the Holmdel Township Education Association and the Monmouth County Education Association, argued that custodial staff have already absorbed years of financial losses through low raises, higher health care contributions and unpaid extra work.
“You can’t put a number on what those men and women did for you to get this school open,” she said, citing a recent snowstorm in which custodial, maintenance and grounds staff worked through hazardous conditions – in some cases sleeping at school – so buildings could open safely.
Patty Dasaro, president of the Holmdel Township Education Association, said outsourcing custodial staff “would be a mistake.” She added that longtime custodians bring institutional knowledge that would be difficult to replace.
“Holmdel is a community that thrives on the people that are in these buildings,” Dasaro told the board.
“If there is a leak in any part of any school,” she said, the in-house staff knows about all the hidden access points, aging infrastructure and recurring problem areas that often do not appear on building plans. “Any outsourced company will not know that,” Dasaro said.
Board members said they value employees but face limits from state spending caps and local tax constraints.
Board member Anthony Lebeci said the BOE does not have a “magic wand” to resolve issues. “We do have to make decisions based on facts, and those facts hurt.”
Several residents are now calling upon the township’s elected officials to help the school district. The Save Holmdel Education petition has garnered more than 450 signatures so far.
The petition urges the township committee to establish a shared services agreement that directs at least 30% of annual PILOT revenue to the Holmdel School District, or place a public referendum question on the ballot allowing residents to vote on the matter.
A PILOT is a financial arrangement between municipalities and developers that allows developers to make fixed payments to the municipality instead of paying traditional property taxes. The township’s budget relies heavily on PILOT revenue, which helps it keep the tax rate stable.
The petition notes that state law allows municipalities to retain 95% of PILOT payments, while counties receive 5%, leaving school districts with no direct share. Under normal property tax streams, about 68% typically flows to the schools.
At the heart of this PILOT dispute is the Bell Works redevelopment, which generates about $7.5 million annually under a PILOT agreement, according to the petition, of which schools get no share.
The township committee recently approved a new PILOT agreement tied to the redevelopment of the former Vonage site for a senior community and agreed to share $250,000 with the school district. But the schools already receive roughly the same amount in property taxes from the existing site.
This isn’t the first time the Holmdel BOE has been under the financial gun: Last year’s shortfall led the district to consider ending courtesy busing. The township committee stepped in and offered $600,000 to cover the deficit.
This year, the same financial pressures are shaping new cuts and cost-saving measures.
Petition organizers noted that while township spending has risen by about $7.4 million over five years and its surplus has grown from $3.5 million to $8.2 million, the school district faces staff and program cuts. They warn that without sustained funding, the district may lay off staff, outsource services, cut programs and busing, or raise taxes.
Dasaro urged the board to back state legislation that would require municipalities to share PILOT revenues with school districts.
Superintendent Scott Cascone said he has raised the issue with other superintendents and state association advocates in support of the bill.
The board is expected to revisit the custodial outsourcing proposal, along with other cost-saving measures, at upcoming meetings.
The article originally appeared in the February 12 – 18, 2026 print edition of The Two River Times.
