Important to schools:  S22778/A3680 amendment legislation does recognize that there a number of Cost Drivers Beyond Local Control:

Key Budget Cost Drivers over which schools have no control are addressed by Spending Growth Limitation Adjustment (SGLA’s) under S2278/A3680.  S2278 andA3680 recognize some of the costs that are beyond local school district control by permitting certain SGLA’s.

This ‘cost driver’ recognition is essential since S1701 imposes caps on overall budgets. If these SGLA’s are not permitted, the de facto caps imposed under S1701 will amount to more than stated at 2.5% or the CPI whichever is greater, due to annual acceleration of  the cost drivers.(FYI: S2248 does not recognize these cost drivers):

S2278/A3680 Proposed SGLA’s:

• Establishes a new Spending Growth Limitation Adjustment (SGLA) for utility costs. Overall, utility costs - on average- are under 2% of school budgets.
• The S2278/A3860 bills make the SGLA’s permanent for health benefits and certain insurances that are currently in place. State policy has been recognizing these items as costs beyond which districts have no control prior to S1701 via SGLA. Without this amendment, these cost driver SGLA’s will be eliminated next year. Thus S2278 and A3680 simply make these SGLA’s permanent. In addition, since making these SGLA’s permanent continues a practice already in place there should not be an impact on school budgets compared to prior year changes.
• Phases out the allowable SGLA for hazardous busing at 25% per annum, beginning with an immediate reduction of 25% of that cost in 2005-06 and ending at 0% in 2008-09. Since this waiver had been permitted under CEIFA for 10 years and helps particularly to stabilize district budgets where enrollment growth and hazardous routes are a reality, this phase down reasonable in that is needed to ameliorate the abrupt change in this regard.
• *Allows an SGLA for mandated special education costs that reach the $40K threshold at which Extraordinary Aid can then be requested via district application.

*(Note: While GSCS advocates consistently for recognition of the special education cost spiral and underfunding of the state obligation to its commitment, this amendment was not originally in A3680 until added at the last minute before the voting session. Understanding legislative timeline as well as budget constraints, all the education groups had signed off on A3680 prior to that adding the special education SGLA on the floor. In fact, a LEE Group and GSCS statement supporting A3680 ‘as is’ was placed on legislators’ desks earlier that morning. Two days later in a speech to New Jersey mayors Governor Codey used the addition of that amendment in particular to point a finger at legislators and schools for pushing for large “loopholes” in S1701. Since then, the Senate has repeatedly refused to even post amendment legislation for committee hearing and the Assembly has not posted A3680 again for a vote.)

S2278/A3680 details some conditions for Commissioner review of administrative cost capping:In addition to permitting flexibility for commissioner approval to exceed S-1701's cap limitations as in S2248 the bill details certain conditions [yet does not limit review to those conditions only] that the commissioner should consider in reviewing district circumstances

ü     S2248 improves S2278/A3680 in that it maintains allowable surplus at 3% for FY0506 and ensuing years. S2278/A3680 reduce surplus to 2% for Fy0506 and then returning allowable surplus to 3% for FY0607 and subsequent years.

ü    S2248 provides regional cost benchmarks be the ‘cutoff’ before the administrative cap is applied to administrative costs increases from one budget year to the next. S2278/A3680 do not allow this. The S2248 approach is more reasonable since districts that come in below that benchmark are penalized for being efficient by S1701…In other words, under S1701 & S2278/A3680 a district could be $300 per pupil below the administration’s own definition for the regional benchmark and still be subject to the same restriction as a district that is spending above that benchmark.

The following improvement to S1701 is embodied in both S2278/A3680 and S2248: Commissioner flexibility allowed in reviewing district appeals for administrative costs; S2278/A3680 allows some line item transfer flexibility: Allows certain line-item transfers previously restricted by 

S-1701.