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2-18-10 GSCS Testimony before Assembly Budget Committee 2-17-10
"...With the information on hand to date, our research indicates that GSCS members will be not be receiving nearly $90M (nearly 20% of the $475M)in state aid for the remainder of this year. Feedback at this point is spotty and differs according to perspective and understanding as to how impacts might play out. One issue that seems to be emerging is that middle income districts that were gaining ground with the implementation of the School Funding Reform Act (SFRA) will be hit hard by aid reduction. Districts that had been efficient by saving money or by growing funds through program development – say an in-house program for autistic children that brings tuition payments into district –may lose the opportunity to build a needed full day kindergarten for example (approximately a third on New Jersey districts do not have full day kindergarten). How will next year’s school budgets hold up when property tax relief monies, which are drawn from surplus, are unavailable in whole or in part? Currently, districts are *statutorily required to roll over into the following year budget any funds, dubbed as property tax relief, above the allowable 2% rainy day funds. Because this law has been implemented for several years now, the reduction of surplus will create a hole in the subsequent budget.(It is worth nothing that caps are automatically waived when state aid is decreased - Budget Guidelines, Section III, F)

We hear the administration say tools will be provided to districts to help them get over the hump of dealing with aid loss during this year and the negative implications for property tax relief in Fiscal Year‘11. We look forward to hearing more on what those tools will be and when they will be available...Just as schools are being targeted to help put the current year state budget back on a more even keel, we ask folks in Trenton to reciprocate by allowing relief from as many mandates and regulations as possible, which will result in savings of time and money. And, we hope that can be done soon."

Garden State Coalition of Schools/GSCS

204 West State Street, Trenton, New Jersey 08608

609 394 2828       732 618 5755

Assembly Budget Committee, February 17, 2010, Committee Room 11

Testimony on Governor Christie's proposal for closing the Fiscal Year 2010 estimated budget shortfall”

 

Hello, Chairman Greenwald and members of the Committee. I am Lynne Strickland, Executive Director of the Garden State Coalition of Schools (GSCS). We thank you for the opportunity to comment on the Governor’s plan to address the current year deficit.

Certainly we have been hearing the warning calls. Office of Legislative Services Chief Budget and Finance Officer David Rosen testified just a few weeks ago that most of the state budget funding for this year was “already out the door’. This reality made school aid, which is paid out in bi-monthly installments, the largest target available to help offset the state’s deficit.

A main tenet of the Coalition is ‘public support for public education’. A major GSCS priority is how to achieve fiscal responsibility to local and state taxpayers while assuring a stable base for quality education.

To retain stability will require the ability to make what required cut backs may be asked of us by state policymakers with the least harm to school programs overall. And since school districts do not fit the one-size-fits-all construct, they will need flexibility in how they apply potential reductions to their own budgets.

As you know, the current year deficit plan was just announced in the Governor’s message last Thursday, which was followed by the extended President’s holiday weekend. Between the time crunch and the many details that remain to be clarified, solid analysis of the plan this soon needs to be hedged a bit by acknowledgment that further clarifications can make a difference.

GSCS understands that the fiscal situation in the state has made for some very difficult decisions, and while we believe that it is important to be a part of a solution to help the state move ahead, we also recognize our responsibility to inform Trenton of the impact of the immediate loss approximately $475 in state school aid.

With the information on hand to date, our research indicates that GSCS members will be not be receiving nearly $90M in state aid for the remainder of this year. Feedback at this point is spotty and differs according to perspective and understanding as to how impacts might play out. One issue that seems to be emerging is that middle income districts that were gaining ground with the implementation of the School Funding Reform Act (SFRA) will be hit hard by aid reduction. Districts that had been efficient by saving money or by growing funds through program development – say an in-house program for autistic children that brings tuition payments into district –may lose the opportunity to build a needed full day kindergarten for example (approximately a third on New Jersey districts do not have full day kindergarten).

How will next year’s school budgets hold up when property tax relief monies, which are drawn from surplus, are unavailable in whole or in part?  Currently, districts are *statutorily required to roll over into the following year budget any funds, dubbed as property tax relief, above the allowable 2% rainy day funds. Because this law has been implemented for several years now, the reduction of surplus will create a hole in the subsequent budget.

It is worth nothing that caps are automatically waived when state aid is decreased. (Budget Guidelines, Section III, F)

To reiterate, it is important to continually release hard information as soon as possible so that districts can work on their budgets in a fact-based way.  Our members report that right now they are guessing ‘what might be’ for today and tomorrow’s FY11 budget. Meanwhile the timelines required for FY’11 budget process and vote begin just after the March 16 budget message.  And, we wonder:  will the state run the SRFA formula?  GSCS suggests the formula be run no matter what. Even if there is a reduction in aid, running the formula recognizes and keeps current critical data such as enrollment growth and increased taxing authority.

We hear the administration say tools will be provided to districts to help them get over the hump of dealing with aid loss during this year and the negative implications for property tax relief in Fiscal Year‘11. We look forward to hearing more on what those tools will be and when they will be available.

Just as schools are being targeted to help put the current year state budget back on a more even keel, we ask folks in Trenton to reciprocate by allowing relief from as many mandates and regulations as possible, which will result in savings of time and money. And, we hope that can be done soon.

                                     **************************

*The actual ‘property tax relief’ language in the authorizing statute, P.L. 2004, c. 73, is: “The amount of any funds made available for appropriation as a result of the reduction in the percentage of authorized undesignated general fund balance pursuant to P.L.2004, c.73 shall be used to reduce the general fund tax levy required for the budget year.” (See Section 3 of P.L. 2004, c.73, page 7 of Pamphlet Law.)

FYI -GSCS 2-17-10 Assm. Budg. Comm. Testimony/Attachments (Excerpts /GSCS Email-Net 1-26-10)

GSCS continues to watch the proposal to cut state aid to schools via additional surplus on hand:

While empathetic to the state budget pressures, GSCS reminds us all that the plan poses multiple problematic effects on NJ districts:’

 

·       Using the additional surplus to cover the underpayment of a district's state aid entitlement can likely have a negative impact on programs in the subsequent school year.

 

·       This proposal will have an uneven impact on school communities, as many districts do not have surplus overage in the '08-'09 audited school year.  And efficient districts accumulate overages as well.

 

·       GSCS questions whether that state aid will be replaced for FY11 and notes that loss of state aid is loss of property tax relief.

 

·       GSCS also strongly recommends that the school funding formula must be run-regardless-so that district information and wealth status is kept current.

 

·       GSCS submits that school communities require flexibility in how to apply any potential aid cuts.

Education Transition Team Recommendations Reflect GSCS Input:

‘Throughout the Transition Team's Education Committee report, GSCS is encouraged to see many of the recommendations we had gathered from our members and submitted during our meeting with the team on your behalf.  A few that we note include:’ 

·       a call for a moratorium on new programs and expanded initiatives and a review of educational rules and regulations

·       an immediate review of the School Funding Reform Act for its applicability in the future

·       an expectation that fiscal assessment will be done for all new legislation, rules and regulations to determine the impact on local property taxes and school budgets (as underscored in Executive Order 4, 1/20/10)

·       a concern for how the approximately $1 billion in Federal Stimulus grants that went into 2009-10 state funds for public education will be replaced as a source of funding without cuts to state aid

·       a suggestion that high performing districts already in compliance should only need to go through QSAC monitoring every seven years

·       a call for the state to move away from the "one size fits all" approach to governing local districts

·       a call for allowing well-performing districts to be released from burdensome central controls and oversight

·       a recommendation that High School finance literacy requirements be amended to allow for inclusion in existing courses

·       a call for a moratorium on school accountability regulations ('Burden of Proof' noted)

·       a call for an overall review of special education, particularly where state regulations exceed federal mandate

·       an acknowledgement of proposed bills A-4140, A-4142 and prevailing wage legislation as problematic

·       a call for quality education for all NJ children

 

‘GSCS will be watching to see if these positive recommendations make the required next steps to become reality.’