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While there is a lot of talk about how to continue the school construction program and there are no answers yet...Senator Joe Doria postulated that there would be no tangible information until after November elections...GSCS is focused on renewal of the program and on helping the last go-round referenda districts that passed their bonds: how is the state going to proceed in terms of funding distribution and payment process? No word yet and no definition - GSCS testimony addresses several of the outstanding issues.
609 394 2828
Testimony before the Join Committee on Public Schools October 3, 2005
School Construction Funding Issues
Good morning, I am Lynne Strickland, Executive Director of the Garden State Coalition of Schools (GSCS). GSCS member districts, now representing approximately 120 districts throughout the state and 350,000 public school children within the regular K-12 structure, thank you Mr. Chairman and members of the committee for this opportunity to comment on the serious funding policy issues facing the State school construction program today.
We must acknowledge the severe predicament in which the Abbott communities find themselves regarding SCC oversight and management problems that are hurting children’s education environment and city residents alike. Today, I will present on the issues confronting
CONTEXT:
For the first time in recent history, the passage of the Education Finance and Construction Act in 2000 made significant property tax relief available to all communities in
The SCC began sending warning signals about the diminishing ‘pot’ available to suburban and rural districts for close to a year. So even though crunch time had been envisioned early on, no advance preparation was planned by the state to offer a predictable process for dealing with the crunch now upon us.
The regular operating districts still do not know what to expect from the state, even those districts that passed referenda on September 27, just a week ago. The state promised eligible cost coverage to those districs in writing, albeit saying the funds may come to these district in the normal up front grant, or in debt service. But, the state has yet to determine how to triage districts in to those 2 groupings: the grant or debt service districts.
The 540+ regular operating districts are faced with 3 major concerns right now.
- One, clarity and credibility. Generally, the school construction program budgeting process is not easily transparent and that means the public begins not to trust what information is parsed out. For example,
- How much funding would be available for regular operating district projects has been in free fall since last year when it was first stated by the SCC that a
projected 200M might be on hand through December 2005. That ‘final pot’ number since fell to 150M in early 2005, then maybe 110 M or so after last April’s referenda to a reported 80M in early summer to 60M at the end of August. What is the real bottom line number – we will likely hear it is 60M today – and how was it literally derived?
- The SCC ‘encumbers’ the assigned state share districts are to receive in grants f or a certain time period, even after a referendum has failed. What is the status of the encumbered funds now, and are how they accounted for in the remainder of the 2.5Bfund?
- How can the state promise future debt service funding at guaranteed rates for all districts when such funds must be appropriated annually by the legislature, and one “notwithstanding” clause can overturn precedent.
- How is the state share of the $14.4M for the 55+% district that just passed its referendum on September 27, 2005 accounted for? Is it included in the state $60M remaining. If so, that would $45.6M is the pot available for other districts that passed their referenda. Or, is that amount treated separately as previously noted when addressing the 55+% districts’ funding.
- Two, can those districts who are told they will receive debt service aid in lieu of grants be able to trust that promise when the history of debt service indicates otherwise? (see addendum/PARI study 1997, School Facilities: A Challenge for
- Three, will there be a reissue of a stable state share for construction funding for all school district in the near future?
The credibility problem hits local communities as well. When districts go out for a bond referendum they work hard to inform and gather local community support. This comprehensive effort usually takes at least a year, often several years. An important element in that process is how much will the local share of a bond cost. Those districts which held September referenda were given a either-or notice from the state only in mid-July of maybe an up front grant, or maybe debt service. Thus, very late in their process local districts had to tell their public that they really did not know – and continue to not know - how much the project might literally cost in the out years. On the other hand, the state made a promise to those communities that full eligible cost funds would be forthcoming and thus that is what people expect.
How projects will be prioritized and by whom, is also still outstanding. This has to be addressed as soon as possible as well.
(FYI re: triage needs - When the School Construction law was written GSCS was concerned that prioritizing district facilities needs be incorporated into the legislation and in fact, it was. Per PL2000, Ch. 72, 18A:7G.5 (d) m. “The commissioner shall establish, in consultation with the Abbott districts, a priority ranking of all school facilities projects in the Abbott districts based upon his determination of critical need, and shall establish priority categories for all school facilities projects in non-Abbott districts.” This prioritization may be taking place only now with no public input, and under a timeline already passed.)
Finally, we ask the SCC – and state leadership - for reassurance by requesting expeditious answers to the following questions that address the $2.6B funding for regular operating districts :
SPECIFIC CONCERNS - TRANSPARENCY/ACCOUNTABILITY ISSUES
ü If ‘September 27’ schools have to borrow larger bonds than grant agreements would have afforded, isn’t it likely their bond rating be negatively affected?
ü How does the SCC get to a bottom line of remaining funds in the pot?
ü How is the SCC notified when referenda fail so that the funds that had been put on hold for grant agreements are recycled back to the pot?
ü How much spent on actual school building construction/bricks and mortar?
ü How much for operating expenses?
ü Are there separate accounts for Abbott and Non Abbott construction funds?
ü How much for bonding costs and fees? It is being reported that $65M is attributed to these costs so far by SCC – from what fund is the $65M drawn?
ü Are there any salaries paid for out of the school construction fund? If so, what?
Attached:
1.GSCS Data Report ‘Before and After: School Facilities Aid’ which lists district entitlement prior to passage of S200,
the Education Finance and Construction Act, and after the Act became law in July 2000, Ch.72 [PL 2000].
2. PARI Report: School Facilities: A Challenge for
3. FYI -
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DEBT SERVICE AVERAGE PRIOR TO 'EFCA' CHAPTER 72 | |||||
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(Districts Grouped by |
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No. of |
Debt Service % |
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Groupings |
Districts |
Before S 200 |
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0 to 39.9% |
429 |
11% |
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40% to 54.9% |
82 |
47% |
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55% to 99.9% |
32 |
61% |
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Abbott Districts |
30 |
58% |
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Non Abbotts |
543 |
19% |
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Prepared by |
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