School Construction: Third Report to Governor by Interagency Working Group
http://www.state.nj.us/governor/home/pdf/3rdrptsept14.pdf ........ GSCS opposes recommendations for Regular Operating Districts (RODs) in this report re: debt service aid replacing a grant system and inattention to ROD 'pipeline' districts.

One, debt service has a proven track record in New Jersey for being neither reliable nor predictable since it has to be appropriated annually; two, the report suggests that perhaps the debt service could be secured by a trust fund – trust funds in N. J. also have a proven track record of unreliability, witness the Transportation Trust fund, among others.

Three, the report recommends that the debt service distribution be based on a future wealth-based school funding formula. This would be a significant change and significant loss to the RODs. The school funding formula is not likely to be implemented in the near future so that the lag-time for RODs to receive construction aid could add up to 2- 3 years for starters. A wealth-basis for aid distribution means that some RODs will no longer qualify for any capital construction aid under this construct. In fact, when the school construction law, PL 2000, was passed and signed in July 2000, about 44% of the RODs did not qualify for any debt service aid; another near 20% received appreciably less that the 40% floor, the standard guaranteed in that Act. Construction aid has been, in recent history, the most significant form of property tax relief offered to hundreds of communities in N.J.

Four, the ‘pipeline’ districts, nearly 40, that passed bond referenda since September 2005 are excluded from any discussion in the report. In fact, those districts and the difficult position that they were handed by the state’s lack of consistent, up front guidance when SCC funding was drying up, require priority recognition. This is a serious omission.

For the record, at the RODs conference in July 2006, the majority of the panel members did not support debt service as a viable alternative to grants (see p. 5 of the Report). Only when the theoretical ‘perfect world’ scenario was posed, where debt service - set at the standard 40% of eligible cost minimum - and where the payments would also be predictable and reliable, was there any nod in that direction by some.