Assembly Budget Committee Hearing April 9, 2018: State Budget FY 2019 Good morning Chairwoman Pintor Marin and members of the Committee. I am Betsy Ginsburg, Executive Director of the Garden State Coalition of Schools. Thank you for the opportunity to give testimony this morning. Moving Towards Full Funding As I testify before you today, New Jersey school districts are in a much different position than they were just one year ago. Though the education community faces many challenges, we have reason to be hopeful. At GSCS, we are thankful to both the Legislature and Governor Murphy for shedding a bright light on school funding issues and seeking ways to bring us to full funding under the SFRA formula. Though we believe there are aspects of the formula that need to be re-examined or updated, we know that this committee’s work deals specifically with the FY ’19 budget. We will confine our remarks to matters within that purview. Concerns From FY 2011 through FY 2017, the majority of New Jersey school districts were systematically starved of the financial resources needed to support programs and staffing. Many districts received funding increases in FY ‘18, which began a reversal of that trend. But the effects and pain of that starvation, which has resulted in extreme anger in some communities, cannot be corrected in one or two years. The move towards full funding must continue. Timing School districts all over the state are making budgets now and will finalize them before May 1. We know that you share our hope that the budget process this year will be shorter than last year. Changes to aid amounts, especially if some of those amounts are reduced, need to be made in a timely manner to minimize disruption. We understand that the budget process is complex, but urge you to keep this in mind. Pressure Points The move towards full funding will take years, not months, and will require, in some cases, readjustment/reallocation of state aid amounts. Lost aid means potential harm to students, no matter what the reason for the removal of that aid. While the aid adjustment/ move towards full funding process moves forward, we believe that there are ways to help districts that will lose some amount of state aid. The following are two suggestions for that relief. They can be used separately or as part of an overall strategy to help districts bear the burdens of funding loss. • Reallocation of Adjustment Aid and “Under-Taxed” Districts : There has been a great deal of discussion about reallocation of adjustment or “hold harmless” aid, initially given to districts that would otherwise have been harmed in the change from the old CEIFA formula to the current SFRA formula. If FY ’19 budget negotiations culminate in a reduction of adjustment aid to districts that are currently “under-taxed” (not raising tax revenues sufficient to meet their “Local Fair Share”), we would ask that the Legislature also consider granting a waiver of the two percent tax levy cap for those districts. Such a waiver would give local boards of education the option of raising their local tax levies beyond two percent to compensate for the lost adjustment aid. • Communities Receiving Less Than Two Percent Increase in Aid: In FY ’19 some districts will receive less than a two percent increase in aid. We suggest that those communities also receive a waiver allowing their boards of education the option of raising the local levy so that the combination of the state aid amount and the levy increase adds up to an increase of two percent over the previous year’s aid amount. If the local board of education opts not to use the waiver, the amount that might have been raised should be “banked” for possible use the following year. Extraordinary Aid for Special Education The state aid figures issued by the DOE do not include amounts for Extraordinary Aid for Special Education, a category that provides assistance for Special Education students whose expenses exceed $40,000 per year. The number of these students rises every year in the vast majority of NJ districts, with cost increases well in excess of two percent. Senator Sweeney’s proposal addresses this issue by offering, among other provisions, full funding of Extraordinary Aid. We have no way of knowing how that proposal will ultimately figure into the FY ’19 budget. If it does not, we suggest increasing the allocation for Extraordinary Aid. The amount that the State reimburses districts for expenditures above that $40,000 threshold has diminished from 77% in 2012 to just 58% in 2016. A slight increase last year began to remedy the situation, but more is needed. The depletion of Extraordinary Aid over six years created a situation where districts were forced to cannibalize regular education programs in order to do what is both right and legally mandated for special education students. An Extraordinary Aid increase would have a relatively small impact on the budget as a whole and provide over 500 of the State’s districts with at least a modicum of relief, helping to avoid the polarization of communities that results when regular education programs are cut to pay mandated (but underfunded) special education costs. Thank you for allowing us this time to share our concerns with you. As always we look forward to working with you and your legislative colleagues on efforts that will promote high quality, sustainable education for all our students.