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GSCS Testimony on FY06 March 2005
Garden State Coalition of Schools/GSCS
210 West State Street
Trenton, New Jersey 08608
609 394 2828
Testimony before the Senate Budget and Appropriations Committee March 22, 2005
State Budget Fiscal Year 2006
GSCS member districts, now representing 120 districts throughout the state and approximately 350,000 public school children within the regular K-12 structure, thank you Chairman Bryant and members of the committee for this opportunity to comment on the FY06 State Budget.
This year has been unusually stressful for public education in terms of funding stability for quality programs. For the fourth straight year, state formula aid (per CEIFA) to Non Abbott districts is being held flat, in spite of enrollment growth in many districts combined with mandated program growth, as well as double digit increases in cost drivers beyond local school district control (e.g., health benefits, insurances, utilities). Stable support for public school programs has further been compounded by the imposition on districts of the hastily passed S1701 legislation. This law does not help districts contain costs in any substantive way and unfortunately gave the public false expectations that property taxes would be reduced significantly. In addition, in passing this bill, the legislature signaled its misunderstanding over what really drives the major costs in school budgets. While the Assembly moved bills ahead to ameliorate some of the negative impacts of S1701, the Senate chose to manage by potential crisis,“giving S1701 a year” to see what problems shake out.
Due to state budget ills in the recent past and certain misperceptions that influence policymaking, a number of stressors continue to confront school communities and policymakers alike. It is time to address these stressors with clarity to engender positive results. Certain issues in particular stand out that require in depth understanding so that decisions by policy makers may be as well informed, thus more productive, as possible:
I. Property taxes rising and state aid falling.
There is a direct link between increasing property taxes when state aid is pared back to localities (see attached chart). This year that recognition has finally gone public. To his credit, Governor Codey did not point a finger of blame at towns and schools as being the culprits for the large property tax increases in recent years. On the downside, the Governor did not propose any increase in school aid which means taxpayers and school programs alike will continue to be hit hard. It is notable also that the relationship between less state aid requiring more property taxes to support local services has finally been cited with regularity by the press this year.
The public gets it too:
From a new Quinnipiac University poll released this morning….More than six out of ten New Jerseyans (61%) oppose Codey's plan to reduce or eliminate property tax rebates, and 70% say that they prefer state taxes increased, rather than local property taxes, if tax hikes are needed to pay for local schools and government. ….
(Richards/Quinnipiac Univ.): “And in a clear message to Trenton, voters say it's better to raise state taxes than to force property tax hikes by freezing state aid to schools and local government.”
[Politicsnj.com 3-19-05]
FYI - Statewide equalized tax rates show that more and more municipalities fall at or above the line of the statewide equalized average now, with 335 municipalities – 60% - at or over the average (see Funding & Data Reports/Statewide Equalized Tax Rate Reports at our website (www.gscschools.org). Those below drop at a more extreme pace and thus the result is that more districts are more stressed to provide local property tax support while less districts are comparatively less stressed. In terms of equalized school tax rates, shore communities – especially in the south – and Abbott districts are the least stressed as groups.
Like the Governor’s complaint that the state budget is impacted by entitlement costs, so too are school district budgets constrained. GSCS has repeatedly spoken to the issue of cost drivers in school budgets. We continue to ask the state to work with schools to find ways to cost contain these drivers, such as the State Health Benefits Plan (SHBP) that requires school districts to cover the full costs of health plans for married couples, rather than allowing an incentive buy-back plan so that one spouse’s plan could cover the others. This would save millions of dollars across the state for those districts that participate in the SHBP. This practice is allowed in municipalities but not in school districts. Why not?
2. Parity is not the High End Cost Driver in Abbott
While GSCS has always supported the concept of parity and continues to do so, this distinction of what drives the high cost of Abbott has become increasingly important to understand. Why? Because policymakers – in seeking to reduce school aid - can promote misguided legislation based on misunderstanding. For instance, a number of legislators have indicated that suppression of I & J spending was an underlying rationale behind S1701. Their premise was that if I & J spending were suppressed that parity aid would be correspondingly reduced and thus less aid would have to be required for Abbott districts. Reduction in parity aid will not result in less aid to Abbotts in current context. At the same time, this back-door approach not only hurts higher wealth districts, but negatively impacts every Non Abbott district in the state.
In fact, supplemental aid to Abbotts is the ‘last aid dollar’ decided upon for Abbotts by the state. A state practice underscores the importance and place of supplemental aid: since parity aid is based on a per pupil formula, that parity number will be adjusted when audited enrollment figures are finalized. As directed in letters sent out by the Department of Education for several years now, if an Abbott district’s projected the parity aid number needs to be adjusted downward [due to a reduced pupil count], the dollar amount of aid to that district is not reduced. Rather, a bookkeeping transfer is made adding what was reduced in the parity amount as an increase in the supplemental aid side of the ledger. This year the parity reduction amounted to more than $90M. That amount was simply renamed supplemental aid transferred on the books to the supplemental line.
In addition, according to the Education Law Center, approximately $627M in supplemental aid (now dubbed “Discretionary Education Opportunity Aid) was awarded over and above parity aid by the State to the Abbott districts for the 2004-05 school year.
p.2 gscs
Another example that parity is not the end cost driver for Abbotts is found on the DOE website (Commissioner’s Press Release on Comparative School Spending Guide 2005) “…Expenditures in New Jersey’s 31 Abbott districts were, on average, higher than non-Abbott districts. Total comparative costs in Abbott districts ($13,857) exceeded the average expenditure in non-Abbott districts ($10,385) by 33.4 percent...”
In 2004 I&J Parity was projected at $10,552 by the State. With a rare exception, per pupil spending in Abbott districts was higher, e.g., (Comparative Spending Guide2005):
Asbury Park at $17,017 New Brunswick$15,105
Newark at $15,312 Long Branch $12,506.
Camden at $13,476
3. School Construction
The Star Ledger published an article this Sunday pointing out that wealthier districts are further ahead of middle and lower income districts in obtaining state funds for school facilities. The article did not relay certain options that are available under the law, and this requires clarification.
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.” Further, the legislation established an appeal process for districts that failed 2 school bond referenda within three years (C.18A:7G-12).
Finally, it is important to note that enrollment growth in higher wealth districts outpaced state averages by nearly 2 to 1 in from the late 90’s through 2003.
4. The New Jersey system of school funding requires an overhaul: there are two systems of school funding in N.J: 1) Court Protected Abbott and 2) Non Abbott.
· Non Abbott funding is not stable or predictable: CEIFA has not been run since 2001-2002. In the first year that CEIFA was not run, the state prediction was that not running CEIFA saved the state more than $400M. And we know that the taxpayers bear the brunt when the formula is not run. Since FY03 the Appropriations Act has been used to specify any aid changes for schools, which have been minimal and usually more district-specific.
· Data reporting must be show separate figures for Non Abbotts and Abbotts. It is confusing and inappropriate to combine figures such as statewide per pupil spending amounts for two distinctly different types of school district funding categories. Like the NCLB message, disaggregating the data will avoid Non Abbott and Abbott alike from “getting lost in each other’s averages”.
It is well past time for the state to take a lead in developing a school funding formula that does not divide but that works to provide support and quality education for all our schoolchildren. [050328]
