Decrease in Net State Aid for NJ Schools

By Geoff Mulvihill
|  Monday, Apr 15, 2013  |  Updated 5:15 PM EDT
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Decrease in Net State Aid for NJ Schools

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When he unveiled his state budget proposal, Gov. Chris Christie said no school district would receive a decrease in "formula aid.''
 
But an analysis released Monday by an education advocacy group finds that the net state aid would go down in the coming year for 294 districts _ or about half _ when considering a growing surcharge for districts that got state subsidies for building projects.
 
The Education Law Center, a group that represents children in low-income cities in litigation against the state, finds that some districts would see net payments from the state go down as much as $900,000 if Christie's budget plan is adopted as it is. The payments have been a concern for school officials for months, but the law center's report appears to be the first time their statewide impact has been quantified.

"The governor is trying to sneak an unauthorized, stealth tax into the budget that will hit public schools in middle-income communities the hardest,'' David Sciarra, executive director of the ELC, said in a statement Monday.
 
Michael Drewniak, a spokesman for Christie, said these payments are separate from formula aid _ the main state subsidy for most school districts. The governor is calling for sending about $9 billion to school districts next year _ by far the state's biggest expense and about 1 percent more than this year. No district is getting a cut in formula aid, though about 250 districts are budgeted to get either no increase or a symbolic boost of $2 or less.
 
"When the administration passed on millions in savings to school districts for construction costs due to favorable refinancing, no one crowed about getting extra formula aid,'' Drewniak said in an email. ``That's because it is separate and apart from formula aid, which is being delivered to districts at historic levels in the proposed budget. Every school district in New Jersey will have its formula aid held flat or increased this year.''
 
In 1998, the state was ordered by the New Jersey Supreme Court to pay for facility upgrades for a group of New Jersey's poorest districts. The Legislature allocated $6 billion for that task, plus another $2.5 billion to subsidize construction for middle-income and wealthier districts. That money fueled a building boom in schools statewide as the state government picked up at least 40 percent of the tab.
 
The surcharge goes back to 2010. Amid a budget crisis, the state began requiring all districts except for the poorest ones to pay 15 percent of the state's debt-service costs each year for school construction projects.
 
The state's annual payments have fluctuated because of refinancing and details of bond agreements. For the fiscal year that starts July 1, the annual payments are scheduled to be $34 million, up from $21 million this year. For the 494 districts that received the subsidies, the increase works out to $26,000 more in charges for the coming year compared with the current year. But the amounts vary widely because districts had different construction projects.

Sciarra says that's contrary to the districts' original agreements with the state.
 
The payments are a major concern even for education groups that are not in the business of criticizing Christie's education stances are concerned about the coming spike in debt-service costs.
 
"The districts need a little more advance notice for financial planning purposes,'' said Frank Belluscio, a spokesman for the New Jersey School Boards Association. "We're hoping that there will be relief of some sort.''
 
 

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