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Atlantic City School District Goes Bust, Fiscal Monitor Put in Place

School system wracked by aftershocks from collapse of casino industry, city's fiscal calamity

Atlantic City
Credit: Kimberly Paynter/WHYY

New Jersey has placed fiscal monitors in nearly a dozen school districts to date, almost all intended to address alleged mismanagement or other weaknesses in the local administrations.

But Atlantic City schools are presenting a novel problem: they’re running out of money.

The Christie administration yesterday announced it would send Gary McCartney, a retired superintendent from South Brunswick, to lead a team of financial experts to start scouring the district’s budget for savings in the face of a drastic drop in local tax revenues, largely due to the collapse of casinos in the city.

“This is an extraordinary, if not unique, fiscal crisis due to the ratable drop,” said state Education Commissioner David Hespe yesterday.

“We have had monitors go into districts when there is a fiscal dilemma, sometimes by the administration or the board, sometimes by external conditions,” Hespe said. “This is clearly in this case due to the latter.”

The numbers are stark. In 2012, the city had a local tax base of $18 billion. This year, it was down to $12 billion, and next year will be closer to $8 billion. That has left the district, which gets only $18 million in state aid out of an estimated $170 million overall budget, scrambling for cash, with plans in place to cut $13 million next year.

“The rest of the money comes from the local taxpayers,” said Glenn Forney, director of the department’s office of state monitors. “That why we need to get ahead of this … These are clearly circumstances that are unparalleled in the state.”

Waiting for his team to get on the ground, Hespe wouldn't say if the state would bail out the schools with an infusion of emergency aid. Atlantic City already has a monitor and emergency manager in place for the municipal government.

The timing is pressing: Gov. Chris Christie will present his budget for fiscal 2016 next week, and it will include proposed state aid for next year for all school districts.

“In a few weeks, we should be able to answer that question [of a bailout],” Hespe said in an interview. “I think the governor and the Legislature will be looking to us and asking the question of what are the revenue needs for a fiscally responsible budget.”

Given the state’s own fiscal condition, Atlantic City’s prime advocate in the Legislature wasn’t holding his breath for significant financial help from Trenton.

“I think people in Atlantic City are resigned to the reality that a bailout isn’t coming [for either the city or the schools],” said state Sen. Jim Whelan (D-Atlantic), a former mayor and retired teacher from the district.

“The state can’t pay for its pension liability, the Transportation Trust Fund is going broke, they money is not there, it is just not there,” he said.

Nonetheless, Whelan also said that he didn’t think the district needed to make steep cuts beyond those it has already planned. But it is also a time of transition, with Superintendent Donna Haye going on an extended medical leave and then retiring at the end of the school year.

“I’m just hoping [the monitor] doesn’t come in with a meat axe approach of chop, chop, chop,” he said. “That not to say cuts don’t have to be made at all, but I hope it’s not a ‘ready, shoot, aim’ approach.”

Atlantic City will be the 10th district to be put under a fiscal monitor, a step short of the state taking control of fiscal operations altogether. The others are Asbury Park, Belleville, Elmwood Park, Elmer, Garfield, Lakewood, Pleasantville, Trenton and Woodbine.

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