Q&A: The Budget Shortfall and Your Public School

Under Gov. Chris Christie’s proposed $29.3 billion budget, schools would take an $819 million hit, a blow that would affect virtually every district in New Jersey. Christie also proposed new limits on how much districts can spend and tax

New Jersey’s public schools are the lead story in Gov. Chris Christie’s proposed $29.3 billion budget. Under the governor’s plan, schools would take a $819 million cut, the first major statewide school cut in almost a decade and impacting virtually every district. Christie also proposed new limits on how much districts can spend and tax, putting a cap of 2.5 percent on both. Debate and discussion will take place in the next three months, before a budget must be approved by June 30. We answer just a few of the early questions to what it all may mean.

Q: What will happen at our local school?

Stay tuned for the specific aid figures being released Wednesday, but it is unlikely that any district will be spared from at least some reductions in their state aid in the 2010-2011 school year (see Where the Money Goes). The average reduction will be about 4 percent of their overall budget, officials said. For those districts that don’t get much state aid in the first place, cuts may have nominal impact. For others that rely on state aid to fund as much as half of their budgets, the cuts could be in the tens of millions of dollars.

Q: Will it mean layoffs?

That will depend on the district. When teacher contracts are rising on average about 4 percent and other costs exceed even that, the pressures will be on districts to reduce personnel, their largest expense by far. With pension and health benefit reforms also proposed, Christie said he eventually will save districts those escalating costs, helping them avoid any layoffs. But the full impact of those reductions is likely years away and probably won’t help much in the next couple of years (see The Budget in Brief).

Q: Will our property taxes go up to make up the difference?

Maybe. Current state law allows for 4 percent increases, with some exemptions. But the law also allows a district to make up in property taxes any cuts in state aide, so some districts could ask their voters for well more than 4 percent. The voters will still need to approve. Christie’s proposal to cap tax increases to no more than 2.5 percent is still at least a year away, even if approved.

Q: How will the 2.5 percent caps work?

Christie’s proposal—coined Proposition 2½, after a similar measure in Massachusetts in 1980—would limits schools’ property tax levy increases to 2.5 percent. The limit now is 4 percent, including some exemptions. The Christie plan would have no exemptions. If a district wanted to increase the levy more than 2.5 percent, the residents would need to approve by a vote. Budgets within the cap would no longer require voter approval. Christie’s plan would also place new limits on any contracts that would send the levy up by more than 2.5 percent, giving the state new veto powers over bargained contracts.

Q: How will the cuts be determined for each district?

The general plan is to limit cuts to no more than 5 percent of a district’s budget. For a large urban district like Newark, with a budget of nearly $1 billion, that could be almost $50 million. For a smaller suburban district like Lawrence with a budget of $65 million, that’s $3 million. For districts where state aid amounts to less that 5 percent of their total spending, they could lose virtually all of their state aid.

Q: How will enactment of the new school funding formula for urban schools be affected?

The Christie administration maintains that the School Funding Reform Act, proposed and signed by former Gov. Jon Corzine, remains in place and the aid will be distributed based on the formula’s determinations of whether a district is spending and taxing at “adequate” amounts. Those districts that benefited most under SFRA would likely see the least pain under Christie’s plan. NJ Education Commissioner Bret Schundler said the administration’s continued commitment to the formula should allow it to pass muster with the court, when and if it is challenged. “We did run the formula, we support the formula, we will defend the formula,” he said.

Q: Will this new funding of the formula be challenged in court?

Probably. The Education Law Center, representing urban schoolchildren in the Abbott v. Burke school equity case for more than 30 years, has maintained that SFRA was unconstitutional in that the Corzine administration eventually underfunded it. Christie’s moves to actually make cuts only feed the argument, and the ELC was attacking Christie’s cuts even before he announced them.

Q: Will there still be school elections?

School board members will still be elected, and Christie has proposed moving the school elections to November, to coincide with federal and state general elections. The budget vote will remain in the spring, administration officials said.

Q: Will these cuts and other proposals ever pass?

Christie’s budget is now up for review and debate by the Legislature, the Democrats in control of both the Assembly and Senate have already voiced strong reservations. But even under a Corzine administration, schools were likely to face hard times, and there may be few other options available to close the state’s wide budget gap. Christie’s Proposition 2½ measure is another question. He has proposed a constitutional amendment to go before the voters, and there may be some support for that in a state bedeviled by high property taxes.