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Consolidating School Districts Could Increase Costs – NJSBA

TRENTON, October 18, 2006 - Consolidation of school districts is no cure for high property taxes and, in fact, could increase costs, an official of the New Jersey School Boards Association today told a legislative panel examining property-tax reform.

“Unless it’s considered case by case, school consolidation could easily result in higher costs – and higher taxes,” said Eva M. Nagy, NJSBA vice president for legislation/resolutions. “Certainly, that is not what this committee wants.”

Complete text of NJSBA testimony

Some lawmakers have made proposals to force school districts into countywide structures, or to merge with their neighbors on the premise that reducing the number of school administrators would cut property taxes.

However, Nagy noted that staff salaries, transportation and administration factor into any school consolidation, whether the plan involves merger into county-wide units or placing existing elementary-school districts in Kindergarten-through-12th grade structures.

“The New Jersey School Boards Association supports consolidation when it is approved by voters after a study of educational and financial impact,” she told the Joint Legislative Committee on Government Consolidation and Shared Services.  “But there are so many variables that could result in increased costs.”  Nagy urged the panel to consider these factors in developing a school consolidation initiative:

• Salaries:  It is likely that, under a county school district structure, negotiations would push the salary levels for all staff up to those that had been in effect in the highest-paying community prior to consolidation.  Forcing elementary districts into K-12 units would virtually guarantee higher costs.  Right now, when school districts merge, state law requires the largest school district’s salary guide to be the new contract for all teachers.  “When salary guides of smaller districts, such as K-6 and K-8 districts, are compared to those of larger systems, such as high-school regional districts, the larger districts consistently have higher salaries,” she added.

• Tax apportionment: Up to now, when school districts have considered regionalization, property taxes – not home rule – have been the deal breakers, according to Nagy.   When costs are divided up for the proposed regional district, one community’s taxes would increase, while another’s taxes would decrease. This is a “political land mine” that the Legislature needs to address in any school consolidation initiative,” Nagy told the panel.

• Incurring new debt:  Consolidating school districts would also result in communities assuming the debt of a neighboring school district that typically results from school construction.

Nagy told the panel that shared service arrangements among school districts and municipalities hold the key to savings.  They can be implemented through current school district configuration—without forcing consolidation and risking higher costs and changes in tax rates.”

A member of Somerset County’s Franklin Township Board of Education, Nagy pointed to a successful program in her county.  “Last year, the Somerset County Business Partnership estimated that shared services among school districts, municipalities and county agencies saved county taxpayers $13.6 million,” she said.

Because merging school districts would not automatically yield tax savings, Nagy urged the panel to develop a plan that would strongly encourage, but not mandate consolidation.

“The most recent statewide study of regionalization, a 1999 report by the state Assembly Task Force on School District Regionalization, recommended that school district mergers remain a local decision,” Nagy said.

“In its final recommendation, the Task Force stated: ‘The decision to regionalize should be made on a case-by-case basis since it is apparent through the testimony received by the Assembly Task Force that school district regionalization does not necessarily result in cost-savings across the board.’”    

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The New Jersey School Boards Association, a federation of district boards of education, advocates the interests of school districts, trains local school board members, and provides resources for the advancement of public education.