SCC Report Lee expressed her concern after the July 26 release of a study by a committee of the New Jersey Schools Construction Corporation, the unit created by the McGreevey administration to oversee distribution of construction funds to the Abbott districts and to manage projects in poor communities. The report—endorsed by Acting Governor Codey—identified 59 out of 400 potential Abbott district projects that would receive funding through the $1.4 billion that remains in the Abbott portion ($6 billion) of the school construction fund.

The panel based its selections on school overcrowding, health and safety, capacity for early childhood education, status of land acquisition and construction, and the extent of new school construction that has already taken place within the district.

To date, the SCC has completed 73 facility projects (new construction and renovations) in the Abbott districts.

“The situation today is far from ideal because the reality is that the SCC doesn’t have the financial resources left to meet the school construction demands across the state,” said Codey. “One thing should be clear to New Jersey residents: there will be many more schools built in our state in the future, and it will be up to the next governor and Legislature to find the necessary funding.”

Inspector General Probe An investigation by the state’s inspector general attributed the lack of progress in Abbott construction and the reduction of available funds to “weak internal management and financial controls and lax and/or nonexistent oversight and accountability.” An interim report in April resulted in a series of recommendations and a shake-up at the state agency.

Nonetheless, reports have indicated that the unanticipated high cost of land acquisition and condemnation in the densely populated Abbott communities also contributed to the situation, as did increases in the costs of construction materials and supervision.

NJSBA supported recently enacted legislation, S-2163/A-3542, which created a School Construction Review Commission to provide stronger oversight and cost efficiency of projects.

$100 Million Left for Non-Abbotts Enacted in 2000, the Educational Facilities Construction and Financing Act, authorized the issuance of $8.6 billion in bonds through the New Jersey Economic Development Authority. Most of the proceeds, $6 billion, were earmarked to meet court-required construction in the Abbott districts. The remaining $2.6 billion was set aside to fund a minimum of 40 percent of state-determined “eligible” construction costs in the non-Abbott districts through up-front grants or state debt service aid. The state-funded projects needed to be based on five-year facility plans, reflecting enrollment and education program needs.

According to the SCC, only $100 million in grant money remains for non-Abbott districts. At the same time, $300 to $400 million in non-Abbott construction proposals awaits submission to voters. The situation prompted a July 6 notice from Deputy Commissioner of Education Richard Rosenberg, recommending flexibility in ballot language. Specifically, Rosenberg advised that non-Abbott districts planning bond referenda in September or later should indicate that the state-paid portion of their proposals would come in the form of either a state grant or state debt service aid.

Theoretically, debt service aid provided during the life of a bond would be equivalent in size to the state construction grant. Unlike a grant, which enables a district to reduce the size of its construction bond, debt service aid requires a district to borrow for the full amount of the construction project. Additionally, debt service aid would be provided through a line-item of the annual state budget, as are other types of state education aid. New Jersey has a history of underfunding its state education aid programs.

Since enactment of the facilities act, more than 250 non-Abbott district projects have received voter approval. Nearly all of the school districts opted for grants rather than debt service aid.

Property Tax Relief The depletion of the construction grant fund will eliminate a successful means of local property tax relief, according to Lee.

“Before the facilities act, property taxes funded most, if not all, project costs in the majority of school districts,” she explained. “The facilities grants reduced the amount of borrowing that school districts needed for construction projects. They also encouraged community support for needed facilities.

“Most significant, the program has helped our students by upgrading their schools and alleviating overcrowding,” Lee continued. “New Jersey school enrollment increased nearly 30 percent in the past 15 years. Refreshing the fund should be a high priority for our state.”