School Funding Remains Stable

After nearly a week of heated negotiations and the unprecedented shutdown of New Jersey state government, the Legislature and the governor approved a budget, ending the fiscal crisis on July 8.

An initial review of the final appropriations bill shows little change in funding for school district operations in comparison to the spending plan proposed by Gov. Jon S. Corzine in March.

TPAF Reduced The biggest change affects the state’s contribution to the Teachers Pension and Annuity Fund. Corzine had proposed approximately $805 million for the fund for 2006-2007, an increase of more than $700 million over the previous year. The final state budget, however, will provide $661 million—$144 million less than the governor proposed.

Like the other state pension systems, TPAF has been chronically underfunded over the past nine years. Corzine’s recommendation represented an attempt to preserve the fiscal integrity of the fund by making up for past shortfalls. The amount contained in the final appropriations act will help, but not to the extent envisioned by the governor.

Under an agreement dating back to the late 1950s, the state government, rather than the local school district, pays the employer’s cost of teachers’ pensions and Social Security.

Some Increases, Some Decreases The final state budget provides an additional $26.3 million in general formula aid (Core Curriculum Content Standards Aid and other programs) to a handful of local school districts, as well as a total increase of $3.3 million for student transportation aid. Spending proposed for special education, bilingual instruction, and programs for disadvantaged youth remain as originally proposed by Corzine.

Debt service aid, provided to school districts to help pay off locally authorized construction bonds, will remain at the amount proposed by Corzine ($116.8 million). However, the School Construction and Renovation Fund, which supports the state’s school construction debt service for new and existing bond issues, was reduced by $10 million from the governor’s proposal, to approximately $365 million. The final figure still represents an increase of more than $100 million above the 2005-2006 appropriation.

In addition, the governor’s proposed operating budget for the state Department of Education was sliced by $4.5 million, to $57.5 million.

Travel Regs: Still Here The 2006-2007 state budget includes provisions directing the state education commissioner to implement regulations and restrictions on travel by local school district officials. The travel provisions are carried over from the 2005-2006 state budget.

Abbott Data The Legislature added new provisions to the new budget that require the education commissioner to prepare a summary of the costs associated with the education department’s Abbott responsibilities. Under the provisions, the commissioner will implement a student-level database and establish academic progress benchmarks for each Abbott district. Urban education advocates, including the Education Law Center, have requested such data.

NJSBA staff will continue to analyze the 2006-2007 state budget and its impact on local school district finances and operations. School Board Notes will include updates as they become available.