Dear NJSBA Member,

Although school districts will receive more state aid this year, a bill now awaiting the governor’s approval—the new tax levy cap law—will have a much stronger impact on 2007-2008 school budgets.

School boards should prepare their communities for the law (Assembly Bill 1) and its restrictions on proposed budgets. A district’s ability to maintain programming, as well as the size of its school tax levy, will depend on its individual circumstances under the new cap law, along with its level of state aid.

Unlike previous school district spending caps, A-1 will impose a cap solely on property taxes. When enacted, it will immediately affect 2007-2008 budgets. Budget decisions made this year will affect budgets in subsequent years.

I encourage school boards and administrators to begin discussion of A-1’s impact on their districts immediately. Key points should include:

• Eligibility for cap adjustments for healthcare costs, special education, capital outlay, certain tuition cost increases, and new school start-up costs.
  
  
• A more stringent method for calculating cap adjustments for enrollment growth.
  
  
• Procedures for above-cap spending questions.
  
  
• Elimination of the adjustment for courtesy busing.
  
  
• Some loosening of surplus restrictions.

This week, NJSBA will send a letter to school board presidents explaining critical points of the legislation, which will affect budgets, school programs, property tax rates and voter reaction on April 17. We will also post updated information at www.njsba.org.

As always, the NJSBA staff is available to provide the information that local school board members will need during the critical budget development period.

Sincerely,

Kevin E. Ciak
President