State Approves $33 Million in Budget Cap Waivers

State Approves $33 Million in Budget Cap Waivers

The New Jersey Department of Education approved $33.2 million in cap waivers last month, or approximately 57 percent of the amount requested by local districts.

In all, 65 school districts had requested a total of $58.6 million in cap waivers to exceed the 4-percent property tax cap.

The property-tax cap law (A-1) enacted in April 2007 placed a 4-percent local levy cap on school, municipal and fire district budgets—and it also provided districts with the ability to petition county school superintendents for waivers to the cap under specific circumstances.

According to the New Jersey Department of Education, the main reasons for the waiver requests included:

Special education costs, particularly for out-of-district placements;
Non-recurring revenue, such as the loss of surplus that was available last year;
Energy costs; and
Employer’s cost increases for the Public Employees’ Retirement System.

Waivers can also be requested for increases in hazardous transportation costs, insurance costs, sending-receiving tuition and opening a new school.

Of the 65 districts with cap waiver requests this year, 42 were partially approved; 13 were totally approved; nine were rejected entirely; and one was withdrawn by the district.

Districts may have received only partial approval if state education officials found additional revenue in the district’s budget, such as surplus or tuition, or if the state identified areas in the district’s budget that could be cut.

Cap waivers can result in permanent base budget increases, or they may be in effect for one year only. Ten of this year’s approvals were permanent, all for opening new schools or new wings. The permanent waivers totaled $5.5 million, and were granted only for a district’s operating cost increases over and above what it would have paid if the new school or wing hadn’t opened. Therefore, not all employment costs for new teachers and staff were approved as part of the permanent cap waiver, since many of the districts would still have hired some new staff even without a new wing or school.