Excess Surplus Will Off-Set State Aid Cuts

Excess Surplus Will Offset State Aid Cuts - Corzine

Current-year state aid to public school districts would be cut by $260 million under Gov. Corzine’s plan to address the state’s $924 million deficit for 2009-2010. The reduction, announced by Corzine Dec. 22, would represent the first mid-year cut in direct school aid in memory. The cut would match, dollar for dollar, the funds accumulated in each local school district’s budget that exceed the surplus allowed by law. Under a 2004 statute, known as S-1701, a school district cannot appropriate more than 2 percent of its operating budget as surplus. To help close this year’s deficit, “the state would not provide school districts with funding to match that [excess] amount,” explained Commissioner of Education Lucille E. Davy in a message to Marie S. Bilik, NJSBA’s executive director, prior to the announcement. Corzine’s proposal would require action by the state Legislature. Beginning in February 2010, districts would have to use a portion of their excess surplus balances – totaling $260 million statewide – in place of state aid payments. The administration touted the proposal as a way to avoid mid-year program cuts. While the action might not have an impact on school programs in 2009-2010, it would negatively affect many districts next budget year. In previous years, many school districts used the excess surplus funds that they accumulated in one budget year as revenue to support programs or property tax reductions the following year. For 2010-2011, that money would not be available under Corzine’s strategy.

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Excess Surplus Will Offset State Aid Cuts - Corzine