NJSBA: Overdue Changes Must
Accompany Painful State Budget Cuts

Local school districts will receive notification of their 2010-2011 state aid allotments today.  In his first annual budget message to the state Legislature on Tuesday, Governor Christie said that direct aid to public school districts will decrease by approximately $820 million.  It marks the first time in memory that a governor has sought a statewide school aid reduction as part of his recommended budget.

According to Christie, the school aid recommendation results from an unprecedented $10.7 billion budget gap.  “No fiscal crisis we have had in New Jersey’s history compares to this one,” he said.

Christie’s proposed state budget totals $29.3 billion, almost $3 billion less than the 2009-2010 package, approved last year.  In addition to cutting aid for K-12 education, the proposed budget will reduce funding for municipalities, colleges and other areas.

When school districts receive their 2010-2011 state aid figures today, it appears that all will see a reduction in direct state aid.  Cuts in aid will be capped at an amount equal to 5 percent of the district’s operating budget.  Fifty-nine school districts will lose all of their direct aid. Most districts will continue to receive state funding for extraordinary special education costs and debt service.

Needed Changes in Labor Law  In his address, Christie recommended changes in labor law to strengthen local school boards’ position in negotiations, many of which NJSBA has long sought to help boards of education control costs.

“Along with painful cuts in school funding, Governor Christie provided encouragement that the state might reverse a generation of political decisions that have put local boards of education at a distinct disadvantage in labor negotiations,” commented Marie S. Bilik, NJSBA executive director..

“For too long, too many state leaders have criticized local school boards for contract settlements that, in fact, were made possible by union-initiated proposals that were put into state law,” she continued.  “We hope today’s budget message represents the beginning of the end of that scenario.”

The governor, for example, recommended restoration of a school board’s ability to implement its “last best offer” when contract negotiations are fully exhausted.  That concept, prevalent in public sector labor law, was eliminated through union-backed legislation in 2003, a change that significantly reduced the strength of local school boards in collective bargaining.

Christie also called for requiring all school employees to contribute to the cost of their health coverage, part of pension/benefit reform proposal (S-3), supported by NJSBA, that will be addressed by the Assembly Appropriations Committee tomorrow.  School districts would also be relieved from certain regulations.

Cuts Will Hurt  Bilik, however, also stressed the devastating impact of the funding cuts in many communities.
 
“School districts are already reeling from a $475 million midyear cut, which will force them to use surplus money that would otherwise go toward controlling property taxes next year,” she said. “The additional $820 million in cuts will mean staff and program reductions for many school districts.

“To deal with the aid reductions and provide an adequate level of education, school districts will need something more in their toolkits than layoffs.

Future Caps The governor also proposed a constitutional amendment to cap all future property tax growth at 2.5 percent annually. Such an amendment, however, would not affect 2010-2011 budgets since the earliest voters could act on the proposal would be the November General Election.  Currently, school district proposed budgets for 2010-2011 will be controlled by the existing cap law, which limits increases in the school property tax levy to 4 percent and also allows an automatic adjustment for loss of state aid.

Even if the existing 4 percent cap remains in place, school districts should carefully weigh program needs and the burden placed on taxpayers in the current political climate.

The administration is expected to look critically at any proposed school property tax increases. Such a tone is evident in budget-related documents posted on the governor’s Web site.

One entry in a list of frequently asked questions about the proposed state budget states that the administration developed a balanced state budget in spite of loss of federal funds and decreased revenues.  It accomplished this by eliminating programs, cutting spending and creating efficiencies, the document states.  “Governor Christie is confident that local elected officials will also rise to the challenge.”

Next Step  The governor’s proposed budget will now be considered by the state Legislature.  A balanced budget must be enacted by July 1.

Said NJSBA Executive Director Bilik, “We understand the magnitude of the state’s budget crisis, and we have heard Governor Christie’s proposal to address it,” she continued. “It is now the Legislature’s turn at bat, and NJSBA will urge the lawmakers to make preserving public school programs their highest priority as they deliberate over the governor’s recommended budget.”

NJSBA will continue analyzing the impact of the proposed state budget on school districts and will address legislative initiatives to give school boards the tools necessary to control costs. Members can also contact the NJSBA Labor Relations Department at 1-888-886-5722, Ext. 5219, for information and guidance on the impact of the proposed budget and related legislation on negotiations.

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