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NJSBA has received numerous inquiries regarding the new budget cap law (S-1701), the most significant piece of school finance legislation in many years. The new law affects school district budget caps, surplus, administrative spending limits, budget transfers and second ballot questions. |
While the majority of inquiries have focused on the technical aspects of the bill and its impact on school districts, a significant number of the inquiries have focused on NJSBA’s response to the bill, particularly the possibility of litigation, such as a class action suit.
Possible litigation areas have included the retroactive nature of the bill, causing many school districts to undo prior year transfers and recertify their tax levies; the reversal of the will of the voters, particularly in those school districts that passed their school budgets and certified a voter-approved tax levy; and the inability of certain districts to provide a thorough and efficient education, given the impact of S-1701 on school district operations.
Staff from NJSBA’s Legal Department have researched the issue and believe that litigation is not the most effective course of action at this time. The courts have generally upheld retroactive legislation when the legislation, as written, is clearly meant to be retroactive and individual constitutional rights are not affected.
Rebuttal arguments can be made that the Legislature, which is given deference in these types of cases, did not overturn the will of the voters—it simply provided property tax relief, an overriding public policy goal. Finally, the argument that a school district is unable to provide a thorough and efficient education for its students is fact-specific to each district and proving it is a lengthy process that can take many years.
While there is always a remote possibility of litigation success, it appears that the likelihood of success in this matter is limited and the road to that success is costly in both time and money. A legislative solution appears to be the better path.
NJSBA has developed an interactive Web page to inform its members and respond to inquiries about the legislation. The full memorandum regarding a S-1701 litigation response may be found on this Web page.