It isn’t very often that one finds unanimity among state-level education organizations on issues before the Legislature. Last week, however, NJ LEE (New Jersey Leadership for Educational Excellence), a coalition that includes NJSBA, expressed unanimity on several matters involving the proposed 2013-2014 state budget, and in particular, the “SDA assessments.”

When the administration unveiled the proposed budget in February, NJSBA expressed appreciation for the fact that, in this uncertain economic climate, no district would lose state aid and many would receive significant increases. We are still appreciative of the state aid numbers. Unfortunately, for a significant number of districts, another provision of the proposed budget, involving questionable charge-backs for state-provided construction grants, would result in a net loss in available revenue. These charge-backs are called School Development Authority (SDA) assessments, named after one of the state agencies that has been responsible for financing the grants. For 2013-2014, the assessments would increase by 62 percent.

The state first levied the SDA assessments in 2010-2011, a decade after the awarding of the initial construction grants through the Educational Construction and Financing Act of 2000. Whether there should even be such assessments in the first place is questionable. Here is what NJ LEE told the Legislature about the so-called SDA assessments:

… the state does not have the authority to assess regular operating districts a share of the principal and interest it incurred in financing the school construction grants… The so-called “SDA assessments” run contrary to the stated goals of the construction act, which included providing non-Abbott districts with up-front grants to reduce the long-term debt incurred by local property taxpayers to support school construction and renovations.  …there is no statutory basis for these assessments. The construction act … gives the state authority to charge only for administrative and organizational costs. It was not the legislature’s intention to charge districts back for principal and interest, effectively reducing the grants by 15 percent.

Of particular concern in the proposed 2013-2014 budget is the basing of these costs on calculations made in December 2012 instead of January 2013, when they had been substantially lowered by refinancing.

Additionally, districts have no flexibility in addressing these unanticipated costs.  The assessments fall within the 2-percent tax levy cap. If the state does assess districts for these capital costs, the expense should be charged to a fund not limited by the levy cap.

The financial impact of the SDA assessments on school districts is verified in a report by the non-partisan Office of Legislative Services: “After accounting for an individual district’s increased assessment, approximately 48 percent of regular operating districts will experience a net decrease in state aid [in Fiscal Year 2014 as compared to Fiscal Year 2013].”

To express their opposition to the proposed Fiscal Year 2014 SDA assessments, local school boards may use a sample resolution available on NJSBA’s website. It is critical that your own legislative representatives, as well as the Senate Budget and Appropriations Committee, Assembly Budget Committee and the legislative leadership, hear your concerns.

NJ LEE consists of NJSBA and organizations representing the state’s teachers, superintendents, principals and PTAs. When these diverse groups express unanimity on an issue, it is significant. By all means, the proposed SDA assessments should be a significant concern for legislators in their deliberations over the proposed 2013-2014 state budget.

These are my Reflections. I look forward to hearing yours. Contact me at feinsodreflections@njsba.org.

 

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