Following the conclusion of public testimony on the proposed FY2021-22 budget, the budget committees of both legislative houses have moved on to taking testimony from commissioners and other heads of administrative departments. Per usual, this phase started with both the state Treasurer and the Office of Legislative Services (OLS, a non-partisan arm of the legislature) providing revenue forecasts and discussing the proposed budget before the Senate Budget and Appropriations and Assembly Budget committees on April 6 and 7 respectively.

Additionally, the Senate committee had a hearing on April 6 with the treasurer and state auditor regarding federal funds already received and expended. The Acting Commissioner of the Department of Education and the Executive Director of the Schools Development Authority also discussed the proposed education budget on April 8.

Overall State Budget

OLS and the treasurer testified before both budget committees, and it appears the state will finish this fiscal year (FY2021) with a surplus of $6.4 billion — $3.5 billion higher than expected. This does not include additional federal aid, but is based mainly on a unique borrowing scheme adopted last year and approved by the Supreme Court to mitigate potential revenue losses due to the pandemic.

Republicans on both committees said reliance on borrowing for this budget looks unnecessary now. Further, some questioned the timeline of the borrowing, insinuating the administration knew it was not needed, saying it borrowed the money for an “election year budget” that was high on spending without the pain of tax increases. Others questioned why the administration had locked the state into 10-year bonds. However, this was countered by the treasurer’s staff, noting it enabled them to secure interest rates near 2%.

For their part, Democrats sought to turn the conversation toward how to use the revenue. They said  the budget surplus and the anticipated $6 billion in federal aid would shore up the state’s financial house and avoid a potential “fiscal cliff” starting in fiscal year 2023, when spending will outpace revenue collection. Committee members of both parties suggested funneling the extra aid to education. Some suggested targeting additional funds to districts scheduled to lose aid under the school funding formula known as S-2. Others recommended using the funds to get underfunded districts to 100% of the funding formula more rapidly. Sending the excess revenue to the Schools Development Authority for new projects was also suggested. No commitments were made, however, by the treasurer.

According to OLS, the three big items in this budget are:

  • $6.4 billion for the state pension system (the first full payment since 1996);
  • $578 million increase in state formula education aid (returning the state to be on course to full funding of the formula by 2025); and
  • $319 million for the Middle Class Tax Rebate Program (a new program).

In total, Governor Murphy proposes to spend $44.8 billion for the upcoming fiscal year. To meet a June 30 deadline, the Legislature may either enact the governor’s budget, make changes, or draft a spending plan of its own.

The Senate budget hearings can be viewed here: OLS, State Treasurer, Federal Funds

The Assembly budget hearings can be viewed here: OLS, State Treasurer

Acting Education Commissioner Addresses Questions about Standardized Tests

The discussion of the proposed NJDOE budget turned to an announcement that the federal Department of Education had approved NJDOE’s request to skip administering a standardized test this year. A key legislator, Sen. Teresa Ruiz, raised questions about the announcement.

Ruiz (D-Essex), who serves on the Senate budget and appropriations committee and is also chair of the Senate Education Committee, questioned the terms federal education department’s response to New Jersey’s request to suspend the statewide New Jersey Student Learning Assessment (NJSLA) this year.

The response seems to indicate the Start Strong assessment will substitute for the usual student achievement tests administered in the spring. However, Ruiz noted that Start Strong is not a summative assessment, like the NJSLA, and only had a 10% participation rate last year, which was the first time the test was administered.

Further, Ruiz expressed concern that skipping the NJSLA for two straight years will only exacerbate the achievement gap and leave the state with little idea of where students actually stand academically during this pandemic.

Acting Commissioner Angelica Allen-McMillan responded that NJDOE is in a continuing dialogue with the federal DOE on how to enhance Start Strong to ensure that it serves as a proper substitute.

During the hearing, other Senate Education Committee members reiterated their calls for excess funds to be allocated to districts scheduled to lose aid. Senator Mike Testa (R-Cumberland) called for a greater commitment to getting extraordinary special education to full funding. Senator Patrick Diegnan (D-Middlesex) inquired as to what NJDOE and the Schools Development Authority were doing to ensure indoor air quality in schools.

The hearing can be heard here.