School Funding
The board of directors approved the following advocacy positions in order
to carry out action on the LWVNJ School Funding Program item. The board
of directors approved amendments to sections of the Facilities Construction
and Financing Act (not yet introduced, but already being examined by legislative
leaders in education and finance). The amendments which the board approved
are necessary to assure that Court-ordered construction in Abbott districts
begins as ordered in spring 2000 and is completed within a reasonable
time, and that substantive facilities aid is provided to all other school
districts for needed construction and renovation. The proposed legislation totally revamps the state aid program which provides
funds to school districts undertaking renovation or construction of facilities.
As such, it affects every school district in New Jersey. The catalyst
for this legislation was the Supreme Court's decision in Abbott IV in
1997 that the state was responsible for providing facilities necessary
to achieve the core curriculum content standards in the poor urban districts. Major changes in the structure and eligibility of districts will take place,
including: 1) Some 250 districts which were ineligible for debt service aid will now be
eligible for either ten percent of approved costs or a two percent state
loan from a revolving loan fund. 2) The original legislation mandates that districts receiving more than 50
percent state aid for construction must use the NJ Building Authority
to oversee and construct or renovate new facilities. The legislature has
balked at this, and postponed action on the bill until after the summer
recess. 3) Districts receiving less than 50 percent state aid may choose to receive
debt service aid at the percentage they are eligible for, or to borrow
from the revolving loan fund. Those selecting debt service aid will be
subject to the possibility/likelihood of annual shortfalls in debt service
aid funds. When this occurs, their aid will be reduced by the percentage
that the aid falls short of 100 percent. No figures on the amount of money the state will provide are included in the
draft legislation, but the administration number is $6 billion. However,
this is not all state funds; the state share is $4 billion, the remaining
$2 billion from local school districts. The state is required by Supreme Court order (Abbott V) to fully fund facilities
in the 30 special needs districts (Abbott districts). Facilities plans
for most of these districts have been completed and total almost $7 billion.
It is likely that the state computer program which they were required
to use overestimated costs significantly. Nevertheless, the cost in these
districts alone will be $5-6 billion. The costs in other districts will
be several billion dollars to provide for an increase of 181,000 students
since 1989; for schools built in the 60s which need renovation or replacement;
and updating or replacement of existing facilities which cannot handle
computer and other technological requirements. The total facilities needs may well reach or exceed $8 or 9 billion dollars.
The board approved action on the following provisions of the legislation.
1) Restore state debt service aid for construction and renovation done through
lease purchase, and include site acquisition costs as eligible for debt service aid. 2) Include in the law reasonable timelines for review and approval of districts'
facilities plans for both the Department of Education (DOE) and the New
Jersey Building Authority (NJBA). Furthermore, assure that these entities
have sufficient resources to carry out the review/approval process within
the deadlines provided in the law. 3) Make renovation costs 100 percent eligible for state debt service funding
since there is no rational policy basis for restricting aid for renovation
to less. 4) Amend provision setting standards for deciding on renovation vs. new construction
to change present criteria which bases such decisions on safety and cost
effectiveness only and add educational adequacy as a primary consideration.
5) Amend subsection 5(g) to provide for an expedited appeal process to the
Appellate Court because such appeals typically result in a one-year delay
which is both impractical and expensive. This is essential because the
commissioner already has denied hundreds of requests for approval of educational
and facilities plans and programs by the Abbott districts. 6) Eliminate Section 14 which authorizes the commissioner to bypass the Administrative
Procedures Act (APA) procedures for rule making and adopt regulations
effective up to six months without public input. APA procedures require
final regulations (with public input) after a period of 120 days from
emergency regulations adoption. 7) Support efforts to increase the funding for the School Facilities Project
Revolving Loan Fund from $200 million to $1 billion.
There are two additional major concerns that are not addressed directly
in the proposed legislation. Both are of extreme importance to the LWVNJ.
We intend to work for the amendments outlined above with one strategy. It
is likely we will use a different strategy on the essential problems discussed
below.
8) The legislation calls for repayment of bonded indebtedness incurred by the
NJ Building Authority for school facilities from the General Fund of the
State of New Jersey "subject to and dependent upon appropriations being
made from time to time by the legislature for such purposes." This makes
it possible to avoid a public vote on increasing state debt that is required
by the New Jersey Constitution. 9) The legislation does not contain any provision for a source or sources of
revenue for repaying the principal and interest incurred by bonding for
school facilities. To date, the two sources of revenue identified for
repayment of bonds are: * ten cents of the 40 cent increase in cigarette taxes passed not too long
ago. The projected income from this ten cent increase has been touted
as $50 million annually. * proceeds from the "Big Game" lottery which New Jersey joined this month.
Original estimates for $50 million annually were increased to $63 million.
(Falloff of sales to other New Jersey lottery games is predicted to reduce
the net revenue gain to $43 million). The New Jersey School Boards Association
indicates that this amount of revenue will be unable to cover principal
and interest payments after four or five years.
This continues a practice of the present administration of providing no
revenue source for massively expensive programs and structuring such programs
with small annual payments in early years but vastly larger payments in
later years. This enables them to avoid increasing taxes, but forces later
elected governments either to make massive cuts in programs or increase
taxation.
Furthermore, the League has serious concerns about the equity of using these
revenue sources to fund educational facilities needed for students in
districts statewide. Both the cigarette tax and lottery are highly regressive
taxes, taking a far larger portion of the income of poor citizens. In addition to the League's concern about the inadequacy of state funding to
pay for the constitutionally required facilities in the Abbott districts
and the needs in the other almost six hundred school districts, we are
concerned about the time frame for building these facilities. The Star
Ledger reported that a deputy state treasurer said that the state would
provide $162 million in 2000 with that figure increasing to $250 million
in bonding annually for the Abbott district needs.. USING THIS SCHEDULE,
AND ASSUMING ONLY $5 BILLION IN ABBOTT NEEDS, IT WOULD REQUIRE MORE THAN
20 YEARS TO FLOAT THE BONDS NEEDED. The LWVNJ will use its resources and power to bring these facts to the attention
of the public, to inform the administration their plan fails to meet the
order of the Supreme Court, and to lobby the legislature. These actions
will be designed to force New Jersey's elected leaders to increase the
amount of money available to meet facilities needs in all districts, to
increase the amount of bonding in earlier years to make educationally
adequate facilities available to NJ students sooner, and to reduce the
additional costs which will be incurred by delaying construction.
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