The League of Women Voters
of New Jersey

a nonprofit, nonpartisan organization whose purpose is to promote political responsibility
through informed and active participation in government

Testimony S.200

School Facilities Construction and Financing Act

Senate Education Committee

May 4, 2000

In December 1999 and January 2000 the League testified in support of a 5 percent increase in the proportion of debt service aid as an interim measure until aid formulas were reviewed and changed to provide more adequate state support for educational programs and facilities. We noted the serious erosion in basic state school aid which has eliminated or reduced debt service aid to middle income districts. Today, we support the more generous provision which make districts receiving more than 40% state aid eligible for construction aid of 115 percent of their CCCS aid.

A decade ago, LWVNJ joined others in supporting facilities legislation, which would make school districts eligible for a minimum of 25 percent of construction costs. It and similar bills never passed. Since that time, property taxes for schools have grown enormously placing a far heavier tax burden on low- and middle-income taxpayers who pay a larger share of their income in property taxes than wealthier citizens.

State payment of a larger share of the cost of school facilities, as proposed in the amendment which would provide a minimum of 40 percent state aid to all districts, clearly will help ameliorate the inevitable increase in school property taxes caused by facilities construction. The League’s long-term position in support of measures, which reduce New Jersey's use of the property tax, makes us view the 40 percent floor positively.

However, in every letter to legislators and every testimony before legislative committees, the League has spoken out concerning the failure of the administration and the legislature to responsibly address the need for additional state revenue to fund school facilities. The 40% and 115% amendments to this bill will dramatically escalate the state’s share of costs.

LWVNJ cannot in good conscience urge your support for the 40 percent minimum facilities aid when the provisions for payment of state costs not only are totally inadequate but also purport to use higher revenues when in fact they divert existing revenues from the General Fund. To date, the state has identified $50 million in cigarette tax revenue, $62 million in Big Game Lottery revenue, and $100 million in tobacco settlement revenue for school facilities.

Cigarette Tax: Despite a doubling of the cigarette tax, projected income in 2001 is $8 million less than the revenue received in 1997 before the tax increase. The $50 million dedicated to facilities is simply reducing the amount of revenue available for other state programs.

Big Game Lottery: The Office of Legislative Services projects that all lottery proceeds, including the Big Game, will increase to $685 million this year, instead of the $713 million earlier estimate. The lower amount is due to a 40% drop in Pick-6 sales, far larger than originally estimated. If the state continues its plan to provide $62 million in Big Game Lottery revenue for school construction, other state programs paid for by the lottery will lose $28 million in funds.

In short, the administration and legislature are "robbing Peter to pay Paul" with these diversions.

Even more serious is the fact that the amount of all three proposed revenue sources falls far short of projected future costs which will rise to three-quarters of a million dollars or more annually with the addition of the 40 percent minimum aid provision.

As LWVNJ has said before, "Passing legislation without providing the revenue source(s) leaves the unpleasant and politically unpopular necessity of raising taxes, or reducing other programs, to later administrations, governors, legislators and taxpayers. This failure to provide additional revenue sources for the massive costs for school construction is fiscally irresponsible and not acceptable."

The League notes with interest that the Economic Development Authority has been designated as the agency responsible for carrying out the state’s role in school facilities construction and finance, following early designations of the Educational Facilities Authority and the New Jersey Building Authority. It seems clear that, at present, no New Jersey agency is prepared for the enormous task that faces whichever one is given the responsibility. LWVNJ hopes that the choice of the Economic Development Authority follows a thorough evaluation to determine the agency most qualified for the job. And, we urge the legislature to assure that the additional resources required to enable EDA to carry out its responsibilities be provided expeditiously. The expansion of EDA to handle planning, designing, hiring expert staff, and gearing up to provide efficient and effective service, must be phased in carefully to assure that construction is not slowed or halted by inadequate capacity. If this does not happen, New Jersey’s school facilities program will be seriously undermined and slowed.

We continue to urge that school districts other than those already mandated to use the Economic Development Authority should be encouraged to construct and finance their schools to avoid greater overload on the state authorities. For most school districts, the present system should be retained. It responds to needs without creating an ongoing bureaucracy, and avoids using the debt capacity of the state. Furthermore, it is not clear that EDA costs will not be higher, or that bundling of projects will not bid up construction costs. es.

The most important goal of legislation governing school construction and financing should be as rapid construction or renovation as possible to provide classroom space for the 250,000 additional student increase since 1991 and for the almost 50,000 students in overcrowded classrooms in the special needs districts, as well as to provide the specialized facilities needed to assure that every student has access to an academic experience which enables him/her to achieve the core curriculum content standards.

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