Education Commissioner Defends Hefty Cut in State Aid to SP-F, Other Districts

State Education Commissioner Bret Schundler on Wednesday defended the governor's significant cut to New Jersey school districts' state aid, telling reporters that previous Democratic administrations and the loss of $1 billion in federal stimulus funds are partly to blame for the reduction.

The Scotch Plains-Fanwood School District found out Wednesday afternoon that it will lose $3.84 million in state aid for the 2010-2011 school year. Fifty-nine other districts, including Berkeley Heights, New Providence, Springfield and Summit, had their state aid eliminated entirely.

The reductions come on the heels of Gov. Chris Christie's budget speech on Tuesday, in which he stated that school districts would see an aid cut that would equal no more than 5 percent of their total operating budgets.

In a conference call with reporters, Schundler said that districts had been told to anticipate this reduction in aid.

"Districts had the understanding that it would be 15 percent and it is a number that is less than that," Schundler said.   

But the Scotch Plains-Fanwood School District and others were operating under the impression that the 15 percent cut would be out of the aid they receive, not out of their total operating budgets. 

In a series of recent budget presentations, SP-F Business Administrator Anthony Del Sordi told the Board of Education that the district was preparing a budget under the assumption that it would lose about 15 percent of its state aid, dropping the amount they receive to about $4 million. Instead on Wednesday, the school district learned that it would actually lose 4.99 percent of its total operating budget of nearly $80 million. That slashed state formula aid by $3.84 million, dropping the amount they'll receive to just $708,590. The money goes toward general education expenses. This figure excludes about $5 million in specialized state aid used for debt service, Social Security payroll taxes, etc.

Schundler pointed to the loss of federal stimulus money as one reason state aid was cut so much. The education commissioner noted that funds from last year's stimulus package were used to partially pay for state aid payments at that time. The federal aid was meant as a one-time payment to states.

On Wednesday, Schundler said that the state legislature can avert layoffs at the school district level by implementing Christie's package of public employee reforms in a quick time frame. The package includes changing the pension and health benefits packages for teachers, including requiring co-pays and larger payments for pensions. The co-pays will apply to school personnel who retire after the changes are made, but not to those who leave their jobs before the proposals are enacted.

Schundler said this will allow for more quick retirements from teachers who do not want to pay part of their health insurance in retirement. He said quick enactment, which is not considered likely, will help stem the expected layoffs in school districts statewide.

"That will dramactically reduce the number of personnel reductions that would be achieved through a layoff," he said. "These reforms will reduce costs to the districts and create a need for early retirements."

The Scotch Plains-Fanwood district will have the option to raise property taxes above the four percent state cap in order to make up for the lost school aid, but Schundler said the county superintendents will be looking to hold property tax hikes under the four percent cap and are prepared to veto spending over this amount.

Schundler said he believes that school districts can accomplish the cuts by the March 30 deadline for school budgets to be submitted for voter approval. He said he has instructed county superintendents to throughly review each school district budget and be prepared to make line item vetos in order to make further reductions before the budgets go to the voters on April 20. State law allows county superintendents to make these vetos.

The Scotch Plains-Fanwood School District is expected to present its tentative budget at the Board of Education meeting tonight, March 18, at 8 p.m. at district headquarters. The public hearing on the budget is scheduled for March 31.