State Bill Could Cause Princeton To Cut Programs in School District
The state's recent refusal to reverse a bill that will decrease school districts' fund balances to below three percent could cause serious financial problems for New Jersey school districts, including Princeton Regional Schools.
Signed into law by Gov. James McGreevey on July 1, bill S-1701 requires school districts to reduce their budget surplus below three percent, despite budgets that were approved by taxpayers in April, which allowed some districts, including Princeton, a surplus of six percent. The bill went into effect immediately, but New Jersey school districts weren't notified until recently that their appeal to reverse the bill did not go through.
Faced with this knowledge, districts now must look to make cuts in their budget to allow for the change, which could include cutting programs not mandated by the state but supported by the school district.
"I am totally disappointed, frustrated, and amazed," said Board President Anne Burns at a recent Board meeting.
According to Ms. Burns, by passing this bill, the state is in essence saying that the district doesn't need to prepare for the unexpected, such as a leaky roof, the need to hire additional staff, or problems or changes to construction projects, which the district has experienced quite often during this past year.
"This is really exceptionally serious for us in the school district...I don't anticipate that we'll be able to make the numbers work this year," she said.
The fund balance is like the district's savings account, to be used in case of emergencies, said Ms. Burns. In the past, state law allowed districts to carry a fund balance between three and six percent. However, with a required fund balance of 2.5 percent or the inflation rate, districts are left with less leeway in case of an unexpected financial problem.
"If you come into a budget situation with an unexpected expense, you use your fund balance...It's only good fiscal policy to have a reserve," said Ms. Burns.
In recent years, the district has saved a considerable sum in its fund balance, after having a negative fund balance seven years ago, said the Board president. Rather than being rewarded for its efforts to be fiscally responsible, however, the district is now being punished for having too much money in reserve, she said.
The bill is supposed to help relieve property tax inequity in New Jersey, said Ms. Burns: "It's a political thing."
According to Ms. Burns, S-1701 could threaten several unmandated programs in Princeton that are supported by the district, including Princeton Young Achievers, an afterschool program which receives $65,000 annually, as well as free rent of its space on Valley Road; and Corner House, a counseling agency for adolescents in Princeton, which receives approximately $35,000 from the district. Other programs supported by Princeton are Spring Board, a tutoring program that operates out of the Princeton Public Library, and the all-day kindergarten program, also not required by the state.
"None of these are mandated and are unfortunately obvious choices," said Ms. Burns, adding that ideally the district would like to keep all of them.
Some other measures are still being sought by New Jersey school districts, as the state has offered to consider "minimal changes" to the bill that can be argued by schools.
Stephanie Kennedy, Board secretary, has sent a letter stating Princeton's concerns to the Hamilton School District as part of a combined letter that will be delivered to the state from Mercer County schools. The New Jersey School Board is also creating a separate letter to the state.
In the meantime, the Princeton Regional Schools will hold a combined program and finance committee meeting near the end of the month to discuss the impact of the bill on the district's budget and programming.
For more information on bill S-1701, visit www.njsba.org/1701/.