Accelify Blog

$1M Unexpected Aid Fuels Jackson School Budget Debate (NJ)

May 28, 2010

At its May 12 meeting, the Township Council praised school district officials and its Board of Education for how they handled the budget reconciliation process.

The council and the board came up with a compromise that resulted in more than $1 million in red uctions from the $71.6 million local school tax levy that voters vetoed last month.

The council’s independent auditor, Gene Farrell, a certified public accountant, complimented the school district on its professionalism.

"The administration’s cost containment benchmarks are very high," he said.

Both sides appeared to be pleased with the outcome of the negotiations.

Those good vibrations lasted less than two weeks.

On Tuesday night, council members lambasted the school board and district administrators for its decision to use $1 million in unexpected state aid to bridge the gap in the $135.9 million spending plan.

Councilwoman Bobbie Rivere, one of the members involved in the budget negotiations, said the understanding was that particular state aid, known as extraordinary aid, was to offset state aid reductions in other line items.

Extraordinary aid is provided by the state to school districts to help offset costs due to federal mandates on special education students.

"I wasn’t aware the $1.2 million existed until I read it in the paper (last) Friday," said Rivere. "(In the meeting,) our auditor brought it up and asked twice whether there were offsets to that money, and we were told "yes.’ I was not a happy camper."

Councilman Ken Bressi was even more opinionated.

"It’s disgraceful that this happened," said Bressi, who wanted to see the extraordinary aid money used toward tax relief.

Mayor Michael Reina said he h ad a meeting with district Superintendent Thomas Gialanella to discuss the matter.

"The taxpayers deserve answers," said Reina.

According to school board President Sharon Dey, who was a primary figure in the budget process, it comes down to the timing of the release of the extraordinary aid numbers and that school officials were surprised by how much money the district received .

State officials notified the school district administration that it would receive about $1.2 million in extraordinary aid literally hours before the council decided to vote May 12 on the reduced tax levy. The extraordinary aid announcement was a month earlier than usual, said Allison Erwin, the school district spokeswoman.

And the amount was roughly $1 million greater than the school system was accustomed to receiving in extraordinary aid.

"Why should we expect to get an additional $1 million in extraordinary aid with no offsets?" said Erwin. "It is rather common when you get additional aid in one area, to have a reduction in aid from another area. Especially in these times."

Two days after the May 12 council meeting, the school board and administrators were able to get written confirmation from the state that there were no offsets attached to the aid.

Gialanella and business administrator Michelle Richardson made that same point publicly at the May 18 meeting, when the budget was officially adopted.

"The problem is council decided to move the date up to vote on the budget," Dey said. "They had until May 19 to make recommendations. If they would have waited until we got conf irmation from the state, this wouldn’t have happened. We were literally still negotiating during that council meeting."

Despite the cuts, taxpayers still will see an increase in their school taxes. A homeowner will see a tax increase of about $185 this year, based on a home assessed at $332,800, the township average.

The budget reductions resulted in the elimination of 49 full-time and 15 part-time positions. Those jobs include 24 teachers, with about half of the reductions coming through attrition, said Gialanella.

By using the extraordinary funds, the school district was able to prevent any further layoffs or further reductions in supplies and programs.

Meanwhile, there is likely more grim fiscal news on the horizon for residents as the council also unanimously passed a resolution to issue Tax Anticipation Notes to cover a short-term revenue shortfall, according to Phil DelTurco, business administrator. The notes are securities backed by the anticipation of future tax collections.

Township officials confirmed Tuesday that tax collections and revenues are down in the municipality so far this year.

Reina also acknowledged his administration is in ongoing meetings with municipal union leaders to discuss possible concessions.

Last week, Reina authored a memo published on the township’s website indicating job cuts, pay freezes and reduction in services might be a part of the municipal budget.

"Our 2010 budget faces cuts in state aid and the impact of previously negotiated labor contracts," Reina wrote. "Unfortunately, our budget will not be able to be balanced without sacrifices that will affect b oth residents and employees."

Reina hasn’t presented a budget draft yet. The earliest this could happen would be June 22 at the next council meeting.