Impact of new rules for school financing varies
Officials say rules will mean cuts in Ocean Twp., but not LB schools
BY CHRISTINE VARNO
Staff Writer

OCEAN TOWNSHIP — New state regulations governing school budgets will have a very different impact on two neighboring school districts.

The new law, which limits the amount of surplus in school budgets and caps budget increases, will prompt changes in the Ocean Township school district, including an increase in class sizes and a decrease in busing and programs.

According to Ocean Township School Business Administrator Kenneth Jannarone, the district will be one of those affected by the new state law that is aimed at providing property tax relief to taxpayers.

But in Long Branch, Superintendent Joseph M. Ferraina said the bill will not impact his school district.

Since Long Branch is designated as an Abbott District, it is already operating with a 2 percent surplus — the limit the legislation will impose on districts statewide, according to Ferraina.

The legislation, S-1701, was signed by Gov. James E. McGreevey July 1 and will change the way local school districts handle finances throughout the state.

The two most significant changes imposed by the bill are a reduction of the allowable school district surplus, from 6 percent to 3 percent this year, and a reduction in the overall budget cap.

Beginning in the 2005-06 school year, surplus funds will be limited to 2 percent, or $100,000, whichever is greater.

In addition, district budgets will be held to a 2.5 percent increase year-to-year.

Under the new law, surplus budget funds must be limited and the excess used for short-term property-tax relief.

“Either school districts cut waste and put money back into the classroom or we won’t approve their budgets,” McGreevey said when he signed the new law.

The bill will protect taxpayers “from runaway municipal and school district budgets by freezing local government spending at 2.5 percent or the cost of living, whichever is greater,” McGreevey said in a statement.

Jannarone said the district has been operating on a 3 percent cap and will face costs that escalate despite the 2.5 percent.

The cap decrease refers to the amount of funds that can be transferred from one line item to another in the budget to balance any deficits or surpluses within the budget. Under the new law, the transfer of surplus amounts to line items and program categories requires the approval of the state commissioner of education.

The three major line items in the Ocean Township budget — health insurance, administrator salaries and special education costs — have all increased by approximately 10 percent in the past five years, according to Jannarone, who said he anticipates the costs will increase by more than 2.5 percent next year.

“Without cap adjustments, we will have to cut programs,” Jannarone said. “We will have to start cutting back in noninstructional areas first.”

In the past, the district was able to surpass the cap in certain scenarios, such as if the district had a growing enrollment or if the district supplied courtesy busing.

The bill eliminates those cap exemptions, he said.

“We choose to bus children [who are categorized as courtesy busing],” Jannarone said. “Next year we will not be allowed to do that. People are going to be in for a big shock when services they regularly received are being taken away.”

The surplus — a reserve of funds based on increases in the current year’s miscellaneous revenue or other budgeted revenues — is used for emergencies within the district that may not be covered by insurance, according to Jannarone.

He said the decrease for an allowable surplus from 6 percent to 3 percent does not affect the district because it already has been operating at a 3 percent budget.

“We do not know what the full effect of the bill will be,” Jannarone said. “People will start seeing the repercussions when the school board is working on the school budget in the winter.”

According to Ferraina, “It will not be a major problem for us. We are ahead of the game.”

Long Branch is one of 30 Abbott districts — a school district established as having “special needs” in the state Supreme Court’s 1998 ruling in Abbott vs. Burke — and receives state funding to pay for certain mandated operations and to ensure that the school system is funded at the level necessary to provide a “thorough and efficient education” as mandated in the state constitution.

The 1998 decision was the fifth in the case, which was originally filed in 1981 on behalf of children in the state’s urban school districts.

Abbott districts can only have a 2-percent surplus, according to Ferraina, who said that Long Branch is one of the largest Abbott districts, with more than 5,000 students.