School & District Management

N.J. School Administrators Take Aim at Budget-Cap Law

By Catherine Gewertz — October 12, 2004 | Corrected: October 26, 2004 3 min read
  • Save to favorites
  • Print

Corrected: Because of a typographical error, this story reported incorrect projected expenses for one special education transfer student in the Hainesport Township schools. The amount will be in excess of $100,000.

Strict new state-imposed limits on the budgets of New Jersey school districts are causing concern that districts might have to cut programs or forgo building repairs. Such worries have prompt ed a state lawmaker to introduce legislation to repeal the spending caps.

The budget restrictions, signed into law in July, lowered the ceiling on how much districts’ budgets can grow annually, from 3 percent or the rate of inflation, whichever is greater, to 2.5 percent or the rate of inflation.

Bill Baroni

The restrictions also force districts to reduce their budget surpluses from a maximum allowable 6 percent of the general fund balance to 3 percent this school year, and 2 percent in 2005-06, and limit per-pupil administrative spending to 2.5 percent annually.

Gov. James E. McGreevey, a Democrat, backed the changes as a way to lighten growing tax burdens and rein in school spending. But those limits, along with other features that restrict districts’ authority over some budget functions, have led to objections from scores of New Jersey’s 600-plus school districts.

In a survey conducted last month by the New Jersey School Boards Association, district officials expressed a range of concerns about the budget caps. Many worried that maintaining a surplus of only 2 percent or 3 percent could harm districts’ bond ratings, or put them into financial trouble when unexpected expenses surface.

“Three percent of the district’s budget will just barely cover one payroll,” said one respondent, from Jackson Township in central New Jersey. “If funds were slow from the township or state, it could prove to be a serious hardship.”

Mark Silverstein, the superintendent of the Hainesport Township schools, which enroll 650 children in grades K-8 about 20 miles east of Philadelphia, said that annual costs for a special education student who transferred into the district this fall will exceed $10,000. Luckily, the student’s home district notified Hainesport officials last spring, in time for them to build the expenses into their $7.6 million budget, Mr. Silverstein said.

With the new surplus cap, the district’s allowable budget surplus this year is $175,000, so an unexpected special education transfer could prove “a real calamity,” he said.

Minimizing Waste?

Concerns such as those led Republican Assemblyman Bill Baroni to introduce a bill last month that would restore the district spending limits that were in effect before July 1, when Gov. McGreevey signed the caps into law.

“Setting a lower cap is just harming our schools, when there is no evidence they are being wasteful,” Mr. Baroni said in an interview. “That’s no way to make public policy.”

Mr. McGreevey blames “runaway” local spending for part of the state’s property-tax spiral and cites figures that show New Jersey spends more than most states on school administrative costs. He views the spending limits as one of several prongs in his plan to address rising property-tax burdens in the Garden State.

In the same week, he signed measures that imposed the school spending caps and placed similar limits on municipal spending, as well as enacted a “millionaire’s tax,” the proceeds of which will be used for property-tax rebates.

The state also is laying the groundwork for a constitutional convention in 2006 to overhaul the property-tax structure.

“School districts and municipalities can’t keep growing their budgets every year in perpetuity,” said Juliet Johnson, a spokeswoman for the governor. “We have an obligation to the property-tax payers, one, to make sure more money is getting into the classroom, as opposed to growing bureaucracy, and two, to make sure we’re responsibly spending their hard-earned property-tax money.”

James J. Dougherty Jr., the president of the New Jersey School Boards Association, predicts that the spending caps will actually drive up property taxes.

In many districts, he said, budget surpluses have enabled officials to avoid asking local voters to approve property-tax hikes. But with reduced surpluses, that will often not be possible, he said.

The law applies to districts’ 2004-05 budgets, which local residents had voted on three months before the governor signed the measure. Surplus amounts above the newly required limit had to be given to municipalities for use in property-tax relief.

James H. Murphy, the executive director of the New Jersey Association of School Administrators, said one district in southern New Jersey had to return $250,000 of its surplus, then found it had to replace an aging boiler, which would cost about that amount. Now the district will have to borrow—and pay interest on—money for the boiler, he said.

“The law actually punishes districts for being efficient,” he said.

Related Tags:

Events

Artificial Intelligence K-12 Essentials Forum How AI Use Is Expanding in K-12 Schools
Join this free virtual event to explore how AI technology is—and is not—improving K-12 teaching and learning.
Federal Webinar The Trump Budget and Schools: Subscriber Exclusive Quick Hit
EdWeek subscribers, join this 30-minute webinar to find out what the latest federal policy changes mean for K-12 education.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Curriculum Webinar
End Student Boredom: K-12 Publisher's Guide to 70% Engagement Boost
Calling all K-12 Publishers! Student engagement flatlining? Learn how to boost it by up to 70%.
Content provided by KITABOO

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

School & District Management Opinion Denver Superintendent: Why We Sued the Federal Government
Education leaders shouldn't remain apolitical in the face of immigration enforcement changes and other threats from the Trump administration.
Alex Marrero
6 min read
Human hands created secure environment for children via home roof gesture. Adults taking care of vulnerable students.
Mary Long/iStock + Education Week
School & District Management Food and Massage Coupons: How Principals Signal Their Appreciation for Teachers
Small gestures can go a long way this Teacher Appreciation Week.
5 min read
Image of a notebook page with "THANK YOU TEACHER" written with some doodles and smiley faces.
iStock/Getty
School & District Management Opinion How to Be a Focused Leader When There’s a Lot of Noise
Burnout, attrition, absenteeism, and disengagement are key issues for schools. Here's a path forward for educators.
3 min read
Screen Shot 2025 04 29 at 6.54.09 AM
Canva
School & District Management 'Go-Betweens' Are Invaluable to Principals. A Guide to Cultivating Them
A school leader's guide to creating and supporting a second-line leader.
2 min read
Wooden pawns on interconnected circles. Concept of interrelationships. 3d illustration.
iStock/Getty