Saturday, December 19, 2015

How is the state going to pay for Sweeney's Pre-K expansion?


Senate President and gubernatorial candidate Steve Sweeney has proposed a large expansion of state-funded Pre-K.

“We need to expand early-childhood education throughout the state and implement creative ways of funding innovative programs. This is a major step forward in that process."
Under Sweeney's proposal, another 17 districts would get the same level of Pre-K services that the Abbotts currently have. This mens two full years of Pre-K for all 3 and 4 year olds residing there.



This is part of the Democrats' "New Jersey: Investing in You" campaign, a six-point campaign that excludes K-12 funding as one of its objectives.

Sweeney also proposes restoring "wraparound" services in the Abbotts, that is, before care and after care.

The wraparound services are not mandated by the NJ Supreme Court and the Christie Administration and legislature have cut them in order to balance the budget in the last few years and avoid deeper cuts to K-12 education and Pre-K in non-Abbotts. Sweeney evidently wants to spend even more money in the Abbotts, regardless of how badly aided other districts are.

The cuts to wraparound services usually preserve the services for "free" for the poorest children, but less-poor and middle-income children do not qualify for "free" services and many do not participate.  (even affluent children in the Abbotts are eligible for the academic component of Pre-K.)

The costs of Sweeney's proposal would be $62.7 million in 2016-2017 budget and $103 million for the next year, with the cost increasing thereafter.

Since the state spent $656 million on Pre-K in 2015-16, this represents a 15% increase.   However, this is less than a third of the (utopian) Pre-K expansion envisioned in SFRA in 2008, in which all districts with FRL-eligibility rates above 40% were supposed to get universal, state-funded Pre-K for all students and poor kids in any district were supposed to get state-funded Pre-K.  SFRA's much more ambitious expansion of Pre-K would pay for universal Pre-K to 100 districts and cost $360 million.  

No Source for Funds Identified by the Democrats

The huge problem is that there's no way to pay for the Pre-K expansion. New Jersey's economy is barely growing a fact that Sweeney recognizes "“Our growth has been anemic next to the nation’s." Any new revenues brought in by that economic growth are to be reserved for pensions, a policy that Sweeney supports and makes the central part of his pipe dream to fully fund NJ's pensions without raising taxes on the middle class or slashing services.

I have no clue where the state is going to get this money.  For 2015-16 the total increase in Pre-K and K-12 state aid was only $8 million.  For 2014-15 the increase was $35 million.  For 2013-14 the increase was a much more substantial $114 million, but that was part of the post-recession state aid rebound and the state was ignoring its pension obligations then too.

The increases of the last few years have been significantly below general inflation, let alone the health care and Out of District tuition inflation that constantly erode financial resources for school districts.

Source: State Aid Summaries
Sweeney's Pre-K plan is incompatible with his own plan to dramatically increase the state's pension contributions.

For FY2017, the state's pension payment is supposed to increase to $1.83 million from $1.3 billion in FY2016, meaning that even Chris Christie plans to have the state find another $500 million alone for next year.

Source, NJSpotlight, http://www.njspotlight.com/stories/15/12/17/senate-president-revamps-payment-plan-for-closing-deficit-in-state-s-pension-fund/


MOREOVER, Sweeney is forgetting the risk of the state losing the COLA payments case in Berg v. Christie, which will be decided in 2016.  If the NJ Supreme Court guts pension reform and orders the state to make back payments on COLAs and pay COLAs in the future the state's budgetary position will be ruined.

Even if the state prevails in Berg v. Christie, I don't see how anyone can fit in much larger pension payments AND much larger Pre-K expenses unless you slash aid somewhere else.

Hey, if Adjustment Aid were being cut I'd be all for Pre-K expansion, but without a funding source this is just irresponsibility from Sweeney or, more likely, a smart campaign tactic to build support among liberal true believers in the Democratic party.

Phil Murphy also talks about Pre-K, although his discussion is more cautious and acknowledges research shedding doubt on Pre-K's long-term effects.  Either way, it is possible that the Democratic primary could become a contest where the candidates try to "out Pre-K" each other.

Although Sweeney's proposal would cost $100 million a year in two years for the state and would be a headache for him as governor, it costs him nothing as a candidate just to make it.  As Senate president this proposal is cost-free to Sweeney too, since his autumn contemplation of redistributing state aid would divide the Democratic party.

Anyway, there are some forms of political advertising that money can't buy and a Pre-K proposal that gets good press is one of them.











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