Friday, March 3, 2017

New Jersey=Debtors' Prison: The 2017-18 Budget

Note, this post was accurate at the time it was written regarding flat-funding for K-12 operating aid.  In June 2017 Steve Sweeney pushed through a deal that did increase K-12 aid by $100 million, PreK by $25 million, and Extraordinary Aid by another $25 million.   See this update on disparities for a look after Sweeney's last-minute changes.

Everything in this post I say about categories of debt getting the lion's share of new money remains still accurate. 

The Garden State
For 2017-18 K-12 state operating aid for school districts is increasing by a measly $3,140,585, all of which is going for Interdistrict Choice and Host District Stabilization Aid for Newark.

Of New Jersey's 577 school districts, only 91 are receiving any aid increase at all.

Even New Jersey's most savagely underaided districts, like Manchester Regional, Freehold Boro, East Newark, Chesterfield are gaining nothing.  Bound Brook, who was the most underaided school district for 2016-17, is getting a $6,387 boost, which is for perhaps another Interdistrict Choice student.

Atlantic City, which had lost another $2 billion in Equalized Valuation, gained nothing other than $60,881 for Interdistrict Choice.  This is a contrast to last year, when Atlantic City gained $32 million last year for "Commercial Valuation Stabilization Aid."

Since state aid for 2016-17 was $8,031,337,333, the increase is an imperceptible 4 one-thousandths of a percent.  2016-17 was a bad year too, but at least in that year K-12 aid increased by $90 million.

Yet there is more to this story than just the headline aid increase of $3,140,585 and that untold story is large increases for New Jersey's debt.

  • TPAF funding is increasing by $411 million.  
  • Post-retirement medical funding for teachers is increasing by $69.9 million.
  • Debt Service on Christie Whitman's Pension Obligation Bonds is increasing by $15.4 million.
  • Debt service aid (which goes directly to districts) is increasing by $17.4 million.  

State Debt Servicing, which is for the bonds the Economic Development Authority floated for (mostly Abbott) construction is increasing by $20.5 million from $898.3 million to $918.8 million.

New Jersey's expenses for teachers Social Security is actually falling.  Perhaps this is due the 2016-17 budget cuts meaning that there are now fewer teachers?

Because TPAF and other education debt expenses increased so much, education spending (broadly defined as opex aid and other education-related expenses) is now 39% of the state budget versus only 31% of the budget in 2001. (FY2018 = $13.8 billion out of $35.5 billion)

Click to Enlarge.
Source, pg 41

And for comparison's sake, here is where the increase for 2016-17 went.  (the graph refers to "proposed increases," but these proposed increases actually were implemented.)

As you can see, it's the same story.

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