David Sciarra of the Education Law Center has renewed his crusade to get the State of New Jersey to "promptly" borrow billions in order to pay for 100% of the costs of construction projects in the Abbott districts.
May 10, 2018
All $2.9 billion in bond financing for school construction projects approved by the New Jersey Legislature in 2008 is now spent or committed, and lawmakers must promptly approve a new round of funding for urgently needed projects across the state.
Education Law Center Executive Director David Sciarra issued the call to action to replenish funds for school construction in testimony to the Legislature’s Joint Committee on the Public Schools on May 8.
The school construction program, which provides significant support to rebuild and upgrade New Jersey’s aging facilities infrastructure, was launched in 2002 to comply with rulings in the landmark Abbott v. Burke case ordering the state to fully finance needed improvements to dilapidated, overcrowded and unsafe school buildings in the state’s 31 urban districts, called “SDA districts.”
In establishing the Abbott school construction program, the Legislature included grants for projects in non-SDA districts – called “regular operating districts” (ROD) – and county vocational schools. The program is administered jointly by the NJ Department of Education (DOE), which reviews district-wide plans and project proposals, and the Schools Development Authority (SDA). The SDA issues bonds and finances projects and is also responsible for facilities construction in the SDA districts.
ELC’s testimony highlighted the following:
- The SDA has $1.7 billion in outstanding bond financing available for SDA districts, but virtually all of the funding is allocated to current projects in the pipeline to be completed over the next few years.
- In a review of the SDA districts’ most recent long range facilities plans, the DOE identified the need for 381 major school construction projects – including renovations of 200 existing schools and construction of 102 new schools.
- The SDA has extremely limited funds remaining for emergent repairs and capital maintenance projects in the SDA districts.
The funding for regular operating district grants and county vocational school facilities has been completely exhausted.
Although even Sciarra does not say how much money he wants New Jersey to borrow, if Sciarra's demand were to be heeded, it would increase New Jersey's already billion-dollar annual debt servicing costs and diminish K-12 operating aid and money for TPAF.
It's a little commented on fact, but New Jersey's debt servicing costs for SDA construction have grown from $15 million per year in FY2002 to a projected $1.067 billion for FY2019.
|Source, NJ Treasury, Budgets In Brief|
"Note, FY 2012 Appropriation was reduced because $367.6 million in debt service costs were appropriated from funds in the FY 2011 budget." This chart smooths out this movement.
During Christie's tenure alone, debt servicing costs increased from $403 million in the last Corzine budget to $918 million, a $515 million increase that was more than double the $200 million increase in K-12 operating aid that occurred during Christie's administration.
Since the money for construction debt also comes from income taxes, it was partly the sharp increase in construction debt servicing that prevented Christie from better funding pensions and K-12 operating aid.
"Given Out" would be more accurate as "bonded for."
I cannot estimate the costs of the construction Sciarra wants, but school construction anywhere in NJ is very costly.
The cost of Phillipsburg's new high school was $127.5 million and the cost of some new elementary schools in Jersey City, Pemberton, and other Abbotts has been in the $50-$60 million range. Thus, the new construction alone would cost in the high ten-figures, before one even considers repairs.
In the two previous rounds of construction bonding in 2000 and 2008, 30% of the total money was reserved for non-Abbotts and vo-techs. Were the legislature to give money to non-Abbotts again, the costs would be higher.
New Jersey Needs a Unitary Funding Law for Construction Aid
Aside from the caution NJ must exercise in taking on more debt when we are always ranked as the one of the country's most indebted states, what is troubling about Sciarra's demand is that the Abbott districts are not, as a class, NJ's poorest districts.
Hoboken is, by far, NJ's richest K-12 district in tax base per student, with over twice the tax base per student of Millburn. Long Branch, Jersey City, and Neptune Township have average tax bases per student, so it is unfair that they would get the state pay for 100% of their construction costs. Asbury Park, Harrison, Jersey City also have substantial sections of their tax base "hidden" behind PILOT deals.
True, most of the Abbotts remain poor. Of New Jersey's 10 poorest districts for 2018-19 in Local Fair Share per student, nine are Abbotts. Of the 50 poorest districts in Local Fair Share per student, 23 are Abbotts.
Under any appropriate construction financing law, low-income Abbotts would have the state pay for the large majority of construction costs, but is 100% state funding appropriate? Especially when the state aid targets for operating aid for the Abbott districts are so high? Shouldn't all districts at least have some skin in the game?
And even if 23 of the 50 poorest districts in New Jersey are Abbotts, what about the 27 non-Abbotts in the lowest-tax base fifty? Is it right that Freehold Boro should have to put up with extreme crowdedness for years to get permission to override its voters on local construction bonding, because they had no hope that the state would contribute? (eventually the state agreed to contribute 85%)
And how is it appropriate to target precious state construction aid at the Abbotts when not all Abbotts have had enrollment growth? Since 2009-10, Asbury Park, Keansburg, Neptune Twp, Burlington City, East Orange, Salem City, Pemberton Twp, Pleasantville, and Millville have lost residential enrollment. Several other Abbotts, like Paterson, Jersey City, Newark, and Camden have lost enrollment in the traditional public school, with the growth in residential enrollment coming in the charter sector that does not benefit from SDA funding.
It is because of the shift of student to charter schools that brand-new, $54 million PS 26 in Jersey City opened at only half of its capacity in 2017.
Getting reform of Adjustment Aid has been difficult enough, but if we reformers are fortunate enough to win the battle over Adjustment Aid, we can set our sights on getting fairness in school construction aid too.
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