Schools face a worsening budget crisis

2019-2020 budget proposes 750 layoffs and $10 million tax increase

Schools face a worsening budget crisis
The Jersey City Board of Education proposed a budget that includes a tax increase and layoffs.

As Mayor Steven Fulop offered nearly $11 million in aid to the school district in his state of the city address at City Hall on March 20, uptown at a special meeting, Board of Education trustees introduced a doom and gloom $609 million budget that would raise school taxes by 10 percent and could result in as many as 750 layoffs.

The school tax increase is expected to raise a property owner’s overall tax bill — comprised of city, school, and county tax levies — by two percent.

Last year, the board faced a similar shortfall in funding. It was not quite as extreme, and the trustees managed to find ways to avoid any increase in taxes or layoffs.

But the big issue this year is the additional cut in state aid that added to a $120 million budget gap.

From the $400 million in annual state aid previously granted to the district, the state intends to cut $175 million over the next five years. The district had anticipated a $15 million cut this year but was hit with a $33 million cut instead.

If adopted unchanged, the budget presented at the special meeting would eliminate 450 positions for instructional and 150 from central office staff and another 150 non-instructional staff.

The district has a $70 million deficit carried over from last year.

“This [the layoffs] will account for about $50 million,” said Board President Sudhan Thomas.

“This has not grown because of the changes we made last year,” he said. “But this year’s budget increased by $20 million in contractual agreements.”

This was somewhat offset by the district’s move last year to get off the state healthcare plan and become self-insured, saving about $22 million.

“We also saved about $10 million in improving operations efficiencies.”  Board President Sudhan Thomas

Adding to the district’s woes, charter schools saw a significant increase in enrollment, diverting about $6.5 million from the public schools.

State law requires the board to send a preliminary budget to the county superintendent of schools for review, said Thomas.

“We have eight weeks to hold a public hearing and to make changes,” he said.

This year, harder choices

Last year, at this stage, the board approved a preliminary budget that called for 400 layoffs, but managed to avoid any by enacting other budget cutting measures.

But according to Trustee Matt Schapiro, many of the measures used to balance last year’s budget have already been implemented, and are not available to bring down the current budget.

During his state of the city address, Mayor Fulop said a new payroll tax which went into effect on Jan. 1 will be entirely dedicated to the school district. While no precise figures can be predicted, the original assumption when the law was proposed was that it could generate as much as $75 million per year.

Major developers in the city challenged the law, but the Superior Court ruled in early March that the law was legal and could be implemented.

“I haven’t seen a figure on city on the money from the payroll tax,” Thomas said. “We have to plan as if it’s not coming. I have to send a balanced budget to the state.”

Fulop also said that the city would earmark $8 million in direct aid to the schools and another $3 million in shared services with the district.

Thomas said the $3 million, which includes the city playing $2 million for police protection and another $1 million for trash, has already been accounted for in the budget presented.

Abatement policy changes

In the past, tax abatements to incentivize real estate development did not provide any revenue to the schools, and as the city grew wealthier overall because of massive development, some state legislators balked about continuing the level of school aid from the state. In reaction to these complaints, the state imposed the $175 million cuts over the next five years.

Although he played down the role the city’s abatement policies had in prompting the state to cut aid, Fulop said future abatements – if there are any – would provide 24 percent of the payments to the school.

But Thomas and other school officials claim that the state has been short-changing the district for years and that partly accounted for the existing $120 million budget gap.

“This situation is much worse than last year,” Shapiro said. “This budget calls for cuts in 25 line items, including millions in athletic programs.”

“The education of the children of Jersey City will be structurally changed by decisions made in the coming months by the Jersey City Board of Education as a result of the worsening funding crisis.” Trustee Matt Schapiro

Worse still were the heavy cuts made to the administration over the last year, which took many seasoned professionals out of the district, crippling the ability to adequately address the crisis.

Schapiro also claimed the board has been somewhat dysfunctional in the previous few months, leaving him to believe the board may not be in the best position to make the decisions necessary either.

He said taking hundreds of teachers out of the class room is going to have a huge impact on education of the student.

“We need a sober and stable board and district leadership to handle this,” he said.

For updates on this and other stories check hudsonreporter.com and follow us on Twitter @hudson_reporter. Al Sullivan can be reached at asullivan@hudsonreporter.com

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