Mayor Steven Fulop and Ward D Councilman Michael Yun have announced a plan which allocates $250 million to the Jersey City school district over the next three years.
The school district faces a loss of $175 million in state aid over the next five years due to changes in the state’s school funding formula. The district, which educates more than 30,000 students, lost $27 million in state aid last year alone.
The plan from Fulop and Yun calls for school tax increases, budget cuts, abatement sharing, and more.
The School Funding Action Plan outlines proposed revenue sources for the district, including $40 million in abatement revenues $10 million of which would be in 2020, $20 million in 2021, and $10 million in 2022.
Last year the Board of Education had a forensic audit done, which concluded that the school district was missing out on more than $16 million in revenue from 19 tax abatements alone, which were incorrectly billed.
During the last City Council meeting, the council approved the hiring of outside auditors to review all historical Payment in Lieu of Taxes (PILOT) agreements.
According to the city, the audit will ensure the city is receiving the maximum amount of revenue according to each individual PILOT agreement, and any additional dollars found will be transferred to the Board of Education.
Last year the city implemented a payroll tax, which the plan projects will provide $55 million over the three-year time period. The School Funding Action Plan also recommends that the school district sell the Board of Education’s District Headquarters on Claremont Avenue to the city for $15 million, which the city would then lease back to the district for $1, according to Fulop.
Under the plan, the city and the Jersey City Municipal Utilities Authority (JCMUA) would do lead remediation of the schools for $13 million this year.
In addition to the city providing revenue, according to the plan the district must also make budget cuts amounting to $45 million over the next three years, calling it “an operational efficiency corrective action.”
The plan doesn’t propose what those corrective actions are, and Fulop said that that’s up to the Board of Education.
The city’s plan also includes increasing the school tax levy by $25 million in 2020, 2021, and 2022 for a net of $75 million.
The plan recommends that the Board of Education conduct an Energy Audit which is projected would save the district $2 million.
“We’ve been working proactively to come up with this fair and balanced funding plan where the city is offering to make strategic adjustments to assist the schools with their current budget crisis,” said Councilman Yun. “These proposed solutions are tough decisions we’re making on the city budget side, but they are necessary.”
According to Fulop, some of those decisions by his administration include cuts in police recruiting, fire department recruiting, reducing overtime, and hiring freezes.
“This is a serious issue, and we are taking steps to fix it, and I’m encouraged that we’ve come up with a plan of action that doesn’t require massive tax increases for people on fixed incomes or broad layoffs,” Fulop said. “Instead, we’ve laid the groundwork to fix the system responsibly, and most importantly, in a fashion that best serves our children.”
According to the city, Fulop and Yun have been meeting with stakeholders, including parents, teachers, and school board administration to develop the strategy over the last several months.
“We have always said that we would do our part and show leadership by putting forward a plan,” Fulop said. “This plan corrects decades of mismanagement from previous administrations, and builds towards providing 100 percent of the tax abatement revenue that the schools would receive under conventional taxes …The students and teachers are the number one priority here. The next step is we need a basic action plan from the Board of Education.”
Fulop added that if the school board addresses and solves the funding crisis, he will rescind a referendum on the November ballot which will ask voters if they want to continue to elect the board of education or if the board should be appointed.
But Lorenzo Richardson, school board president, outlined issues with the city’s plan in an email sent to Fulop before the plan was released.
“Our focus is on fully funding the budget which is our responsibility as board members,” Richardson said in his email. “We can have a separate conversation about the appointed board vs. elected board, but I do not think a referendum to appoint a board …. should be used as a threat over this board or the budget process.”
One issue he highlighted was the city’s audit of its 178 PILOT agreements, noting that its own audit covered the top 19 PILOT agreements and already found them to be out of compliance.
He noted, “All you have to do is to initiate the 60-day cure clause and allow the 19 PILOTS 60 days to cure, which is to send you their audited financials for 2017, 2018 and 2019. Upon receipt, you can invoice them for the actual PILOT fees owed instead of the old 2016 rates the city was currently invoicing from.”
“Putting the cure on hold and trying to do an audit of all the PILOTS which we have already audited last year in August does not make sense at this point in time,” Richardson added. “The sooner you can resolve this without delay reduces pressure on the city’s budget.”