State to delay last 5% of school aid payment

State to delay last 5%
of school aid payment
Superintendents, board
members angered over
governor’s ‘sleight of hand’

Area school districts will have to make do with even less this year, according to the state.

New Jersey will be delaying the last state aid payment for the 2002-03 school year to the state’s school districts for about a week or 10 days, according to Micah Rasmussen, a spokesman for Gov. James E. McGreevey.

"The payment is delayed. Everyone is still getting every penny," Rasmussen told Greater Media Newspapers April 9.

Not all local school superintendents are so sure about that, however, and have been left scrambling to make plans to pay all bills that will be due in June. Districts will have the option of paying their bills by appropriating surplus funds or by seeking short-term loans.

Districts are paid their state aid in 20 installments and the final payment to be delayed amounts to about 5 percent of the 2002-03 state aid total.

The 20th payment, which is due in June, will instead be paid as the first payment for the 2003-04 school year, according to Rasmussen. That budget year begins in July.

The money that was earmarked for the schools will instead be used to fund nursing homes that lost federal funding.

"State aid is not being reduced. The governor is increasing school aid in the [coming year’s] budget by $200 million," Rasmussen said.

Other states that are also facing budget woes are taking more dramatic action, according to Rasmussen.

"New York is cutting $1.4 billion in educational aid and some states are going to four-day school weeks," the governor’s spokesman said.

Rasmussen said that at some point in the future there will be a "double up" payment to make up the amount that is not being paid in June.

"We don’t know when that will be," he said.

State Department of Education spokesman Richard Vespucci said that by law, districts are not allowed to run deficits, and that there is some pending legislation in Trenton that would allow districts to borrow the funds to cover the payment.

"There are some banks that are interested. The districts can even have the July payment sent right to the bank to repay them," Vespucci said.

In the Marlboro school district, the delay may mean an increase in taxes for the 2004-05 budget, even if the payment is doubled at some future point.

"You can’t run a railroad this way," an angry Superintendent of Schools David Abbott said.

Abbott said his K-8 district will be lacking about $490,000 as a result.

"I’ve been in this business more than 35 years. I’ve never seen anything like this," he said, explaining that the district has increased by some 500 students while funding has remained frozen for the last three years.

"Now they are taking money away. The Board of Education is fuming," Abbott said.

"This is atrocious and ridiculous," board member Mark Orenzow said at the April 8 board meeting.

The final state aid payment, in the case of Marlboro, amounts to $494,472. This amount also includes payments for certain grant revenues such as Early Childhood Aid, Demonstrably Effective Program Aid, Instructional Supplemental Aid and Distance Learning Network Aid.

A memo from Abbott and district Business Administrator Cindy Barr-Rague charges that McGreevey is taking a back door approach to take money away from schools.

"Next year, they can take away two payments," Barr-Rague said, explaining how she could not prepare a budget under such circumstances.

The Monmouth County Association of School Business Officials is urging all New Jersey school business officials to write their legislators to oppose this change. The New Jersey Association of School Administrators is also urging all school boards to adopt a resolution protesting the move.

At the April 8 meeting in Marlboro, board members passed a resolution opposing the deferment/withholding of final state aid payments for the 2002-03 and 2003-04 fiscal years.

The resolution petitions the state Legislature to require that all state aid for both fiscal years be paid to the district before the end of that fiscal year.

The resolution also petitions the Legislature to eliminate from all future budgets of the state, language that would permit the state to withhold or defer any state aid from the New Jersey public schools.

In the Freehold Regional High School District, the state will withhold a payment of $1.9 million.

"I’m concerned that the state is in such severe financial condition that they are delaying our payments." said Business Administrator Joan Nesenkar Saylor. "We will be able to meet our obligations as of June 30, so we will not be in the situation where I will be needing to borrow money. However, I’m more concerned about the long-term ramifications."

Saylor said the 20th payment of next school year is already deferred into the following year.

"My concern is that it is supposed to be rectified when the state economic conditions improve," said the business administrator. "I’m concerned about the future in terms of what, if any, extraordinary steps the state is going to have to take in order to solve their financial problems."

In the K-8 Manalapan-Englishtown Regional School District, the missed payment for June will amount to $870,964.

"It will not cost our taxpayers [additional money[," said Superintendent of Schools Maureen Lally. "As soon as we heard about this, about [six weeks ago] when the first letter came out, we immediately took some steps to ensure that we had the coverage."

Lally said funds were in place for important items, such as payrolls and all necessary items. The superintendent said not every district could afford that and might have to secure a loan to cover its obligations.

"We said to people, ‘Let’s stop spending,’ " she said. "We know your need, but you can’t necessarily have that right now. You may have to wait until next year because we have to pay the payroll, insurance and mandated costs have to be covered."

Lally said the district went into a planning mode to make sure that what was being required by the state would be met.

The superintendent noted that the state recommends that the district keep 3 percent of the total budget as surplus. When asked if the district fell below that level at the start of the budget year, would the district have to collect additional tax money, not only for the operating budget, but also to replenish the surplus, Lally responded, "Right now you have to go to the county superintendent of schools for permission to be below the 3 percent temporarily."

In the Freehold Township K-8 school district, Superintendent of Schools Peter Bastardo said administrators are talking with vendors and asking them to work with the district, putting off the required payment of some bills until July. The state payment being withheld from Freehold Township is expected to amount to about $200,000, he said.

"Our concern is whether or not we’re ever going to get that money. We’re hoping it’s not sleight of hand," Bastardo said. "If the state continues to never pay us [the 20th payment from the 2002-03 school year], that’s a loss. If, by January or February, they do not double up the payment for 2003-04, then somewhere the money has to be made up in the 2004-05 budget, and then what would the state’s motivation be to pay it back?

"The board has asked the business administrator to let our legislators know about our outrage. We have a suspicion we will not receive that money and that’s like pulling the rug out from under us," the superintendent said.

Bastardo said the governor’s claim to be raising state aid to school districts by a total of $200 million in 2003-04 is not an accurate claim if one takes into account the missed final payment of the 2002-03 school year which, he fears, will never be forthcoming from Trenton.

Greater Media Newspapers staff writers Charles W. Kim, Jennifer Kohlhepp, Jeanette M. Eng, Dave Benjamin and Mark Rosman contributed to this story.