District offers payouts to help meet budget caps

Officials: Decline in school funding real cause of high taxes

The Red Bank School District is offering employees monetary incentives to resign as a cost-cutting measure in the face of a new state law that caps school budgets.

Superintendent of Schools John Krewer and Business Administrator Fran Finkelstein told reporters at a recent news briefing that as a way to save money over the next few years, the district is offering teachers and administrators a Separation from Service program.

All 96 eligible members of the faculty and administration are being given the option of submitting an irrevocable letter of resignation in exchange for a payout of their accumulated, unpaid sick leave.

The program is one of the measures the district has come up with to deal with the effects of S-1701, a bill signed into law July 1. The new law, aimed at providing property tax rebates to taxpayers, puts caps on budget increases and surplus and limits the freedom of school boards to move funds from one line item to another in school budgets.

According to the notice sent to Red Bank teachers, the district will give eligible employees a per diem stipend calculated at 1/200th of the employee’s 2004-05 annual salary for all accumulated, unused sick leave up to a maximum figure of $20,000.

Krewer explained that for an employee with 10 unused sick leave days, that would amount to a $1,000 payout.

The money will be paid out over a two-year period.

Krewer said four employees resigned last year, which will save the district about $100,000, equal to about 1 cent on the tax rate.

“Anyone who is certified is eligible,” Finkelstein said. “It’s on the table.”

She said all 96 of the district’s teaching staff and administrative employees are eligible for the separation agreement.

Under state code, sick time for faculty and administrative staff is cumulative and can be carried from year to year, she explained.

“We have people with hundreds of days,” she said, adding that the offer is more likely to appeal to employees at the upper end of the pay scale.

“In theory, younger staff with lower salaries will not be receptive to this,” she said.

The aim is to save the district money, she said.

“This is a short-term fix until a constitutional convention {to study the issue of property taxes} finds a long-term solution,” Krewer said.

According to a survey conducted by the New Jersey School Boards Association, schools anticipate a dramatic impact from the legislation in nearly all areas.

“This is a serious problem,” Krewer said. “The unspoken criticism of this is that high property taxes are the result of high spending by school districts, not declining state funding.”

Krewer said that last year, the district received only 16 percent of its funding from the state, although the state average is 49.6 percent.

According to Krewer, Red Bank is at the 44th percentile of state funding for schools.

Krewer said that as the state aid decreases, it forces districts to have a greater dependence on local tax payers, which he believes is not fair.

“We’re given three years of a flat rate for state aid, but not three years of flat spending or three years of flat enrollment,” Finkelstein said. “That puts us at a disadvantage before we even start.”

Krewer and Finkelstein criticized the state’s handling of the issue of rising property taxes.

“The state isn’t playing by its own rules,” Finkelstein said. “The state increased its taxes this year by 17 percent. It’s not regulated.”

The district’s budget failed to gain the approval of voters in April, although, according to Finkelstein, it was one of the lowest increases in school budgets in the county.

“Taxpayers are understandably taking out their frustrations on a defenseless body,” Finkelstein said.

According to the survey, 62 percent of schools anticipate S-1701 will have a serious impact on facilities, and 32 percent anticipate a moderate impact. Only six percent anticipate minor or no impact on facilities.

Schools statewide were asked to rate the impact on a scale of one to five (with five indicating a serious impact and one indicating no impact).

Ninety-four percent of schools said the state-mandated limits would have moderate or serious impacts on curriculum, and 90 percent foresee a moderate or serious impact on extra-curricular programs.

At the same time, schools indicate expenses will rise in the 2004-05 school year for business operations and negotiations with personnel.

Health care coverage is expected to increase by 22 percent, with 130 districts providing estimates ranging from 3.4 percent to 34.86 percent.

Insurance costs are expected to rise by 27.3 percent, with 180 districts estimating increases ranging from less than one percent to 59 percent.

The cost of utilities is expected to go up by 8.73 percent. Ninety-one districts estimated the increase will range from 1.5 percent to 26 percent.