EAST BRUNSWICK — The stable school tax rate achieved by the Board of Education last year may have been a fleeting accomplishment.
School officials are up against an especially difficult budget process this year, facing an array of financial obstacles that will most likely cause the district to have a shortfall of anywhere between $4.8 and $8.2 million, thereby forcing significant cuts.
“We’re anticipating an extremely difficult year in budgeting that will have a significant impact on the services that we provide,” said school district Business Administrator Bernie Giuliana. “We’re not projecting any growth.”
The 2009-10 budget totaled $132.8 million, down 2.5 percent from 2008-09. The general fund tax levy, which was approved by voters last April, remained level at $106.1 million. Since the debt service tax levy decreased from $8.7 million to $7.8 million, residents saw a decrease of nearly $42 per $100,000 of assessed valuation this year.
But such a feat will not be possible for 2010-11, given several fiscal impediments. Among many anticipated wrenches thrown into this budget is a reduction in state aid. Giuliana said that official information will not be released until after Gov. Chris Christie’s March 16 state budget presentation, but he is estimating that the district will see a 5 percent decrease in aid.
“Though we don’t have the official numbers yet, we’re looking for a shortfall in state aid, and there will not be an economic stimulus package this year either,” Giuliana said.
According to Giuliana’s projections, funding from the American Recovery and Reinvestment Act (ARRA) will not return this year. The 2009 legislation provided the district with $2.2 million for education stabilization and government services.
Other caveats for the 2010-11 budget are the state’s proposal that districts use 75 percent of excess surplus, thus reducing surplus money available for use in the budget. The state may also impose a tax levy increase cap of 1.5 to 2.5 percent, which is smaller than in years past.
While not the primary strain on the budget, Giuliana said a new charter school is an additional expense that needs to be taken into consideration. The Hatikvah International Academy, which will teach Hebrew language and culture along with the New Jersey state curriculum, was among eight charter schools approved last September by the state Department of Education. It is poised to open in September 2010 for 108 students in kindergarten through second grade.
New Jersey law dictates that the local school district pays the charter school for each student enrolled, equal to 90 percent of the district’s own school budget per student for each grade level. Based on 2010 costs, Giuliana has estimated that each student would cost the district $10,069 for the year, not including transportation services. With 108 students, the charter school takes up $1.1 million in the upcoming budget. Transportation expenses will amount to $114.258.
Giuliana has been giving updated budget presentations at board meetings since mid- December, with the intention of involving residents as much as possible.
“We’ve been communicating quite a bit with the public at board meetings regarding the budget outlook. We want to keep them abreast of how this is all developing,” he said. Since the initial presentations, two separate budget projections have emerged.
The first possible budget, which provides projections without a surplus reduction, estimates revenue of $129 million and appropriations of $134 million, for a shortfall of $4.8 million. The second budget, however, provides projections with a surplus reduction and estimates revenue of $125.7 million. Compounded with the same appropriations, the district may be in danger of an $8.2 million shortfall.
Both estimates consider a spending budget identical to the current school year, while taking charter school expenses into account and providing for no growth.
“We’re basically hoping for the best and expecting the worst right now,” Giuliana said. While the numbers are still not definite, Giuliana said the district will most likely need to make severe cuts.
“When looking at millions of dollars, there’s no question that a lot will be cut and there’s no doubt that will affect our schools,” he said.
Giuliana said staff reductions are “inevitable,” leading to larger class sizes and hinder school services.
“We don’t have much of a choice but to put everything on the table,” Giuliana explained. “There’s no aspect of school operations that won’t be considered.”
Giuliana said officials will continue to fine-tune the tentative budget, but details regarding state aid will not be available until March 18. Following that announcement, the district will begin to look seriously at specific cuts.