By John Saccenti and Kristine Snodgrass, Staff Writers
School district officials say that a state freeze of education aid funds will eventually mean higher property tax bills for homeowners.
On Thursday, Gov. Chris Christie invoked executive authority to freeze funds for education aid, forcing school districts to spend down current surpluses and face potential property tax increases in the future.
West Windsor-Plainsboro school board President Hemant Marathe said the district learned that aid for the current school year would be cut by $2.8 million, sending the district scrambling to its approximately $4 million surplus fund to make up for the shortfall. He said the effect would eventually hit taxpayers in the 2010-11 school spending plan.
”Christie came in saying he wouldn’t increase any taxes. This is a hidden tax increase, making school districts collect taxes for the state,” he said. “We’re collecting $2.8 million in taxes and we’re giving it to the state.”
In addition, Mr. Marathe said that combined with approximately $600,000 former Gov. Jon Corzine took to cover pension costs, the district would see a shortfall of approximately $3.5 million, about equal to the expected increase in payroll next year.
”The fact of the matter is, they miscalculated their revenue, not us,” said Mr. Marathe. “We did everything right. They are simply saying ‘because we messed up, we’re going to take it from you because we’re allowed to take it from you and you have no defense.’ That is truly unfortunate.”
Montgomery Township School District Superintendent Earl Kim said the district’s excess surplus would be used to make up for the loss in state aid.
”The Montgomery schools remain committed to doing their part in helping the state to fill its budget gap,” he said in a statement issued Friday. “The district has maintained for years that fund balances are intended for just this kind of perfect storm.”
The district was informed last week that its state aid would be cut by$1.9 million for the balance of the school year, a decrease of about 34 percent, Mr. Kim said. The district was directed to transfer funds from its surplus reserves to meet operational costs for this school year.
However, Mr. Kim said the repercussions of this move will be felt in the 2011-12 school year.
A district may keep 2 percent of its budget as surplus, and anything above that is termed excess surplus, he explained. This year, that amount was projected to be $1.5 million, Mr. Kim said. Typically, excess surplus is applied toward tax relief for the next year, reducing the amount that has to be raised through taxation.
If the district’s surplus is used to fill the hole left by the cut in state aid, there won’t be excess surplus to apply to tax relief, he said. This will result in larger property tax increases or large reductions in programs and staff in 2011-12, he said.
The reduction in surplus funds also increases the likelihood of cash flow issues, and could affect the district’s AA+ bond rating, he said.
”If we hope to avoid this kind of situation in the future, it is essential that legislators and the chief executive refund schools for ‘reserved’ state aid as state revenues have already and will continue to rise as our economy moves out of recession,” he said.
The news comes as the district struggles to balance its 2010-11 budget. Last week, the school board discussed a budget that included a $332 tax increase for the average township homeowner and reductions in staff, including a kindergarten teacher, a grade three teacher, and two grade five teachers.
Alan Hegedus, president of the Princeton Regional School District Board of Education, said the district will also make up for its loss of state aid with surplus funds.
”It’s going to put the squeeze on us, not unlike any other school district,” he said. “But we’re about as well prepared for it as we can be.”
The district’s dependence on state aid is “modest,” he said. Princeton Regional schools received in total $5.5 million in state aid for the 2009-10 school year.
”I really salute big time Christie facing up to what has to be done, and doing immediately the courageous thing, and obviously the politically shocking thing,” Mr. Hegedus said.
However, Mr. Marathe said the move is irresponsible.
”It sends a really wrong message, where if you are fiscally responsible, then you are going to be punished,” he said. “It’s like me saying, if you have money in your savings account, then we’re not going to give you a paycheck.”
jsaccenti
@centraljersey.com.
