South Brunswick schools superintendent prepares for worst effects of loss of state aid

SOUTH BRUNSWICK – Administrative cuts. Increased costs for programming. Transportation changes. A reduction of kindergarten offerings.

South Brunswick School District Superintendent of Schools Scott Feder named some of the worst-case scenario effects of an anticipated $9 million loss in state aid through 2024 and cautioned residents those effects could become reality.

On March 2, Feder addressed S-2, a 2018 state law which changed the distribution of funding for New Jersey public school districts. He said that three years ago, South Brunswick received $24.5 million to offset taxpayer costs.

In 2019, district administrators received a six-year schedule of how much money the state will take away over the next six years.

The estimated state aid reduction, according to S-2, as of numbers released in March 2019, prepares for a loss of $1.15 million in Fiscal Year (FY) 2020, a loss of $1.77 million in FY ’21, a loss of $2.19 million in FY ’22, a loss of $2.05 million in FY ’23, a loss of $1.27 million in FY ’24 and a loss of $403,000 in FY ’25. This is a total of about $8.85 million over six years.

The initial $1.77 million reduction in state aid was changed to a $1.94 million loss in February because the state is also blocking the school district’s $1.1 million health waiver.

“The urgency … is because February was a really bad month for South Brunswick,” Feder said.

Thus, South Brunswick is forced into a deficit budget model, Feder said.

“It means that from one year to the next, you need more money in the second year than you can collect. If you think of if you have a job and you make $2,000 a week it would be the same as if in the change of a month your bills went up just a little bit … with a little bit less money than you had the month before. In that model, all you can do is cut, that’s your only choice. Or, you can figure out how to raise a little more,” he said.

Feder said the good news is that because administrators budgeted conservatively years ago, the district still has access to $640,000 for the 2020-21 school year; but that would be the only time the district could tap into those funds.

Feder said that after the 2008 recession, no one expected a boom economy.

“In the last three years there has been an infusion of money in the township of $265 million, of which we can access approximately $7.5 million, that’s it. So there’s money, we just can’t get it,” he said.

He said since school districts do not have the ability to use a credit card or take out a loan, all revenue has to balance with what the district spends.

To further explain, the tax levy is the amount of money the district can collect from residential and commercial property owners, Feder said.

In 2019-20, the tax levy was $111.5 million; for 2020-21, the amount is $114.4 million. The district will have to use $673,225 in reserves to put toward the $2.9 million increase between the two school years.

Total local sources for 2019-20 was $112.4 million, while 2020-21 is $115.5 million. State aid is down $1.936 for 2020-21. Extraordinary aid is up about $600,000.

The total operating budget, which is the amount of money the district has, was $140.69 million for 2019-20, and will be $142.56 million for 2020-21.

On the flip side, the total appropriations, or the amount of money the district needs, will be $143.37 million for 2020-21 – translating into $1.35 million the district needs, but will not have.

A conservative estimate, Feder said, is that as years compound, the district will need up to $6.3 million in the 2023-24 school year.

Showing a diagram of 20 square blocks, he removed one block year by year, demonstrating how when funding is eliminated, it does not return due to the compounding of funding reduced by S-2.

“There is no way to manage a deficit model on a good year, let alone compounded,” he said.

Feder said proprietary “funny math” – meaning the state makes up a random number each year for its multiplication – is used in determining the figures. He said to make up for this, school districts receive extraordinary aid, which is the amount the district receives back for high cost special projects. In 2019-20, South Brunswick received $470,000, while in 2020-21 the estimate is $1 million.

However, since South Brunswick must work in the deficit model, Feder said the district actually needs $1.7 million.

Thus, there are $16 million in cuts expected through 2023-24. He said in 2010, the district had to cut $6 million from its budget, which translated into 117 jobs, so he does not know what cutting $16 million will do.

“If things don’t change, if the state does not understand this, if the state continues to sit on its thumbs on this issue, this is a reality,” he said.

Feder said the budget also takes into account local fair share, which is the state’s calculation that determines how much the state pays and how much property owners pay.

Also, adequacy factors in, which is if the district has enough to fund itself. Feder said right now, according to the state, South Brunswick is $8 million to $10 million under adequacy, which he said is “oxymoronic.”

“The state said we are not spending enough. We said, OK, we’re good with that, we will spend more. Then they said we can’t do that. Then they said, oh, and we’re going to take some more. That’s exactly what happened. You don’t have enough money … get more money from the taxpayers … then we are going to take that from you,” Feder said.

In terms of valuation, Feder said South Brunswick as a whole was worth $8.6 billion two years ago and increased 13% to $9.9 billion. He said the state said the township was too wealthy and needed to pay more of its local fair share, and officials abided.

So, Feder said short-term, the school district needs to try to generate more revenue. He said charging the same people the district is already taxing “is not a great option,” but may be the only option.

He said the school district can try to rent out its facilities more; make sure every line in the budget is good; stop declining enrollment; seek grant money and extraordinary aid; go out to bid on certain aspects, for example, transportation; raise rates, for example, for the Summer Institute; charge more for transportation, for example, the district buses music students for $50 each, but since the cost is $200,000 total and the district recoups only $25,000, that may need to increase; and possibly stop certain programs and not begin others.

Feder said any such measures are “a good revenue stream for the district, but unfortunate for the families.”

And, he said the district is basically moving forward “check to check” and must tighten expenses without any extra spending.

Long term, Feder said, the school district needs to find $10 million, which is “not really a reasonable situation.”

Worst case scenario, he said, is that the anticipated loss of state aid could cause massive staff reductions, massive program shutdowns, the elimination of certain programs, the reconsideration of offering kindergarten and taking away busing from students who live close to the school they attend.

“This is not Scott being overly dramatic. This is real and we have to do something about it,” Feder said, preparing to be “stripped down to the bone.”

“It’s not feasible, it’s unsustainable, we can’t do it,” he said.

Feder said South Brunswick joined 100 other districts as part of Save Our Schools, which has been fighting the state for two years. He said he is “jumping into the battle,” meeting with legislators, other school district administrators, South Brunswick municipal officials and the Commissioner of Education.

He said the situtation needs to be changed before May when the final budget for 2020-21 is scheduled to be adopted by the school board.

“This is a big deal. Our SOS is lobbyists,” he said.

Feder said although Gov. Phil Murphy announced $336 million for school budgets during his state budget address, South Brunswick lost another $160,000.

And Feder also said he is not sure how towns like North Brunswick and East Brunswick received $6 million and $3.5 million, respectively, while Old Bridge is losing $13 million in state aid.

Feder said there is the option to put the budget to a public vote so he can raise taxes another 2.5% over the standard 2% cap; however, the earliest the vote would be is November and by that time the budget process for 2020-21 will be complete.

Overall, in order to avoid such a dire situation, Feder said, “We unify, we band together, we coordinate, we use the power of this town to give the state government no choice … that is what we’re going to do and we need people’s help.”

The tentative budget for 2020-21 was set to be adopted on March 16. An update will be provided on April 9. April 20 is the last day to finalize the 2020-21 budget and then a public hearing is scheduled for May 4.

For more information, visit sbschools.org. A video of Feder’s budget presentation is available.

Contact Jennifer Amato at jamato@newspapermediagroup.com.