JCBOE Fiscal cliff – How we got here? Where do we go from here?
The Jersey City Board of Education (JCBOE) has received $3,500 less per student per year below the legally/constitutionally mandated full funding levels since Christie administration took office in 2009. The JCBOE budget was underfunded by about $25 Million between years 2009 through 2013; the underfunding dramatically increased to in excess of $100 Million each year from 2013 onwards putting the total underfunding in 10 years in excess of $1 Billion.
The School Development Authority (SDA), the NJ state agency tasked with funding capital expenses including repair, modification and replacement of old building underfunded the JCBOE’s Long Range Facilities Plan (LRFP) in the last 10 years by over $1.1 Billion. The JCBOE fund balance which stood at a robust $ 75 Million in surplus was raided between the years 2013 through 2017 leaving an operational budget deficit of $100 Million in 2018.
This $2.1 Billion underfunding of the JCBOE is a complete violation of the law enshrined under the School Funding Reform Act (SFRA) and runs contrary to New Jersey’s Constitutional guarantees of “Thorough and Efficient education” vested with the State of New Jersey.
The State of New Jersey was in control of the JCBOE (since 1989) as a State Administered school district through all of these years of underfunding. The Christie administration additionally capped the JCBOE’s ability to increase its School-Tax-Levy at 2% since 2009 there by limiting the JCBOE’s ability to increase the School-Tax-Levy which accounts for 24% of the home owner’s property tax bill.
In 2018, The JCBOE School- Tax-Levy stood at $110 Million accounting for 15% of the annual $ 630 Million budget while the remaining funding came from the State and Federal sources. The $630 Million budget was still $110 Million less than the fully funded levels enshrined under the law (SFRA) and Constitution of New Jersey to extend a Through-and-Efficient Education to the 30,000 JCBOE students.
In 2018, the State of New Jersey passed the S2 which further eliminated $175 Million in State adjustment aid from the JCBOE budget. The State pointed to a $270 Million “local fair share gap” as one of the reasons for the elimination of the state adjustment aid essentially stating that Jersey City was contributing $270 Million less in local levy than it should be.
The State then proceeded to dump $270 Million in the JCBOE’S bank cap. This measure by the state signaled its authority to the JCBOE to bypass the existing annual-2% school tax levy cap. In other words the JCBOE was no longer encumbered by the annual 2% cap but had 3 years per the Bank Cap regulations to increase its school-tax-levy to $380 Million from the $110 Million; a roughly 250% increase of 24% of the home owner’s property tax which would result in a 60% increase in the overall tax bill across the city. A devastating prospect!
A Payroll tax projected to collect $ 80 Million annually was hurriedly introduced to pay for this $ 175 Million cut with a locally driven collection process. The payroll tax was supposed to pay each year’s adjustment aid cut and escrow the remaining collection to pay for the future year’s adjustment aid cuts, expected to run out in 9 years. The constitutionality of the payroll tax is currently being challenged by business groups in the Appellate court after the lower court upheld the law.
Why the JCBOE chose not to challenge/contest the budget cuts totaling over $2.1 Billion starting 2013 remains a $2.1 Billion mystery! This massive $2.1 Billion underfunding, $175 Million adjustment aid cut is finally now the subject of a comprehensive law suit- constitutional challenge filed by the JCBOE against the State of New Jersey in April, 2019. The State of New Jersey responded by trying to get a summary judgement dismissal of the JCBOE law suit which Judge Mary Jacobson, Superior Court-Mercer County denied in January, 2020 thereby allowing the law suit to proceed to trial. The Education Law Center (ELC) also moved the State Supreme court in December, 2019 to compel the SDA to fully fund the Capital expenses of the urban school districts like Jersey City, a validation of the legal strategy espoused by the JCBOE. All major legal challenges facing education in our nation starting from Brown VS Board to ABBOT were resolved in the courts as is the expectation for the JCBOE law-suit.
The JCBOE has since 2018 pursued an all-encompassing approach including Legal, Legislative, Elimination of Waste, Rationalization of Human-Resources, Operational Efficiencies and Increase in Revenues taking head on the funding challenges. The JCBOE’s planning, policy and oversight measures since 2018 have created over $ 65 Million in savings to the budget and cut the carry forward deficit in half from $ 100 Million to $ 50 Million.
The State however has exacerbated the situation by increasing the adjustment aid cut to $240 Million from the originally proposed $175 Million; $65 Million more in cuts creating $27 Million cuts in 2019 (originally projected $ 13 Million);$86 Million in 2020 (originally projected $56 Million) which has created a huge financial emergency at the JCBOE. These enhanced cuts would deplete the Payroll Tax-Escrow in 4 years instead of the projected 9 years. The Mayor of Jersey City has withdrawn the $ 86 Million Payroll Tax Certification he issued on March 11th and has committed to only pay $ 10 Million and $ 5 Million for 2020 and 2021 respectively.
The JCBOE currently faces $150 Million funding gap contributed in part by an $ 86 Million State aid cut; $52 Million more than originally projected; $ 50 Million in carry forward deficits from 2013; $ 10 Million in new operational investments. The JCBOE adopted a fully balanced budget with a $ 50 Million increase in school tax levy; $10 Million in operational efficiencies to fund the new investments; remaining $ 86 Million is due in Payroll Taxes.
Mayor Fulop started the year by swearing in 2 incoming JCBOE members Hamilton and Velasquez. In a bizarre move the very next day Fulop issued a press release threatening to fire the elected Board (including the 2 he just swore in the previous night) with an appointed Board of his choosing. The relationship has since plummeted made worse by his open threats to replace the elected JCBOE with an appointed Board if they do not do his bidding.
- On February 18th Fulop came out with a proposed plan which he claimed would fund the schools. The JCBOE rejected his plan upon close review and realization that Fulop’s plan would actually defund the JCBOE by over $314 Million in 3 years.
- On March 12th Fulop then proceeded to ignore his own plan and fully certified the $ 86 Million (from his original offer of $ 40 Million on February 12th) confirming the funds were held in Trust.
- On March 20th , a day after Fulop publicly lashed out at the JCBOE’s proposal to increase the school tax levy by 40%, Fulop abruptly decertified the $86 Million claimed to have been held in trust stating the monies were no longer available citing COVID-19.
These series of flip-flops coupled with Fulop’s belligerence targeting the JCBOE has damaged the close cooperation brought about in the last 3 years between the JCBOE / City of Jersey City turning the clock to the former era of distrust and hostility that was evident between 2013 through 2017.
Importantly, the Mayor’s de-certification of Payroll tax commitment creates an existential threat to the JCBOE’S ability to afford through-efficient-education through the potential for 1200 teaching jobs which will eviscerate the school district. The State refused to extend the March 20th deadline this year to submit the budget despite the ongoing pandemic and ensuing disruption. The State’s actions continue to be arbitrary and capricious, singling out Jersey City further substantiating the JCBOE’S legal challenge against the state. The State will predictably approve the board’s interim budget passed on March 20th despite being privy to the decertification of the $ 86 Million Payroll Tax commitment which creates an $86 Million hole in the budget. The historical context outlined above coupled with the recent events have created a financial emergency at the JCBOE which need immediate redress.
Superintendent Walker has worked in the JCBOE for over 40 years impacting over 4 generations. President Richardson, a Pastor in his Church has state wide respect as an Educational activist for over 20 years; the only Master Certified Board member in Hudson County. These 2 African-American leaders have great respect, following in Jersey City and should be allowed to carry out their responsibilities without outside interference.
The City should come together in this pandemic moment of grief and uncertainty to support the JCBOE and the leadership through collaboration and communication sans threats / diktats to cure the epidemic of JCBOE full funding to ensure the 30,000 children of Jersey City have a real shot at the American dream.
We owe this to our children while the nation and the world combat COVID-19 Pandemic, the greatest threat to humanity in modern times.
God Bless These United States of America.
Sudhan Thomas
Community Organizer / Civic Activist; Former, President, Jersey City, Board of Education(JCBOE),Director, New Jersey School Board Association (NJSBA).
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