MEMO

To: Members of the Board of Education

From: Robert H. Davis 1<..1nvCopy: Dr. Mark Toback, Mr. Walter Rusak, Mr. Peter Carter, Mr. Michael Donow

Date: March 8, 2011

Re: Required Local Share and Minimum Tax Levy

Ms. Theresa Minutillo, Chairperson of the Finance Committee, has requested that Iprovide information to the full board relative to the minimum tax levy required as a localshare to meet the educational adequacy standard. In essence, state law defines theamounts of money that are required on a per pupil basis for weighted pupil enrollments todetermine what is the amount of money each district should spend to provide a thoroughand efficient system of education for each pupil. Each districts property value and incomelevels determine what the district local share (property tax levy) should be. If the localshare required to attain the "adequacy budget" is not met (i.e. the district is belowadequacy), then the district must budget a local levy equal to the previous budget year.This is its minimum tax levy. Her three questions were:

1) Have I verified the numbers?2) Have I contacted the county office for their confirmation?3) Could I provide the board with a copy of the statute?

In response to those questions, please be advised as follows:

Question #1I have checked the statistical information provided by the state in its state aid

notifications and worksheets as well as the data provided in the computerized budgetarysoftware downloaded to us and find no errors in the numbers provided.

Question #2I have contacted the office of the Hudson County Executive Superintendent of Schoolsand they have confirmed that the minimum tax levy provision in question is correct. Theyindicated that since the requirement is from the statutes and not the code, no one exceptthe legislature can alter the provision. The statute is clear in that the requirement states"shall" and not "may". It is mandatory and not permissive,

Question #3The state aid law is 18A:7F-5 through 18A:7F63 (59 sections, 39 pages of detaileddefinitions and formulas).

18A:7F-5(b) states "Each district shall have a required local share. For districts thatreceive educational adequacy aid pursuant to subsection b. of section 16 of P.L. 2007, c.260 (C.18A:7F-59), the required local share shall be calculated in accordance with theprovisions of that subsection.

For all other districts, the required local share shall equal the lesser of the local sharecalculated at the district's adequacy budget pursuant to section 9 ofP.L. 2007, c. 260(C. 18A:7F-52), or the district's local share for the prebudget year.

In order to meet this requirement, each district shall raise a general fund tax levywhich equals its local share.

No municipal governing body or bodies or board of school estimate, as appropriate,shall certify a general fund tax levy which does not meet the required local shareprovisions of this section."

The information is therefore correct and mandatory as incorporated into the preliminarybudget document. At the current time, there are 205 school districts in New Jersey whohave a mandated minimum tax levy equal to the prior years levy, 24 more than last year.

If you have any further questions or require any additional information, please do nothesitate to let me know.

************** Edits Were Run and No Errors Were Detected **************New Jersey State Department of Education Page: H 1

Division of Finance and Regulatory Compliance2011 - 2012

03/08/201112:45:140000

SFRA Cales

HUDSON - HOBOKEN CITY

Report of District Status Above or Below Expected Local Levy

District Adequacy Spending:

2011-12 General Fund Levy 36,479,095(A)

Equalization Aid o (B)

Total Budgeted Adequacy Spending (A) + (B) 36,479,095(C)

District Adequacy Budget 37,083,017(D)

Excess Amount = (C) - (D) -603,922(E)

If E is:Positive-Proposed Budget Exceeds Expected Local LevyZero or negative-Prop. Bud. is at or Below Expected Local Levy

* * *'* * * * * * * * * * * Edits Were Run and No Errors Were Detected **************New Jersey State Department of Education Page: H 2

Division of Finance and Regulatory Compliance2011 - 2012

03/08/201112:45:140000

SFRA Cales

HUDSON - HOBOKEN CITY

Minimum Tax Levy Calculation

District Adequacy BudgetRequired Local Share10-11 General Fund Levy

Adjusted 10-11 General Fund Levy

37,083,017 (A)114,855,165 (B)36,479,095 (C1)

0 (C2)0 (C3)

36,479,095 (C4)

* 36,479,095 (D)

Less:Non-permanent Separate Proposals 10-11Non-permanent Waivers 10-11

Minimum Tax Levy Lesser of (A) or (B) or (C4)

*Amount Shown on Line 150 or 160, col. 4 Must Equal or Exceed

* * *.* * * * * * * * * * * Edits Were Run and No Errors Were Detected **************New Jersey State Department of Education Page: H 3

Division of Finance and Regulatory Compliance2011 - 2012

'03/08/201112:45:140000

SFRA Cales

HUDSON - HOBOKEN CITY

Tax Levy Cap Calculation

Prebudget year adjusted tax levy, including weighted increasesfor enrollment, inflated by 2% 37,208,677 (A)

Adjustment for increase in Health Care costs o (B)

Adjustment for increase in certain normal and accruedliability pension contributions (pension deferral) o (C)

Adjustment for responsibility assumed by district o (D)

Adjustment for responsibility shifted to anotherdistrict or entity o (E)

Tax Levy Cap = sum (A) through (E) 37,208,677 (F)

Note:

The 2011-12 tax levy recorded on line 150 of the budgeted revenues cannot exceed theamount on line F above, unless the result of a merged separate proposal.Additional levy increases must be proposed separately to the voters or board ofschool estimate and be supported by interpretive statements.

12:46:22 New Jersey Department of Education11-12 School District Budget Statement

--* FATAL ERROR REPORT *--

HOBOKEN CITY

Error Message

11-12 Line 150 < Minimum Tax Levy

Amount 1

36479094

03/08/2011

Amount 2

36479095

Page 1 of 4

Davis, Robert_ .._--------------_ .._-----_._----------From: Cynthia Triminio [CTriminio@EdlawCenter.org]

Sent: Tuesday, March 08, 2011 10:05 AM

To: Cynthia Triminio

Subject: Governor's FY12 Budget Again Goes "Off Formula," Ignoring Students' Funding Needs

Education Law Center60 Park Place, Suite 300

Newark, NewJersey01102(973) 624-1815 Fax: (973) 62!4-7339

Email: elc@edlawcenter.org

fOR IMMEDIATE RELEASE

GOVERNOR'S FY12 BUDGET AGAIN GOES "OFF FORMULA," IGNIORING STUDENTS'FUNDING NEEDS205 DISTRICTS "BELOW ADEQUACY" WILL FALL FURTHER BEHIND

Newark, NJ -- March 7, 2011

For the second straight year, Governor Chris Christie's proposal for K-12 state aidignores the legal requirements of the State's school funding formula, depriving overone-third of NJ districts of the funding necessary to deliver the Core CurriculumContent Standards to students, particularly those at risk of academic failure.

The Governor's FY12 aid proposal comes as Special Master Judge Peter Doyne isexamining the State's massive aid cut in the current school year --·2010-11. JudgeDoyne, under a directive from the NJ Supreme Court, is assessing the impact of the aidcut on the delivery of the CCCS in districts with varying concentrations of studentpoverty across the state. Judge Doyne will file his report with the Supreme Court byMarch 31st.

In the hearing before Judge Doyne, the State conceded aid was cut in the current yearby $1.08 billion from the 2009-10 level, or 13.6% of state aid. And, for the first time,the State revealed the real aid shortfall to districts: a $1.6 billion cut from the levelrequired if the SFRA formula had been fully funded, or almost 20% of state aid.

Adequacy Gap Will Widen in FY12

As this chart shows, the gap between state aid provided in the current year (2010-11)and the amount required under the SFRA formula is $1.6 billion. Under the Governor'sFY12 proposal, the "adequacy gap" will widen next year to an estimated $1.88 billion.

3/8/2011

Comparison of Estimated 2011-12 SFRARequired K-12Sh(lO~ Fundin .•..to th,eGoven~r's' Bud at (\oCQ,m' ms•.··,·ded,( , ' H .. g . r." . ug •••......'<;;; .. .en .

2'0••'111· .,5····11··. IF···· d'...·...-~'coo •UJltng

~ $6oi $4

$1.0 ""~"~".,,,,,-'"''~-'''''''''''",=,,"~~''''',...

$8 -;-'--~ ..'-:~~~-"--.". - ..'----.-'C.-....-".

$2

~o~2010~11Actual Governor's

BudgetRecommended

2'011-12.

2010-11 SFRAReqllire,d

Estimated 2011~12 :SFRARequ.ired

Districts Below Adequacy Will Fall Further Behind in FY12

Page 2 of 4

The evidence before Judge Doyne also showed that the number of districts spending"below adequacy" under the SFRA, or the funding level to deliver the CCCScalculatedby the State, rose from 161 in 2009-10 to 205 this year. Even worse, districts belowadequacy, which serve almost three-fourth of NJ's at risk students, fell further behindthe State's defined adequacy level.

This chart shows the number of districts below adequacy in 2010-11 by the district'sconcentration of at-risk students:

3fSf2011

Page 3 of4

Districts Sp.endiing Be·lowAdequacy, 2010 ..1180 -,- ----.----.-- ...---.---.----.--.----.-. -- ..---.'-. --~-'--"---

II)

1J 60$;:••••II)

Q1; 40 ·k~·'"""~··,,,·:,!I..QJ.

.Q

E!3 '"10 .\~- r--r-2: L.

(}! ...."..~..•".,-

20-40% Over 40t}'O0-20%

Percent At-Risk

A more detailed analysis m of the below adequacy districts shows:

• The budget shortfall in the 205 districts below adequacy under the SFRA iscurrently over $1 billion.

• As a percent of the districts' current budget, the Guttenberg district has thehighest adequacy gap -- 78%. In 91 districts the adequacy gap exceeds 10% oftotal budget.

• The Governor is proposing to distribute a $217 million aid increase in FY12without any regard for whether districts are spending below adequacy. Theincrease is also below the current Consumer Price Index of 1.23%.

• The Governor's proposed increase will do nothing to close the districts' adequacygap. Instead, by ignoring the SFRA formula, the gap in below adequacy districtswill widen even further next year.

"The aid cuts in 2010-11 represented a devastating blow to the provision of equitableand adequate funding to enable all districts to provide students with the CCCS,which isthe measure of a thorough and efficient education under the NJ Constitution," saidDavid G. SCiarra, ELC Executive Director. "The Governor's school aid proposal for nextyear does not even make a dent in the intolerable funding gap in over 200 districtsnow below adequacy, or the amount the State itself says our students need to achievethe CCCS."

Education Law Center Press Contact:Danielle Farrie, Ph.D.

3/812011

Research Directoremail: dtarrie@edlawcenter.orgvoice: 973624-1815 x13

·Y.~\C1F.ii~~.~

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3/8/2011