State Delays School Aid for One Month

ERMA — Most residents are aware the state has a budget deficit of somewhere around $3.6 billion and that fact has hit home with the deferment of a state aid payment to the Lower Cape May Regional High School District.
Superintendent Jack Pfizenmayer told the board of education at a May 28 meeting that a state aid payment normally received in June has been pushed off to July.
“You are looking at approximately $820,000 to $830,000 that we would normally get in the month of June from the state being put off until July,” he said.
According to the New Jersey School Board Association, Gov. Jon S. Corzine, citing steep drops in anticipated state revenue for 2008-2009, announced that the treasury would delay the next-to-last installment of state education aid – initially due to school districts June 8, 2009 – until early July, after the start of the new fiscal year.
Many school boards will have to hold special meetings before June 8 to authorize the borrowing of funds to close the gap created by the deferred payment.
In 2003, the McGreevey administration deferred the final aid installment to the next fiscal year. That delayed payment became permanent, with school districts now receiving final installments of each previous year’s state aid after July 1, according to NJSBA.
The affect is the last two aid payments are now deferred.
“The month of June is going to be a very difficult month,” said Pfizenmayer. “I think most of the staff is going to want to be paid in June.”
The district could borrow the money from a bank to replace the delayed state aid at zero interest. He acknowledged the state’s financial difficulties.
Pfizenmayer said the district has a lot of responsibilities in June in addition to payrolls including debt service.
School systems are permitted by the state to keep only 2 percent of their budget in a surplus fund thus not allowing extra money for unexpected events. In years past, schools were allowed to keep 6 to 7 percent surplus.
The delay in state aid applies to all school districts, said Pfizenmayer.
In addition to that situation, the regional school district chose not to defer a $250,000 payment owed to the PERS (Public Employee Retirement System), which is the pension fund for school support staff.
The state suggested school districts could defer the payment for three years and pay interest on it for eight years or longer as a measure not to increase their tax rate. By not deferring the pension fund payment, the school will be penalized.
“The state is reducing our state aid by that amount of money,” said Pfizenmayer. “That money will never come back.”
He questioned the logic of putting off the PERS bill and later paying interest on it.
A bright spot for the district, the Richard M. Teitelman School earned a $100,000 grant from the federal No Child Left Behind (NCLB) because for two consecutive years, the school made adequate yearly progress. The Teitelman School and the district are no longer identified as “in need of improvement,” by NCLB.
“It is really a remarkable, outstanding achievement ”said Christopher Kobik, director of curriculum and instruction.