Acting Commissioner Dave Hespe appeared before the Assembly Budget Committee on May 5 on the FY2015 education budget. The free wheeling conversation ranged from the current projected budgetary shortfall and its impact on school funding to the recent PARCC field test.
All Options on the Table
Front and center was a discussion on the impact of the current $807 million shortfall on school funding as we move into the new budget cycle. Acting Commissioner Hespe indicated that while the Administration has indicated that "all options are on the table," he could not provide any insight on what direction the Administration would take to address this gap that must be satisfied by June 30.
“At this point in time, I cannot say what the impact will be, although we can certainly assume given that school funding, both direct and indirect payments, makes up a third of the budget, we can certainly assume there will be some impact,” Hespe said in response to repeated questioning that opened the hearing.
“I just cannot say what that is,” he said. “The goal would be to limit impact to as little as possible. . . . At this point in time, everything is on the table, and I don’t have the ability to take anything off the table.”
The Christie administration last week said the shortfall for the current budget, which expires June 30, had swelled to $807 million. Revenues for April were $600 million less than the governor had anticipated.
The reality is that there are only so many places that the money can be found to close the gap — and state aid to schools is among the most obvious. State education aid makes up more than one-third of the overall budget, totaling more than $12.8 billion. Hespe acknowledged that with only with only weeks left in the fiscal year, there are no cuts that he believed can be made without great difficulty.
And, the options are limited. The most obvious would be to postpone the next school-aid payment to July. The state already defers the final two payments of the school year into the next fiscal year, a practice started under former Gov. Jim McGreevey to help solve his own budget crunch. This move would add a third deferred payment.
The payment, amounting to about $400 million, is slated to go out May 22. That impact would be felt more in cash flow, as most districts have in the past either tapped into surplus to keep paying the bills or entered into short-term borrowing, with the state helping to defray those borrowing costs.
More significant would be eliminating one of the aid payments altogether, amounting to essentially a 5 percent cut in aid. Other options might include reductions in specific aid categories, such as special-aid costs or aid for districts experiencing big enrollment growth.
The three hour hearing also included a discussion on the Administration's rationale in divying out the coming year's $12.9 billion education funding for the coming year. That plan uses as a basis the FY2014 numbers and then seeks to add on $20 per pupil. Assemblyman Joseph Cryan (D-Union) asked why the administration chose to give increases to every district equally rather than use the School Funding Reform Act guidelines, which bases aid on need.
“I’m confused by the idea of growth. Why invest in a well-performing district?” Cryan asked.
“We wanted to acknowledge that all districts are experiencing cost struggles,” Hespe said.
State Control of Districts
Also discussed was State take-over districts – including some specific discussion on Newark and Paterson in particular.
In addition, several Budget Committee members raised questions about State preparedness for the upcoming movement to the digital based PARCC tests. Commissioner Hespe, when questioned about district preparedness indicated that over 70 percent of districts that participated in the recent field test were prepared.
Finally, the committee rounded the day with a discussion of the roll-out of teacher and principal evaluation.