Governor’s Budget Address Includes Modest Increase in School Aid, Required Pension Payment & A Few Dollars for CCSS & PARCC Implementation

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Governor Chris Christie delivered his fifth budget address February 25 totaling $34.4 billion in spending. The Republican governor's new budget is 4.2 percent larger than the one he signed last year, and relies on revenue growth of 5.8 percent.   The proposed budget includes a modest increase in aid to schools as well as several increases in preschool aid, funding for continued expansion of the Interdistrict Public School Choice program and non-public school aid. 

Throughout the address, Governor Chris Christie made pointed reference to the fact that the required pension and debt service payments, in coordination with health benefit increases unduly bind the hands of the State to fund education as well as other public priorities. 

"Due to our pension, health benefit, and debt obligations, only 6 percent of new spending can be focused on the areas where we really want to dedicate our resources: education, tax relief, public safety, higher education, drug rehabilitation, health care," Christie said. "We are in danger of having these costs overwhelm our budget, monopolize our resources, and threaten our ability to continue to fund the priorities we care about most."

In fact, the Governor stated that when the pension and health care costs and debt service costs were taken out the budget is $2.2 billion smaller than Fiscal Year 2008.

He repeatedly called for the Legislature to join him in an “attitude of choice” which he has used during his recent State of the State address (Governor Delivers 4th State of the State Address, January 14, 2014).

Aid to Schools

The Governor repeatedly highlighted New Jersey's tough financial situation and touted a series of spending increases that he managed to eke out, including "a record-setting $9 billion in direct aid to schools." That's an increase of $38 million from the current fiscal year.

"We will ensure that every one of our nearly 600 school districts receives an increase," Christie told lawmakers gathered in the Assembly chamber.

The budget also includes an additional $5 million to support preschool initiatives in New Jersey.  This brings total aid to preschool education in the state to $653 million, which supports pre-k education for more than 53,000 students in 143 districts.

In addition, the proposal increases funding for the Interdistrict Public School Choice Program by $4.8 million to almost $54 million, in part to the detriment of charter school direct aid which saw a decrease of $4 million over last year’s budget.

New & Returning Ed Pockets

The proposal also includes two new pockets of aid, “PARCC Readiness” and “Per Pupil Growth Aid” totaling $13.5 million each.

And, the Governor’s $5 million “Innovation Fund” makes a return – although this year the competitive proposal for school’s appears to be focused on providing extended day and year opportunities – something the Governor initially raised in his State of the State address as a priority.

“This budget includes $5 million for a new Education Innovation Fund — a competitive "Race to the Top" style program which will call on school districts to put forward proposals for the best way to implement approaches to increase students’ learning time.” Christie stated, “We can then scale the most effective approaches on a state-wide basis.”

Pension & Benefit

The proposed budget makes this year’s projected 4/7th pension payment of 2.25 billion ($670 million increase over last year) as required by legislation enacted in 2011.  In 2011, the Governor and Legislature made several changes to the retirement system for current and future retirees.  In exchange, the state agreed to pay an increasing sum every year into the pension funds after years of State missed payments.

“Together, we worked to achieve a sweeping, bipartisan plan to deal with our state’s pension and benefit system.  We raised the ages of early and regular retirement for the pension systems ..Increased employee contributions …Ended mandated cost-of-living adjustments until funds are healthy and are better managing the individual pension systems while mandating a healthy level of funding for each system that cannot be violated once it is reached.” the Governor stated, “We did this while still keeping our promise to the people — making the largest state payment to the pension fund in history — $2.25 billion.”

Dubbed a “looming crisis” repeatedly by the Governor, he called for further changes to the system of retirement benefits to public workers. 

“Even though this $34.4 billion budget represents an increase of 3.5 percent over what we spent last year, 94 percent of that increase –virtually all of it — is taken up by three things: pensions, health benefits, and debt.” Christie stated, “Nine out of every 10 dollars of new spending this year goes to fund these three entitlements.”

“Though the historic 2011 reforms we enacted together immediately reduced New Jersey’s state and local unfunded pension liabilities by 32 percent, it just doesn’t go far enough.” Christie added.

Sadly the address did not provide much of a plan outside of what his administration had previously called for as part of his property tax “toolkit.”

Saving for a Rainy Day

The state's rainy-day fund, or surplus, would also see a slight increase of $313 million in the new budget.

Next Steps

The Democratic-controlled Legislature is now tasked with reviewing, analyzing and making decisions about Christie's plan in expectation of passing a budget before July 1.  NJPSA will keep you posted as the Legislature begins their deliberations.