Christie to cut N.J. school aid by $800M; 800 Layoffs in San Bernardino; R.I. Court Upholds Salary Cuts; Lancaster PA Pension Tsunami

Issues regarding education have heated up in many states. This education roundup covers recent news.

$800 Million Budget In New Jersey

The Star Ledger is reporting Gov. Chris Christie plans to cut N.J. school aid by $800M.

Gov. Chris Christie's budget includes an across-the-board cut in state aid to school districts that will equal up to 5 percent of their budgets for the current fiscal year, a move the administration expects to be challenged in court, according to three state officials familiar with the plan.

By basing the aid calculation on districts' budgets, the overall reduction of about $820 million is at odds with New Jersey's school funding formula, which dictates that more money go to districts with the neediest children, officials said. That formula, which survived a Supreme Court challenge last spring, replaced the longstanding "Abbott" system that sent the bulk of the aid to 31 poor urban districts.

The cuts to schools come on top of $475 million that Christie sliced from school aid in the current fiscal year. Those cuts were based on districts' excess surplus.

In addition to schools, Christie's first budget will make major cuts in aid to towns and colleges while skipping a $3 billion payment to the struggling state pension system, said four officials who spoke on the condition of anonymity ahead of Christie's speech.

The Republican governor on Tuesday also plans to propose slicing municipal aid by $445 million and aid to public colleges by $175 million, the officials said. That includes about $270 million in standard state aid to all towns, with the remainder coming from eliminating special municipal aid and extraordinary aid — two funds that help municipalities in distress, but have been criticized by Republicans as a crutch discouraging better fiscal management.

I commend the governor's efforts across the board.

Christie Proposes Constitutional Amendment To Cap Tax Hikes

Please consider Christie will propose constitutional amendment to cap tax hikes in N.J. budget

Gov. Chris Christie will propose a constitutional amendment limiting annual property tax increases to 2.5 percent when he introduces a budget Tuesday that will seek fundamental changes in spending at every level of government, according to administration officials with knowledge of the plan.

Christie will also propose converting the state’s property tax rebate checks into direct credits on homeowners’ tax bills, eliminating what was once considered an almost untouchable fixture of New Jersey government and politics because of its popularity among voters. Some homeowners may still receive a refund, but the envelope from the state treasury containing an actual check that has arrived almost every summer for 30 years would be gone.

The governor’s $29.3 billion budget will shave $2.9 billion off state spending from last year, about a 9 percent drop. The cuts include reductions in aid to municipalities and school districts, said two officials, who spoke to The Star-Ledger on the condition of anonymity ahead of the speech.

Unlike the current 4 percent limit, the new "hard" 2.5 percent cap on municipal, school and county property tax levies would be all-encompassing, without exceptions for such essentials as rising health insurance or debt payments. The tax could be raised higher only if local voters grant their approval in referendums. The state also would be constitutionally barred from increasing its own spending on direct state services by more than 2.5 percent per year.

I applaud those efforts as well.

800 Layoff Notices in San Bernardino

The San Bernardino Sun is reporting Hundreds of teachers get preliminary layoff notices

Nearly 800 teachers at some of the San Bernardino area's largest school districts could lost their jobs by the start of the next school year after receiving pink slips in recent weeks.

Hundreds more teachers at smaller districts also were warned.

March 15 is the annual deadline for school districts to send preliminary layoff notices to teachers and other certificated school staff in California. The decision on actual layoffs is made by May 15, the state deadline for final notification.
It is a situation of great concern, said Jack O'Connell, state superintendent of public instruction.

"Our state budget crisis has forced districts to lay off thousands of teachers over the past few years. And now the governor has proposed cutting another $2.4 billion from public education," he said.

"While I understand the governor and the legislature have tough decisions to make, these budget cuts are devastating to our schools and impacting our ability to do the most important job in our society. That is, to teach our children."

If teachers and administratiors want to do something other than whine, they should persuade the teachers' unions to accept some benefit cuts. The fact of the matter is not a single teacher needs lose a job.

Stimulus money was already wasted preventing layoffs. Let us hope more stimulus money does not put off the inevitable once again. Pension benefits must be cut.

Rhode Island Teachers’ Salary Cut Upheld By Superior Court

Please consider R.I. teachers’ salary cut is upheld by court.

In a ruling that could alter the future of collective bargaining for municipal workers in Rhode Island, a Superior Court judge has upheld the East Providence School Committee’s decision to unilaterally cut teachers’ salaries and force a 20-percent contribution to their health insurance costs last year.

Facing a deficit of more than $4 million, the board made the reductions in January 2009, saying it was necessary to comply with a state law that says school districts can’t deficit spend.

The board’s lawyers also argued that the committee was able to make the changes without the consent of the local teachers union because there wasn’t a contract in effect for the almost 500 teachers. The last agreement with the East Providence Education Association expired on Oct. 31, 2008.

“... When the parties have reached an impasse in negotiations and their actions are not governed by a binding collective-bargaining agreement, a committee can make unilateral changes when faced with an actual deficit,” Judge Michael A. Silverstein said in his written decision released Monday.

Local teachers union president Valarie Lawson declined to comment Monday, but Mayor Joseph S. Larisa Jr. said the decision is a “sound interpretation of Rhode Island law” and “vindicates the unprecedented and heroic action” taken by the School Committee.

“The School Committee used the savings to balance the school budget without attacking our hard-hit property taxpayers,” Larisa continued. “It also allowed the School Department to invest, wisely, school resources directly in the kids, where it should have been in the first place.”

“Had we lost this case, EP would have been between a rock and a hard place, with a several-hundred-dollar tax increase on each homeowner, or bankruptcy as the only two options for the city.”

This is a start of hopefully more sensible court rulings to come. Note that bankruptcy was the alternative.

Lancaster Pennsylvania Pension Tsunami Threatens Schools

In Lancaster Pennsylvania 'Pension tsunami' threatens schools

Mike Leichliter doesn't want to increase class sizes, charge fees for pupils to play sports or cut back on counseling services for kids with drug, alcohol and emotional problems. But the Penn Manor School District superintendent said those cost-saving measures might be necessary in the next few years to pay for rising pension costs.

The bottom line: Pennsylvania and its public schools are facing a financial nightmare of historic proportions.

And taxpayers are caught in the middle of it all.

Next year, the PSERS contribution rate will jump by more than 70 percent, costing Lancaster County school systems — and taxpayers — an extra $7.5 million.

But that's just a ripple compared with the wave that will crash down on school budgets two years later, when the rate is projected to more than triple, rising from 8.22 percent of employees' salaries to 29.22 percent.

It is projected that pension costs for the county's 17 school districts will increase by a staggering $59.1 million over that period — with no relief in sight.

Contributions will continue rising, peaking at 33.6 percent in 2014-15 and remaining at 25 percent or above for the next 15 years, according to PSERS projections.

"These rates are not 'spikes.' Rather, they are more like a 'launch' because they do not come down for a long time," said Tim Shrom, business manager for Solanco School District.

Teachers and other school employees have paid their mandated share of contributions into the system every year without fail, while the state and school districts have been underfunding the pension system by $600 million a year, PSEA officials say.

Why, then, should their benefits be cut?

"We are going to do all we can to protect our members' benefits," PSEA treasurer Jerry Oleksiak said.

But lawmakers insist something's got to give.

"We've come to a time when the overburdened taxpayer has had enough," state Rep. Gordon Denlinger of Narvon said in an e-mail.

"We face a square-off between the public-sector unions and the taxpayers of the commonwealth."

Union Contributes Pennies, Wants Millions In Return

PSEA treasurer Jerry Oleksiak asks "Why, then, should their benefits be cut?"

The answer is the unions put in their "mandated share" which was preposterously low for benefits received. Moreover, most of the union contribution really comes from state matching contributions (in other words taxpayers). It's like throwing a penny in a jar 8 feet tall and 3 feet wide, while proclaiming "We put in our mandates so taxpayers have to fill the rest of the jar".

My proposed solution to this mess is bankruptcy. Taxpayers have had enough of public union leaches.

Please read that last article again. Lancaster County is in one of the biggest messes you can find anywhere. I encourage the county to declare bankruptcy. We will then see what benefits hold up in court. If it comes to that, my hope is none.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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