Dealing with the "CAPs" in Today's Changing Environment

It's no secret the 2% CAP(s) were put into place to provide tax levy relief under the assumption that Public Schools in New Jersey were running inefficiently and without proper oversight or restrictions on spending.  While this may have been the case for a select few, by in large districts have and continue to manage their annual budgets with clear and precise operating procedures that existed long before the Accountability Regulation promulgated in Chapter 23 of Title 6A of the NJ Administrative Code.

What the Accountability Reg's did accomplish in many cases was to provide a strong degree of authority and strength for the School Business Administrators when dealing with enforcement of compliance.  Absent the regulations, BA's were left to rely on their influence and reasoning surrounding sound business decisions and fiscal management skills.

That withstanding, the problem of the 2% CAP or any cap structure is the inability to freeze costs "expenditures" such as wages and benefits for an extended period.   Add to this the complications of containing Special Education costs related to out of district private school tuition and I.E.P (Individual Education Plan) related services including 1 to 1 aides and the task is all but impossible.

Chapter 23 introduced districts to OFAC (Office of Fiscal Accountability), SEMI (Special Education Medicaid Initiative) in Chapter 5 and the Executive County Superintendent Budget Review in Chapter 9.  These measures were designed to enhance oversight and in SEMI's case push more funding away from the state and onto another source, in this case the Federal government.

It is Chapters 10 and 11 that deal with "Spending Growth Limitation" and Tax Levy Growth Limitation."

(c) The Commissioner shall complete by the end of the 2010-11 school year a study of the tax levy growth limitation enacted pursuant to N.J.S.A. 18A:7F-37 through 40, for the purpose of analyzing any effects that the tax levy growth limitation has had on disparities in spending among the school districts. The study shall include a recommendation by the Commissioner on whether the tax levy growth limitation should be continued after the 2011-12 school year, or whether the spending growth limitation under N.J.S.A. 18A:7F- 5, and N.J.A.C. 6A:23A-10.2 and 10.3 (banked cap) would be more effective in 153 addressing any identified disparities in school district spending, or whether a revised growth limitation method might be warranted.       

Since inception of the CAPs which include Superintendent Salaries, I could not help compare the attempt to artificially halt or contain budgetary price and salary increases with the failed attempts throughout history such as the "wage & price controls" of the Nixon administration in the early 70's or the "Law of Maximum" in revolutionary France in the 1790's.  Neither of which proved effective nor where they sustainable.

Bottom line is we are in the "Business of Education" and like any business the laws of supply and demand ring true.  Giving an effective wage and annual increase allows schools to attract and retain high quality administrators, teachers and clerical staff that do and will compete for higher wages and benefits in other sectors of the market.

The chief reason most district's have been able to manage within 2% environment over the past four years has been in large part due to the additional revenues captured under Chapter 78 through employee contributions; however, this has only exacerbated the already strenuous employee dissatisfaction of declining (take home) net pay.  The unrest has morphed into disgruntled feelings of oppression for the unions that is making its way into collective bargaining.

Although the CAPs are with us for the 2016-17 budget, we should consider the potential damage and long term effects of erosion in our programs that come from forced choice to make extreme cuts by eliminating program and staff in order to adjust to those CAPs.