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Monday, March 24, 2014

BoE announces 3.9% tax increase and potential 54 layoffs

Thursday night the Hoboken Board of Education announced a preliminary budget with almost a four percent tax increase with an unknown budget deficit it says potentially may require 54 layoffs.

The numbers determining the figure of 54 layoffs can't be calculated due to the lack of financial details.  Most of the negative budget impact is attributed to federal, state cuts in aid and charter school increases although other key drivers are part of the financial picture based on limited information, some from late week reports.

A federal cut is attributed as 15% but the percentage figure does not indicate what the actual dollar amount is to the Hoboken school district. The district is expected to see a tax levy of $39 million in its $64.8 million budget.

Some sources believe the state loss may derive from changes in the school choice program. Hoboken reportedly will see $250,000 less in the program due to a formula change. Previously, NJ school districts could accept outside students based on a popular statewide choice program. Additional restrictions were added by the State after school districts often overestimated the amount of students enrolling resulting in huge over payments across the state.

Among the additional costs hitting the BoE district are spiraling health care costs, new contract increases taking affect (3.4% annually) and a flat student population without significant revenues via the school choice program. Retirement savings from departing senior district employees acting on state pension changes in recent years are not likely to offer significant offsets this year.

Another expense for the BoE is its unpaid school lunch program bill carrying a years long price tag, upwards of 750K. A payment schedule to eliminate the that bill will be levied against its annual budget over multiple years according to one BoE administration source.

One option in favor of the district is its cap bank, where prior year budgets below the 2% annual increase allowed are permitted to be utilized on the back end of a three year period. As the district is over the 2% annual tax increase permitted, it's unclear how much of a cap bank is available beyond the 1.9% in the total 3.9% addition already planned.

A million dollar reduction in the preliminary budget has been implemented based on actions taken by Superintendent Mark Toback.

Last week, BoE President Leon Gold said the charter schools were "bankrupting" the district but HoLA President Barbara Martinez countered the suggestion saying the half a million required in its expansion hardly offset the $64.8 million budget to the degree requiring layoffs in the district.

Martinez is quoted as saying "The most important thing for people to understand here is that HoLa spends $11,000 per pupil and the district spends north of $24,000 per pupil."

Last year the three Hoboken charter schools costs were a bit over $7.8 million with this year coming in at $8.3 million.

Some/additional figures require confirmation in the preliminary budget.

Hoboken High School at night during the Hurricane Sandy emergency with volunteers awaiting to unload supplies.
The BoE is underwater and says it may need to increase taxes and lay off 54 employees.

Talking Ed Note: The funding to Hoboken's school district is complex and more details are required to identify the projected dollar figure gap in the preliminary budget. It's unclear how the layoff figure of 54 was determined without complete data.

MSV will look to get more questions answered so readers should feel free to submit questions to smartyjones@me.com.

The City of Hoboken's $107.6 million introduced budget is likely to include a tax increase of 1.5% after some additional tax rateable come online this year. Health care costs, an 800K charge for illegal early retirements under the Roberts administration, a possible million in legal losses with an impact from new municipal contracts all play a role in the increase expected to come in below two percent.

The slight anticipated increase to the City budget will be the first increase since 2009 under Mayor Dawn Zimmer. Previously, she delivered double digit municipal tax decreases.

In the last few years, municipal budget hearings have produced additional cuts, in the range of several hundred thousand one year, almost all of which driven from the administration or its reform allies on the council. Typically, the Old Guard council fails to attend much of the budget hearings and although complaining about the budget puts nothing on the table in the way of true cuts.

This BoE story was partially based on figures from the weekend story by reporter Dean DeChiaro.