Monday, February 22, 2010

Eduflack: Eliminating Rainy Day Funds in NJ Schools?

Eduflack: Eliminating Rainy Day Funds in NJ Schools?


Eliminating Rainy Day Funds in NJ Schools?

Last fall, when the Commonwealth of Pennsylvania was suffering through one of its worse budget stalemates in modern memory, one of the debates was how deep should the state dip into its "rainy day" fund to balance the current budget.  Do you completely deplete your reserves to get a budget many can live with?  Or do you hold back some of that rainy day fund, with the fear that 2010 or 2011 may not be particularly sunny either?

Ultimately, Pennsylvania (like a lot of states in similar situations) decided to tap the vast majority of those reserves to keep the state moving forward.  Such funds are established to help navigate those doomsday budget scenarios, and those dollars, along with the billions coming through the feds through the American Recovery and Reinvestment Act, help many a K-12 state school system stave off disaster.

With the federal stimulus money nearing sunset, we are starting to see those doomsday scenarios coming back to the forefront.  In Eduflack's home state of Virginia, new Gov. Bob McDonnell is proposing a $731 million cut in K-12 education.  Details are still in the works, but it seems clear that most public school systems — urban, suburban, and rural — will face the butcher's knife before the coming fiscal year's budget is complete.  Many feared that cuts were coming, but few expected them to be as deep as McDonnell is currently proposing.

More interesting, though, is what is happening in New Jersey, where equally new Gov. Chris Christie has also declared that the public schools will face massive cuts.  In many ways, the Garden State is in an even more dire financial situation than the Old Dominion, with higher unemployment rates, a bigger budget deficit to overcome, and a generally dimmer light at the end of the tunnel.

For nearly two weeks, communities in New Jersey have been abuzz about the impact of the cuts.  The Christie Administration has told all districts to prepare for the possibility of at least 15 percent reductions, with virtually every school district now talking about $1 million-plus reductions to the money they receive from the state.  And it comes at a time when local taxes are also unable to pull out from their downward spiral.