LEGISLATIVE FISCAL ESTIMATE TO
SENATE, No. 386
STATE OF NEW JERSEY
DATED: April 1, 1996
Senate Bill No. 386 of 1996 establishes a Regionalization and Shared Administrative Services Incentive Fund in the Department of Education. The purpose of the fund is to provide grants and loans to public school districts to finance activities which promote regionalization and the sharing of administrative services among school districts. The fund would also finance State regionalization incentive aid payments to public school districts which regionalized after the bill's effective date.
Under the bill's provisions, the fund would annually be credited with the total amount of excess administrative spending penalty funds which are deducted from the State aid of school districts pursuant to the provisions of P.L.1995, c.236. That law provides that any school district whose budgeted per pupil administrative spending for the preceding school year exceeds the median budgeted per pupil administrative spending for the preceding school year for districts of the same operating type by a percentage established in the law, shall have its school aid reduced by the dollar amount of the excess. This bill provides that the penalty money will be deposited into the incentive fund to finance regionalization and shared administrative services grants and loans as well as regionalization incentive State aid.
Under the current law, the penalty money is being used to fund the school efficiency program which rewards school districts for their low per pupil administrative spending.
The grant funding provided for in the bill would be available to school districts to finance activities which promote regionalization and shared administrative services, including but not limited to, the costs to the district of a feasibility study, facilities modification, program expansion, transportation expansion, and modifications to collective bargaining agreements. The grant funding would be distributed by the Commissioner of Education based on proposals submitted to him.
The loan funding provided for in the bill would also be distributed by the commissioner to provide low interest loans to school districts to finance the renovation, repair, alteration, or construction of school buildings or the conversion of existing school buildings to other instructional purposes, which may be necessary to effectuate school district regionalization. The amount of each loan and the percentage of the project to be funded by the loan would be determined by the commissioner in accordance with the amount of money available in the incentive fund and the number of school districts applying for regionalization loans.
Finally, the incentive fund would also be used to provide incentive State aid payments to school districts which regionalize after the bill's effective date. Each such school district would be eligible to receive aid for a period of ten years following regionalization. The aid would be in the amount of $200 per student multiplied by the transition weight. The transition weight would equal 1.0 for the first year following regionalization and would decrease by .10 in the second and each subsequent year thereafter. This bill will first be applied to the 1997-98 school year.
The Office of Legislative Services (OLS) notes that the enactment of this bill will not result in any additional costs to the State. As provided in the bill, funding for the regionalization and shared administrative services incentive program will come from school aid deductions imposed on school districts to reflect penalties for their excess administrative spending. Since this bill does not take effect until the 1997-98 school year, the amount of money that will be available in the first year of the program's implementation will depend upon the penalties imposed on to local school districts for the 1997-98 school year. For informational purposes, the administrative penalty program penalized local school districts $9.7 million in the 1995-96 school year. For the 1996-97 school year, the penalty is estimated to be $6.6 million.
OLS also estimates that funding for the regionalization and shared administrative services incentive program established in this bill might decline gradually since the administrative penalty program was designed to encourage school districts to operate more efficiently. Therefore, fewer school districts may be penalized for excess administrative spending during the program's future years of operation.
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67.