Newark Public Schools Budget Presentation FY March 19, 2008

2 Changes for

3 School Funding in NJ CEIFA has not been run since Up until last year, state aid had been frozen for most districts at the levels. State’s goal is to create a fair, equitable, and predictable funding formula for FY09 based on student characteristics, regardless of zip code.

4 Prior Abbott Funding Under the New Jersey Supreme Court Abbott ruling districts were provided funding: Parity with the spending for regular education by I&J districts For Supplemental Programs based upon the particularized needs of their students New Facilities

55 “School Funding Reform Act” (SFRA) of 2008” New K-12 State Aid Categories Expansion of Preschool Estimated Tuition Calculation Minimum Tax Rate Calculation “Report on District Status Above or Below Adequacy” Changes in Extraordinary Aid

66 SFRA Aid Categories – K-12 Increase of School State Aid of $532 million in FY State aid increase ranged from 2% to 20% based upon an individual communities wealth, local fair share calculation and adequacy budget

7 SFRA Aid Categories – K-12 Consolidates 26 existing aid categories into: Equalization Aid (wealth based) Special Education Categorical Aid Security Categorical Aid Extraordinary Special Education Categorical Aid Transportation Categorical Aid Debt Service Aid Misc (choice aid, educational adequacy aid, fica, pensions)

8 School Spending in NJ New Jersey per pupil spending is the highest in the nation (NCES, FY 2005) NJ school spending per pupil in FY05 - $14,117* US Average in FY05 - $8,701* New Jersey state aid per pupil in FY05 is the 5 th highest in the nation Only higher are: VT, HI, AK, and DE.

9 Summary of Adequacy Budget Amounts ElementaryMiddleHigh Regular Ed$9,649$10,035$11,289 At-Risk$14,184-$15,149$14,751-$15,755$16,595-$17,724 LEP$14,474$15,052$16,934 At-Risk/LEP$15,390-$16,355$16,006-$17,009$18,006-$19,135 Spec. Ed.$20,546 $20,932$22,186 Speech$10,731 $11,117$12,371 Voc. Ed.n/a $14,789

10 FY09 Adequacy Budget – Weights/Amounts Elementary School Weight = 1.0 Amount = $9,649 Limited English Proficiency Weight Weight = 0.50 Amount = $4,825 ES to $5,645 HS Middle School Weight = 1.04 Amount = $10,035 At-Risk/LEP combined students Weight = at-risk weight plus 1/4 LEP weight Amount = $5,741 ES/low % to $7,846 HS/high % High School Weight = 1.17 Amount = $11,289 Special Education Census Assume 14.69% classification rate, pay $10,897 average excess cost of special ed students Two-thirds included in the adequacy budget, remainder paid through categorical aid (aid independent of wealth) Vocational Education Weight = 1.31 plus high school weight Amount = $14,789 At-Risk Weight Weight = sliding scale from 0.47 to 0.57, based on free and reduced lunch percentage; Amount = range from $4,535 for ES/low % to $6,435 for HS/ high % Speech Assume 1.9% of students require services, pay $1,082 per student

11 SFRA Required Tax Levy Offset Use of State Aid Increase if Over Adequacy Impacts 120 districts Districts Spending above adequacy and their local fair share must use the increase in state aid over 2.89% to offset levy increase District may still apply for waiver or use separate proposal to increase levy In sum, every district subject to provision will receive full increase in state aid and be able to grow budget by same 4% plus adjustments, waivers and separate proposals. In addition, these district can grow budgets by increase in aid up to 2.89%.

12 Tax Levy Waiver Requests New for FY is the ability for districts to submit a “tax levy cap waiver” to exceed the allowable tax levy growth for “extraordinary costs” Extraordinary cost” for a waiver is defined as: “Costs beyond customary and usual in the operation of a public school, beyond the control of the district, necessary to achieve T&E as determined by the Commissioner, and the expenditure was not included in the original budget of the prebudget year or increased by more than 4% of the amount included in the original budget of the prebudget year”

13 Tax Levy Waiver Requests There are specific “extraordinary cost” waiver requests allowed in the law which include: Energy cost increases in excess of 4%; Capital outlay increases in excess of 4%; Use of non-recurring revenue in current year budget; Increases in insurance (excluding health) in excess of 4%; Increases in hazardous busing in excess of 4%; Increases in special ed costs over $40k/pupil in excess of 4%; Increases in tuition in excess of 4%; Incremental increases in costs for opening a new school in the budget year; and Not meeting the CCCS defined for as a DINI district

14 Tax Levy Waiver Requests Waivers are NOT automatic Executive County Superintendent will review and approve waivers as part of budget approval and may make budgetary reallocations up to the total amount of the waiver request

15 SO WHAT DOES THIS MEAN?

16 Impact on District Budgets Districts spending over their adequacy budget amount and receiving only a 2% increase in state aid for may find it difficult next year and in future years preparing budgets.

17 Impact on District Budgets Districts receiving only a 2% increase in may find that their state aid will be flat funded for several years thereafter. Some Abbott Districts will either have to significantly raise their local taxes or cut positions and programs gained under the Abbott Ruling

18 Impact on District Budgets What does SFRA mean for the “Former” Abbott Districts? Possible Flat Funding for 3 or more years State recalculated proposed “Local Fair Share” for all school districts. For most Abbott Districts, our “Local Fair Share capacity amounts increase significantly, ranging from 4.9% to 171.4% over their FY current tax levy. The State has determined that the City of Newark’s “Local Fair Share” capacity is $139 million or $43.6 million (45.2%) over the FY levy The District for FY proposed an increase of $3.8 million or 4% over FY

19 OTHER DATA

20 Chapter Law 53 requires: Districts to post the “User-friendly” plain language budget forms on its internet site following public hearing and before election; and Districts and department to post the “user- friendly” final budget forms following election and municipal review of defeated budgets

21 Employee Contractual Info The Commissioner of Education shall require a school district to submit annually with the budget (either by Feb 15 or March 6), the following items as supporting documentation in regard to the superintendent of schools, the assistant superintendent of schools, the school business administrator and any employee with an annual salary that exceeds $75,000 who is not a member of a bargaining unit

22 FY BUDGET

PROPOSED BUDGET $995,792,909 A net increase of $39 million over original budget

Budget Summary- Revenues Includes an increase in state aid of $25.5 million (including Charter School Aid) Increases an increase of $3.8 million in local tax levy An appropriation from Fund Balance of $23.9 million or an $8.4 million increase over FY

Budget Summary- Expenditures Includes increases for non discretionary mandated items such as: Salaries Tuition Transportation Utilities Charter Schools etc. All non salaried discretionary costs remained flat Includes a net reduction of 32 instructional/support positions.

26 NEWARK PUBLIC SCHOOLS Operating Budget $ 850,912,083 Grants & Entitlements 144,880,826 Total District Budget $ 995,792,909

27 Revenue Sources Fund Balance $ 23,938,400 Local Tax Levy 100,213,266 Miscellaneous 6,898,018 Semi Medicaid 950,000 State Aids 718,912,399 Operating Budget $ 850,912,083 Grants & Entitlements 144,880,826 Total Aid Awarded $ 995,792,909

28 $ 995,792,909

29 Newark Public Schools Three Year Comparison of Revenue Awarded Where Does The Money Come From?

30 State Aids Equalization Aid $ 571,889,796 Transportation Aid 4,969,042 Special Ed Categorical A 24,894,683 Security Aid 15,741,827 Adjustment Aid 87,585,999 Charter School Aid 11,589,312 Extraordinary Aid 2,027,468 Adult Education Aid 214,272 Total Aid Awarded $ 718,912,399

31 Major Costs of Total Budget Salaries $ 505,651,191 Health & Employee Benefits 109,049,859 Charter Schools 62,964,122 Tuition 66,013,109 Utilities 14,247,646 Pupil Transportation 33,846,909 Other 59,139,247 Total Operating Budget $ 850,912,083

32 Total Salaries School-Based$ 344,702,938 69% Central Office 150,818,257 30% Special Schools/Programs 10,129,996 1% TOTAL$ 505,651, %

33 $ 850,912,083

34 Major Cost Increases Salaries$ 26,687,312 Salary Breakage vs budget to budget (18,394,670) Salaries (Net of Breakage) 8,292,642 Benefits (Net) (2,016,813) Pupil Transportation 2,000,000 Tuition 2,694,774 Utilities 1,000,000 Charter Schools 22,279,793 New First Avenue Cost transferred to fund 11 from fund 20 2,259,743 Reduction in ECPA Aid (2,458,579) Food Services 3,000,000 Other Programs 2,511,722 TOTAL$ 39,563,282

Revenues to Balance the Budget Tax Levy 3,854,356 Fund Balance 8,438,400 State Aid 13,852,582 Additional State Aid (Charter Schools) 11,589,312 Extraordinary Aid 2,027,468 Reduction in Special Revenue (Net) (198,836) TOTAL $ 39,563,282

36 Fund Balance Analysis Beg Bal10,751,08815,228,663 13,196,395 14,410,924 Anticipated11,477,37521,967,732 16,714,529 17,000,000 Used to balance the budget 7,000,00024,000,000 15,500,000 23,938,400 Ending Bal15,228,66313,196,39514,410,924 7,472,524

37 Total District Enrollment (Excluding Charter Schools) Elementary19,79420,57019,278 Middle10,130 8,768 9,951 Secondary11,94911,92811,274 Total41,87341,26640,503 Change from Prior Year (607) (763)

38 Per Pupil Cost

39 Per Pupil Cost - $19,182 Total Classroom Cost$10,050 Total Support Services 4,354 Total Administrative Cost 1,616 Total Operations & Plant Maint 2,699 Total Food Services Costs 149 Total Extracurricular Costs 228 Total Equipment Costs 12 Total Other Costs 74 Grand Total$19,182

40 Comparison of Per Pupil Costs

41 Charter Schools

42 CHARTER SCHOOLS COMPARISON FY

43 District-Wide Positions Reductions

44 TOTAL STAFFING Current Employees District-wide 7, School/Central Reductions: Special Education/Categorical (12.0) Regular Education (9.0) Support-Inst/Non-Inst (11.0) (32.0) Total 7,307.1

Teachers (6 Vac) 2.0 Bilingual (2 Vac) 1.0 ESL 1.0 Resource (1 Vac) Special Education/Categorical 12.0 SBB Positions Reductions Special Ed Aides 1.0 Bilingual Aides (1 Vac)

Gr. 1-5 Teachers (6 Vac) 3.0 Gr. 6-8 Teachers (3 Vac) Regular Education 9.0 SBB Positions Reductions

Class Room Aides 3.0 Coordinators (3 Vac) 1.0 Athletic Trainer (1 Vac) 1.0 Analyst (1 Vac) Instructional Support/Categorical 11.0 SBB/Central Office Positions Reductions Principal (1 Vac) 1.0 Nurse (1 Vac)

48 VACANCIES BREAKAGE VACANCIES HELD ($ in Millions) % OF TOTAL SALARIES SCHOOL- BASED $5.5 $10.5 $11.4 $ % CENTRAL OFFICE % TOTAL$10.4 $17.0 $19.9 $ %

49 Tax Levy Analysis

50 NEWARK PUBLIC SCHOOL PROPERTY TAXES TEN YEAR ANALYSIS

51 School Operating Cost To The Average Tax Payer Average Property Assessed Value $175,000 $200,000 Current School Tax Levy $1,533 $1,752 New School Tax Levy * $ 1,594 $1,822 Average Annual Net Increase $ 61 $ 70 *The new levy is based on a $3,854,356 increase in the tax levy for the School District’s budget.