Opinion ID: 2424209
Heading Depth: 1
Heading Rank: 24

Heading: The Budget Process

Text: Each year the DOE publishes a School Election and Budget Procedures Calendar which sets forth both the statutory budget deadlines pursuant to Title 18A of the New Jersey Statutes, and the statutory election deadlines for the presentation of the school budget to the voters pursuant to Title 19 of the New Jersey Statutes. [17] Stip. ¶ 171. In the ordinary course of a school budget cycle, all school district boards of education must adopt and submit an itemized budget, which provides for a thorough and efficient education, to the Executive County Superintendent (ECS) on or before March 4. N.J.A.C. 6A:23A-8.1; see also N.J.S.A. 18A:7F-5 & -6. Prior to the submission of the budget to the ECS, the school district's superintendent will receive several budgets outlining the various needs of the district's schools, transportation needs, facilities needs, and the like. Kim, 6 T 27:19-25. Generally, the superintendent will review the submitted budgets with the district's business administrator, and other administrative staff, by examining each line item and incorporating staffing projections based on anticipated enrollment. Id. at 29:2-15. Thereafter, each school district's board of education will receive the district's proposed budget for review for the upcoming year for review in late January. Id. at 52:9-16. According to the testimony of the one superintendent, typically, the Association of Business Administrators will informally receive the preliminary numbers from the DOE, with the understanding those figures are usually the approximate State aid amounts the district will be allocated, which allows for preliminary budget preparation. Id. at 55:1-7. The actual State aid figures are received by the districts on or about the fourth Tuesday in February, at the time the Governor presents the annual budget message to the Legislature for the upcoming fiscal year. [18] Stip. ¶ 172 (citing N.J.S.A. 52:27B-20). Within two days of the budget message, the Commissioner of Education (Commissioner) must notify each district of the maximum amount of aid payable to the district for the upcoming school year and of the adequacy budget payable to each district for the upcoming year. Stip. ¶ 174 (citing N.J.S.A. 18A:7F-5). In the normal course, the district's tentative budget is approved by its board of education in late February, in time for its submission to the ECS, in the beginning of March. Kim, 6 T, 52:9-25; see also N.J.S.A. 18A:7F-5 & -6. Upon receipt of the itemized budget in early March, the ECS determines whether the proposed budget meets the requirements of a thorough and efficient education, as well as a checklist of efficiency standards set by the State. If the requirements are met, then the ECS approves the budget. Kim, 6 T 53:10-16. The tentative budget is then returned to the district board of education by the ECS about one week later. Ibid. If the ECS approves the budget, the board of education may continue to discuss it until final submission. Id. at 53:21-24. If it is not approved, the district then has to make adjustments, with the board of education's input, and the budget will need to be again forwarded to the ECS for approval. This approval and discussion process takes place throughout March. Id. at 54:3-5. At the end of the month, the district is required to submit its final itemized budget to the ECS, who has to approve it before it can be placed on the ballot for public consideration. Ibid. Using a specific software program developed by the Commissioner, the proposed budgets are transmitted to the ECS in the format required by the DOE, along with supporting documents. See Plfs.' Letter Memo. 1-2, Feb. 17, 2011 (citing N.J.S.A. 18A:7F-5(c); N.J.A.C. 6A:23-8.1(b)). Apparently, a district cannot file a proposed budget without a signed transmittal letter on the specific form designated by the DOE. [19] Id. at 2. The letter of transmittal, or school district budget statement signed by a district superintendent and the board of education's secretary, is required, as an administrative practice, to be submitted with the budget for review to the ECS. See Dfs.' Letter Memo. 1, Feb. 16, 2011; see also D-26. Without the signed letter of transmittal, the ECS cannot accept the proposed budget from the district, and as a result the budget cannot be placed on the ballot for voter's consideration. For the FY 11 budget cycle, the Governor's budget message was delivered on March 16, 2010. Stip. ¶ 173 (citing P.L. 2009, c. 269). Consequently, the Commissioner had to adjust the dates in the school budget calendar to conform to the State aid notification date which follows the budget message. Stip. ¶ 175 (citing N.J.S.A. 18A:7F-5c). Districts seeking a waiver to increase the adjusted tax levy by more than the allowable amount, N.J.S.A. 18A:7F-39, had been required to submit a preliminary budget to the ECS no later than February 25, 2010 for the upcoming school year. Stip. ¶ 176. As revised, but by no later than March 22, 2010, all districts, except those under state intervention, [20] were to submit their final itemized budgets to the ECS. Stip. ¶ 177. Once the ECS approved the final budget, the district could no longer make adjustments to it. Kim, 6 T 54:14-16. Consequentially, as the final budget had to be submitted by the end of March, in preparing the FY 11 budget, the districts were under significant time constraints to restructure their budgets, which took several months to create, [21] and to do so in less than a week. Id. at 64:2-21. Following approval of the budget by the ECS, advertisements of the budget statement are made and public notice for hearings on the school district's budget is provided, which are then held between the end of March and beginning of April. [22] Stip. ¶ 178. Within 48 hours of the public hearings, the school districts are required to post on their websites a user-friendly plain language budget summary. Stip. ¶ 179 (citing N.J.A.C. 6A:23A-8.1(c)). The school elections, held on the third Tuesday of April each year, took place on April 20, 2010 to vote on the FY 11 budget. Stip. ¶ 181 (citing N.J.S.A. 19:60-1). Conversely, for those districts whose budgets are not submitted to voters, [23] as well as those districts under state intervention, the last date for the adoption of a tax certificate establishing the local levy to be collected in support of the proposed budget was April 8, 2010 for the FY 11 budget cycle. Stip. ¶ 180 (citing N.J.S.A. 18A:22-14, -26, & -52). Within two days of certifying the school election results, the boards of education for all school districts with voter-approved budgets are required to certify to the County Board of Taxation the tax levy amount to be raised for the upcoming school year. Stip. ¶ 182 (citing N.J.S.A. 18A:22-33). Alternatively, within the same two days of certifying the school election results, if the budget is defeated by the voters, the district's board of education has to deliver the defeated budget to the governing body. Stip. ¶ 182 (citing N.J.S.A. 18A:22-37; N.J.S.A. 18A:12-17). The governing body then has until a statutory deadline, for the FY 11 cycle it was May 19, 2010, to consult with the board of education to determine and certify to the County Board of Taxation the tax levy amount to be raised. Stip. ¶ 183 (citing N.J.S.A. 18A:22-37 & N.J.S.A. 18A:12-17). Within ten business days after the certification of the general fund tax levy by the governing body, for districts where budgets were defeated either by vote or by the board of school estimate, the district's board of education may submit an application to the Commissioner to restore any budget reductions made. Stip. ¶ 184. Accordingly, the Commissioner has the authority to restore any reductions which would either negatively affect the ability of the district to provide a thorough and efficient education or affect the stability of the district given the need for long term planning and budgeting. Ibid. Several superintendents testified such requests would be looked upon with disfavor. If the governing bodies fail to certify a levy amount, the budget is then submitted to the Commissioner for review and determination of the tax levy. See D-25 at ¶ 31. Prior to review, the Commissioner may solicit assistance from the ECS to make recommendations for reductions to the budget. Ibid. The Commissioner then adopts a budget and certifies a tax levy amount for the district. Ibid. Based upon the Commissioner's adopted budget, the district is directed to make appropriations and reductions in its budget accordingly. Id. at ¶ 32.