Defeated Budget Process

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Defeated Budget Defeated Budget ProcessProcess

NJ Department of EducationNJ Department of EducationApril 2015April 2015

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Defeated Budget ProcessDefeated Budget Process2015-20162015-2016

1.1. Defeated Budget PacketDefeated Budget Packet2.2. Election DayElection Day3.3. Consultation PhaseConsultation Phase4.4. District & Municipal Role District & Municipal Role 5.5. Tax Certification OptionsTax Certification Options6.6. Post Certification and Next StepsPost Certification and Next Steps

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Defeated Budget PacketDefeated Budget Packet Memo outlining process – Memo outlining process – posted at:posted at:

http://www.nj.gov/education/finance/fp/dwb/defeated/http://www.nj.gov/education/finance/fp/dwb/defeated/

Memo includes two attachments:Memo includes two attachments:Attachment 1 - Attachment 1 - List of required budget List of required budget

items every district with defeated budgets items every district with defeated budgets MUST send to municipal governing body(ies)MUST send to municipal governing body(ies)

Attachment 2 - Attachment 2 - Sample Memo for Districts Sample Memo for Districts to use when sending out Attachment 1 to use when sending out Attachment 1 required items required items

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Key Dates & ResponsibilitiesKey Dates & Responsibilities

Date County Office School District Municipality

Weds., April 15 Distribute memo to all districts that Defeated Budget Pkg is posted on the Web

Tuesday, April 21 E L E C T I O N D A Y

Weds., April 22 By 9:00 am

By Noon

Create/Mail Letters (municipal letters) to Governing Body(ies) of Districts with Defeated Budgets (with municipal letter attachment)

Report Election Results to County Office

By April 29 (2 days following Certification of election results)

Mail Budget & Defeated Budget Info (attachment 1) using Sample Cover (attachment 2) to Municipal Clerk

Send Receipt of Budget & Defeated Budget Info

April 29 – May 19 Contact District/Muni Officials CONSULTATION PHASE

Schedule Mtg with Municipal Officials & Notify County

Mtg(s) to discuss/set general fund tax levy

By May 19 CERTIFY TAX LEVY Resolution with required line-item reductions & justifications/statements.

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ELECTION DAYELECTION DAY Tuesday April 21, 2015Tuesday April 21, 2015

District Reports Election Results to District Reports Election Results to County Office by County Office by 9 a.m. April 22nd9 a.m. April 22nd

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Districts with Defeated Districts with Defeated Budgets and/or Separate Budgets and/or Separate

ProposalsProposals

WHAT WHAT HAPPENS HAPPENS NEXT????NEXT????

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Consultation PhaseConsultation Phase

April 22 - May 19April 22 - May 19 By April 22, County Office prepares By April 22, County Office prepares

Letter to Municipal Clerk which Letter to Municipal Clerk which outlines defeated budget processoutlines defeated budget process

Consultation period begins between Consultation period begins between BOE and municipal governing BOE and municipal governing body(ies) with Executive County body(ies) with Executive County Superintendent guidanceSuperintendent guidance

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RESPONSIBILITIESRESPONSIBILITIESDISTRICT BOEDISTRICT BOE

MUNICIPAL GOVERNING BODYMUNICIPAL GOVERNING BODY

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District ResponsibilitiesDistrict Responsibilities

By April 29By April 29thth

Two days after certification of election results (but Two days after certification of election results (but encouraged to send 2 days after election–April 23encouraged to send 2 days after election–April 23rdrd))

BOE prepares Defeated Budget Info.BOE prepares Defeated Budget Info.per N.J.A.C. 6A:23A-9.7(a)1per N.J.A.C. 6A:23A-9.7(a)1

(attachment 1 of defeated budget packet), (attachment 1 of defeated budget packet), and Letter of Transmittaland Letter of Transmittal (attachment (attachment

2 2 of defeated budget packet) of defeated budget packet)

Required for Required for allall defeated budgets defeated budgets

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Defeated Budget Information Defeated Budget Information (attachment 1):(attachment 1):

1.1. Proposed Budget for 15-16Proposed Budget for 15-162.2. Separate proposals passed by votersSeparate proposals passed by voters3.3. Salary (PCR) schedules for all Salary (PCR) schedules for all

employees (14-15 & 15-16)employees (14-15 & 15-16)4.4. Pupil enrollment by grade as of 6/30/14, Pupil enrollment by grade as of 6/30/14,

10/15/14 & projected 10/15/15.10/15/14 & projected 10/15/15.

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Defeated Budget Information Defeated Budget Information (attachment 1):(attachment 1): cont.cont.

5.5. # of schools & classrooms in each, incl # of schools & classrooms in each, incl pupil capacity in each classroompupil capacity in each classroom

6.6. Detailed tuition analysis (sent &/or Detailed tuition analysis (sent &/or received)received)

7.7. Analysis of professional & Analysis of professional & nonprofessional staff, 14-15 & projected nonprofessional staff, 14-15 & projected for 15-16 (incl list of retirees)for 15-16 (incl list of retirees)

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Defeated Budget Information Defeated Budget Information (attachment 1):(attachment 1): cont.cont.

8. 8. Proposed capital projects and/or deposits Proposed capital projects and/or deposits into capital reserveinto capital reserve

9.9. Copies of BOE’s most recent annual report, Copies of BOE’s most recent annual report, annual audit, taxpayers guide to education annual audit, taxpayers guide to education spending, and school performance reportspending, and school performance report

10.10. Any other information deemed appropriate Any other information deemed appropriate by Executive County Superintendent for a by Executive County Superintendent for a specific BOEspecific BOE

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District ResponsibilitiesDistrict Responsibilities Defeated Budget InformationDefeated Budget Information – Salary Information (Support Doc)

Pursuant to N.J.S.A. 18A:7F-5.3, districts must prepare supporting documents for salary and benefit information for certain employees:

Superintendent Assistant Superintendent Business Administrator Any employee not a member of a collective bargaining unit, with a salary that exceeds $75,000

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As soon as possible, district As soon as possible, district administration should establish meeting administration should establish meeting date with municipal officials to review date with municipal officials to review defeated budget information defeated budget information

Executive County Superintendent should be Executive County Superintendent should be notified of the date notified of the date

Open Public Meetings Act applies if either Open Public Meetings Act applies if either BOE or municipal governing body, or both, BOE or municipal governing body, or both, have majority presenthave majority present

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Municipal Governing BodyMunicipal Governing BodyResponsibilitiesResponsibilities

By Tuesday, May 19thBy Tuesday, May 19th

Municipality must certify General Municipality must certify General Fund Tax Fund Tax LevyLevy (not the entire general(not the entire generalfund budget) fund budget) to the County Board ofto the County Board ofTaxationTaxationCANNOTCANNOT certify a tax levy below certify a tax levy below minimum levy required by N.J.S.A. minimum levy required by N.J.S.A. 18A:7F-518A:7F-5

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Certify Levy by resolution for the Certify Levy by resolution for the sum of the base budget amount sum of the base budget amount andand any passed separate proposal(s)any passed separate proposal(s)

No authority to change debt service No authority to change debt service levylevy

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If certifying a decrease from the proposed If certifying a decrease from the proposed base budget levy, governing body must base budget levy, governing body must also provide the BOE a:also provide the BOE a:

statement of the specific line-item reductions statement of the specific line-item reductions and revenue increases to offset the levy and revenue increases to offset the levy reduction; and areduction; and a

certification attesting the revised budget is certification attesting the revised budget is sufficient for provision of a thorough and sufficient for provision of a thorough and efficient (T&E) system of education.efficient (T&E) system of education.

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If certifying a decrease from proposed levy If certifying a decrease from proposed levy belowbelow the adequacy budget, the municipality the adequacy budget, the municipality MUSTMUST also provide a specific also provide a specific written written explanation and document by clear and explanation and document by clear and convincing evidenceconvincing evidence for each line-item for each line-item reduced that it either will not adversely reduced that it either will not adversely affect T&E or the BOE’s overall operations affect T&E or the BOE’s overall operations given the need for long term planning and given the need for long term planning and budgeting.budgeting.

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And remember for And remember for certifications below the certifications below the adequacy budget…adequacy budget…

The Burden of Proof is on The Burden of Proof is on the municipality that the the municipality that the reduced levy is reduced levy is sustainable for T&E .sustainable for T&E .

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For defeated separate proposal(s):For defeated separate proposal(s):

→→Restoration by municipality is not Restoration by municipality is not allowed. Decision of the voters is final.allowed. Decision of the voters is final.

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Governing Body Options for Governing Body Options for Certifying a Reduced LevyCertifying a Reduced Levy

Acceptable Line-Item RecommendationsAcceptable Line-Item Recommendations

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Proposed Budget Proposed Budget >> Minimum Minimum LevyLevy

1.1. Reduce general fund appropriations for Reduce general fund appropriations for amount equal to or less than the difference amount equal to or less than the difference between proposed tax levy and minimum tax between proposed tax levy and minimum tax levy; levy;

2.2. Increase other general fund revenues Increase other general fund revenues (budgeted fund balance or miscellaneous (budgeted fund balance or miscellaneous revenues) for amount equal to or less than revenues) for amount equal to or less than the difference between proposed tax levy and the difference between proposed tax levy and minimum tax levyminimum tax levy

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Proposed Budget Proposed Budget >> Minimum Levy Minimum Levy Appropriation of Appropriation of SurplusSurplus less than 2%less than 2%

remember…remember…

A municipality cannot increase A municipality cannot increase budgeted fund balance (surplus) to budgeted fund balance (surplus) to reduce tax levy if the increase results reduce tax levy if the increase results in the BOE’s remaining surplus balance in the BOE’s remaining surplus balance to be < $250,000 or the minimum to be < $250,000 or the minimum amount necessary based on district amount necessary based on district circumstances and needs, whichever is circumstances and needs, whichever is higherhigher

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Proposed Budget Proposed Budget == Minimum Minimum LevyLevy

If the proposed budget is If the proposed budget is at the at the minimum levyminimum levy, the municipality , the municipality must certify the minimum levy. must certify the minimum levy. There are no options to reduce There are no options to reduce

below the minimum.below the minimum.

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Use of Use of Capital / Maintenance / Capital / Maintenance / Emergency ReservesEmergency Reserves

Neither the municipality nor Neither the municipality nor BOE has the legal authority to BOE has the legal authority to appropriate capital reserve to appropriate capital reserve to offset current expense funded by tax levy offset current expense funded by tax levy

Only legal appropriation would be to offset capital outlay Only legal appropriation would be to offset capital outlay funded by tax levyfunded by tax levy

but appropriation must fund projects that do but appropriation must fund projects that do notnot require require voter approval (projects without excess costs)voter approval (projects without excess costs)

Withdrawal from maintenance reserve is permissible if for Withdrawal from maintenance reserve is permissible if for required maintenance projects in the comprehensive required maintenance projects in the comprehensive maintenance plan that were included in the original budgetmaintenance plan that were included in the original budget

Withdrawal from Emergency Reserve requires approval of Withdrawal from Emergency Reserve requires approval of the Commissioner, therefore not an option for reducing levythe Commissioner, therefore not an option for reducing levy

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Capital / Maintenance / Emergency Capital / Maintenance / Emergency ReservesReserves cont’dcont’d

Lastly…Lastly…→→Reducing a Capital Reserve withdrawal does NOT Reducing a Capital Reserve withdrawal does NOT

impact general fund levy and therefore, it is NOT a impact general fund levy and therefore, it is NOT a viable optionviable option

→→RReducing a Capital Reserve deposit DOES impact educing a Capital Reserve deposit DOES impact general fund levy and therefore, it IS a viable general fund levy and therefore, it IS a viable option, even if included in LRFP option, even if included in LRFP

→→Increasing a Maintenance Reserve withdrawal may Increasing a Maintenance Reserve withdrawal may impact general fund levy and impact general fund levy and therefore, it IS a therefore, it IS a viable optionviable option

→→Reducing an Emergency Reserve deposit DOES Reducing an Emergency Reserve deposit DOES impact general fund levy and therefore, it IS a impact general fund levy and therefore, it IS a viable option.viable option.

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Post CertificationPost Certification

BOE and Municipality Next StepsBOE and Municipality Next Steps

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BOE Revises BudgetBOE Revises Budget BOE is NOT bound by municipal officials BOE is NOT bound by municipal officials

specific line-item reductions; BOE is ONLY specific line-item reductions; BOE is ONLY bound by the total amount of the reduction in bound by the total amount of the reduction in tax levytax levy

District MUST submit revised budget District MUST submit revised budget including all supporting documentation items including all supporting documentation items and SFRA calculations updated as and SFRA calculations updated as appropriateappropriate

• Districts should Districts should notnot change projected 15-16 change projected 15-16 enrollment in the revised budgetenrollment in the revised budget

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Revised BudgetRevised Budget If BOE does If BOE does notnot dispute reductions, dispute reductions,

the Executive County Superintendent the Executive County Superintendent will ascertain whether revised budget will ascertain whether revised budget is sufficient for T&E and maintain is sufficient for T&E and maintain stability for final budget approval.stability for final budget approval.

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Dispute ResolutionDispute Resolution If BOE If BOE disputesdisputes reductions, the reductions, the

Executive County Superintendent will Executive County Superintendent will schedule a combined meeting with schedule a combined meeting with BOE and governing body(ies) to BOE and governing body(ies) to reach agreement. If revised tax levy reach agreement. If revised tax levy is agreed upon, county board of is agreed upon, county board of taxation is notified.taxation is notified.

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Failure to CertifyFailure to CertifyFailure to AgreeFailure to Agree

If no tax levy is certified by If no tax levy is certified by May 19 (“failure to certify”) or May 19 (“failure to certify”) or regional constituents certify regional constituents certify different amts (“failure to different amts (“failure to agree”) then Commissioner agree”) then Commissioner must certify the amount must certify the amount under the law even if disputeunder the law even if dispute resolution continues.resolution continues.

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Application for RestorationApplication for Restoration

If a tax levy is certified but no If a tax levy is certified but no agreement is reached, BOE can file an agreement is reached, BOE can file an Application for Restoration for some or Application for Restoration for some or all reductions, all reductions, within 10 working days within 10 working days of the tax levy certificationof the tax levy certification..

Governing body then has 10 working Governing body then has 10 working days after receipt of application to days after receipt of application to submit comments.submit comments.

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Application for RestorationApplication for Restoration If an application for restoration has If an application for restoration has

been filed, negotiations can still been filed, negotiations can still continue toward agreementcontinue toward agreement

As long as the muni certified a rate As long as the muni certified a rate by May 19, then they can recertify by May 19, then they can recertify with a with a lesser cutlesser cut after May 19 after May 19 (cannot certify a greater cut)(cannot certify a greater cut)

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Application for RestorationApplication for RestorationAnd remember…And remember…

There is no requirement under law or There is no requirement under law or regulation that Commissioner decisions regulation that Commissioner decisions on Applications for Restoration will be on Applications for Restoration will be finalized before tax bills are mailed.finalized before tax bills are mailed.

Generally, decisions are completed by the end Generally, decisions are completed by the end of August of August

Type I DistrictsType I Districts

Levy was to be certified by Board of Levy was to be certified by Board of School Estimate by April 8School Estimate by April 8thth

District has 10 working days after District has 10 working days after Board of School Estimate certification Board of School Estimate certification to apply for restoration of cutsto apply for restoration of cuts

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Questions on Defeated Questions on Defeated Budgets?Budgets?

Budget Approval by BOE – April Budget Approval by BOE – April Election DistrictsElection Districts

The board of education must approve The board of education must approve the proposed budget no later than 18 the proposed budget no later than 18 days before the date of the April days before the date of the April electionelection

Boards of Education must have Boards of Education must have approved budgets by April 2approved budgets by April 2

(N.J.S.A. 18A:22-32)(N.J.S.A. 18A:22-32)

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Certification of Levy for Districts Certification of Levy for Districts with November Electionwith November Election

The board of education must approve the The board of education must approve the proposed budget no later than May 14proposed budget no later than May 14thth (N.J.S.A. 18A:22-32)(N.J.S.A. 18A:22-32)

In a district holding school elections in In a district holding school elections in November, the Secretary of the Board November, the Secretary of the Board must certify the levy to the county board must certify the levy to the county board of taxation by May 19of taxation by May 19thth (without separate (without separate proposals) proposals) (N.J.S.A. 18A:22-33)(N.J.S.A. 18A:22-33)

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Documents

Defeated Budget Process