Factoring 2.5%

Seems like everyone’s still digesting Gov. Christie’s scroll of fiscal reforms handed over to the Legislature over the past week. The centerpiece, of course, is Cap 2.5, which limits school district budget increases to 2.5%, mandates that Executive County Superintendents veto any school contract award, inclusive of all salary, benefit, and other economic provisions to 2.5%, and bars arbitrators from recommending any contract recommendation greater than 2.5%.

There’s no shortage of other items to inspire ire from public employees. For example, in the context of contract negotiations between individual districts and NJEA local units, school boards get back “last, best offer,” rescinded in 2003 during the McGreevey Administration, an important tool that invites reasonable concessions. Another item in the Governor’s quiver would dictate selection in arbitrators for union contracts. (A long-time rumor among school boards has it that NJEA exerts control over this selection by puppeteering legislators.) Another one is downright confounding: if compensation packages can’t rise by more than 2.5% and that cap includes health benefits, how does that work if, like this year, insurance rate increases came in between 12% and 20%? Then there’s the expansion of power for Executive County Superintendents:
The executive county superintendent shall disapprove all collective negotiations agreements that fail to comply with regulations adopted by the commissioner that: (1) contain salary, wages, and other forms such as health and insurance costs that cause a municipality to exceed the tax levy growth limitation calculated pursuant to the Constitutional 2.5% spending cap; (2) do not require the minimal amount of pupil contact for teachers as set forth in the regulations adopted by the commissioner; (3) do not require a minimum number of work days for individuals covered under the agreement consistent with regulations adopted by the commissioner; or (4) prohibit the contracting out of auxiliary services. The Commissioner of the Department of Education shall adopt a minimum amount of work days per year for school district employees and require a minimal amount of pupil contact time for teachers.
Districts still can ask communities to override caps, and wealthy districts will no doubt do so. On the other hand, budgets were voted down this year in towns like Montgomery Township, with a DFG of J. However, there is legitimate concern that this loophole would effectively allow funding gaps to increase between districts that house residents with deep pockets and those who don’t. (Here’s Education Law Center’s objections.)

So, what’s Christie’s strategy? Does he really think that he can pull off this sort of inside-out palace coup? Our best guess is “not entirely,” but that’s the method in the madness. Let Legislators turn him down on some of the more out-there provisions on establishing county school districts. Give a bit on unrealistic health benefits caps. At the end he’s still shifted the center to a whole new equilibrium.

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