Wayne School Budget’s Tax increase Explained | #Education

WAYNE, NJ — The 2021-2022 Wayne Schools tentative budget was passed by the Board of Education during the last BOE meeting. There was an objection raised by two of the board members who questioned why there should be a tax levy increase beyond the mandated cap of 2%. The final phase of full-day Kindergarten which begins this September and changes to employee healthcare benefits were given as the reasons why the increase went above the limit. 

The current year’s school budget has a tax levy to Wayne residents of $155,236,154. The tentative budget for the next school year is $159,397,523. This is an increase of 2.68%.

New Jersey state law caps the amount a school district can raise taxes from the previous year’s levy at 2%. A district can go above this 2% limit, but it takes a referendum vote from the public and a 60% approval.

There are exceptions to this rule. These include times when there are “exorbitant and unusual” increases in certain costs such as employee healthcare benefits.

Another reason is “Cap Bank.” This is a term that means that tax increases that are less than 2% in previous years can be “banked” and used in future years to increase beyond 2% without a referendum.

For example, if, in 2019 the district had only raised the levy by 1%, they would be able to use the other 1% in future years to increase the levy beyond 2% without the public voting on the approval of the increase.

Although the term “bank” is used, that 1% in the example above is not actual cash in the bank.

During the initial budget presentation, Wayne Schools Business Administrator, Bill Moffitt said that “Bank cap was available to the board at a little over $1,000,000.”  The actual number being $1,056,646. This is the amount over the 2% cap that will be added to the tax levy for this budget, should it eventually be formally approved on May 6.

BOE members Eileen Albanese and Michael Bubba both stated objections to this extra increase and voted against the budget.

“We all know that there are many residents of our community who are struggling financially as a result of either COVID illnesses or the pandemic,” said Albanese. “I just don’t see that we have that need, at this point, to add-in that bank cap addition of over $1,000,000. So, I won’t be supporting the tentative budget as it exists today.”

Cathy Kazan, the BOE President defended the increase.

“I happen to think it’s a very good budget,” she said. “The increase is 2.6% total. And the reason for the bank cap is chapter 44. Chapter 44 has had an impact on us that we haven’t even begun to see. It’s a partial this year, and it’ll get worse next year. Because, in its infinite wisdom the legislature gave us something, and now they’ve taken it back.”

Chapter 44 and Chapter 78

Prior to Chapters 78 and 44, the Wayne School District paid for 100% of the healthcare benefit premiums for school employees. Former NJ Governor, Chris Christie introduced Chapter 78, which forced school employees to pay for a portion of their healthcare benefits.

In accounting terms, these employee contributions to their healthcare benefits are considered “revenue” by the district and this is what Kazan was referring to when she said “the legislature gave us something.”

Last summer, Chapter 44 was passed which is very complex, but it essentially reduced the amount that school employees were paying toward their healthcare benefits. Because the school district now has to pay more, this is considered a reduction in revenue by the district.

This is what the legislature has “taken back,” according to Kazan.

Moffitt has estimated a close to $350,000 loss on this year’s budget and an estimated loss in revenue because of Chapter 44 in next year’s budget as close to $740,000.

Ultimately, the loss in revenue must be made up to fund the budget. With the costs involved in the third-year phase-in of full-time Kindergarten, the district finds that it needs to raise the tax levy beyond its mandated cap of 2%.

Although there have been increases in financial aid to Wayne schools because of the pandemic, these funds are specifically earmarked.

“As for the federal money that can only be used for COVID-related items,” explained Kazan. “Our general fund still has to go to all the other things we typically support and the uptick in funding from the state was part of the plan to introduce full day kindergarten. So, we do need, unfortunately, to use the bank cap to pay for chapter 44 and the decrease in revenues to our district as a result.”

“An estimated tax impact of the tentative budget on an average assessed home here in Wayne Township is $186 annually, $15.47 per month or $0.51 per day,” said Moffitt. The average assessed value of a home is $229,309.

The range given by Moffitt went from homes valued at $100,000 to $500,000. The tax impact for a house valued at $100,000 is $81 per year, and for a house valued at $500,000 the tax impact would be $405, according to Moffitt.

The budget is considered tentative at this point. Right now, it is with the New Jersey Department of Education County offices for review. Once that goes through the approval process, it will come back to the township and go up for public review during the BOE public hearing on May 6, where a final vote will take place.

As far as the tax increase above the cap, Kazan had this to say: “I can say for once, since I’ve been a board member, we’re raising taxes, and we’re getting something quite grand for it: full day kindergarten for this district. Which is going to be a big boom for our property values and for the students’ education.”



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