Major Costs Include: State Workers’ Pensions and $159 Million Set Aside for Higher Education Expenses
NJ Gov. Chris Christie proposed a $34.4 billion budget, the state’s most expensive budget ever, on Feb. 24.
In his Fiscal Year 2014-2015 budget proposal, there is a required $2.25 billion payment to the public worker pension funds without raising taxes, however it leaves no money left over to fund major new programs or initiatives.
Part of Christie’s spending plan for the fiscal year that starts July 1, gives slight increases in K-12 and municipal aid. The budget for some school districts has increased by five million dollars, allowing them to implement longer school hours. There is also an increase in the funding for higher education by eight percent, or $159 million.
Claire Alasio, Director of Financial Aid said, “If we assume the best case scenario, that the entire $159.3 million goes to students and it goes to students at both public and independent students, then that would mean an average of $178 spent on each of the 893,433 students enrolled in NJ colleges and universities for fall 2013. Although that scenario is unlikely, even if it came to pass, the impact to the individual student is minimal.”
There is also an increase in funding for Tuition Aid Grants, or TAG. Christie is adding an additional $14 million to the nearly $47 million funding to this aid.
Alasio said, “I do not understand how this will equate to an across the board increase, given that the Dream Act passed in the fall and there will be more students eligible for TAG.
Alasio continued, “That said, if we take this at face value, the highest TAG grant amount for independent institutions is $11,958 and the lowest amount is $1,922; a two percent increase would mean $239 on the highest amount and $39 on the lowest amount. Again, this is not an impactful increase.
Acting on his commitment to higher education, Christie’s budget provides $1 million to independent colleges and universities.
Pressman said, “There are 13 independent colleges and universities that would share in this. Generally, an institution’s share is based upon enrollment and the number of students enrolled who have financial need. [Monmouth University’s] share would be larger than some but smaller than others. But, if we assumed an equal share, it would equate to about $77,000 to each of the 13 institutions. If you divided that by the approximately 4,800 full-time undergraduates at [Monmouth University] it is about $16 per student.”
Pressman continued, “Of course, higher tuition leads to lots of complaints, and then gets lots of attention by state legislators who then attempt to legislate controls on tuition. Just last week two New Jersey legislators, Celeste Riley (D-Cumberland) and Joseph Cryan (D-Union), introduced a series of bills that seek (among other things) to freeze tuition for nine semesters for incoming students and to have universities graduate a large fraction of incoming students within five years. Schools failing to do this will receive even less state funding.”
“In either case, revenues will decline at state universities. Under no circumstances will universities get more money from the state under the Riley-Cryan bills–although declining state aid is one of the main reasons that tuition at public universities is soaring. The result will be fewer classes and faculty, larger class size and a lower quality of education at state universities,” Pressman said
Christie’s new budget is 4.2 percent larger than the one he signed last year and he is depending on revenue growth of 5.8 percent, according to thr budget.
“Due to our pension, health benefit, and debt obligations, only six percent of new spending can be focused on the areas where we really want to dedicate our resources: education, tax relief, public safety, higher education, drug rehabilitation, health care,” Christie said.
Christie continued, “We are in danger of having these costs overwhelm our budget, monopolize our resources, and threaten our ability to continue to fund the priorities we care about most.”
Dr. Steve Pressman, professor of economics and finance, said, “required state spending on health, pensions (and a few other things) have left little money to do the important things that our state government should be doing to grow the state economy.These are best thought of as public investments–projects that will improve worker productivity, attract business firms to start up in the state because of a high quality workforce here, and enhance the quality of life within the state.”
Pressman continued, “To take my favorite example, budgetary constraints kept Governor Christie from accepting massive Federal money to build another tunnel underneath the Hudson River. The Governor turned this down because NJ would have had to contribute a little bit of money to the project.”
Pressman continued, “Since there was no extra money in the budget and the Governor refused to raise taxes even a tiny bit for the project, the project was cancelled (even though it was one of the ‘shovel ready’ projects that the government was ready to fund in early 2009). This project would have created lots of jobs in NJ, reduced commuting time into NY and improved property values throughout the state.”
Medicaid funding will increase by $200 million, with the cost split between the state and the federal government. According to the budget and online retailers will be subjected to state sales tax that would bring in about $200 million in the new budget.
Several cuts from previous years that have been kept include cuts to women’s health centers and the earned income tax credit, which is aimed at the working poor.
State Treasurer Andrew Sidamon-Eristoff said to reporters before the governor’s speech, “This budget represents a long [term] process of setting priorities and making choices. We have limited resources and we have some significant non-discretionary needs that we have to address. So under these circumstances we’re doing what we think is prudent, fiscally responsible thing.”
“The point here is that while it sounds like a lot of money is being directed toward higher education, when you consider the number of institutions and number of students attending, it doesn’t translate to a big impact at the individual student level.” said Alasio.
Phil Sarpong, a freshman business major said, “It is devastating how much higher education cost, and there is not a lot money going towards fixing that. Even though there seems to be at least an effort, it still does not seem like enough.”
According to The Wall Street Journal, Christie was seen as very humble and avoiding fights with the Democrats, facing the scandal over his administration’s role in the traffic jam near the George Washington Bridge from back in Sept.
Heather Haddon, a writer for The Wall Street Journal, said Christie’s ability to negotiate with a “Democratic-controlled Legislature will be the first significant test of his capacity to govern” since the scandal broke.
A Monmouth University Polling Institute survey indicated that only 40 percent of residents surveyed gave Christie’s administration an A or B, down from 72 percent in Sept. “The fact that Christie’s popularity is significantly diminished simply puts him in a weaker position,” said Patrick Murray, executive director of the polling institute, to The Wall Street Journal about the budget negotiations.
IMAGE TAKEN from Summaries of Appropriations
