CAPE MAY — School officials are blaming a tax increase, only the second since 2006, on a reduction in federal aid due to the lingering effects of federal sequestration.
The city’s small elementary school district gets half its pupils, 85 of 169 students, from the U.S. Coast Guard base on the east side of town. It relies on federal impact aid doled out to districts with a large military student enrollment.
That aid has dwindled from more than $1.1 million in the 2012-13 year to $610,000 this year. Business Administrator John Thomas is projecting $595,000 for the 2014-15 year.
Thomas said impact-aid schools, which have a lobbyist in Washington, have filed a lawsuit and the aid could be restored.
“That should be resolved in June or July. We either will or won’t see the money in August or September,” Thomas said.
Sequestration is a process of automatic federal budget cuts triggered last year when Congress and President Barack Obama could not come up with a budget deal. Sequestration reduced the budget at the Coast Guard base last year from $8 million to $5.9 million.
While Obama and Congress have agreed not to have further sequestration this year, Thomas said the federal budget does not follow a calendar year. The federal budget runs Oct. 1 through Sept. 30. The impacts continue for the federal budget that began last year.
“We still have the sequestration cycle, but from what I understand they’re trying to exempt impact aid from further cuts,” Thomas said.
Relief could also come from the lawsuit. Superintendent Victoria Zelenak said the school is a member of the lobbying group that filed suit for more aid.
Zelenak said the cuts are affecting school programs. She said there are enough children for a second kindergarten class, but she can’t hire another teacher. She also wants to promote the technology teacher from part time to full time but has put that off. Basic skills are another problem.
“I’d like to increase basic skills teaching for kids that need extra help, but I can’t do that. It’s good to catch kids with problems in the early years so they will get to grade level by the third grade,” Zelenak said.
More aid may come later in the year but can’t be counted on for budgetary purposes. Thomas is expecting a tax increase from 5.38 cents to 5.77 cents for each $100 of assessed valuation. This would increase taxes on a $100,000 property from $53.80 to $57.70.
City Tax Assessor Michael Jones said the average residential assessment is $630,000. That would put the average local school tax bill at $363.51, an increase of about $25 per year. That does not include municipal, county or regional school taxes.
The school had not had a tax increase since 2006 until last year, when the rate rose from 5.31 cents to 5.38 cents. The operating budget is down from $3,447,064 to $3,316,497, but the amount to be raised by taxes to support the budget is up from $1,513,599 to $1,574,143.
“Our budget had not gone up. It’s because of these other factors,” Zelenak said.
The budget exceeds the state-mandated 2 percent cap on tax increases, but the school took advantage of a law that allowed them to bank previous years when they were under the cap.
Thomas said they had enough in the “cap bank” to go up 6 percent but are going up only 4 percent. Budgets that exceed the cap using the bank do not have to be approved by voters, he noted.
The budget is also supported by $470,627 in state aid, including almost $70,000 for five students from other towns called “choice students.”
The only capital project on the horizon is a major renovation of the swimming pool, which has been closed due to leaks. That project does not affect the budget. Thomas said the plan is to go to voters as early as September with a referendum question to bond the project.
Zelenak said she expects the impact-aid issue to be worked out over the next couple years but budgets during this time will be tight.
“We’re just sitting back and making do, or more than making do because our teachers are creative. It’s putting more responsibility on them to wear different hats,” Zelenak said.
Contact Richard Degener: