Montclair School Vote

How did the district get into this deficit?

According to the district, the deficit grew over several years because the district was spending beyond its means. The budget was not being adhered to, with unbudgeted staff hires, unpaid bills, and other unbudgeted expenses contributing to the problem.

What is a state monitor and what will they do?

A state monitor is appointed by the NJ Commissioner of Education. Their charter is to ensure a balanced budget and maintain state educational standards. They have the power to override the board on financial matters, approve spending, and direct corrective actions. The goal is financial stability, not to ruin the schools or cut to state minimums. As long as the school district has enough tax revenue and can get to a balanced budget, the monitor has no reason to make cuts. Also, the monitor has no reason to raise taxes as long as state minimum standards are met.

Who pays for the state monitor and how much do they cost?

The district pays for the state monitor directly. The rate is $125/hour for up to 32 hours per week, which is a maximum of $208,000 per year. The monitor remains in place until the state aid advance is repaid. While this figure might seem high, it is relatively small when viewed as interest on a $12.6 million advance (Q1 advance amount).

What is the "interest rate" on the state advance?

The advance itself is interest-free. However, the cost of the mandatory monitor can be seen as "interest." If the monitor costs ~$200K/year, the effective APR on a 10 year $12.6M advance (Q1 advance amount) is roughly 2.9%. This is lower than most mortgage rates.

Can the advance be paid off early and the monitor removed?

Yes, it can be paid off at any time. If, in 5 years, the district is financially stable and wants to remove the monitor, the town could hold another special election to raise the remaining balance (e.g., $6.3 million (Q1 advance balance)) and pay off the advance early. The Commissioner of Education would then remove the monitor. According to the Montclair School District's FAQ, "Monitors remain in place until the loan is repaid."

Will the district lose state aid to pay back the advance?

The advance is paid back by withholding state aid for 10 years. The district will lose $1.26M per year for the advance associated with Q1, $0.5M for the advance associated with Q2, plus 200K (state monitor yearly salary). The total cost of the advance associated with Q1 (witheld aid plus monitor salary) is less than 1% of the school district's total budget. The district could make small efficiency gains to absorb this. In addition, property taxes could be raised to offset the loss of state aid and monitor salary. A $130 tax raise on a $639,630 assessed home offsets the state aid loss and monitor salary for the Q1 advance. $130 is 88% off the full price of Q1, which is $1,117. All budgetary shortfalls associated with Q1 can be avoided by voting No on Q1 and implementing a very modest tax raise next year ($130 on an average priced home).

Will a state monitor impact property values?

There is no evidence of this. Property values in Nutley, a nearby town that was recently assigned a monitor, have increased over the past year based on both Redfin and Zillow data. According to a research paper from the Robert F. Wagner Graduate School of Public Service at NYU, fiscal stress labels assigned by New York's fiscal monitoring program have no effect on property values. Property values are primarily driven by school rankings. There is a direct correlation between tax increases and property values. On average, a 10% increase in property taxes decreases property value by more than 0.34% (source).

Will the state monitor raise taxes?

The monitor does have the power to raise taxes, but in all likelihood would only do that if it’s necessary for the schools to maintain state standards. Montclair has plenty of tax revenue to maintain state standards, so it’s unlikely the monitor will raise taxes. The amount by which a monitor can raise taxes is limited by NJ state law.

Will the state monitor cut staff and programs?

The monitor's job is to ensure a balanced budget and maintain state standards. If those two items can be achieved based on the tax revenue, the monitor will have no reason to make any unnecessary cuts. If spending outpaces tax revenue, it is likely that the monitor will ensure cuts happen in order to get a balanced budget. If cuts are necessary, the monitor will likely work jointly with the superintendent to identify those cuts. The monitor does have the power to choose the cuts. As long as the board and superintendent manage operations effectively, the monitor should not need to make any cuts.

Will the state monitor dismantle the magnet system?

No, because it's not financially beneficial to do this. South Orange-Maplewood (SOMA) School District is a nearby district that is similar in size and has nearly identical economic and demographic profiles. SOMA does not have a magnet system, but they do assign and bus kids to non-neighborhood schools in order to abide by laws banning segregation. Based on the 2024-2025 user friendly budgets (SOMA, Montclair), SOMA spent $1,612 per pupil on transportation and Montclair spent $1,640 per pupil on transporation. This indicates that there is no meaningful cost savings by dismantling the magnet system. A monitor is going to look at areas where cost savings can be achieved (e.g., outsourcing services, eliminating director roles in the central office, better textbook and classrom supply contracts). Although transporation is a big cost, it doesn't appear to be an area where Montclair is overspending.

Are Montclair schools adequately funded?

Are the financial benefits of the advance associated with Q1 worth the risk of a monitor?

"The central issue is that this financially beneficial advance requires accepting a state monitor."

How do property tax increases impact the community?

What is the community sentiment?

Based on NJMLS data, about 70% of Montclair households do not use public schools. Census data shows that 34% of households earn $100,000 or less annually, making monthly expenses and overall affordability a significant concern for many residents.