New Jersey lawmakers edge closer to school construction fix

Changes to how the state constructs new schools edged closer to reality Monday after Assembly lawmakers approved a bill with amendments that would shed direct funding for charter and renaissance school development in favor of a loan program.

The bill, sponsored by Assembly Speaker Craig Coughlin (D-Middlesex), would retool the long-troubled Schools Development Authority, requiring authority-funded projects in certain districts to meet model specifications while offering loans to fund remediation to charter and renaissance school facilities.

“We think that this is the best version of this bill that we’ve seen since discussion on the bill first started in the Assembly Education Committee a year ago, nearly to the day,” Jessie Young, legislative advocate for the New Jersey School Boards Association told the Assembly Appropriations Committee.

During a hearing held last December, public school advocates worried that allowing charter and renaissance schools to receive Schools Development Authority funding through grants could leave public dollars in private hands if such a school closed. They noted that few charters own their buildings, and such closures are not uncommon.

The Schools Development Authority is responsible for capital improvements — including modernizations, renovations, and new construction — in 31 court-identified districts, which are typically low-income school districts, and funds similar work in other school districts, albeit at lower amounts.

Lawmakers have sought to retool the agency amid growing dilapidation in a broad portfolio of aging school buildings.

The loan program the bill would create loans for schools leasing their buildings from nonprofit entities. Only projects with a lease term of 10 years or more would be eligible, and a charter or renaissance school must be within an SDA district to apply.

Such loans would be administered by the Economic Development Authority and would carry far lower interest rates than those currently available to charter and renaissance schools. The bill would set interest at 1.75%, or at half of the AAA bond rate — which was 4.8% at the start of December — whichever is lower.

“Loans these days are six, seven percent, so this would very much help us,” said Harry Lee, president and CEO of the New Jersey Public Charter Schools Association.

At present, Lee noted, public charter schools do not receive direct state aid for school construction.

Numerous witnesses raised concerns about what would happen to those loans if a charter school folded, noting provisions of the amended bill would place the building — and the debt — at the feet of the local board of education.

“It is our belief that if a charter school should close or have their charter revoked while there is an outstanding loan, the board should have the right of first refusal for that facility, but under no circumstances should they ever be asked to assume a loan that was taken out by a charter school,” said Melanie Schulz, director of government relations for the New Jersey Association of School Administrators.

Schools Development Authority funding pays for those districts’ capital needs, she said, and it’s unlikely they would be able to bear the costs on their own.

Though most of the panel’s legislators hailed the bill, one lawmaker said there is little reason to exclude charters, saying the bill treats them as second-class schools.

“Kids who go to charter schools are disadvantaged vis-a-vis their public-school peers. We’ve heard a while: their overhead costs are greater. The subsidies they get are smaller, and they make do,” said Assemblyman Jay Webber (R-Morris). “There’s no reason why charter schools … should be treated less well than our public schools.”

Private schools, Webber added, should be able to secure some public dollars for school construction, an opinion joined by Assemblyman Gary Schaer (D-Passaic). Schaer voted in favor of the bill, which cleared the committee in a 7-1 vote.

Other amendments to the bill removed provisions that would have required the authority to disburse larger awards to non-SDA districts that follow the model school design specifications the bill requires the SDA to create. At earlier hearings, some advocates warned that because funding was limited, larger awards for such districts would come at the expense of SDA districts. 

The bill would require at least 70% of SDA grant funds to go to emergent or regular projects in SDA districts. The remaining 30% could go to other districts.

The bill does not address funding for the Schools Development Authority, which is estimated to fall billions of dollars short of capital needs in its districts.