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This week former Senate President Steve Sweeney’s Center for Public Policy at Rowen University published a report that aims “to provide insights and inform the public debate on the fiscal policy challenges that New Jersey faces as the administration and legislative leaders enter into the final weeks of negotiations on a state budget for Fiscal Year 2023, which begins July 1.”
The sweeping report, written by a bi-partisan group of experts, covers Economic and Revenue Forecasting, Overall State Budget Expenditures, State Aid, Medicaid and Healthcare Spending, and NJ Transit. Depending on revenue collected by the state in the form of taxes, the report presents three scenarios for New Jersey’s ability to maintain its current spending levels: 1. Baseline; 2. Pessimistic; and 3. Optimistic. The calculations are based on assumptions that the Federal Reserve is lifting short-term interest rates, NJ’s portfolio will decrease, there will be a lagged effect of the phase-out of federal COVID relief, energy prices will increase, and there will be ongoing supply-chain issues.
What’s the result? Total state spending is projected to rise from $49 billion in Fiscal Year 2023 to $57.6 billion in FY 2027. That’s a total increase of 17.4% over four years that averages out to 4.4% a year and includes the ramp-up in school spending to comply with the school aid formula called the School Funding Fairness Act of 2018.
Here are two other education-related issues the report addresses:
- Formula aid to education, which makes up almost 20% of the budget, is projected to increase from $9.9 billion in the FY23 budget to $11.8 billion, including a pair of $300 million increases in the FY24 and FY25 budgets.
- Pension contributions for teacher and state worker retirement funds are projected by the state actuary to decrease from $5.73 billion to $5.7 billion by FY27 as a result of the state ramping up to make its full Actuarially Required Contribution in FY22 for the first time in over two decades.