Funding

Planning for Improvements with State Funding

'Something for Everyone' Includes Taxpayers

Investments in our school buildings are investments in community assets. Although the Tenafly Public School District (TPS) district makes capital investments every year in our buildings, the current state-wide tax levy cap renders the regular operating budget insufficient to cover needed improvements. Most importantly, the state of New Jersey’s annual budget allocates aid that is only available to districts that are performing bond-funded capital improvements. As a result, districts where voters do not approve bond-funded improvements are effectively leaving that money “on the table” and instead allowing other districts to tap into this state aid which is being funded by our collective taxes. Details below.

A voter-approved referendum is a critical financial planning tool to make approximately $76 million worth of improvements across the district. Only through bond-funded capital improvements can TPS capture a special kind of state aid worth $16.5 million. That’s why this referendum has something for everyone, including Tenafly taxpayers. The chart to the right gives an overview of the costs by site.

The state aid would mean less impact on local tax bills to fund major, long-lasting school improvements.

Taxpayers across the state pay into the revenue for school improvements, but only benefit if their community passes a referendum.
Proposed projects like roofing replacements and HVAC upgrades would break the cycle of continual repairs and improve energy efficiency – keeping future operational costs in check.
Our high-achieving schools bring pride to the Tenafly community, and our aging facilities require attention to meet our needs.

The value of advance planning and the benefits of state aid cannot be overstated. Recognizing this, the Board of Education will ask voters for permission to sell bonds.

State Aid to Reduce Local Tax

The Board of Education has spent years considering what was necessary to maintain Tenafly’s investment in buildings and outstanding educational programs.

Proposed improvements are estimated to cost $76,097,000.
State aid, already promised of $16,536,258, would reduce the amount on local tax bills.
The remaining local tax share of $59,560,742 is projected at $881 per year, per household considering these factors:

the average cost over 20 years (because sometimes bond payments vary from year to year), and
the value of a home assessed at $839,023 (the mathematical average of assessed values in Tenafly).

Important notes: Financial advisors will monitor the bond market to advise on the best time to sell bonds for optimal terms. That up-front funding may not be needed until December 2024 and the bonds could be sold in states if that benefits TPS. The exact terms of this funding process - including the length of the payback - won't be finalized until TPS needs the money and receives competitive bids to get it.

Assessed Value is NOT Market Value

Municipalities use assessed values to calculate property taxes. A home’s assessed value is often much lower than its market value – sometimes half the amount!

Market value can be found on Zillow.com and it fluctuates as housing demand grows and weakens.
Assessed value can be found in the database NJpropertyrecords.com. Enter your address and click to find your “assessment total.”
Hear Business Administrator Stephen Frost explain this in the recording of our Aug. 5 Virtual Forum by advancing to the 1:32 mark.

Bonds are a Form of Borrowing

Public schools sell bonds to generate up-front funding – similar to the way a resident might use a home equity loan to renovate a kitchen or add bedrooms. Investors buy bonds and districts use property tax revenue to buy them back, with interest, over time.

Financial advisors have conservatively estimated the interest rate for Tenafly's proposal at 3.75% for 20 years.
Bonds are sold in a competitive market, so TPS would get the best rate possible. The actual rate will be determined after voters approve the plan and the district considers competitive bids.
Like home mortgages, bonds can be refinanced to take advantage of lower rates in the future.

Up-front funding would allow Tenafly’s schools to see improvements in security, instructional rooms, athletic facilities, auditoriums and building systems within two to three years, while spreading costs for residents – even those who won’t move here for 10, 15 or 20 years – over time.

Why Not Work These Costs into the Regular Budget?

Maintenance projects are always part of the district’s regular operating budget. That budget is capped by state law to grow by no more than 2% each year (unless the district uses very specific waivers provided by the state), and projects funded from that budget do not qualify for the special kind of state aid TPS can get when selling bonds to make capital improvements. State aid is a $16.5 million incentive to seek voter approval of bond funding.

State aid is an incentive to seek voter approval of bond funding.

Referendum projects aren’t the only ways the Board plans a continual investment in Tenafly schools.
State aid that comes with voter approval is not the only pursuit of funding outside the local tax base.

Capital improvements since 2021 have totaled almost $7.5 million. Funding came from the district’s regular local tax levy, whereas similar projects funded through a bond would qualify for state aid to pay a share. These projects include concrete and paving work throughout the district, roofing and brick repairs, restroom renovations, and heating system pipe replacements.

Additional improvements planned or underway total $4.9 million. These projects include the replacement of heat system components and upgrades to electrical and energy management systems, roofing and LED lighting. Those will be funded through a combination of state and federal programs.

The State of New Jersey uses everyone’s tax dollars to help school districts pay for capital improvements. That special kind of state aid is distributed only to districts that use bond funding; the Ramsey, Closter, Westfield Regional and Cresskill districts have already benefited.

School budgets have increasingly become a battle between instructional costs and everything else. It has become almost impossible to meet capital improvement needs within the operating budget.
That’s why a bond referendum is a financial strategy: Voter approval would bring tax dollars back to Tenafly for important and impactful school improvements.

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