On November 4th, New Jersey voters will decide on a measure tightening the constitutional restrictions on State borrowing. These restrictions, known as the Debt Limitation Clause, would require voter approval before the State could issue bonds to finance capital or other infrastructure improvements.

However, under a separate provision in the NJ Constitution – the Education Clause – the State is obligated to fund school construction to ensure children a “thorough and efficient” education, especially in the poorest school districts. Will the November 4th ballot measure effect the State’s constitutional obligation to fund school construction?

No. The State remains under a continuing constitutional mandate, established in the landmark Abbott v. Burke education equity case, to fully fund school facilities improvements in NJ’s high poverty urban districts. In addition, the Legislature has extended the school construction program to include school districts statewide. Nothing in the proposed ballot measure relieves the State of its obligation to ensure all public school facilities are safe, not overcrowded and educationally adequate.

As a practical matter, this means that the State must find a way to finance school construction to meet future needs, even beyond the $3.9 billion in additional funding approved by the Legislature this past June.

The ballot initiative will also not impede the State’s ability to finance school construction through so-called “contract bonds,” or bonds issued by the independent Schools Development Corporation (SDA) without voter approval.

A June 2008 analysis by the non-partisan Office of Legislative Services (OLS) concluded that the ballot initiative, if passed, would not foreclose future use of contract bonds to pay for needed and constitutionally required school facilities construction.

First, according to the OLS, the NJ Supreme Court has given contract bonding for school construction special significance because of its link to the constitutional obligation imposed by the Education Clause. In Lonegan v. New Jersey (Lonegan I), 174 N.J. 435, 440 (2002), the Court suggests that contract bonds issued to fulfill the State’s obligation to public school children under the Education Clause are immune from the restrictions in the Debt Limitation Clause.

Second, the OLS points to the contemporaneous passage of the November 4th ballot initiative and Assembly Bill No. 2873 – the June 2008 enactment providing for $3.9 billion in contract bond financing for school construction. OLS cites an Attorney General Opinion that “contemporaneous enactments of the Legislature are to be read consistently” and concludes that the simultaneous passage of the Debt Limitation Clause Initiative and a new wave of school constructing funding without voter approval means that the Legislature intended these contract bonds to be an exception to the proposed amendment.

So no matter what the voters decide on November 4th, the State remains obligated to fund school facilities in the future, and can continue to use contract bonds in order to provide such funding, if necessary.

Prepared: October 28, 2008

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