Lakewood Schools Shut Down After $30M Shortfall

LAKEWOOD, NJ — The Lakewood School District is shut down Monday because the district does not have a certified school budget — which it does not have because there is a $30 million shortfall after Gov. Phil Murphy signed the state's 2019-2020 budget on Sunday.

That means all of the district's extended school year programs are shut down as of Monday. Summer camp programs run by the Lakewood Recreation Department at district schools are shut down. Lunches, which had been provided to all of the rec department's summer camps, are not being provided. And public school special education students who receive busing to their extended year programs defined through their IEPs are not receiving that busing.

The $30 million is funding David Shafter, the state monitor assigned to the district, has said is needed for the district to meet its obligations, including busing and special education. The funding was promised by Murphy's office, but was not included in the budget put forward by Senate President Stephen Sweeney and approved by the state Legislature.

"We are not talking luxuries," said Michael Inzelbuch, the school district's attorney, during a conference call with parents and staff late Sunday night. "We are talking about a thorough and efficient education for our public school students."

For a school district budget to be certified, the district must show it has the funding to meet what it expects to spend, with the business administrator signing off and saying the funding does exist.

But because the state budget does not include that $30 million, the district has no way to certify that it has a source for that money, and Shafter and Robert S. Finger, the interim business administrator, have refused to sign off.

"You cannot spend money unless you have a budget that has been approved and that has a source of funding," Inzelbuch said.

Private schools will continue to operate and will have buses this summer because summer transportation is privately contracted by those schools, Inzelbuch said.

"We apologize for what Trenton has done," Inzelbuch said Monday during the school board meeting. The shutdown was announced Sunday, leaving parents scrambling to make other arrangements at the last minute.

The school district's shutdown was announced Sunday evening and in the conference call late Sunday, Inzelbuch said the district, which had budget meetings in mid-March, after Murphy's budget address, and in early May, had received assurances from Glenn Forney, the deputy assistant commissioner of the Division of Finance for the state Department of Education, that the district would receive the funding.

In addition, the Department of Education was expected to grant a $5 million deferment to the district of its repayment of a loan taken to cover a previous shortfall. That was not included in the budget either, Inzelbuch said.

The two issues causing the most stress on Lakewood's budget — busing for private school students and the high cost of special education services for public school students sent to out-of-district programs — are ones where the district's hands are tied by state mandates. Busing for private school students — or a stipend when busing isn't provided — is a state law.

Inzelbuch noted the state Department of Education is the one that approves special education schools where public school students with disabilities receive out-of-district services, and that the state approves the tuition rates. Among the state-approved schools is the School for Children with Hidden Intelligence. That school has come under fire over its tuition and has been in the spotlight since its founder, Rabbi Osher Eisemann, was charged in 2017 with misusing the school's funds. He was found guilty in February on a charge of money laundering and sentenced to 60 days in jail, a sentence prosecutors are appealing because they argue it is insufficient.

The school receives nearly $2 million per month in tuition from the Lakewood School District and other public school districts for special needs students; the 2018-19 tuition rate for SCHI was $509.51, or $106,997.10 for a 210-day school year program.

"The tuition rate is set using a state formula that is based on the 'reasonable, ordinary and necessary' costs to educate the students, and all tuition funds must be used strictly for operating expenses of the school," state officials have said.

On Monday morning, the Lakewood school board passed several resolutions, including paying employees through June 30, as several worked through the weekend as they waiting for final word from the state on what would happen with the budget.

The board also passed a resolution urging the state legislature to pass Assembly Bill 5441 introduced by 10th District Assemblyman David Wolfe that would create an Ocean County-wide transportation authority to bus private school students and remove that burden from districts struggling with the costs. In addition to Lakewood, Toms River and Jackson are seeing increased costs for private school busing. The state had operated a pilot program in Lakewood, but the Lakewood School Transportation Authority ceased operating at midnight and was not renewed in the budget.

Another resolution put Lakewood Township officials on notice, approving legal action against the township over the district's need to provide courtesy busing due to hazardous walking conditions for students. The intent will be to force the township to pay for the busing, citing continuous approvals of new construction that increase hazards for students. Inzelbuch pointed to the recent approval of a project on the site of the Route 70 flea market as an example.

"You build houses nonstop," Inzelbuch said. "It's a great gig. It's approved, and then we bus everyone. We have no control over construction here" but the district is left with the burden of busing.

"(T)he township, through their construction approval process and land use regulations is responsible to ensure safe and adequate transportation routes for all students," the resolution says.

It was not known how long the shutdown will continue. The district has filed an emergency relief motion and Inzelbuch said a decision was supposed to be rendered Friday but is expected sometime this week. Shafter said they are hoping to have something in place to reopen the district for Tuesday but nothing has been settled.

Until the situation is resolved, however, the district is closed. Inzelbuch drove the point home about the financial crisis when someone in the audience mentioned that it was cold in the meeting room.

"Please shut the air because we don't have money for that either," he said.

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