Atlantic City Public Schools Facing Supreme Financial Crisis [UPDATED]
We have been talking daily about the significant and ever-mounting financial problems currently facing Atlantic City on the city purpose tax side.
In a Hurley in the Morning / WPG Talk Radio 1450 investigative report, we can now confirm that there has been a significant ripple effect that is also creating a supreme financial crisis for the Atlantic City Public Schools system.
On Thursday, March 10, 2016, I had a wide-ranging, one hour interview with Atlantic City Board of Education President John Devlin and the Interim Superintendent Paul Spaventa.
We have learned much more since this interview. The details follow here.
Devlin is also a long-standing sworn Atlantic City Police Officer. As such, he is directly affected by both the city and public schools financial crises.
Unless a deal with the state can be brokered beforehand, on or before April 8, 2016, Atlantic City will have no money to pay its bills.
This means that police, fire, emergency rescue, and other key Atlantic City employees will have to continue to protect and serve. Yet, they may face the financial hardship of not getting paid for their work.
To their credit, they have confirmed that they will continue to do their jobs regardless of whatever financial crisis hits.
This would turn them into quasi-volunteer public safety servants, who will be forced to collect unemployment benefits at the same time.
In most cases, the unemployment benefits would fall well short for those affected to be able to provide, food, clothing, shelter and other essentials for their families.
Hopefully before this occurs, the state of New Jersey, Atlantic City Mayor Don Guardian and City Council can arrive at a compromise to avert this financial disaster from taking effect.
However, at this time, Governor Chris Christie and New Jersey Senate President Steve Sweeney are on one side, and New Jersey General Assembly Speaker Vincent Prieto and Atlantic City are taking the opposite position.
Speaker Prieto has repeatedly confirmed that he will not support any legislative efforts that gives the state the power to touch any collective bargaining agreements.
The current legislation would give the state full financial and operational control of the city.
The sides are far apart. To try and raise money fast and stave off a state takeover, the City has formally sought requests for proposals to sell the iconic and valuable Bader Field partial. This is "priceless" water front property that Revel owner Glenn Straub and others want to purchase and develop.
The City has placed a minimum bid of $150 million for the property. That's a dramatic reduction from the more than $ 800 million that Penn National Gaming offered Atlantic City back in January, 2008.
Tragically, Senator Jim Whelan and others did everything in their power to stop this sale from happening.
Then Casino Reinvestment Development Authority Chairman Thomas Carver called Penn National's proposal, "a scam." Further, Carver said, "I think they're trying to steal Bader Field. They're undermining a public process that this industry has faith in. The City would be foolish to support this," said Carver.
Let's fast-forward to 2016 (just 8 years later); How foolish do these words from Carver look and sound now?
Atlantic City could have had more than $ 800 million right before the Great Recession hit so hard?
It would have solved all of Atlantic City's financial problems. The city has plummeted from a valuation of $21 billion down to the present $7 billion.
At the same time, the Atlantic City casino industry has dropped from a
$5.2 billion to $2.6 billion annual gaming jurisdiction.
So desperate for cash, the city has borrowed hundreds of millions under very bad financial terms. They also owe substantial 9 figures in successful tax appeals won by casinos and other property owners.
This now makes Atlantic City a desperate seller, who is willing to entertain selling its largest, most viable partial of water front real estate for as low as $ 150 million.
Since my definitive on-air interview last week, I have confirmed from well-placed high-ranking Atlantic City Board of Education sources that they have been told by the City that there is no money on hand to pay the required school tax payments to the Board of Education.
This now places the Board of Education in the exact same position as the City. If this is not averted, the public schools district will not have the money to meet its district obligations.
It's unacceptable that our children would not receive their public education.
Our state Constitution requires by law that a "Thorough and Efficient" education is required to be provided.
I strongly believe that the state will make funds available to keep the public schools open.
They really have no choice. The payments to keep the schools open would have to be made. But, they would come with many strings attached, and, no doubt with further state oversight assigned.
Now is the time for real leadership.
Since this story was originally sourced, the city confirmed that they will make the required school tax payment. But, going forward, unless the city strikes a deal with the state, the school district will soon experience the same fate as the city. There simply will be no money to meet the district's financial obligations.
Update 12N 3/22: I just interviewed Atlantic City Board of Education President John Devlin. I've confirmed that the administration proferred an idea to spend up to $30,000 to hire a special legal counsel to sue the City of Atlantic City for Board of Education tax payments. Devlin confirmed to me moments ago that, "as long as I am the Board of Education president, we will not sue the city. It would be like suing ourselves. And the city has been operating in good faith. So, unless I am countermanded by the state or the fiscal monitor, we will not sue the city under any circumstances."