More than 160 New Jersey school districts that have suffered through six years of state aid cuts will receive one-time payments totaling $102 million this year through a last-minute bill signed last week in Trenton. But many of those districts’ leaders say the extra money, which is separate from Gov. Phil Murphy’s budgeted school funding, is just a “Band-Aid” and they need a sustainable solution to keep serving their students.
Many of the districts face dropping enrollment, but the aid cuts are driving them to cut programs, increase class sizes, and lay off teachers and staff. For instance, 40 faculty and staff members in Sussex County’s Vernon Township school district were informed March 23 that they would not be returning to their jobs this fall.
The district lost $8.5 million over six years, school officials said. The additional aid from last week’s legislation provides a one-time payment of $211,000.
“We need a long-term systemic solution … this is a Band-Aid. It’s only a one-time allocation,” said Jeanne Howe, superintendent of Jefferson Township Public Schools in Morris County, another affected district. Jefferson will receive $1 million through the legislation, more than most other school districts in Passaic, Morris and Sussex counties receiving the payments.
The Jefferson district’s enrollment dropped 29% since 2010 but its state aid has fallen by 60%, she said.
Jefferson Township will likely spend its $1 million on district technology needs. It is “a one-year source of money, so it’s not as though we can build this into our regular budget account,” Howe said.
Aid cuts larger than enrollment declines
The aid cuts are unfair because they are disproportionately larger than the enrollment drops, Howe said. The per-pupil cost of education has increased with inflation and other needs, she said, compared with when the funding schedule was last updated with a law passed in 2008.
“We have increased costs for educating our students, keeping them safe, having them prepare for the future with use of technology,” she said. “We were in a very different place than when this snapshot was taken.”
The aid cuts started in 2018 through legislation intended to balance funding between underfunded and overfunded districts.
School districts are also feeling the aid cuts more this year because “during the COVID years, there was a significant reduction in operation costs and there were a lot of grants and monies given to the schools,” said Russell Rodgers, Vernon Township’s superintendent, referring to the infusion of federal COVID relief to schools nationwide, called ESSER funds.
The Murphy administration has given no indication it might revisit the cuts given the post-COVID educational priorities schools face in 2023, critics say.
The state Department of Education is required to implement laws that dictate how much money schools receive from the state. But changes to those laws are driven by policy, and outside groups like the Education Law Center have been calling attention to attrition in senior positions at the department.
Kevin Dehmer, chief financial officer and assistant commissioner, who was described by insiders as the department’s school funding expert, resigned in September and joined Rutgers University. In addition, Zakiya Smith Ellis, the chief policy adviser to Murphy and previously the state secretary of higher education, joined an educational consulting firm in July 2022.
Is the 2% tax cap a burden for districts?
The one-time payments approved last week were pushed through by Sens. Vin Gopal, D-Monmouth, chair of the Senate Education Committee, and Andrew Zwicker, D-Hunterdon, both of whom will stand for reelection in November with the rest of the Legislature. The two represent many districts most affected by the cuts.
The funding formula that determines each year’s state aid amounts to districts should have been revised a few years ago to take into account rising costs, said Chuck Sampson, superintendent of Freehold Regional in Monmouth, which is receiving $4 million in one-time aid.
School districts cover their annual budget expenses through a combination of state aid and what districts raise in property taxes. Property taxes cannot increase by more than 2% annually by law, a cap that can be raised only if residents agree. That takes a referendum, but districts hesitate to hold one if they know the measure won’t pass.
Districts affected by the cuts felt the impact even more because of the 2% cap, said Howe, the Jefferson Township superintendent. “I know that district budgets are increasing more than 2% every year … given the spikes in inflation and health insurance,” she said. “The 2% cap is not sustainable.”
‘Policy malfeasance’
The supplemental aid for the 160-odd school districts approved last week covers two-thirds of the drop in total aid between last year and this year. Republicans criticized Murphy and the Democratic-led majority for not reinstating the entire difference in aid for this year from the $10 billion budget surplus.
“This is policy malfeasance,” Sen. Declan O’Scanlon, R-Monmouth, told NorthJersey.com. “It is outrageous that we didn’t solve this problem — see it and solve it two years ago. The reason the protests [from school districts and their elected representatives] get louder and louder each year is because it gets harder and harder to make the cuts.”
Gopal, who also represents many South Jersey districts taking the biggest hit, said he fought for a full restoration of the $157 million in cuts. “Democratic leadership and the governor wanted $50 million originally, but $I04 million was the number I could get leadership and the governor to agree with,” he said.
Gopal said he would push for a new school funding formula, after the budget kicks in July 1, that takes into account “COVID, inflation and many other factors regardless of enrollment declines” that, to his knowledge, were not considered in the 2008 formula.
School funding formula ‘opaque’
School leaders are also frustrated that they do not completely understand the cuts. The 2008 state aid formula is “opaque” even to district leaders and business administrators, said the superintendents Howe and Sampson.
Education advocates and independent experts have also been warning about the harm caused by the formula’s steady cuts. “These unpredictable aid losses from one year to the next are not tenable,” said Danielle Farrie of the Education Law Center.
“We applaud Senators Gopal and Zwicker for listening to educators and public education supporters and working to ensure massive budget cuts are averted,” Farrie said. “But the bill, once again, ignores the central feature of the School Funding Reform Act: adequacy.”
“Adequacy” refers to how much a school district should spend so that every student can meet the state’s academic standards.
The one-time $102 million payout “would still force 48 below-adequacy districts to make over $38 million in cuts, while giving back over $30 million to districts that are already spending above adequacy,” Farrie said. “The state has an obligation to move all districts towards their adequacy targets, not push them further away.”
A 2019 effort led by then-Senate President Steve Sweeney that would have freed some towns losing aid from abiding by the 2% tax cap was vetoed by Murphy, said Jeff Bennett, an independent school funding expert and blogger. In his veto, Murphy said he did not want to place an additional burden on New Jersey’s taxpayers.
“If the residents of these districts really want their schools to be properly funded, they would be happy about raising the cap because they could tap their own tax bases,” Bennett said. “It would be necessary to stabilize educational spending.” He also noted that some Shore districts have very high tax bases but are still receiving aid under the new law.
“It is such a crime that they are getting additional money,” he said.
That puts the ball back in Murphy’s court. The administration is required to review formulas every three years.
“This underscores the need for the governor and commissioner of education to seriously address this and other issues in the required three-year review,” Farrie said. The 2008 formula, called the School Funding Reform Act, has brought New Jersey’s schools closer than ever before to being fully funded, but it needs revising, Farrie and Bennett both said.
“After 15 years, the formula has never been given a thorough, in-depth review to ensure that it is operating at its optimal level,” Farrie said.
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