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.”
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.
