Thursday, November 12, 2015

Fair funding for our schools

The proper distribution of state aid to New Jersey's schools has been elusive since the creation of a state income tax in 1976, which was intended to provide a predictable funding source. Over forty years the State has developed several funding formulas and fully financed them only a handful of times. The well-known, long running Abbott vs. Burke court case addressed funding issues for a small number of poor urban districts, leaving insufficient dollars to be distributed among the rest of New Jersey's communities.  Local property taxes to supplement state funding shortfalls have soared as a result.

In the mid-1990s, the state defined a "thorough and efficient" education through core academic standards, and then calculated what it would cost to educate students to those standards. By 2008, the Legislature had adopted the current formula, the School Funding Reform Act or SFRA. The SFRA was based not on school district characteristics but on the needs of students including enrollment levels and at-risk status (economic disadvantage, learning disabilities, and limited English proficiency). Unfortunately, due to the Economic Recession and other priorities, the SFRA has not been implemented as anticipated. 

Earlier this year the Education Law Center (which represents the plaintiffs in Abbott vs. Burke) published a policy brief on adjustment aid (a funding stream in the SFRA) based on data they mined from the 2015-16 Informational State Aid Notices that each district receives from the state's Department of Education. While the focus of the brief was on adjustment aid distribution, the dataset included two other calculations which were intriguing: the amount each district is spending above or below the state-determined adequacy budget; and the ratio between the local tax levy and the state-determined local fair share.

Obviously, districts are at a significant disadvantage if they are not able to spend at least up to the adequacy level. Districts that also tax their residents above the local fair share are in a no-win situation. In summary, the taxpayers in these districts are overburdened, and yet still don't have the resources to fund an adequate budget. 

There are 70 such school districts in the state of New Jersey, including the Newton Public SchoolsThey are found in every region of the state, represent every socioeconomic demographic, and include districts large and small. The following things are also true of the 70 districts:
  • All spend below the adequacy level as defined;
  • All have a tax levy above the local fair share;
  • None receive adjustment aid; and
  • There is no special category of state aid to provide for their needs.
I took the Education Law Center's data from the brief and added a calculation I have called the Funding Fairness Index (FFI). It combines the percentage a district spends below adequacy with the percentage that same district taxes its residents above the local fair share. For example, Newton spends 95% of the adequacy budget (5% below 100%) and has a local tax levy 34% above the local fair share for an FFI score of 39. This index is useful in highlighting the extent of the problem each of these 70 communities is facing.

Regardless of where each district falls on the FFI, we are all truly in need of relief. Therefore, I have proposed that the state create a new revenue category to give us the ability to provide adequate resources to our schools and reduce the tax burden on our local residents. The current shortfall is calculated to be over $373 million, so solutions will not be easy. 

The FFI dataset has been sent to the superintendent of each impacted district. The information has also been shared with the state's Department of Education, key leaders of the Senate and Assembly Education and Budget Committees, and leaders of the school administrators and school boards associations.

It's time for some funding fairness!

1 comment:

  1. Hi, I wholeheartedly endorse your call for funding fairness! New Jersey's aid distribution is appallingly unfair and the more people who know this the better the chance at reform is.

    I just wanted to link to a piece I've written about the ELC's report on Adjustment Aid.

    The ELC made some odd projections and even a basic error in that report.

    The ELC based the alternative Adjustment Aid figures on an assumption that the state would be able to give each district is capped SFRA aid. This is equivalent to another $1 billion in spending and is not reality-based. Also, the ELC made 2014-15 as the base year for the "hold harmless effect" in Adjustment Aid instead of 2008-2009. While this reform is economically possible, it isn't consistent with the letter of SFRA, which is supposed to guarantee every district 102% of what it got in 2007-2008.

    Anyway, the big mistake is that that the ELC conflated "low DFG" with "low wealth" and more than half of the low-DFG districts that would get Adjustment Aid under the ELC's alternative calculations are middle wealth, high wealth, and even ultra-high wealth. This is because many low-DFG districts are at the Jersey Shore and have very few kids relative to their tax bases. Jersey City (DFG B) is a notable low-DFG district that actually has an average tax base per student.

    (my definition of "ultra-high wealth" is any district having a higher Local Fair Share per student than Millburn, or, more than $37k per student.)

    In fact, half of ultra-high wealth districts would get Adjustment Aid under the ELC's calculations, meaning ultra-high wealth districts are more likely to get Adjustment Aid than NJ districts overall.