These days almost everyone agrees that the way New Jersey doles out aid to its public schools is unfair. There is less agreement on what that means or how to fix it.
Tensions in Trenton are running so high that Democratic leaders in the Senate recently threatened to shut down state government unless Gov. Chris Christie and other lawmakers yielded to their ideas for reforming the state’s school aid formula. The last time the government shut down, in 2006, it temporarily closed courts, MVC offices and even Atlantic City’s casinos.
With that discord as a backdrop, school funding has emerged as a central issue in this year’s race to replace the term-limited Christie as governor. Not only does school aid consume more than a third of the state budget, crowding out spending on other initiatives, but candidates are also pushing for reform as a way to reduce New Jersey’s highest-in-the-nation property taxes.
“Any gubernatorial candidate that speaks to solving the property tax crisis without first addressing our school funding is either oblivious or being disingenuous,” Assemblyman Jack Ciattarelli, a Republican candidate, said last month. “You cannot solve the property tax crisis in this state without first addressing the inequitable distribution of K through 12 funding.”
The candidates’ policy positions on school funding all reference, in one way or another, New Jersey’s existing law, known as the School Funding Reform Act of 2008, which uses a weighted formula to steer money to school districts based on their number of high-need students and ability to raise revenue through property taxes.
That formula was supposed to help funnel aid to districts with large or growing numbers of poor students. Confronted with other budget concerns, however, Christie has never fully funded it.
The formula is currently underfunded by about $1 billion, or roughly 3 percent of the state’s current $34.6 billion budget, according to the Newark-based Education Law Center, an advocacy group.
The formula has also been blasted by critics for a provision that imposes funding caps on districts with increasing enrollment and another feature, called the “hold harmless” provision, that protects districts from funding cuts even if they lose students or experience other demographic changes.
That has resulted in some districts receiving far less aid than the formula says they should get, while other districts get more.
The four main Democratic candidates for governor — former Goldman Sachs executive and U.S. ambassador to Germany Phil Murphy, former U.S. Treasury official Jim Johnson, Assemblyman John Wisniewski and Sen. Raymond Lesniak — are united in their calls for the state to fully fund the School Funding Reform Act, or SFRA.
Doing so, they say, would help local officials reduce school tax levies while improving the quality of education and expanding the programs districts can offer.
Murphy summed up the candidates’ overarching position during a gubernatorial debate last month: “Chris Christie … gives us the impression the formula somehow has failed. He’s failed the formula. He never funded it.”
The candidates have also said they would impose a moratorium on the creation of charter schools, which supporters say offer parents a choice of where to send their children but which detractors argue worsens segregation and takes much-needed dollars away from regular public schools.
Less discussed among the candidates, however, is that fully funding the SFRA will put even more strain on a state budget that’s already in dire fiscal straits. An analysis released last week by Moody’s Investors Service said that New Jersey’s annual operating deficit could reach $3.6 billion by 2023 unless structural budget changes are made.
All the Democratic candidates have proposed some combination of tax increases and the closing of corporate tax loopholes to fund their school funding and other proposals.
Murphy, for one, has said that “everything’s on the table” as far as taxes are concerned and has committed to raising taxes on high-income earners and taxing the sale of marijuana if it is legalized.
Some candidates have endorsed other reforms that would either reduce or add to the cost of fully funding the SFRA.
Lesniak, for example, said during a debate last month that the state should end the SFRA’s “hold harmless” provision that protects some districts from funding cuts. Staff at the Senate Democratic office, which has been working on legislation to tweak the law, has said that doing so could free up as much as $540 million from over-funded districts.
Johnson, meanwhile, has called for universal pre-K and after-school programs for middle school students. Those proposals are music to the ears of many education advocates, but it’s unclear how the state could pay for them.
The two main Republican contenders — Lt. Gov. Kim Guadagno and Ciattarelli — have been more circumspect about their promises on school funding, although both have stopped short of proposing to scrap the SFRA altogether as Christie had toured the state advocating last year.
Ciattarelli has called the SFRA “blatantly flawed” and wants to redirect state aid from “the most extremely overfunded school districts” to districts that receive less than what the formula says they should be getting.
“A town’s state aid should go down as its ability to pay goes up,” he said during a debate last month.
Guadagno also supports ending so-called “hold harmless” aid to over-funded districts. She says she would rededicate that money to property tax relief and special education programs.
“In that way, all districts will share equally to the extent they have students in need of special education services,” Guadagno writes on her website.
Ciattarelli has blasted municipalities like Jersey City and Hoboken for the use of payment in lieu of taxes, or PILOT, agreements that he says hides their true property wealth and allows them to receive more state school aid than they should.
He has also proposed forcing every district to fund at least 25 percent of its operating budget and construction costs through local property taxes — a requirement that would cause taxes to skyrocket in low-wealth districts like Paterson, where the local tax levy pays for only $41.5 million of its $550 million budget.
Guadagno, meanwhile, wants every municipality to pay its “fair share” toward funding its schools — an amount determined through the SFRA based on a community’s property wealth and other factors. She, too, has criticized Jersey City and Hoboken for not paying enough toward local school costs.
Guadagno is anticipating a lawsuit challenging any changes made to the formula, a development she told The Record’s editorial board in March that she would welcome because it would require creating a “full, fleshed-out record” so political leaders can “find out what the facts are” as they try to rethink how the state disburses school aid.
Such a lawsuit would continue a tradition in New Jersey of school funding-related litigation that dates back to the 1980s. The existing School Funding Reform Act was found to be constitutional by the state Supreme Court in 2009.
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