In Case You Missed It: New School Funding Formula Has Same Old Problems

IN CASE YOU MISSED IT...
 New school-funding formula has same old problems
Editorial, Home News Tribune, December 31, 2007 

The bill that would change the way New Jersey grants aid to its schools runs 160 pages and is a testament to the terribly complicated formula that seeks to bring parity to the state's more than 500 school systems. And yet the central dichotomy at work in the aid formula — the notion that the aid is viewed in some quarters as education funding and in others as tax relief — is ever more evident.

When the bill was finally released to the public in the days leading up to the Christmas holiday, more than 100 of the state's districts learned the fairly sizable increases in aid the bill promised them were something of an illusion. According to the wording in the bill, those districts spent more than the state believed they ought to have spent on education, and so the majority of their aid is to go to tax relief, not education spending. In East Brunswick, more than $1.5 million of its $2 million increase in aid would have to be directed at property-tax relief.

Meanwhile, a ceiling Gov. Jon S. Corzine instituted as a means of holding down property taxes, which limits tax increases to 4 percent annually, remains in effect, so high-spending districts may get a double whammy.

Corzine is getting a great deal of mileage out of his oft-stated and lauded proposal to give aid to poor children regardless of where they live, a formula change that is likely to bring much-needed money to working-class towns all across the state — towns that were not part of the original 30 Abbott districts that qualified for extra funding.

But while the change may bring more money to some needy districts, it isn't radical enough to solve either the state's education-funding crisis or its property-tax woes, because despite adding more than $500 million in education aid, Corzine's bill won't drastically alter the percentage of education funding supplied by the state. In New Jersey, local property owners pay 60 percent of the cost of education; the state pays less than 40 percent, more than 10 percentage points below the national average. According to the New Jersey School Boards Association, the state should pick up at least half of the tab, but even the $500 million in additional aid next year will increase the state's share of spending by only 3 percent. Meanwhile, there is no evidence the increase in the state's share will continue after the hold-harmless provision of the bill runs out in three years. There certainly isn't enough money in state coffers to suggest it will ever pick up an additional 10 percent of the tab.

As long as property taxes fund a disproportionate share of school funding, there will be constant pressure to use education aid to push down the cost of those taxes, not fund education. There is further irony here: The new school-funding formula continues a long-standing tradition of determining a community's wealth by combining its income and its property wealth. The irony, of course, is that the state gives aid based partially on its assessment of income wealth, but local governments are not allowed to tap into that income wealth. They must rely wholly on property taxes.

Is there any greater evidence that the state has got the formula wrong? Instead of rushing to adopt a formula that contains many of the weaknesses of its predecessors, maybe the governor should spend his time and political capital working out a formula that not only accurately assesses wealth but accurately taxes it, too.

There is little doubt that there are a boatload of struggling communities that deserve more aid from the state. So let the governor give out his planned increases. But do it without forcing through a piece of legislation that seems to inflict as many wounds as it heals. Find a third way and take a year to discuss it thoroughly.

As expected, advocates for urban school districts resumed their whining last week about being shortchanged on state school aid in response to newly released funding figures. If there is any whining to be done, it should be in Ocean County and parts of Monmouth County. Actually, it should be screaming, not whining.

Last week, Gov. Corzine unveiled a new school funding formula billed as the first step in addressing some longstanding inequities. Suburban and rural districts have been shortchanged for years when it comes to school aid and per-pupil spending. The old formula has failed many middle- and lower-middle-income districts badly, including most districts in Ocean County.

Statewide, under the proposal for 2008-09, school aid would increase an average of 7 percent, with about half of the state's 616 districts getting increases of 10 percent or more. None would get less than 2 percent. In Ocean County, which has the sixth-lowest household family income in the state, only five of 30 school districts would get more than the 2 percent minimum. Monmouth County would be treated more kindly. Yet, only 17 of 55 districts would receive more than 2 percent.

Two Shore-area districts would fare particularly poorly — Sen. Andrew Ciesla's 10th District, where just one of 13 school districts is in line for more than 2 percent and outgoing Sen. Joseph Palaia's 11th District, where only five of 29 districts would receive more than the minimum. The legislative delegations there need to make some noise.

Under the new plan, 20 of the state's 31 poorest school districts, the so-called Abbotts, would receive the minimum increase. But to make the new formula more palatable to urban lawmakers, it includes a "hold harmless" provision, which ensures that Abbott districts that now receive more aid than they would under the new formula wouldn't have any aid taken away from them. The state would allocate $860 million to districts which, under the formula, otherwise would not be entitled to it. Corzine has promised there would be no decreases in aid for those districts for at least three years.

One reason most of the Abbotts would receive the minimum 2 percent increase in aid next year is because they have received almost all of the new money allotted for education in the past five years. Between 2002 and 2007, the Abbotts received an average 6 percent annual aid increase, compared with an average 1 percent increase in New Jersey's 585 other districts. And the aid to the Abbotts continued to pour in despite sharp drops in enrollment.

While suburban districts such as Jackson, which experienced a 19 percent spike in enrollment between 2000 and 2007, were flat-funded, Abbott districts such as Asbury Park, where enrollment plummeted 28 percent during that same period, continued to get massive influxes of aid. Other Abbott districts that continued to receive substantial increases in funding while experiencing substantial drops in enrollment include East Orange (down 13 percent), Hoboken and Irvington (11 percent) and Jersey City (down 8 percent).

In Ocean County, during that same time frame, school enrollment rose 27 percent in Southern Regional and 9 percent in Barnegat and Stafford. Only Stafford, which would receive an 8 percent hike in aid, would be getting more than the bare minimum.

There are other, less parochial, reasons not to like the new school aid formula, beginning with its allocation of an additional $530 million in funding — little of which will be applied to property tax relief — and its failure to offset that increase with improved efficiencies and cost-cutting measures. New Jersey spends more on education than any state. Its deficiencies are related to waste, mismanagement, its profusion of school districts and overly generous employee benefits. New Jersey should be spending less money on education, not more. And it should be allocating it in a way that is fair to all taxpayers and all children in all communities.

The new school funding formula helps right some of the inequities. But it has not done enough for middle-class and lower middle-class districts. And it has done nothing to address the disgraceful waste of resources. 

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