Can NJ Fix Its Messy School Funding Formula?

March 29, 2023

It’s a complicated situation.

New Jersey’s school funding formula, which is supposed to equally provide all students with the chance to get a good education, is constantly being tweaked because some school districts wind up getting more or less than they need based on a variety of factors that change frequently.

After the allocation of funding was modified this year, Gov. Phil Murphy and legislative leaders quickly agreed to provide districts getting less money than they had originally anticipated with a financial aid package worth more than $100 million.

But what happens next year, and can the school funding formula ever get straightened out?

It’s a complicated problem

According to Marc Pfeiffer, the assistant director of the Bloustein Local Government Research Center at Rutgers University, this is a complex public policy problem.

He said the state must meet a court-imposed standard for how education money is to be distributed to ensure a thorough and efficient education while balancing the ability of taxpayers in different parts of the state to pay for that education. At the same time, the state must take into account how much money different districts really need.

He said what’s happened over the years is the state has come up with different funding formulas, but when it’s determined a school district should get less funding, that district has already created a financial spending plan based on their previous funding. That means they must either cut staff salaries, cut programs or raise property taxes.

Pfeiffer pointed out they can’t raise property taxes much because of state-mandated property tax caps and “there’s no practical way to simply reduce salaries to people when aid gets cut because you’ve got teachers contracts, you’ve got staff contracts, you’ve got individual contracts with superintendents and administrators.”

Schools need predictability

He said schools need predictability “and they also can’t be expected to absorb large cuts to their budget because there’s no practical way, unless you give their property tax cap relief, that they can raise more money locally.”

He said while the courts and or the state may decide a district must get less aid, “the practical implementations of implementing that are very, very difficult to do, and in many cases impossible.”

He said the Legislature was well-intentioned when they crafted a school funding formula that would reduce funding significantly if it’s determined a district doesn’t need the money it is getting, but to try and change things in one year doesn’t work.

How do we fix the problem?

Pfeiffer said instead of slashing school aid for some districts a better approach for the state could be to expect districts to slowly make budget reductions until they catch up to the formula.

Ater the school funding formula was overhauled 15 years ago, many thought it would be equitable and work well, but the economy has gone through changes and other factors including Superstorm Sandy have impacted communities in different ways. The result has been a reshaping of school districts and in some cases, the wealth of different communities to support them.

He said to improve the situation the state must find a better way to deal with a constantly changing school district landscape.

That could mean “holding districts harmless for a period of time, providing a limit for how much is going to be cut, and provide some certainty of that over a couple of years as best they can, and be more proactive about addressing economic changes and updating formula criteria on a regular basis.”

WPG Talk Radio, March 29, 2023

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