ANOTHER BIG CAMPAIGN ISSUE: A NEWSCHOOL FUNDING FORMULA

By November "asset monetization"is likely to be in every New Jerseyans' vocabulary. Governor Jon Corzine sees the practice as a way to rescue state government from its fiscal problems. But most folks are skeptical, and Republican candidates in this fall's midterms want to tap into that sentiment andwarn voters that Democrats may pass an unpopular plan in the lame duck session. However, no matter what happens with asset monetization, there's another big issue that lawmakersmay also not deal with untiladdressing until after the election, and citizens should be concerned about this as well. That issue is a new school funding formula.

Yes, last year's special session of the legislature on propertytax reform was supposed to come up with a new school funding formula. It didn't but diddo a solid study that resulted in a list of principles to help guide the entire legislature and the governorin developing a new formula.Even with this guide, lawmakers will still have toaddress several difficultquestions. Whatprecisely constitutes a "thorough and efficient system of education?" How much shouldlocal taxpayers contribute to their school system? Do all the districts currently labeled "distressed" deserve the enormous amount of state aid they receive?And, if a new school funding formula calls for the state to provide more aid to certain districts, from where will that money come?

No wonder this issuemay not be tackled during the campaign season. Nonetheless, there are big pressuresfor creating a new school funding formula. The most obvious one is the ever increasingproperty tax ratesin suburban areas which, despite the new cap, will continue to rise. Especially hard hit are those districts experiencingincreases in overall enrollment and in special needs students. The latter are defined aschildren from low income families, for whom English is a second language, or who have a developmental disability.

A second reason has to do with concerns about the Abbott school districts. Given improvementsin local economies and increases in ratables in some districts, should they still be considered distressed and eligible to have most of theireducation costs picked up by the state? Are the billions of dollars in state aid sent to the Abbott districts spent effectively? Or, are there administrative inefficiencies and patronage jobs that can be cut? Do the improvements in educational performance, which are typically small, justify thehuge amount of money spend per pupil in the Abbott districts? And, wouldresidents of these districtsfeel more invested in their schools, and make those schools more accountable, if they paid a bit moretowards them?

Then there is theequity question that has significant financial and political ramifications.In the absence of a clear definition of what a "thorough and efficient system of education" is, the state supreme court ruled that distressed school districts should receive state aid so that they can spend as much money per pupil as the average of the state's one-hundred wealthiest districts. If this is thedefinition ofevery New Jersey school child's constitutional right,why don't the hundreds of other non-Abbott, non-wealthyschool districts receive enough aid so that they can spend as much per pupil as their wealthy and distressed counterparts?That's a question that educators, parents of school kids, and property taxpayersthroughout the statewant answered.

In the meantime,this spring education advocates pressured thegovernor and the legislature to provide more of what's called extraordinary aid for special education. They had hoped the state would be able to pick up all, or at least eighty percent, of the costs above $40,000 for any special education student regardless of where the child resides.Local school officials also wished thatstate government decided how to provide funding for new school construction and refurbishment. The court has mandated state support for these projects in Abbott districts,but helping non-Abbott districts is at the discretion of lawmakers. While there will be political pressure to help the non-Abbott districts, the state's fiscal condition may prevent it from doing so.

What the legislature and the governor did do in the new budget was increase state aid to non-Abbott school districts bythree percent. This is the first time in five years that those districts have received more state aid. The new budget also includes a hikein direct aid for increases in enrollments and targeted assistance for at risk students, both of which have created financial pressures on many non-Abbott districts.In addition, the state is providing more funds for full-day kindergarten and for pre-school programs.


According to the Joint Legislative Committee on Public School Funding Reform, a new school funding formula should address these issues and more. The committee's final report recommended that a new formula be based on the characteristics of the student population of a district as well as the district's ability to pay. This would mean that state aid would "follow the children" and not be based on geography alone.In addition, the committee wants public-funded pre-school programs for all children who qualify, whether they live in Abbott districts or not, and all-day kindergarten in all districts.

What also needs to be resolved is the cost of a thorough and efficient system of education. The committee suggests relying on "professional judgment panels," a standard practice nationally, to determine the resources needed to achieve educational standards.Any such calculation, however, should also take into account the added costs of educating students deemed at risk, with special needs, and with limited proficiency in English.

What taxpayers will want to know, of course,is who will foot the bill for a new school funding formula.. Well, the joint committee recommended that school districts look seriously at sharing and regionalizing services, adopt best practices in administration and program delivery, find ways to reduce school transportation costs, and cut unnecessary state mandates.Yes, 616 school districts are too many for state the size of New Jersey, but the committee did not decide how many school districts the state should have.However, it did state thatthe Abbott districts should be reviewed and consideration given to making residents in those districts pay more toward their schools.

Along with stricter caps on local property tax increases, some of these recommendationsare already beingconsidered byschool officials. But without requiring districts – Abbott, suburban or rural – to pursue savings measures, education costs will continue to rise. And, if the state plans to help districtsimplement thegoals and programsabove, the cost will likely bea billion dollars or more a year.From where will that kind of money come?

Some Republican legislators have arguedthat hundreds of millions of dollarsof wasteful and ineffective spending can be found in the highpriced, low achieving Abbott school districts. However, the joint committeeproposed a "hold harmless" clause in the new school funding formula, meaning that no district should lose state aid because of the disruption that cuts would likely cause. That may be a politically popular view in the Abbott and high aid school districts butwill make funding a new school funding formula more difficult.

Governor Corzine has already said that he will not support an increase in the state income tax because of the negative effect that would have on the state'sclimate for business. What then? Did anyone say "asset monetization?" After all, the Governorargues that borrowing billions of dollars against the toll roads will enable the state to pay down its debt, thereby freeing up funds fornecessary and goodprograms and policies. Perhaps the advocates of "asset monetization" willtryto sell an otherwise unpopular plan with the promise that it willenablestate government toprovide more aid to schools.

David P. Rebovich, Ph.D., is Managing Director of the Rider University Institute for New Jersey Politics (www.rider.edu/institute). He also writes a regular column, "On Politics," for NEW JERSEY LAWYER and monthlyreports on New Jersey for CAMPAIGNS AND ELECTIONS Magazine.

ANOTHER BIG CAMPAIGN ISSUE: A NEWSCHOOL FUNDING FORMULA