Funding High Schools to Achieve High Academic Standards

New Jersey’s school finance law, adopted in 2008, implements a school funding formula that attempts to ensure all students have the resources needed to achieve high academic standards and graduate as what the state deems as college and career ready. Prior to the SFRA, districts where labeled Abbott districts and were the districts determined as high risk. These Abbott districts would receive extra funding to support high risk per pupil costs. However, in 2007 when the legislation for the SRFA was proposed, “nearly half- 49 percent – of the children who qualify for free or reduced-price lunch, in New Jersey, live in non-Abbot districts”.

The School Funding Reform Act accommodates the funding formula. The SFRA formula determines how state aid is distributed to districts across New Jersey. The formula determines the amount money a district needs to provide a “thorough and efficient” education to the residents of New Jersey. It is a two-step process in which it quantifies the cost of student needs, and then determines how a district will pay for it through local fair share and state aid.

Adequacy Budget

The actual demographics and needs based on the population of a district run through a universal cost model to arrive at the Adequacy Budget. This universal cost model provides addition support by giving different weights for students that are high risk or ELL, for example. This is how districts arrive at the Adequacy Budget. The Adequacy Budget is what a district needs (money) to provide a “thorough and efficient education” per pupil. It is specific to the district because the profile make-up of the district has a “weight” in the formula.

The second part of the funding formula is how a district will determine how it will pay for the needs to provide an adequate education. New Jersey established what is a baseline cost per pupil at the elementary level. Elementary students are considered the baseline and counted as “1.00” students. It gets increasingly costlier to educated students as they get older, so there are higher values for middle schools, high school students and vocational/technical students. It however then takes into account the demographic make-up of a district. The community is part of the formula to provide the local fair share. The local fair share is what the community will pay from its own local tax levy to fund their own district’s education. If the taxes go up in a local community, a portion of it can be earmarked to fund more of the local fair share. The community will pay for it to the extent in which they can, and the remaining deficit will be paid by state aid.

Local fair share is a formula based recommended responsibility of the local community, used to determined how much state aid a district will receive. If a local community does not raise their local fair share, they will be underfunded. Local tax levy cannot be raised above 2%. Thus, in a community in which the tax levy must exceed a raise of 2% to meet their share, it will be under adequacy.

How do rising costs and chronic underfunding of the SFRA contribute to a growing number of districts being below adequacy?

When enrollment decreased, there is a lower adequacy budget. If enrollment increased the adequacy budget grows. The state determines students’ high-risk status if they qualify for free or reduced lunch. The Per Pupil Amounts has weights applied to the funding formula for at risk, low poverty concentration, at risk, high poverty concentration, ELL, and a combination of ELL/At Risk. These weights ae applied to the base cost to determine additional per pupil funds required by the funding formula.

Politicians may have not thought this entirely through; Property value and income does not increase state aid. Districts will be underfunded if staid aid remains the same while district needs are increasing with more enrollment. Urban areas have less access to local fair share. That chronic underfunding has deprived students of essential education resources, including teachers, reasonable class size, tutoring, social supports, and interventions for at-risk students.

Speculate on why low wealth districts are more likely to be below adequacy than high-wealth districts.

Adequacy Budget is funded as a combination of state and local revenue. The SFRA determines the amount of revenue that should be contributed locally called the Local Fair Share. Local Fair Share is based on a community’s fiscal capacity measured by property values and personal income.

In a low wealth district, both the property values and personal income of its residents is traditionally demographically substantially lower that a wealthy district. One of my biggest concern is that the state determines the property rate and income rate multipliers of the local fair share. I can speculate that the actual amount of taxes collected in low income districts is lower than wealthy ones. Thus, the local fair share will be underfunded in low income districts. Any community can have high-risk students. However, the state determines high risk by qualifying for free or reduced lunch. 

Thus, low income districts demographically have rising per pupil costs as they have a higher population of high-risk students. While the SFRA formula provides added weight to the funding formula for high risk students, the local fair share may not be enough to cover it. In addition, “If the per pupil costs in the formula grow faster than inflation, which they typically do, the burden for providing additional revenue falls to the local taxpayer.” The SFRA fails to recognize that some districts simply lack the tax capacity to raise enough money to fully fund their budgets (Farrie, 2020). Local Fair share is what the state determines what should happen vs. what actually really happens. Local fair share may increase every year. However, state aid does not necessarily proportionally also increase.

Under a 2018 revision Senate Bill 2, SFRA is amended to phase out adjustment aid over a seven-year period. Adjustment aid was created to ensure that a district did not loose on any funding it had received previously. State Aid Gaps in low wealth districts have gotten larger and larger. In 2009, the State Aid was underfunded by $1,231 per pupil. In 2020, low wealth districts were underfunded by almost double of that by $2,634 per pupil. While medium and high wealth districts have never been underfunded by more than $600 per pupil. More disheartening, local revenue gaps in low wealth districts went from underfunding of $934 per pupil to underfunding of $2,045 per pupil in 2020 Middle and High Wealth districts have been overfunded. In 2020, New Jersey has 187 districts are “below adequacy” status (Educational Law Center, 2020).

The SFRA provides a national model framework for funding schools, because it attempts to provide equitable access to students in high needs despite the demographic make-up of the district. Basically, ideally educational funding is attached to the pupil and regardless whether these students are in a high wealth or a low wealth income community, they will receive the basic amount of money to provide an adequate education. However, differences in the actual tax levy vs. the local fair share determination, creates a funding gap. Our students in low wealth districts are chronically being underfunded. Currently, in 2020, 78% of districts that are below adequacy are in low wealth communities. There is a deficit of 1.4 Billion dollars of underfunding for low wealth districts in comparison to 21 million in high wealth districts (ELC, Below Adequacy Funding Research, 2020). With the rate of 2020 districts (187) that are below adequacy status, it is evident that the SFRA needs to be revisited to ensure that our children receive their constitutional right to a “thorough and efficient” education.

References

• Farrie, Danielle, January 29, 2020. New Jersey’s Unfinished Business: Adequate Funding for all School Districts. Retrieved from:https://edlawcenter.org/news/archives/school-funding/new-jerseys-unfinished-business-adequate-funding-for-all-school-districts.html
• Davy, Lucille, December 27, 2007. Committee Meeting of Assembly Budget Committee and Assembly education Committee “Discussion on the Governor’s new proposed school aid formula”, Trenton, New Jersey. Retrieved from: https://www.njleg.state.nj.us/legislativepub/pubhear/AEDABU122707.pdf
• NJDOE, 2007. “A Formula for Success: All Children, All Communities.”
• New Jersey School Board Association (NJSBA), New Jersey’s School Funding Formula 101. Retrieved from: https://www.njsba.org/news-information/parent-connections/school-finance-101/
• Educational Law Center (ELC). 2020. SFRA State Summary. Retrieved from: https://edlawcenter.org/research/school-funding-data/sfra-state-summary.html
• Educational Law Center (ELC). 2020. Below Adequacy Districts. Retrieved from: https://edlawcenter.org/research/school-funding-data/below-adequacy.html   

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