S 2 A 2

Modifies school funding law to eliminate adjustment aid and State aid growth limit; allows adjustment to tax levy growth limitation for certain school districts

NJEA is not taking a position at this time. However, we do believe that it is important to outline what we think about this bill and how we believe it could be improved.

S-2 (Sweeney, Thompson, Ruiz, Cunningham)/ A-2 (Coughlin, Greenwald, Jasey, McKeon) would provide a mechanism for allocating State school aid from the 2019-2020 through 2024-2025 school years.

Under the bill, a “State aid differential” is defined as the difference between the amount of State aid that the district received in the prior school year (not including educational adequacy aid and school choice aid) less the sum of equalization aid, special education categorical aid, security categorical aid, and transportation aid as calculated under the “School Funding Reform Act, prior to applying the State aid growth limit.  This differential would be calculated for each district annually.

In the case of a school district in which the State aid differential is positive, the differential would be reduced by a certain percentage each school year:

  • 13 percent in the 2019-2020 school year;
  • 23 percent in the 2020-2021 school year;
  • 37 percent in the 2021-2022 school year;
  • 55 percent in the 2022-2023 school year;
  • 76 percent in the 2023-2024 school year; and
  • 100 percent in the 2024-2025 school year.

The bill would exempt three groups of school districts from these reductions:

  • county vocational school districts;
  • SDA (former Abbott) districts that spend below adequacy and are located in a municipality in which the equalized total tax rate exceeds the State average; and
  • non-SDA districts that spend below adequacy by at least 10 percent and are located in a municipality in which the equalized total tax rate exceeds the State average by more than 10 percent.

Additionally, in the case of an SDA district that spends above adequacy and is located in a municipality in which the equalized total tax rate exceeds the State average, the total State aid reduction would be limited to the amount by which the district is spending above adequacy multiplied by the percentage for the corresponding school year.

School districts in which the State aid differential is negative would receive an increase in State aid.  Specifically, each district would receive a proportionate share of the sum of the total State aid reduction from districts that have a positive State aid differential and any additional revenue included in the annual appropriations act for the purpose of providing direct State aid to school districts.

The Office of Legislative Services (OLS) has indicated that the bill would result in increased school aid costs (so this is not just a reallocation of the current school aid amount).  The OLS believes that based on data fromthe FY 2017-2018 school year, nearly 200 school districts would be subject to State school aid reductions while the remaining districts would see aid increases.

The following are bill provisions we believe represent improvements on the idea to simply reallocate specific categories of adjustment aid:

  • Uses the formula to allocate school aid;
  • Increases school aid funding to address almost a decade of underfunding by the previous administration;
  • Takes into account the adequacy budget of districts and the capacity of local communities to raise revenues to support their schools;
  • Eliminates aid categories added by the Christie administration that are based on flat per pupil amounts regardless of district need;
  • Directs school aid to districts that the most underfunded;
  • SDA districts that are spending below adequacy and have a tax rate that is higher than the state average will be held harmless to the previous year.
  • All districts with a tax rate at least 10% of the statewide average and spending at least 10 percent below adequacy will be held harmless to the previous year.
  • Aid reductions in SDA districts with a tax rate higher than the state average and spending above adequacy will be capped at an amount that maintains spending at the adequacy level; and
  • Requires that districts that are spending below their adequacy budget must increase their local share by 2% in any year in which school aid is reduced under the bill;

Although the above changes make this bill better, the NJEA would like to note the following concerns:

  • Timing – This bill is expected to pass the legislature by the end of June when school budgets for the 2018-19 school year have already been determined and corresponding municipal tax rates set to support those school budgets. The school funding changes recommended in the bill will take effect for the 2018-19 school year and will mean that school districts subjected to cuts in school aid may have no option but to cut programs and staff to deal with this reduction.  NJEA believes that a simple solution is to suspend the reductions for the 2018-19 school year and give districts the time to plan for these changes in the 2019-20 school year;
  • We believe that the bill should go even further to ensure that each district’s adequacy amount is the absolute minimum annual spending level by mandating that any district below adequacy must increase their spending to the adequacy level by the 2024-2025 school year. This would ensure that New Jersey would once and for all be meeting its constitutional requirement to provide a “thorough and efficient”
  • education, as determined by its school funding formula adequacy budget calculation, for all public school students;

The NJEA thanks the bill sponsors for keeping school funding front and center in recent years and for their willingness to improve on the original idea and this bill.  We agree with the urgency and importance of this issue and ask that the legislature make this bill even better by addressing the concerns outlined above.

Text of bill S 2

Text of bill A-2

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