Lawmakers pass new school funding formula
BY CHRIS GAETANO Staff Writer
Lawmakers in the state Senate and General Assembly narrowly passed a bill that would radically alter the way that state aid is apportioned to local school districts, after a tooth-and-nail struggle that, as one assemblyman observed, fell mostly along geographic lines.

The bills, S-4000 and A-500, respectively, are the result of weeks of intense debate and negotiation after Gov. Jon Corzine initially laid out his plan to both increase school funding and change how it is distributed. The governor's initial proposal was formally unveiled to the public on Dec. 13, and since then, supporters have said that time would be of the essence if the new formula is to be applied for the upcoming budget cycle. To this end, there had been a scramble to pass the bills before the end of the legislative session. This was accomplished on Jan. 7, the last day of the 2006-07 legislative session.

Plan has several changes

The plan, as finally passed by the Legislature, remains mostly unchanged from the governor's initial proposal, though there were a handful of changes introduced.

Currently, funding is primarily determined through a school's location, with wealthier areas receiving less aid and poorer ones receiving more. This has led to some criticism, because even in areas where the average income is higher, there may still be students in need who require extra money to educate them. To this end, the proposed fundamental shift focuses not on a district's location but on how many needy children are in the district.

The basic mechanism behind the formula is a base rate given for every student in a district, depending on grade level, determined by how much money the state feels is necessary to adequately educate a child. For elementary schools, this base rate is $9,649. For middle schools, it is $10,035. For high schools, it is $11,289. Students in vocational schools, meanwhile, will net a base rate of $14,789.

On top of these base amounts would be additional funding for each student who is classified as "at risk," of limited English proficiency (LEP), combined at risk and LEP, in special education, or requiring speech therapy. Further aid, depending on need, is also provided for security, transportation, equalization and adjustment.

The plan, which the governor admitted was an expensive proposition, would pump $532 million into the education system, with the exact source of the funding still to be revealed.

The final legislation differs from the governor's original proposal in 17 different ways, many having to do with special education.

Achange that had received a great deal of attention was an increase in how much the state would reimburse school districts for special-education costs. The original proposal called for districts to be reimbursed 65 percent by the state for specialeducation expenditures over $45,000 and 75 percent for expenditures over $55,000. Sen. Barbara Buono, a sponsor of the bill, said that schools in her district craved more stability on costs than the original proposal offered.

"What I heard from my districts is the enormous, unpredictable burden that these costs place on these budgets; it's very difficult to predict from year to year what these costs will be. What the bill did is, it changed that, and I really was very insistent on changing this," said Buono.

Under the new legislation, the state will now reimburse 90 percent of expenditures over $40,000 and 85 percent of expenditures over $55,000. If this is not enough due to an especially high population of students with disabilities, then districts will be allowed to apply to the state for additional aid.

Another provision in the bill that had changed was how much a state would need to devote to property tax relief if the formula determined that a district was taxing above a certain amount. Under the original proposal, if a district was spending more per pupil than what the formula deemed to be adequate, and if the district was taxing higher than what the formula determined to be its local fair share, then any state aid increase over 2 percent would need to be devoted to property tax relief. The final legislation allows a district to also use the consumer price index, a general cost-of-living indicator, or 2 percent, whichever is higher.

Other changes include progress reports to be issued by the state every three years rather than five, cost adjustments due to district location to be made with the census rather than the aforementioned progress report, expanding what counts as "full implementation" of a preschool program from 80 to 90 percent of eligible students, and increases to security aid for charter schools.

Local impacts

With the bill passing both chambers of the Legislature, it only awaits the governor's signature to be signed into law. Local officials were generally in good spirits when learning of the spending plan's passage, noting that it means their own districts will be receiving an impressive jump in state aid. Edison would receive a 20 percent increase, the maximum allowed under this plan, which translates into $3 million.

"When they first told us this funding formula was going to go through, and [Edison would] get a $3 million increase in our state aid, 20 percent, I was thrilled, but I didn't think it was going to happen. … But now that it's passed, I'm thrilled. I've been here since 1986, and this is the first time the state has come up with a real meaningful increase for our state aid here in Edison," said Edison schools Business Administrator Daniel Michaud.

He went on to say that it will definitely help relieve taxpayers with the local tax levy, noting that the state aid they get from Trenton means they will require $3 million less from Edison residents. He wanted to note that budgets themselves never really go down, but that the extra money would mean lower increases not just this year but for many years to come. This is because the state adequacy figures for Edison comes to about $10 million more than what the district is currently spending per pupil.

"We're going to get it again next year and the year after, until we make up that difference in the adequacy level," said Michaud.

Assemblyman Peter Barnes III, a former Edison council member, supported the bill and said that he had long wanted a change in the state aid formula.

"I think overall I have very positive feelings about it. I think overall our district did pretty well. I agree with the premise that the school funding formula should not be based on geographic location but the need of the student, and that has been addressed," said Barnes.

Barnes said that these changes had been something he, Buono, his father (a former member of the Assembly), and Edison Councilman Anthony Massaro, had been trying to accomplish for years.

Another Edison official deeply involved in this process is Mayor Jun Choi, who chairs the Mayors' Committee on School Funding, a group of 22 mayors that met and released a set of recommendations on how the initiative can be paid for. Choi had expressed enthusiastic support for the plan, though he had also noted that it must be tempered with a commitment to fiscal responsibility and accountability.

"The final bill did not include all of our recommendations, but it included many of them. The mayors have been working in partnership with the administration and legislative leaders for a number of months to find common ground and improve [the initiative]," said Choi.

Choi stated that, generally, the principles of greater accountability, the idea of money following the child, and a unified school formula were followed, though he did say the committee was still concerned about the long-term financial viability of the plan.

Metuchen schools superintendent Theresa Sinatra said that it's still too soon to see how the bill's passage would affect the borough, noting that she would need to get the budget guidelines from the state before being able to make an informed assessment. She did voice some frustration, though, that according to her figures, her district would be one of those determined to be spending above adequacy level, and would therefore need to devote a portion of the aid to property tax relief.

"What the state is trying to do is equalize funding and make sure children all across the state receive adequate moneys to make sure their programs are similar and at least have a baseline, but there are districts like Metuchen who choose to do more than whatever adequacy is - they want to be excellent, and it does cost more money to include programs that, perhaps, the state may not feel they would include, or not include," said Sinatra.

Gearing up for a fight

Both opponents and supporters of the legislation have admitted that a court battle is all but inevitable. This is because the legislation dismantles the current funding formula, which was based on a state Supreme Court ruling that established 31 so-called Abbott districts, less-affluent districts that now receive state aid based on bringing them into financial parity with the wealthiest ones.

"The governor is going to court," said Buono.

"The strong likelihood is [the state] will bring it back, or the Education Law Center will - or maybe others will - bring it back," said Paul Tractenberg, president of the Education Law Center and one of the original lawyers on the case that established the Abbott districts.

Tractenberg said that the legislation raises several strong constitutional concerns and he was strongly opposed to its passage, having said in the past that the adequacy formula would leave state aid figures for those districts much too low, among other problems. He said that any changes to the funding formula must have strong built-in protections for the Abbott districts and called the current proposal "water torture that drips [Abbott districts] to death."

"The state would have to convincingly demonstrate [that] some alternative to the parity funding approach really will protect the constitutional interests of the students … those of us who oppose the bill think the state has not even come close," said Tractenberg.

He is not alone in his opposition. While the Legislature managed to pass the bills, it did so only barely, and even then, lawmakers needed to stay at the Statehouse until about 1 a.m. to vote, the debate having gone on for that long. Buono said that a tipping point was the increase in special-education funding.

Barnes said he noticed that the votes didn't form so much along party lines as they did along geographic lines, noting that legislators in more urban districts tended to vote against it regardless of party, and those in more suburban districts tended to support it. Still, he said, there were a few exceptions, noting some lawmakers from urban districts who voted for it and some from suburban districts who voted against it.

The assemblyman said, though, that this was just a manifestation of the inevitable conflicts that arise in politics and said that his job, as a representative of his district, was to choose policy that benefited his constituents, and that the new formula would be much more fair.

"For many years, the suburban districts have not gotten their fair share. … I have to be concerned about the funding we're getting, because we feel we have not gotten the funding we deserved … . We cannot be concerned with what other districts get or don't get; we have to be fighters for our district," Barnes said.