Toward Reliable, Sustainable School Funding

On Jan. 13, 2008, Gov. Jon Corzine signed into law the School Funding Reform Act of 2008, the new state funding formula for schools.

The act increases state aid to education by $532 million in 2008-2009, guaranteeing a minimum 2-percent increase for every district. Many districts, notably non-Abbott districts with high concentrations of low-income students and growing enrollment, will see state aid increases up to 20 percent.

The new school finance system represents a significant departure from previous school funding methods in that it blurs the distinction between Abbott and non-Abbott districts.

It requires districts to provide a local “fair share” contribution of property taxes to support schools, and establishes an “adequacy budget” for each district. The adequacy budget is based on the expenditure needed to provide a thorough and efficient education, as well as enrollment and factors such as the number of special education students and at-risk, or poor, students.

Significant changes include the distribution of a large share of special education funding on a wealth basis and a requirement that some districts direct part of their state aid increases to property tax reduction. Districts affected by the tax-reduction requirement are those that are already spending above their adequacy budget and which have school tax levies above their fair share contribution, as determined by the formula.

While NJSBA appreciates the increased aid to a large number of districts, it continues to oppose certain elements of the new law. For example, the Association objects to provisions forcing some districts to apply part of their state aid increases to property tax reduction; distributing special education aid on a wealth-equalized basis; and using per capita income, rather than property wealth alone, as a factor in determining a district’s fair share contribution to education costs.