The Challenges Facing New Jersey’s Public Schools:

A Statement of Beliefs

July 2005

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During the next four years, New Jersey and its public schools will face serious challenges, ranging from reform of the school revenue system to closing the achievement gap and directing limited resources to the classroom. In this paper, the New Jersey School Boards Association summarizes its beliefs on the role and responsibilities of the state and federal governments and local school districts in public education.

The New Jersey School Boards Association, a federation of district boards of education, advocates the interests of school districts, trains local school board members, and provides resources for the advancement of public education.

Issues facing public education include—



Teaching Our Students

Academic Standards

Assessing Student Progress

The Achievement Gap

Student mobility

Early childhood education

Reducing class size

No Child Left Behind


Funding and Managing Education

Property Tax Reform

New Jersey ’s School Finance System

Local Cost Efficiency

Cost control of public employee benefits

Sub-contracting services

Shared services


Labor Relations

The negotiation climate

Oppose automatic increments

Scope of negotiations

Special Education Costs

S-1701’s Costly Restrictions

Helping Communities Build Schools

Better Federal Funding for New Jersey

Federal poverty guidelines

Funding ‘No Child Left Behind’

The promise for special education


Teaching Our Students

Academic Standards

The New Jersey School Boards Association is a long-time supporter of statewide academic standards for all public school students. Standards describe what students should know and be able to do by the time they graduate. These academic goals should also form the basis of how New Jersey funds public education. If we want students to meet standards, school districts must be able to provide the necessary textbooks, technology, activities, staffing and facilities. 1

Assessing Student Progress

To enable all students to meet the state’s standards, New Jersey’s assessment system should give teachers the ability to identify areas of individual academic need. A 2000 New Jersey School Boards Association study recommended the following changes in the state testing program:

The state’s assessment method, above all, must accurately measure student progress. That goal may require further changes in the standardized tests currently used, as well as approaches beyond traditional “paper and pencil” exams. 2

The Achievement Gap

Gaps in student academic achievement exist between wealthy and poor school districts and among children of various economic and racial/ethnic backgrounds within the same community. To close this gap, schools must identify the individual students who are lagging behind, accurately determine their area of academic need, and provide remedial services. To complete these objectives New Jersey needs a system to track students as they move from district to district and from school to school.

Closing the gap will also require commitment to early childhood education, reduction of class size, and adequate school facilities.

Student mobility


A 2000 New Jersey School Boards Association study identified student mobility as a deterrent to student achievement in many school districts. Students who change schools frequently may suffer academically and socially. They are more likely to repeat a grade. They also tend to be low-income, inner city, migrant or limited-English-proficient children. 3

The NJSBA study cited a student tracking system in Texas that enables educators to identify the causes of student mobility, to create centralized student records and to develop specialized programs. NJ Smart would reflect many of the recommendations found in the NJSBA study.

Early childhood education


New Jersey requires and funds full-day Kindergarten in the Abbott districts and other poor communities. But for other school districts, New Jersey provides state aid based on the cost of operating half-day Kindergarten—even if a full-day program is offered. The system makes it difficult for middle-income districts and other communities to establish and/or maintain full-day Kindergarten.

Research shows conclusively that full-day Kindergarten contributes to children’s future academic and social growth. From 1983 to 2001, the number of New Jersey school districts offering full-day Kindergarten grew from 78 to 264. But for nearly half of those communities, the current finance system makes it difficult to maintain their programs.

NJSBA advocates changing the system, so that the cost of operating full-day Kindergarten is factored into the state aid calculation for all school districts that provide the program. The Association also supports efforts to give all children the opportunity to attend pre-school. The state should encourage partnerships between school districts and other organizations to provide quality early childhood education services for young children and their families.

Reducing class size

A 2000 New Jersey School Boards Association report cited federal research, Reducing Class Size: What Do We Know?, which shows significant increases in student achievement when class sizes range between 15 and 20 students. Smaller classes, especially in the early childhood and primary years, enable teachers to provide the attention needed to overcome the disadvantages of poverty.

NJSBA would support the establishment of a state-supported matching-grant program to help school districts reduce the average class size in Kindergarten through Grade 3 to no more than 18 students per certified teacher.

No Child Left Behind

Enacted in 2002, the No Child Left Behind Act (NCLB) represents unprecedented federal involvement in the operation of the nation’s public schools. Nonetheless, the Act gives state departments of education significant authority over its implementation.

The New Jersey School Boards Association supports the principles underlying No Child Left Behind:

The public deserves accountability about school performance. Additionally, to ensure that all children meet academic standards, our schools need to measure the academic progress of students of various racial/ethnic, economic and education groups so that educators can determine the effectiveness of programs.

Nonetheless, elements of the federal law and state decisions on its implementation detract from these principles and goals. Most significant, the small subgroup size established by the New Jersey State Department of Education—20 students for most categories—intensifies flaws in the NCLB reporting process, resulting in misperceptions about a school’s academic progress.

NCLB requires states to measure and report test results for the total student population and each of ten student subgroups to determine a school’s and a school district’s Adequate Yearly Progress.

New Jersey sets its subgroup size at 20 for all but disabled students. In comparison, Pennsylvania and New York set the minimum at 40. Nationwide, the average subgroup size is 30 students.

The result: In New Jersey, subgroup test results affect the AYP status of more schools and districts than in other states. In fact, an entire school could be labeled as not making adequate progress because of the test scores of a handful of children in only one of the subgroups.

Change in federal law The New Jersey School Boards Association supports proposed legislation to amend NCLB. Developed by the National School Boards Association, the legislation would change the law’s reporting requirements and system of sanctions for schools that do not make adequate progress—without compromising the goals of NCLB. The proposal would also provide adequate federal funding.

NJSBA seeks changes to NCLB that would—

1 The New Jersey School Boards Association participated in the initial identification and establishment of New Jersey’s Core Curriculum Content Standards in 1996. The Association also played an active role in the most recent review of the academic goals, a process that resulted in a revised set of standards in 2004.

2 NJSBA participates in a coalition consisting of statewide education and business organizations and the Department of Education, which is studying ways, beyond standardized testing, to assess student performance. 

3 A system to track the academic progress of all New Jersey students—called “NJ Smart”—is nearing completion in the state Department of Education. The program would enable educators to address the obstacles facing students who move frequently. However, the 2005-2006 state budget contains no appropriation for NJ Smart.

4 NCLB requires that all public school teachers be “highly qualified.” This means that they must have state certification for the subject field and grade level in which they teach. Another NCLB provision requires that schools in need of improvement contract with “approved” supplemental service providers for remedial assistance to students. Yet, these private supplemental service providers are not required to hire highly qualified teachers, as are the public schools.

5 To be highly qualified under NCLB, a special education teacher at the middle or high school levels must be certified in all content areas that she teaches. This provision does not dovetail with New Jersey’s certification standards and ignores the important training needed for special education instruction.


Funding and Managing Education

The New Jersey School Boards Association believes that our state can attain adequate funding for public education and school property tax reform through a strategy that includes—

Property Tax Reform

Reducing high property taxes—and determining how and when to do it—is one of the most pressing issues facing New Jersey.

Opinion polls, including an NJSBA-sponsored Eagleton Institute survey, indicate that New Jersey residents recognize the primary cause of high property taxes—namely, an imbalance in school revenue sources. Surveys also indicate that voters will support an increase in the state income tax if it results in a proportionate decrease in property taxes.

The National Education Association’s Ranking of the States illustrates the problem: New Jersey places 4 th highest among the 50 states in the percentage of school costs funded by local property taxes—58.9%—in 2004-05. That same year, New Jersey state government paid only 38.3% of school district operating costs.





Local Taxes


State Aid


Federal Funds


New Jersey








Nationwide Average







The property tax is regressive; it has no relationship to income. The tax burden, therefore, falls heavily on people of moderate and fixed incomes. Many of them are senior citizens.

By overburdening homeowners and other residents, the overuse of property taxes also erodes the community support that is essential for school programs and services.

Tax Shift A New Jersey School Boards Association study of school revenues recommended balancing of the state’s current, major funding sources. The NJSBA proposal consists of—

The proposal represents a tax shift, not a tax increase. In fact, NJSBA would support a change in the income tax only if it is matched by a reduction in school property taxes. This tax shift would evenly balance the property taxes and income taxes going toward schools statewide.

Balance Income + Property Taxes NJSBA’s study examined other states’ school revenue systems. It concluded that New Jersey’s main sources of school funding—the local property tax and the state income tax—are sound.

At the heart of the issue is the overuse of the property tax—not the property tax itself, according to the NJSBA study. Tax reform, therefore, should focus on shifting a portion of school revenue away from the local property tax and over to the state income tax. Methods to achieve the shift could include direct subsidy to municipalities to reduce property tax bills; a "circuit breaker" that would limit property tax liability for people on fixed incomes; a statewide equalized school property tax rate; or an income tax credit based on property taxes paid.

Special Legislative Session Up to now, however, public debate has focused less on a specific tax reform plan and more on the type of forum used to develop a tax reform strategy. The state Legislature has two methods under consideration: a Constitutional Convention and a Special Legislative Session.

The immediacy of the issue makes the Special Session the wisest alternative. A Constitutional Convention may not issue recommendations until 2008. A Special Session could meet within weeks.

The Special Session concept has strong support in the Legislature. Seventy-three lawmakers are co-sponsoring the Special Session bills (SCR-20 and ACR-99). That number represents a majority—over 60%—of the membership in both houses.

Moreover, there is no lack of tax reform proposals for the Special Session to consider. Legislators, other state officials and organizations have announced proposals. Many of them are “revenue neutral” and would balance school revenue sources, without increasing taxes or school expenditures.

New Jersey ’s School Finance System

Key members of the state Legislature indicate that the state’s school finance formula—the Comprehensive Educational Improvement and Funding Act of 1996 (CEIFA)—is no longer viable. In fact, the state has not funded the CEIFA formula as intended since 2001-02. As necessary school expenses have grown, flat state funding has resulted in property tax increases to fill the gap.

NJSBA believes that the following principles should guide school funding:

Local Cost Efficiency

Local school districts have a responsibility to ensure cost-efficiency. State law and policy should enable—rather than restrict—local school districts’ ability to implement cost-saving strategies.

Cost-control of public employee benefits

State Health Benefits Unlike private insurance carriers, the New Jersey State Health Benefits Program does not permit local school boards to implement cost control through negotiations. For example, school districts cannot negotiate employee contributions to the cost of individual coverage. They cannot negotiate different levels of coverage for various groups of employees. They cannot negotiate the amounts of deductibles and co-payments. They cannot offer employees incentives to waive duplicate coverage.

Due to market conditions, the State Health Benefits Program remains the only viable employee health insurance option for a significant number of school boards. Currently, 48% of the state’s school districts belong to SHBP. For these districts, the program’s restrictive structure prevents them from negotiating valuable cost-containment strategies.

A coalition of public employer organizations—NJSBA, the New Jersey State League of Municipalities, the New Jersey Association of Counties and the New Jersey Council of County Colleges—is advocating changes in law and regulation to make the SHBP flexible and affordable.

Employee Pensions A serious issue facing the new Governor will be the financial stability of New Jersey’s public employee pension programs. NJSBA believes that frequent piecemeal enhancement to pension benefits, without consideration of the costs, have been a major contributor to the problem. The Association advocates a comprehensive approach to improving the pension system—one that ties benefit levels to reliable funding sources.

Sub-contracting services

Sub-contracting services has provided schools with significant savings in areas, such as transportation, maintenance and food services. A 1999 NJSBA report indicated that school districts statewide saved more than $28 million through subcontracting. They directed the funds to the classroom programs and/or property tax relief.

Shared services

New Jersey has yet to realize the full cost-saving potential of shared services in areas such as transportation, special education, administration, maintenance and recreation. The New Jersey School Boards Association believes that the new Governor and Legislature should consider expanding and funding a state grant program that encourages school districts and local governments to developed shared-service arrangements.

The existing Regional Efficiency Development Incentive Program (REDI) and the Regional Efficiency Aid Program (REAP) have resulted in efficient and effective shared service arrangements. In recent years, however, the programs have fallen victim to state budget cuts.


New Jersey should encourage, but not mandate, regionalization of local school districts, according to the most recent study of the issue. The bi-partisan Assembly Task Force on School District Regionalization (1999) found that consolidation could result in higher costs. Its study cited increases in the cost of transportation, administration, and teacher salaries that could occur when school districts merge.

NJSBA supports state aid for regionalization feasibility studies. Such studies provide objective data that allow communities and their voters to decide on regionalization based upon its impact on costs, tax rates and state aid, as well as educational programming. The Association also supports changes in education funding statues to eliminate financial and tax barriers to regionalization.

The final decision on school consolidation must remain with the voters of the affected communities.

Labor Relations

Collective bargaining in the public schools must balance employees’ interest in fair compensation, students’ rights to a thorough and efficient education, and the public’s interest in cost efficiency.

The negotiations climate

Employee compensation makes up more than 75% of local school district expenditures. The negotiations process, therefore, must balance employees’ need for fair compensation with the community’s education goals and financial resources.

The current climate of public sector negotiations works against such a balance and tilts the bargaining process in favor of unions. A major factor is the absence of strong anti-strike provisions in statute. The void enables unions to use the THREAT of strikes as a bargaining tactic to pressure school boards into concessions.

NJSBA advocates enactment of strong anti-strike legislation. Such a law would eliminate the threat of strikes as a factor in bargaining. It would set automatic daily fines and eventual de-certification for local teacher unions that engage in illegal strikes. 2 The concept is similar to New York State's Taylor Law, which has been an effective strike deterrent.

Oppose automatic increments

A 1996 state Supreme Court decision ( Board of Education of the Township of Neptune v. Neptune Township Education Association) ended a requirement that school boards give their teachers incremental raises upon the expiration of three-year agreements even though a new contract had not been reached. NJSBA successfully argued before the court on behalf of local school boards. Automatic awarding of increments established an artificial floor from which unions would negotiate a new settlement and put school boards at a disadvantage. Restoring this requirement, as proposed by the unions, is not in the public’s interest.

Scope of negotiations


NJSBA supports the current scope of topics that can be determined through collective bargaining in public employment. Bargaining between school boards and teachers is currently limited to salary,

benefits, and working conditions. Excluded are negotiations over educational policy matters, which are properly determined by the public’s representatives in open meetings. Expanding bargaining to include matters such as class-size, curriculum, and student discipline would place decisions on education policy behind closed doors and could increase the cost of contract settlements.

Special Education Costs

Local school districts’ costs for special education far exceed funding provided by the state and federal governments. The gap is filled by local property taxes. Substantial property tax relief would come from state and federal payment of a larger share of special education costs. It would also help local school districts provide necessary general and special education programming and services.

A 2000 New Jersey School Boards Association study of special education funding recommended state payment of all special education costs per pupil above a district’s cost per pupil for regular education. As an interim goal, NJSBA advocated legislation, enacted three years ago, under which the state would provide aid for a significant portion of “extraordinary” special education costs. Unfortunately, the new state budget falls short by $39 million of what the legislation requires in 2005-06. That $39 million must be covered by local property taxpayers. 3

On the federal level, special education has been chronically under funded. Thirty years ago, Congress promised to provide 40% of the cost of educating children with learning disabilities. Since that time, federal funds have never amounted to more than 15% of the cost nationwide. 4

S-1701: Costly Restrictions


Enacted in July 2004, S-1701 (Chapter 73, Public Laws of 2004) placed constraints on school district financial operations that could result in higher costs and force the postponement of needed facility projects. S-1701 restricts the size of school district surplus (or “rainy day” accounts) to 2%, requires state approval of local budget transfers, and places unnecessary limits on administrative spending increases.

For local school districts, the consequences of S-1701 can include—

Proponents of S-1701 cited property tax relief as one reason for the law. However, S-1701’s forced reduction of surplus accounts will result in property tax hikes next year.

Myth of Administrative Spending S-1701 supporters point to administrative spending as a rationale for the law. However, state and federal data show that New Jersey schools are not administratively top heavy.

A-3680 received unanimous Assembly approval on July 2. With its Senate counterpart (S-2329), the bill would give school districts needed flexibility in developing their budgets. The legislation would counteract many of the restrictions placed on schools by S-1701.

A-3680 would—

Helping Communities Build Schools

The Educational Facilities Construction and Financing Act of 2000 gave significant benefits to New Jersey’s local school districts and their property taxpayers.

The law provided $2.6 billion in grants to non-Abbott districts to cover a minimum of 40% of eligible construction costs. Before the facilities act, property taxes funded the most, if not all, project costs in the majority of school districts. 5

The grant program reduced the amount of borrowing—and local property taxes—that school districts needed to raise for construction projects. It encouraged community support for needed school facilities. 6 Most significant, the program benefited students by upgrading schools and alleviating overcrowding. Student enrollment in New Jersey has increased nearly 30% in the past 15 years.

New Jersey is approaching a critical juncture in terms of facility funding. The state Department of Education has issued a notice that grants for the non-Abbott districts will be depleted after September 2005. Additionally, the funding designated to meet the Supreme Court’s requirement for the Abbott districts was always considered short of the total amount that was needed.

At the same time, the New Jersey Schools Construction Corporation, the state agency created to manage construction primarily in the Abbott districts, has been subject to criticism for operating inefficiently.

Federal Funding for New Jersey’s Schools


In 2004-05, the federal government paid 2.8% of the total cost of elementary and secondary public education in New Jersey, according to the National Education Association’s Ranking of the States.That figure represents the lowest percentage level of federal support among the 50 states. (In comparison, Connecticut’s level of federal support is 6.0%; New York’s is 6.6%, while Pennsylvania’s is 8.3 %.)

Additional federal funding for New Jersey’s schools would relieve high property taxes and would enhance school districts’ ability to provide services. NJSBA believes the issue warrants serious attention both by our representatives in Washington and by our leaders in Trenton.

Federal poverty guidelines

Funding for many federal programs is based on the percentage of a community’s students with family incomes below the federal poverty line. Each year, Washington adjusts the poverty threshold for inflation. However, it does not consider regional cost differences. For a family of four, the poverty benchmark is $19,350, regardless of the state of residence.

Due to its high cost of living, New Jersey is shortchanged in the distribution of federal aid. A 2000 New Jersey School Boards Association study concluded that incorporating regional cost differences into federal poverty guidelines would promote fairer allocation of federal funding.

Calculating a “true” poverty line for New Jersey results in a much higher number than the federal benchmark. For example, a “cost-of-living calculator” offered on line by CNN-Money Magazine shows that $19,350 for a family of four in Lubbock, Texas would equal $29,657 for that same family in Linden, New Jersey.

A 2005 study by Legal Services of New Jersey produced even higher numbers. The study examined the costs of housing, childcare and healthcare in all 21 counties. It calculated minimum incomes needed by a family of four to live without public assistance. Results included—$45,492 in Union County; $44,736 in Essex; and $50,100 in Middlesex.

Funding ‘No Child Left Behind’

Federal funding for No Child Left Behind Act is inadequate. For example, New Jersey will spend an estimated $35 million in 2005-06 to alter and expand its testing program to accommodate NCLB, according to a 2003 paper issued by Leadership for Educational Excellence (LEE), a coalition of the state’s major educational organizations. The figure is $23 million less than the amount our state is expected to receive from Washington to implement NCLB testing.

The U.S. General Accounting Office has reported that, nationwide, the cost of testing students in reading and math from 2002 through 2008 will range from $1.9 billion to $5.3 million. The total funding shortfall for the entire nation could be as large as $3.9 billion, according to LEE.

The promise for special education

Thirty years ago, Congress promised to provide 40% of the cost of educating children with learning disabilities. Since then, federal funds have never amounted to more than 15% of the cost nationwide.

Full funding of the federal commitment to special education would produce significant property tax relief in New Jersey.

The Individuals with Disabilities Education Improvement Act of 2004 (IDEIA) authorized an increase of $2.3 billion in federal special education funding each year. If the actual money appropriated by Congress matched the authorization levels, the federal government would attain its 40% funding commitment by 2011. Unfortunately, Congress is already off schedule. In 2005, it appropriated only $10.7 billion in federal special education programming, rather than the $12.4 billion authorized by IDEIA.

1 Income is not taxable at the local level and, therefore, is not a good indicator of the school district’s overall ability to pay for education.

2 Although teacher strikes are not legal in New Jersey, they take place on occasion. Existing law provides only that a court issue a back-to-work order upon the school board’s request. Court penalties for violating back-to-work orders have been inconsistent and have not served as an effective deterrent.

3 The extraordinary aid program was designed to help public schools cover state- and federally required special education costs, such as out-of-district tuition for learning and physically disabled pupils as well as their transportation and housing needs. In some cases, these expenditures can exceed $200,000 per pupil.

4 The Individuals with Disabilities Education Improvement Act of 2004 (IDEIA), authorized an increase of $2.3 billion in federal special education funding each year. If the actual money appropriated by Congress matched the authorization levels, the federal government would attain its 40% funding commitment by 2011. Congress is already off schedule. In 2005, it appropriated only $10.7 billion in federal special education programming, rather than the $12.4 billion authorized by IDEIA.

5 Prior to the 2000 school facilities act, 240 districts received no state funding for facilities. Another 108 received 25% or less of their construction costs from the state.

6 Following enactment of the facilities act, voter approval of school-construction referendums rose dramatically —especially in those communities that previously received little or no state aid for construction. In the act’s first year, the approval rate for construction proposals in those communities increased from 60% to 90%.