1. The real impact of the Governor’s proposed formula is completely masked by $860 million in "adjustment aid." This aid is being distributed politically behind closed doors to buy votes. (A December 16, Star Ledger editorial called it "hush money, designed to keep lawmakers quiet.") Without this aid, the proposed formula would have no chance of passage. But "adjustment aid" is NOT a part of the regular formula. There is no guaranteed funding source this year or in future years. The Governor is trying to win support for a bad funding formula with an unreliable budget promise.
2. The Governor’s plan relies on a base per pupil cost of $10,324. This is almost 10% below the current average base cost throughout the state, and more than 13% below the average base cost in the state’s wealthiest school districts. If this lower "foundation" or base cost is adopted, it will eventually force staff and program cuts in many districts and "level down" the quality of education.
3. The plan does NOT "hold everyone harmless." The approximately 200 districts that would receive a 2% aid increase, including 24 of the 31 urban Abbott districts, would not keep pace with non-discretionary increases such as previously negotiated contract costs, rising fuel prices, and higher health care costs. They would face major cuts in the coming budget year. The districts that receive increases of less than 5% may face similar pressures. Even districts that receive larger aid increases may not make up for the State’s failure since 2002 to fund the existing funding formula, CEIFA. There is plenty of potential for harm in this proposal.
4. The lame duck rush to pass the proposed formula is not necessary to increase State aid to low and middle-income districts. The Governor could increase State aid to non-Abbott districts through the State’s existing formula. This would provide both immediate budget relief for those districts and more time for the careful consideration and public debate needed to develop a credible funding formula that is fair, adequate and sustainable.
5. The Governor’s proposal does not adequately address the central problem of low State share. Without the ad hoc "adjustment aid, which can disappear at any time, the proposed formula would actually reduce State aid to local schools by over $300 million. It would not increase the overall State share of local spending which is 43%, well below the national average of 50%. (Some statistics put NJ’s state share as low as 37%.) Increasing long-term, sustainable State aid to local school districts is the best way to reduce pressure on local property taxes. The Governor’s proposal does not provide that.
6. The proposed changes in Special Education Aid are complicated and potentially harmful to special needs students and their communities. For the first time Special Education Aid would be distributed on the basis of community wealth, average "classification rates," and a one-size-fits-all amount regardless of the type of student disability. There is no time and no justification for considering such dramatic changes in a lame duck, holiday session.
7. While the proposal to expand the successful Abbott pre-K program to more districts and children has wide support, no funding source has been identified to accomplish this. The details about pre-K that have been released so far suggest the new formula could undermine existing Abbott pre-K programs. The challenge of sustaining the quality of current pre-K programs while developing plans to expand them is one more reason this should not be rushed.
   
8. The negative impact of the plan on New Jersey’s Abbott districts would be immediate and devastating. Twenty-four of thirty-one Abbott districts would face cuts in next year’s budget. Many would lose massive amounts of aid once the formula went into full effect. For example, Jersey City would lose $111 million, Newark, $88 million, East Orange $39 million and Vineland $42 million. The Education Law Center estimates the total loss of Abbott aid would be over $600 million. All Abbott districts would lose the right to apply for needs-based "supplemental funding." The "special needs" designation that was applied to these districts by the NJ Supreme Court after twenty years of legal battles and many decades of separate and unequal schooling would also be eliminated.
9. Accountability for effective educational use of State aid would be reduced in several ways. Some districts would be directed to use State aid for property tax relief instead of school programs. Abbott districts would no longer be required to use dedicated funds for specific, demonstrably effective programs like after-school and summer school. State responsibility for school improvement, in the Abbott districts and elsewhere, would be limited to implementation of the new QSAC process. QSAC (Quality Single Accountability System) is untested as a school improvement process and does not monitor the programs and services required by Abbott. Moreover, the recent management audit by KPMG of the NJ Department of Education found that the Department lacked the capacity to carry out its responsibilities under the QSAC legislation.
10. The "Cost Study" which serves as the basis for the Governor’s proposal is unreliable and out-of-date. It is based on models developed by the NJDOE five years ago and did not meet professional standards for review. Corrections made this year by NJDOE consultants in response to public criticism do not reflect reliable current estimates of the cost of programs and services needed to meet New Jersey’s Core Curriculum Content Standards.

Prepared: December 18, 2007