Now that the School Funding Reform Act of 2008 (SFRA) has squeaked through the NJ legislature and been signed into law, what will it mean for New Jersey’s urban and suburban schoolchildren, especially those who are most at risk? An OC/OS analysis finds a handful of gains for some districts, but a much longer list of negatives and concerns.

Governor Corzine’s budget address on February 26 did little to dispel these concerns. Though the Governor noted that State aid to school districts would increase by over $500 million, he did not address the many questions the new funding formula raises, including how districts receiving a 2% increase in aid would be able to balance their budgets given fixed costs that are increasing by 4-5% or more.

In addition, the Governor made no mention of funding for the expanded preschool program proposed in the SFRA. Nor did he address other areas dependent on State funding, from supplemental programs for at-risk students to facilities construction and the controversial new system for funding special education.

While the Governor’s address focused on the state’s longstanding fiscal problems, the fact that he mentioned the increase in funding as if the SFRA would take care of all other issues related to State aid to schools was disconcerting. This is especially true since the increase in school aid is largely "adjustment aid," which is not part of the regular SFRA formula and is dependent on the year-to-year budget decisions of the legislature.

There are many other negative elements of the SFRA:

• Not only does the new law end the Abbott designation set forth by the State Supreme Court, it also does away with the Abbott accountability process, which requires funds to be spent on specific mandated programs, such as summer school and tutoring
• The SFRA ends the appeals process for needs-based supplemental funding in the Abbott districts.
• The cost basis of the SFRA is faulty. It is based on a 2003 cost study commissioned by the NJ Department of Education, which has been criticized by many education advocates, as well as education experts hired by the State to review the report; faulty methodology and very low base costs were cited by the experts (See "State's Own Experts Criticize Education Cost Study")
• The adequacy amount is inadequate. The 2007 base cost in the Abbotts and IJ school districts was $13,100 per pupil; the new adequacy number is an average of $10,200 per pupil, nearly $3,000 per pupil less!
• The SFRA does not solve the basic problem of over-reliance on local property taxes to fund education. New Jersey contributes less than most states to local school costs (an average of about 40%, while the national average is 50%, and many NJ districts receive much less than the state average). The SFRA does not significantly raise the state’s share.
• Although it sets an "adequacy level," the SFRA does not mandate that school districts spend this amount. Districts can choose to spend below adequacy.
• The 2% increase in State aid "guaranteed" to many Abbott and other districts will not cover non-discretionary increases, such as teacher salaries that have already been negotiated through collective bargaining and utility and transportation costs. This plan does NOT hold districts "harmless" as promised.
• Despite promises to expand the nationally-recognized Abbott preschool program, the SFRA doesn't specifically earmark money for that purpose.
• Under the SFRA, State special education aid to districts is based on a statewide census model and average costs, factoring in community wealth, rather than on actual student need, which is the current practice.
• Adjustment aid, which was added to the SFRA so that no district would experience a decrease in State aid in the coming school year, is arbitrary. It is not part of the regular formula, and it is unclear how or whether it will continue, or if it will increase over time.
• QSAC, the State’s newly adopted accountability mechanism for local school districts, is untested and inadequate for the enormous accountability role it has been assigned under the SFRA.
• Questions remain under the SFRA about how charter school funding levels will be determined: will state aid pass through local districts, or will Abbott districts have to pay higher per pupil costs to charter schools from their existing "frozen budgets?"

Positive elements of the SFRA are few and far between, but it should be noted that the new funding formula:

• provides additional resources for the education of poor children outside of Abbott districts;
• provides additional resources for the education of limited English proficient children outside of Abbott districts;
• supports preschool expansion with an expressed commitment to replication in other districts of Abbott program quality standards for preschool;
• requires an updated education adequacy report in order to evaluate the cost basis for the formula every three years.

For more information, see www.ourchildrenourschools.org.

Prepared: March 11, 2008