Governor Murphy, Senator Bramnick, and Acting Department of Education Commissioner Angelica Allen-McMillan tour Chatham High School and highlight Increased funding for legislative district 21 at Chatham High School on Friday March 25, 2022(Edwin J. Torres/NJ Governor’s Office).
Lawmakers on the Senate Budget Committee heard praise Thursday for Gov. Phil Murphy’s plan to boost state school aid, but they also heard familiar complaints about how changes to New Jersey’s school funding formula impacted some districts.
The governor’s $48.9 billion budget proposal, announced in March, provides for an extra $650 million in state funding for schools, boosting the total state school aid to more than $19 billion, or roughly 39% of all proposed spending.
“With an increase of $650 million in formula aid, the vast majority of our members — many of whom were chronically underfunded for way too long — are on their way to eventually getting the resources to which they are entitled,” Jonathan Pushman, director of government relations for the New Jersey School Boards Association, told the Senate panel.
Still, he warned, schools that lost state funding when Murphy signed a 2018 law rebalancing New Jersey’s 2008 school funding formula could face further cuts unless the state boosts stabilization aid to such districts.
The 2018 law immediately eliminated enrollment caps that kept underfunded districts from receiving their full tranche of state aid and began drawing down aid to overfunded districts. Those reductions are set to end in fiscal year 2025.
Lawmakers approved $50 million in stabilization aid in the current year’s budget to defray the impact on districts losing formula aid, but Murphy’s proposal for fiscal year 2023 cuts that down to $20 million.
Pushman urged the senators to keep that funding level in the coming fiscal year.
Winners and losers
While the funding formula changes boosted aid to roughly two-thirds of the state’s 600 school districts, other districts saw their allotments fall, and some school officials on Thursday again urged lawmakers to head off those cuts.
“Toms River Schools students need your help. I don’t know how much more we can cut,” said Anna Polozzo, a Toms River Regional School Board member. “New Jersey student learning standards and education legislation demand we teach more each year. The students aren’t getting the education the legislature intended and that they deserve, while the adults scrap over who will pay. I don’t want to scrap over who will pay.”
Polozzo’s district — which educates students from Toms River, South Toms River, Pine Beach, and Beachwood — was an overfunded district whose state aid fell from nearly $67 million in the 2017-2018 school year to $45.4 million in the 2022-2023 school year.
Polozzo urged lawmakers to support a bill that would create a task force to examine the state’s funding formula. The Senate unanimously passed that bill in February, but it has yet to advance in the Assembly.
The state did approve $7.6 million in stabilization aid for Toms River Regional Schools in October, but that approval came too late for the funds to be used in the current school year.
Polozzo didn’t blame Murphy or former President Steve Sweeney, the architect of the formula’s 2018 rebalancing, noting the district had seen cuts in most years of the last decade.
Is 2% enough?
Officials in the district have raised school levies up to the state’s 2% cap to defray the impacts of reduced state aid. Since 2011, New Jersey has limited annual property tax hikes to 2%. That cap can be exceeded in few circumstances or when voters approve.
That cap poses a problem for the regional school district. Though Toms River has the second largest tax base in the state, second only to Jersey City, its tax rates are lower than they are in 70% of the state’s municipalities, according to Department of Community Affairs data.
Toms River, which has the highest school levy of the district’s four municipalities, has a school levy rate of 1.238, lower than 408 of New Jersey’s 565 municipalities. The statewide average school levy rate is 1.462.
(Three New Jersey municipalities did not collect school taxes in fiscal year 2021.)
Including the three other towns in the regional district, 396 municipalities have a higher total tax rate than Toms River. The district also has three high schools, which drive up costs.
It’s up to the towns to raise more money to reach funding adequacy. But the 2% cap, which has proven successful at slowing the growth of property tax rates in New Jersey, could make that impossible, Pushman said, especially as outside economic factors push costs upward.
“More broad cap flexibility, even if temporary, would be useful to all districts as they try to cope with inflationary pressures, supply chain issues, and rising fuel costs,” he said. “While the 2% cap has been an effective tool at controlling property tax growth, since it was enacted, we have not experienced the type of cost increases that could force districts to make difficult cuts to critical staff and programs.”
It’s unclear if the governor would support a bill giving leeway on the 2% cap.
In 2020, he vetoed a measure that would have allowed districts that were seeing formula-based aid reductions and spending below adequate levels exceed the 2% cap without a ballot measure, blaming its breakneck passage during the lame-duck session.
It’s also unclear whether the legislature would approve such a bill. It could be seen as a tax hike, and that would undercut the affordability message legislative Democrats adopted after 2021’s elections.
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