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Guest Column: Brick Superintendent on The ‘Paradox’ of N.J.’s School Funding Formula

‘S2 – A Formula for Inadequacy’

Brick Township Board of Education/Schools (Photo: Daniel Nee)

Brick Township Board of Education/Schools (Photo: Daniel Nee)

The following column on challenges facing the Brick community in the wake of proposed school funding cuts was authored by Brick Township Schools Superintendent Dr. Thomas Farrell, and sent to Shorebeat with a request for publication.

The Paradox of the Current State of School Funding in New Jersey
S2 – A Formula for Inadequacy
by Thomas G. Farrell, M.B.A., Ed.D.

“The hallways of Trenton are filled again with the normal hustle and bustle… when legislators determine what our state’s funding priorities should be. Inevitably, there are winners and losers. This is especially true when it comes to education”, stated an op-ed article in the Press. School funding and its impact on school districts’ budgets have its tentacles in everything fiscal. Let me illustrate the paradox that exists in New Jersey’s school funding formula by explaining the process and the current inequities. Some districts that are below “Adequacy” and face major reductions in State revenue sources due to “Senate Bill 2” (“S2”) have no mechanism for relief. Each year S2 is active, these districts are driven further away from Adequacy with many now millions “below adequacy”. We need an equitable solution, such as a plausible existing mechanism for relief in the form of “Adequacy Aid” for those districts under Adequacy and negatively affected by S2.

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Thomas G. Farrell (Credit: Shore Regional School District)

Thomas G. Farrell (File Photo)

In 2018, Senate Bill 2 (“S2”) was passed and this law sought to “rebalance” the state’s funding formula established in the School Funding Reform Act (SFRA 2008). Under S2 “Adjustment Aid” was basically eliminated. It’s important to note that the new bill only aimed to deal with the inequities caused by the formula; it did not tackle the formula itself. The impetus for this law was to fully fund and “rebalance” the State’s formula established under SFRA. Its purpose was to ensure “adequate” funding by emphasizing a district’s “adequacy” budget and directing appropriate funding accordingly. On the contrary, it negatively affected some districts that were substantially under adequacy to start.

The school funding formula focuses on an “Adequacy Budget” as its baseline. In theory, the adequacy budget is the funding level necessary so as to provide a “thorough and efficient” (“T & E”) education to EVERY student. The State sets “baseline” numbers in the Adequacy Budget and the “Local Fair Share”. Numbers that are created by complicating and confusing formulas. The paradox is that the State sets this Adequacy Budget without providing relief nor affording a mechanism for ALL districts to reach it. Even though the State does not mandate Local Fair Share as a funding level, they do determine the local wealth factors along with multipliers for property values/incomes. All while still requiring the statutory 2% property tax cap (instituted in 2010 when the inflation rate was 1.5%).

Some districts in the state are way below adequacy and have been negatively affected by S2. Until S2 passage, these districts were able to utilize Adjustment Aid as a means to subsidize their budgets. Since the inception of the statutory 2% tax levy cap, the lone mechanism for relief is Adequacy Aid – but this categorical aid is unavailable to these districts at this time and there is no application process afforded currently. Since its revision (N.J.S.A. 18A:7F-58) and under S2, Adequacy Aid dollar amounts were “frozen” at current levels of $83.4M for just 7 districts (see NJDOE State Aid 2022-2023).

Brick Schools is way under adequacy by $9.4 million in 2022-2023 and projected to increase to $17M below adequacy in 2023-2024, with a Cost-Per-Pupil of $15,500, and has had State Aid reduced substantially (-49% under S2). S2 claimed that aid would be cut commensurate with enrollment decreases, but that is not true for Brick, with an enrollment having only decreased 10%. Brick’s current budget can only generate $2.4M due to the State mandated 2% tax levy cap. Thus, as we further fall below adequacy, it would take Brick over 7 years to catch up to other districts. Meanwhile, class sizes will continue to increase with Brick averaging around 30 in elementary classes with some as high as 34. In addition, staff will be reduced and programs will be cut to balance a budget (which is the law). These are lost opportunities for students. Brick Schools is efficient, yet effective; with one of the lowest cost-per-pupil and Administrative costs in the state. Brick students are held to the same standards and deserve the same opportunities as other students in the State. Brick Schools is forced to do more with less with the same expectations.

Over the last 5 years, the State of New Jersey’s fiscal budget went from $36B to a present $53B, a 40+% increase! The New Jersey Department of Education’s fiscal budget over the last 5 years has increased 32.3%. Taxpayer monies has increased the State coffers to allow to increase State Aid for School Districts. Brick Schools budget has only gone up 6.9% (abiding by the mandatory 2% Tax Levy Cap) and our State Aid afforded to Brick has DECREASED -49% (over $23M) over the same time. With inflation, cost-of-living increases, and other costs increasing substantially, we are in the “perfect storm” fiscally. State aid to the effected S2 districts has been reduced at an exorbitant rate that far outpaces what these districts can replenish annually and put back. These are dire times financially and Brick Schools is bleeding budgetarily. Where is the money going? Not to Brick!

The State Funding Formula is not equitable and flawed. The loss in State Aid under S2 to certain districts has been further compounded budgetarily by extreme inflation that has increased major budget categories such as healthcare, transportation, energy, etc. These fixed cost increases have far exceeded the 2% tax levy cap. This is the “perfect storm” and we need the State’s help. The State can change this.

A short-term solution is for the State to utilize some of the unspent billions in federal dollars received, in reserve, and re-allocate to those districts negatively affected by S2 and below adequacy. More importantly, the State should re-look at Adequacy Aid and how it is dispersed presently as immediate relief, re-purposing that money based on change in school aid funding over the last five years (revision of N.J.S.A. 18A:7F-58).

A long-term solution is that the State MUST re-evaluate the school funding formula so as to provide a thorough and efficient education for ALL students in New Jersey by striving to bring ALL public school districts to adequacy – the State’s base threshold established constitutionally. Additionally long-term, a larger Federal role could help so that there is no disinvestment in public education. For example, more Title III monies afforded to districts who have seen a substantial increase in ELL students (”immigrant status”) such as Brick.

Some districts, such as Brick, are simply running out of time. We need to save these districts from falling off the financial cliff. The time is now for us to advocate for our efficient and effective school districts left behind from S2. We cannot allow the NJDOE’s education malpractice and Trenton’s insouciance to continue.

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