Skip to content
Link copied to clipboard

Long held up as a model, N.J. school funding system facing legal challenge

The Jersey City school board has sued the state over its plan to cut $27 million in aid to the district in the next fiscal year. Eight other districts previously filed suit over cuts.

Gov. Phil Murphy's proposed state aid cuts to a number of school districts are facing legal challenges.
Gov. Phil Murphy's proposed state aid cuts to a number of school districts are facing legal challenges.Read moreSeth Wenig / AP File

New Jersey’s school-funding formula is held up as a model by education advocates. But the state is confronting a new legal challenge from a district that says the Garden State isn’t sending it enough money.

In this case, the Jersey City school board has sued the state over its plan to cut $27 million in aid to the district in the next fiscal year. Eight other districts, including one in Atlantic County and another in Ocean County, previously filed suit over cuts.

The suits take aim at a complicated system, and beyond the details, they underscore the messy realities of paying for public education: How should the state balance the need to fund school districts with unequal tax burdens among communities?

While the specifics vary, school funding has been contentious across the country, including in Pennsylvania, where a landmark suit is scheduled to go to trial next year.

In New Jersey’s case, the legal challenges stem from a recent update to the school funding law, which was adopted a decade ago but never fully enacted.

It was aimed at funding districts based on their needs, but the state stipulated that no district would lose money. As a result, some are receiving aid above what the formula intended. Other districts haven’t received the additional money they were supposed to get.

“These are the districts that are saying, ‘Hey, Jersey City, you’ve got my money,’” said John Donahue, the executive director of the New Jersey Association of School Business Officials.

That has begun to change, as underfunded districts — many of them growing without corresponding aid increases — have protested. A law was enacted last year to draw down aid from districts considered overfunded, providing for a redistribution over seven years.

Gov. Phil Murphy’s proposed budget includes a more than $200 million increase in overall K-12 education funding, but it shifts $90 million from those districts.

Jersey City would be the biggest loser. Facing $27 million in state cuts next year, the school board says it could be forced to shed more than 400 teachers and staff.

Last week, the board sued the state in Superior Court, alleging the proposed cuts will jeopardize the district’s ability to provide the “thorough and efficient” system of education mandated by the state constitution.

That clause has been the subject of decades of court decisions, including the landmark Abbott v. Burke rulings that required the state to steer more money to higher-need districts.

The rulings led to the passage of New Jersey’s school-funding formula in 2008. It was upheld by the state Supreme Court as constitutional. But funding it has been a perennial issue.

It determines what each district needs to spend to provide students with an adequate education — its “adequacy budget” — based on factors that include numbers of students and poverty levels.

Another factor is what each district can afford to raise in taxes. The state is supposed to pay for the rest.

But over the years, the state hasn’t delivered the required funding, and some districts haven’t raised the revenue the law says they need to provide.

Jersey City’s “local fair share" should be $398 million, according to the state, but it is raising less than one-third of that this year. It’s spending $100 million less than its adequacy budget.

Its lawsuit is “nothing more than a brazen attempt to evade responsibility for supporting their own schools and their own students,” Senate President Stephen Sweeney (D., Gloucester), who pushed for the aid drawdown, said in a statement.

The state Department of Education declined to comment on either the Jersey City case or the lawsuit filed by eight other districts. The department has moved to dismiss the eight districts’ case, which was filed in Superior Court in January. Oral arguments were heard Monday.

The Jersey City school board says it has raised its taxes over the years. But the district’s local fair share has also risen, as property wealth has grown.

Part of the problem, board leaders say, is that since 2010, the state has capped property tax increases at 2 percent.

While the Legislature allowed Jersey City to institute a payroll tax, the school board says it doesn’t yet know how much money the levy, which took effect Jan. 1, will bring in. Its lawsuit lists estimates ranging from $40 million to $80 million, which would cover this year’s but not future cuts.

Another problem is that the state hasn’t mandated tax increases in districts spending too little, said David Sciarra, executive director of the Education Law Center. The center is recommending it do so — with some exceptions — and raise the statewide levy cap to 4 percent, its level prior to 2010.

The center also wants the state to target aid to districts that are spending less than what the formula deems adequate.

“The heart of the formula isn’t state aid or local revenue, it’s each district’s adequacy budget,” Sciarra said.

Donahue, of the school business officials association, said he “didn’t have a lot of sympathy” for districts facing aid cuts.

"They’re not raising anywhere near their local fair share. The reason is, they’re getting all this state aid,” he said. “Now all of a sudden, finally, after 10 years, the state has said, ‘Enough.’”