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As states overhaul school funding, not everyone gains. Take New Jersey

After a decade, New Jersey is redistributing money to more fully enact its school-funding formula — meaning fiscal pain for those districts who see their subsidies cut.

Washington Township School District in Gloucester County is one of a number of New Jersey districts grappling with state aid cuts this year.
Washington Township School District in Gloucester County is one of a number of New Jersey districts grappling with state aid cuts this year.Read moreMELANIE BURNEY / Staff

New Jersey has just added more than $350 million to help pay for public education, yet the Washington Township School District finds itself looking at cutting back on capital projects and insurance coverage.

And it's only going to get worse, says school board president Ginny Murphy, with more-drastic cuts inevitable. "It's going to be a difficult seven years for us," she said.

In Glassboro, where state aid is being slashed, "it's going to decimate the public school system," said board president Peter Calvo.

While most districts in the state are getting more money for the 2018-19 school year, Washington Township and Glassboro — both in Gloucester County — are among the districts losing dollars under a redistribution to more fully enact the state's funding formula, which calculates how much aid school districts need based on student enrollment and a community's ability to raise taxes.

Effect of New State Aid to Local Districts’ Budgets

The Chesterfield School District in Burlington County will receive an additional $1.6 million in state aid for the coming school year, an increase that is equal to 16 percent of its previous total budget. Conversely, the Glassboro School District is taking the biggest proportional hit in state aid in South Jersey, losing aid equal to 5 percent of its previous budget. Gloucester County’s Washington Township School District is losing almost $500,000 in aid, but that cut is a relatively small amount of its previous budget, at 0.3 percent.

Districts with an increase in state aid

Districts with a decrease in state aid

SOURCE: N.J. Department of Education
Staff Graphic

The state needs to take money from some districts to adequately fund others, says Senate President Stephen Sweeney (D., Gloucester). Inevitably, that is going to mean fiscal pain for those who see their subsidies cut.

It is a dilemma that has been playing out in several states that have adopted new school-funding formulas. In Pennsylvania, the future of how the state will pay for public education has become an issue in the gubernatorial campaign, with Gov. Wolf hammered by GOP rival Scott Wagner for saying he favored applying the formula passed in 2016 to all state education aid. The approach — which Wolf has said would take more money — would benefit poorer districts, like Philadelphia, and others where student needs and enrollments have grown, but could require cuts to others. That can become problematic.

"Almost every state, when they pass a new funding formula, creates some sort of" provision to ensure no one loses money, said Mike Griffith, a school finance consultant with Education Commission of the States. The aid "can become addictive at a certain point for school districts," Griffith said. "You have a harder and harder time as the years go by getting rid of that."

Among states with plans for phasing out aid to districts, Rhode Island established a seven- to 10-year time frame, while Idaho is considering three to five years, Griffith said.

In New Jersey, which adopted a formula in 2008, the state just began shifting aid from districts last year. Gov. Murphy has said he will sign a bill that would establish a six-year schedule to shift aid from districts — meaning it might take 16 years from the formula's passage before it is fully enacted.

While the approach faced stiff opposition from the state teachers' union and communities slated to lose money, "the districts that have been on the path of being over-funded can't deny they have had an advantage for years," Sweeney said.

For those that have been underfunded, like Bellmawr School District in Camden County, the added money "is long overdue," said Annette Castiglione, Bellmawr superintendent. Her district received an additional $794,000 in aid — about 5 percent of its total budget from the year before.

Bellmawr's tax base is weaker than some of its neighbors, and Castiglione said the district hasn't been able to restore positions it eliminated after losing $1 million under Gov. Chris Christie.

"We don't have a guidance counselor in every school. We don't have a social worker. We don't have coaches. We don't have our own school nurses," Castiglione said. The school board will meet next week to decide how to use the additional aid; Castiglione said she will recommend it be put toward services, rather than tax relief.

"There are things we need to do to catch up with the districts that surround us," Castiglione said. The district is also trying to determine whether its insurance will cover the damage from a fire at an elementary school building.

In Merchantville, which is getting an additional $671,000 — or 8 percent of its total budget last year — Chief School Administrator Scott Strong said he would like to hire staff, including specialists to help children who are below grade level but not receiving special education services. Much of the pre-K-through-8th-grade district's added costs in recent years have gone toward paying for its students to attend high school in Haddon Heights — a new arrangement that has proved popular.

"This will give us a little more wiggle room, where we can perhaps not go all the way to the top" in raising taxes, Strong said. The district has been raising taxes above the state-imposed 2 percent cap for the last two years, an exception permitted because of the Haddon Heights arrangement. In 2014, it got taxpayer approval for $2 million in building projects.

"Because we were underfunded, we had to go out for that bond," Strong said. With added state money, he said, the district will be able to "hopefully provide that tax relief" for residents.

While Murphy signed the budget July 1, districts did not receive official notice of their state aid for the year from the Department of Education until July 13. Districts must decide on a plan for spending additional money or accounting for cuts by Aug. 1.

Murphy's budget plan, announced in March, had increased aid to most districts, cutting none. So for those now losing money, the losses are that much harder to take. Washington Township, for instance, is losing only $483,000 compared with last year, a 0.3 percent decrease from that budget. But it's down $1.5 million compared with Murphy's proposal.

While Pemberton Township's aid is $1.3 million less than last year, it's $1.9 million below Murphy's plan. Anticipating budget changes, the district already made cuts, including $700,000 in staffing in May. It now plans to apply for emergency state aid because "that amount of cut is just too severe," said Superintendent Tony Trongone.

As a former Abbott district — which received added state aid as a result of the landmark New Jersey Supreme Court rulings — Pemberton would be shielded from cuts below a certain threshold in the future in the funding bill expected to be signed by Murphy. The bill lays out a six-year schedule for phasing out over-payments to districts, but makes some exceptions for districts like Pemberton, which have been protected by the court rulings, or others where tax rates are already above the state average.

Still, Trongone said he was "not happy with the calculations for my district, being a former Abbott."

Others, like Washington Township, are expecting continued cuts — $8 million over seven years, according to Murphy. The board hasn't yet voted on how it will handle the money lost this year. As it loses more aid, the district will have to look at partnerships with businesses, Murphy said.

New Jersey's attempt to put its 2008 formula fully in place was complicated by the recession, which made it difficult to draw money down from any district, said Griffith, the school finance consultant.

States generally overhaul their approach to funding schools every 20 to 25 years, he said. In New Jersey, "I wouldn't be surprised if not too long after you phased everybody in, you'd have to go back and look at the formula again."