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  • The State Aid Dilemma

     
    New Jersey is regularly cited as one of the top states in the nation in terms of student achievement, as well as one that provides consistently strong levels of funding to its schools. That macro view was reaffirmed this spring by the Education Law Center (ELC) in their compelling national report, Is School Funding Fair? Their research found that we are one of only two states — Massachusetts being the other — that score highly on all four of their fairness indicators (funding distribution, effort, level, and coverage). Department of Education officials note that both the amount of funding and the percentage of the state budget devoted to education are at their highest levels ever.

    The micro view looks different depending on where you stand. The School Funding Reform Act is currently running at about 85% of the formula’s intent. This may seem reasonable for an increasingly cash-strapped state with many public policy needs. But the overall funding picture masks important differences in state versus local contribution. The unfortunate reality is that the distribution of school aid continues to be mired in outdated information about district, school and student demographics.

    ELC released a policy brief in September focusing on the role of adjustment aid in the formula. The dataset included two other calculations which were particularly intriguing: the amount each district spends above or below the state-determined adequacy budget; and the ratio between the local tax levy and the state-determined local fair share. Obviously, districts are at a significant disadvantage if they are not able to spend at least up to their adequacy level. Those districts that also tax their residents above the local fair share are in a no-win situation. There are 70 such school districts, which are found in every region, district factor group, and enrollment level throughout the state.

    Using ELC’s dataset I calculated what I am calling the Funding Fairness Index. It combines the percentage a district spends below adequacy with the percentage that same district taxes its residents above the local fair share. For example, my district spends 95% of its adequacy budget (5% below 100%) yet has a local tax levy 34% above the local fair share for a Funding Fairness Index score of 39. The distance above zero speaks to the severity of the imbalance between state and local monies that impacts many of our communities.

    Department of Education officials highlighted the dilemma of state funding at this fall’s Commissioner’s Convocation meetings. The commissioner cited this year as a time to give greater consideration to the needs of under-adequacy districts. Legislators are increasingly discussing how to improve the formula. These are encouraging signs that a more equitable distribution of state aid may be within reach.