From time to time, New Jersey lawmakers raise the prospect of altering the school funding formula by reducing hold harmless aid – called “adjustment aid” in the formula – in some districts and “redistributing” that aid to other underfunded districts. These proposals are a reaction to Governor Chris Christie’s continuing refusal to fund the state aid increases required by the School Funding Reform Act (SFRA), the landmark weighted student funding formula enacted by the Legislature on a bipartisan basis in 2008.
“Districts across the state are experiencing the negative impact of Governor Christie’s decision to chronically underfund the SFRA formula,” said David Sciarra, Education Law Center Executive Director. “However, in the rush to find ‘dollars’ for our public schools, we urge lawmakers not to cut adjustment aid from those districts currently spending below their SFRA ’adequacy budget’.”
The SFRA adequacy budget is the spending level determined by the formula for each district, based on the district’s weighted student enrollment, to provide the teachers, support staff and programs necessary to afford students a “thorough and efficient” education under the New Jersey Constitution. Each year, the NJ Department of Education recalculates the adequacy budget for each district and determines if the district is currently spending above or below its adequacy budget.
An ELC analysis shows a total of 177 districts received $556 million in adjustment aid in 2015-16. Notably, 71, or 40% of districts receiving adjustment aid, are spending below their SFRA adequacy budget. These districts are spending $696 million less than what is required by the SFRA formula, yet receiving only $381 million in adjustment aid.
Click here for a complete list of districts receiving adjustment aid, grouped by spending above and below their SFRA adequacy budgets.
According to the SFRA formula, districts receive adjustment aid if their state aid allocation prior to the enactment of the SFRA in 2007 was higher than what the new formula provided. In other words, adjustment aid was included in the formula to “hold harmless” districts that would see a decrease in state aid after the SFRA’s enactment. The formula also determined that as district adequacy budgets grew, adjustment aid would phase out as it transitioned to equalization aid or other categorical funding. Because the formula has not been followed, and the aid categories are in effect “frozen,” many districts continue to receive adjustment aid, even though some or all of that aid should now be in other funding categories.
In addition to state aid levels, the SFRA also calculates the amount of local property tax revenue each district should raise to support the adequacy budget. A significant number of districts spending below adequacy have not increased their “local share” to the level required by the SFRA. However, this has become more difficult since the State imposed a 2% annual cap on property tax increases.
Bottom line: in “below-adequacy” districts, adjustment aid does not support excess spending, but rather is critical to providing the teachers, staff and other resources deemed essential by the SFRA formula for a thorough and efficient education.
To take one example: the Toms River Regional School District in Ocean County currently spends $43.7 million below the district’s SFRA adequacy budget. Under the 2% cap, the district could raise only $2.7 million more from local residents. The district receives $11.8 million in adjustment aid. It’s clear from these figures that adjustment aid is a crucial component in the Toms River school budget, as administrators and staff struggle to provide students with an adequate education.
Cutting adjustment aid in Toms River, Middle Township, Jersey City, Atlantic City and other districts spending below their SFRA budgets would lower spending even more and trigger cuts to teachers, programs and services needed for a thorough and efficient education.
“Adjustment aid is critical to support essential resources for students in districts currently spending below their SFRA adequacy budgets,” Mr. Sciarra said.
Legislators, educators, advocates, parents and students are rightly concerned about the impact on school district budgets and resources from years of SFRA underfunding, unfunded State and federal mandates, and increases in their neediest populations. For this reason, the FY17 State Budget must begin to restore state aid under the SFRA formula, especially in below-adequacy districts.
Policy and Outreach Director
973-624-1815, x 24
Director of Policy, Strategic Partnerships and Communications