ELC to the State of NJ: This is the How and Why of Reviewing the Current School Funding Formula

This is the first report in ELC’s A Roadmap for Improving New Jersey’s School Funding Formula series.

To ensure New Jersey finally and adequately reviews the state’s longstanding school funding formula as required by law, Education Law Center today released a report that provides recommendations for the upcoming Educational Adequacy Report (EAR). The ELC report provides a framework for this review and kicks off an ELC series about what needs to change in the formula, how, and why.

The School Funding Reform Act (SFRA), New Jersey’s school finance law, requires the Governor, in consultation with the Commissioner of Education, to review certain components of the school funding formula every three years. The next EAR is expected in early 2025, and should impact school funding in the FY26 State Budget.

When the New Jersey Supreme Court signed off on the constitutionality of the SFRA, the Justices’ acceptance was contingent on the State’s commitment to review the formula and make adjustments as necessary:

Today’s holding issues in the good faith anticipation of a continued commitment by the Legislature and Executive to address whatever adjustments are necessary to keep SFRA operating at its optimal level. The three year look-back, and the State’s adjustments based on that review, will provide more information about the efficacy of this funding formula. There should be no doubt that we would require remediation of any deficiencies of a constitutional dimension, if such problems do emerge. Abbott v. Burke, 199 N.J. 140, 971 A.2d 989 (N.J. 2009)

The prior EARs released by the New Jersey Department of Education (NJDOE) updated the underlying costs of the formula while failing to consider whether the inputs themselves are adequate for delivering the state’s current learning standards. These surface-level reviews have left the SFRA out of step with current thinking on the resources needed to meet the state’s academic and social-emotional standards. To ensure New Jersey students are receiving a constitutional “thorough and efficient” education, it is time for the NJDOE to conduct a much more thorough analysis.

ELC’s report details which components of the formula should be reviewed and how they should be updated and provides examples of the many ways in which the formula may not represent the resources needed to deliver the New Jersey Student Learning Standards, which have changed significantly since the formula was developed in the early 2000s.

ELC recommends that the Legislature and the NDOE take immediate action to develop an EAR informed by high-quality research, input from school finance experts, and meaningful stakeholder and community engagement. An appropriation in the FY25 budget is required to fund these activities.

Advocates and education stakeholders were united in their requests for a thorough review of the SFRA during a recent Senate Education Committee hearing on improving the formula. ELC has also delivered a letter to Governor Murphy and Senate and Assembly leadership reminding them of the constitutional obligation to review and update the formula.

“Updating the school funding formula is not merely a policy recommendation. It is a legal requirement,” said ELC Executive Director Robert Kim. “Advocates across the state, including Education Law Center, will be watching to ensure that the state meets its legal and moral obligations to New Jersey schoolchildren.”

Download the full report and policy brief.

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