ELC Policy Brief Recommends Steps to Address Jersey City’s Below Adequacy School Budget
A common misconception about Jersey City Public Schools (JCPS) is that the district is “overfunded” under the School Funding Reform Act (SFRA), the state’s weighted student funding formula. Another misconception is that Jersey City relies upon transitional aid in the SFRA formula, called “adjustment aid,” as a way to avoid contributing their fair share of local revenue to the district budget. These myths are debunked in Education Law Center’s new policy brief, “Understanding the Role of Adjustment Aid in New Jersey School Funding: A Case Study of Jersey City.”
The brief provides an in-depth examination of the JCPS budget in relation to all aspects of the SFRA formula. It shows that the district budget is currently over $100 million, or almost $3,300 per pupil, “below adequacy” under the SFRA. Adequacy, which is the key metric in the SFRA, represents the level of spending on teachers, support staff and programs necessary in each district to meet the State’s constitutional obligation to provide all New Jersey students with a thorough and efficient education.
In Jersey City, the adequacy shortfall is due to a large gap – almost $250 million – between the amount of local revenue raised for the schools and the district’s “local fair share,” the amount the city is expected to provide based on property wealth and resident income. Jersey City has increased local revenue every year since 2008, but the state’s 2% annual property tax cap limits JCPS’s ability to make more progress towards closing the large local levy gap.
This is the reason the $151 million in adjustment aid received by JCPS is crucial to support the JCPS budget at its current below adequacy level. Further cuts to adjustment aid – JCPS lost approximately $8 million in the FY18 State Budget – will cause harm to district students.
To address the unique challenges of Jersey City and other districts spending below adequacy due to large local levy gaps, the policy brief recommends several steps the State Legislature can take, including:
- Prohibiting further cuts to adjustment aid in districts spending below adequacy and where the cuts would move the district further from adequacy;
- Raising or lifting the 2% property tax cap for below adequacy districts with large local levy gaps to increase local revenue and accelerate progress in closing those gaps;
- Requiring local revenue be increased in those below adequacy districts that refuse to close their large levy gaps;
- Mandating a fair share of future real estate Payment in Lieu of Taxes (PILOT) agreements for schools;
- Requiring a municipal contribution to the local levy to make up for the revenues lost to schools from past PILOT agreements.
“It’s time to stop the misleading claim that Jersey City is shirking its responsibility for funding its schools by relying on adjustment aid as a substitute for increasing local revenue,” said David Sciarra, ELC Executive Director. “And it’s simply not true the district is spending in excess of what Jersey City students need.”
“Adjustment aid is a crucial protection for Jersey City and other below adequacy districts that face a severe local revenue gap and no realistic means to address it,” said Danielle Farrie, ELC Research Director and author of the policy brief. “Any proposals to cut that aid would harm students by triggering reductions in essential teachers, support staff, programs and services.”
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