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May 16, 2023

In less than two months, New Jersey Legislators and Governor Phil Murphy must come to terms on the FY24 State Budget. Education Law Center has analyzed school aid in the Governor’s FY24 proposals and made recommendations in public testimony provided to both the Assembly and Senate Budget Committees. Just as every year, the stakes are high because 1.4 million public school children are depending on their representatives to provide them with the resources they need to succeed in school.

The Governor’s proposed budget increases K-12 funding by over $1 billion for two-thirds of school districts, increasing aid by an average of nearly $1,000 per pupil and eliminating 76% of the existing state aid gap. The proposed budget also adds over $100 million in preschool funding, $40 million of which is earmarked for preschool expansion. But the proposal also included state aid cuts for over 250,000 New Jersey schoolchildren in accordance with Senate Bill 2 (S2), an amendment to the state’s school aid formula, the School Funding Reform Act (SFRA). The average cut was nearly $600 per pupil and affected one in every five students in the state.

Though Governor Murphy and the Legislature can be commended for continuing to follow through on the plan to fully fund the SFRA by 2025, the negative impact of state aid cuts was especially severe this year. Despite anticipating reductions under S2, many districts saw cuts that were magnitudes larger than they were expecting. The Legislature acted quickly, returning two-thirds of the cuts to districts, lessening the impact for the coming school year but leaving open the question as to how these cuts will be absorbed in the future.

The one-time legislative fix that accompanied this budget was necessary to prevent massive layoffs and reductions in programs and services for students in many school districts, but it does little more than kick the can down the road. Most districts will be in the same position, or worse, next year. This year’s budget makes clear that policy changes are necessary to improve the operation of the formula and the way schools are funded.

In addition to expressing support for the increase in state aid to schools and continued preschool expansion, ELC has noted three key areas that need to be addressed:

  1. The Governor and Legislature must focus on ensuring that all districts are moving towards their adequacy budgets, that is, the funding that is necessary for them to provide a constitutional “thorough and efficient” education to students. Forty-four of the 158 districts affected by cuts under S2 are below adequacy, and cutting state aid to these districts deprives students of the resources and programs they need. While these districts need to raise more local revenue to meet their local fair share obligation under the SFRA, state-imposed property tax caps make it nearly impossible for them to achieve adequate spending. In fact, over 180 districts across the state cannot reach their local fair share under the current tax cap, and many will remain far below adequacy even when state aid is fully funded. ELC recommends that the 2% property tax cap be lifted for districts not raising their local fair share.

  2. The proposed budget exposes some systemic issues in how the SFRA operates. The inability of many school districts to foresee their state aid losses for this school year calls into question the year-to-year predictability of the formula. Though this year’s aid numbers were especially volatile because of unusual shifts in inflation, property taxes, and personal incomes – factors that determine adequacy targets and the state and local share of funding for districts – the current situation suggests that a larger systemic fix is warranted. After fifteen years, it is long past time for the state to conduct an in-depth review of the formula’s components, including adequacy and the weights for special populations, the calculation of local share, and the mechanism used to fund special education. ELC recommends that the Legislature include $1 million in additional funding in the FY24 budget to begin a comprehensive review of the formula for the next Educational Adequacy Report (due Spring 2025).

  3. The Governor’s proposal for FY24 includes no new money for major capital construction and only $80 million to cover emergent projects and capital maintenance. With at least $7 billion in outstanding need in the SDA districts, it is simply unacceptable for the state budget to ignore the facilities needs of school districts across the state. ELC recommends that the Legislature provide $30 million for the Building Conditions and Assessment Survey proposed by the Schools Development Authority, so it can identify needs and budget and plan for future projects, as well as at least $2.2 billion to address the remaining capacity generating projects in 16 districts identified in the SDA’s 2022 Strategic Plan.

When enacted, the SFRA was viewed as a national model of progressive school finance reform. To maintain that reputation New Jersey needs to make sure that the formula stays up-to-date and responsive to current curricular standards and the social-emotional needs of students. Though this budget takes schools one step closer to full state funding, we must continue the hard work of ensuring that the formula provides students with the resources they need to be successful.

To that end, ELC is embarking on a campaign to engage researchers, advocates and policymakers in an in-depth and inclusive process to recalibrate the SFRA to meet the needs of today’s students.

“New Jersey students deserve a funding formula that is based on the reality of schooling today, not the educational standards from before they were born,” said Danielle Farrie, ELC Research Director. “If we want our students to succeed in today’s world, we need to align our funding system with evolving educational expectations.”

Press Contact:

Sharon Krengel
Director of Policy, Strategic Partnerships and Communications
973-624-1815, x 240