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LIFTING TAX CAP FAILS TO DELIVER ADEQUATE FUNDING TO NJ DISTRICTS FACING STATE AID CUTS

December 12, 2019

The New Jersey State Senate is considering a bill to allow certain school districts facing multi-year cuts in state aid to minimize the impact by raising local property taxes above the annual 2% state cap. The bill, sponsored by Senate President Stephen Sweeney, was quickly approved by the Senate Budget Committee on December 5.

The bill amends Senate Bill 2 (S2), a controversial 2018 law that cuts a category of state aid known as “adjustment aid” from nearly 200 districts over six years and sends the aid to other districts. The S2 cuts have sparked a groundswell of protests by parents, teachers and local school officials over the harm caused by the loss of resources and programs in the affected districts.

The proposed amendment applies only to districts whose aid will be cut, despite the fact that their budgets are below the level determined “adequate” under the School Funding Reform Act (SFRA), the state’s weighted student funding formula. Twenty-eight districts funded below their SFRA adequacy budgets nonetheless suffered aid cuts totaling over $40 million in 2019-20. That number is expected to rise to over 30 districts in 2020, and then increase each year as S2 aid cuts continue through 2025. These districts will be permitted to raise local revenue to help offset the cuts by exceeding the 2% property tax cap by an amount equal to the state aid cut but not above the district’s adequacy budget.

“We remain strongly opposed to S2 state aid cuts to districts funded below their SFRA adequacy budget,” said Education Law Center Executive Director David Sciarra. “All state aid, hold harmless or otherwise, is needed in these districts and should not be cut until they are fully funded at the adequacy level. And placing the onus solely on raising local property taxes is insufficient to bring these districts to adequacy as quickly as possible.”   

ELC is urging lawmakers to halt any further state aid cuts under S2 until districts reach their SFRA adequacy budget. ELC also supports a state mandate to increase local revenue in below adequacy districts – even above the 2% cap – to ensure year-to-year progress towards adequacy by 2025.  

Neither the SFRA nor the proposed amendment mandates that districts raise the amount of local revenue, called the Local Fair Share (LFS), the formula determines is needed to support the adequacy budget. Though none of the districts below adequacy and facing a state aid cut under S2 are meeting their LFS obligation, some may take advantage of the opportunity to go above the cap, and others may choose not to.

The Senate proposal also fails to require a thorough study of the way the LFS is calculated in the SFRA formula. This study was part of the SFRA when enacted in 2008, but was eliminated in 2010, when the Legislature lowered the property tax cap from 4% to 2%. A rigorous analysis of whether the LFS calculation accurately reflects the fiscal ability of local taxpayers to support their schools is long overdue.

 

Press Contact:

Sharon Krengel
Policy and Outreach Director
skrengel@edlawcenter.org
973-624-1815, x 24