Recalibration Of New Jersey’s School Funding Formula Is Long Overdue

The Governor’s Office and Department of Education must begin the process of aligning the state’s formula with current curricular standards through an in-depth review guided by school finance experts

This is the third in a three-part series. Part I reviews education funding in the FY24 NJ State Budget. Part II proposes school funding fixes to prevent catastrophic cuts to programs and services in districts facing the final year of S2 state aid reductions in FY25.

Once one of the states with the most equitable school funding systems in the country, New Jersey has slipped significantly in recent years on school funding fairness. According to Education Law Center’s annual Making the Grade report, New Jersey has dropped from an A grade to a D on the funding equity metric.

This slippage occurred over the decade where New Jersey’s school funding formula, the School Funding Reform Act (SFRA), was largely ignored and severely underfunded. Though recent years have seen significant investment, which will likely result in an improved position among states, the SFRA is long overdue for a thorough analysis to modernize and calibrate the formula to current educational expectations.

The 2023-24 school year marks the fifteenth year of implementation of the SFRA, and yet the formula has never been sufficiently analyzed to ensure that it is still meeting the needs of New Jersey students. The SFRA includes a requirement for the Governor to issue an Educational Adequacy Report (EAR) to the Legislature every three years to ensure that the formula is operating at its optimal level. So far, these reports have adjusted costs by updating the average salary data that informs the school funding models. These updates have not analyzed whether the resources identified in the original cost studies underlying the formula, completed nearly twenty years ago, are still relevant given changes in curricular standards and educational best practices over the years.

Education Law Center is calling on the Governor’s office and the Department of Education (DOE) to conduct a thorough and in-depth review of the formula for the EAR due in the spring of 2025. To achieve this, the DOE must:

  • Engage a diverse group of stakeholders, including administrators, staff, students, parents, and other community members, to identify the necessary school resources and student supports that are not adequately funded;
  • Commission school finance experts to update the cost studies that are the basis for the school funding formula, including revising the base cost for general education students and the weights for English learners and students in poverty, to ensure all students have the resources to achieve the state’s curricular standards;
  • Evaluate the preschool per-pupil amounts in the formula to ensure they are sufficient to meet current program requirements across settings and locations;
  • Update transportation aid to better reflect actual district costs.

There are several areas that are beyond the scope of the EAR that nonetheless must be addressed to improve the adequacy and equity of the SFRA. For example, the DOE must also explore potential alternatives to:

  • The Census-based special education funding system in the formula, which funds districts based on average spending and average classification rates rather than the actual characteristics and needs of each district’s special education population;
  • The Local Fair Share (LFS) calculations in the SFRA, a decades-old formula used to determine the state and local share of funding based on property values and income levels that has proven to be unpredictable and unstable.

There is a pressing and legitimate question about whether the DOE is currently up to the task of evaluating the SFRA and recommending to the Legislature updates for its improvement given the number of vacancies in high-level staff positions. Apart from whether the DOE can increase capacity and knowledge in time for the 2025 EAR, a thorough review of the formula will certainly require additional appropriations from the Legislature so the Department can turn to outside experts to inform this work.

ELC is embarking on a two-year campaign to demand necessary revisions to the SFRA so New Jersey can once again claim to be a state dedicated to education equity. We intend to engage policymakers in discussions of what our schools need, relying on the knowledge of school finance experts, education practitioners, parents, and students themselves. As always, ELC’s position will be informed by research, advocacy and a strong commitment to those students and families that are underserved by the current system.

We want to hear from you. If you are interested in participating in the campaign to update the SFRA and/or have recommendations for improvement, please contact ELC at elc@edlawcenter.org.

Read Parts I and II of this series here and here. 

Related Story:

AN ADVOCATE’S GUIDE TO THE EDUCATIONAL ADEQUACY REPORT

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Press Contact:
Sharon Krengel
Director of Policy, Strategic Partnerships and Communications
skrengel@edlawcenter.org
973-624-1815, x240