Thursday, September 22, 2016

Is New Jersey’s School Funding Formula Broken?

The answer is an unequivocal “yes,” according to State Auditor Steven Eells, who just released a report detailing substantial flaws in the ways that N.J. currently distributes state school aid.

The analysis, blessedly brief for these sorts of things, makes four recommendations:
1. Base funding on current district data. School aid is supposed to be distributed based on a variety of factors, including enrollment and student demographics. But the State isn’t calculating changes in these factors. So, for example, in 2016 one district was overpaid by $34 million and another was underpaid by $49 million.
2. An actual classification rate should be applied for Special Education Aid. Several years ago N.J. distributed special education aid based on the assumption that every district had a classification rate of 14.78 percent. But, of course, some districts have higher rates and some have lower rates. In addition, some districts have higher rates of high-cost disabilities like autism while other have higher rates of low-cost disabilities like specific learning problems. From the report:
"Our review of districts with 100 or more special education students in fiscal years 2015 and 2016 found that 234 districts (59 percent) and 258 districts (64 percent), respectively, had an actual classification rate that deviated more than 10 percentage points from the statewide average classification rate of 14.78 percent. As a result, district funding is not commensurate with actual enrollment of classified students in many instances."
(For more on the way NJ distributes special education funding, see here.)

3. Preschool Education Aid should be adjusted for actual enrollment so funding is based on current district needs.: See #1, i.e, preschool aid is allocated without adjustments for changes in enrollment. And, furthermore,
"Every district overestimated their projected enrollment in fiscal year 2015, resulting in overpayments to 32 districts totaling $25.7 million. In fiscal year 2016, 33 districts overestimated their projected enrollment, resulting in 30 districts being overpaid a total of $32.9 million."
Disparity in per pupil amounts[for preschools] leads to imbalanced funding. Districts are free to offer half-day or full-day programs and actual costs vary enormously: from $2,036 per student to $27,663.per student. “This disproportionate funding," writes Eells, "creates educational inequities among the students being served by this aid. “

The report also includes the DOE’s responses to these four recommendations. The department agrees with three of the four, dissenting only with the special education one. However, says the DOE, , findings #1 and #4 requires legislative action, not changes in regulations.

For more coverage see NJ Spotlight and  New Jersey Education Aid