Guest Editorial: "New Jersey and the Myth of SFRA"

Here's an editorial by Essex County Board member Jeff Bennett on the absurdities of N.J.'s allocation of school state aid through the School Funding Reform Act (SFRA). Jeff describes disparities among  suburban and exurban districts, between Abbott districts and equally poor non-Abbots, and the respective  roles of Gov. Christie, the Education Law Center, and the State Legislature.

New Jersey and the Myth of SFRA 

You would have to look pretty closely to see similarities between the school systems of Hillsborough and Bloomfield.

Hillsborough is an exurban community in Somerset County where only 8% of students are Free & Reduced Lunch eligible. The per capita income is $43,000 and the schools are supported by $820,000 in property valuation per student.

Bloomfield is an inner suburb in Essex County where 35% of students are Free & Reduced Lunch eligible.  The per capita income is $30,000 and the schools are supported by only $660,000 in property valuation per student.

Despite the fact that Hillsborough is much richer than Bloomfield, it actually gets more state aid per student, $3586, versus Bloomfield's $3,286.

Guttenberg and Jersey City, on the other hand, are as similar as Hillsborough and Bloomfield are different.  In Guttenberg 82% of students are FRL eligible.  In Jersey City 75% of students are FRL eligible.    Guttenberg’s per capita income is $33,000 and the schools have $443,000 in valuation per student (adjusted for being a K-8 district). Jersey City’s per capita income is $30,490 and its schools have $551,000 in valuation per student.

Despite the fact that Jersey City is slightly richer, the state gives Jersey City drastically more money - $13,836 versus $3,834 per student for Guttenberg.  Despite similar needs, Guttenberg’s per student spending is $11,116.  Jersey City’s is $17,859

New Jersey’s Aid Unfairness

Despite decades of effort to make New Jersey’s education aid distribution fair, the distribution of education aid remains riddled with absurdities.  Exurban districts get 2-3 times as much aid as suburban districts that have equal wealth and Abbott districts get 2-3 times more than non-Abbotts that are their equals.

The fact that poor districts that were not part of the Abbott lawsuit are underaided is well known, but less well-known is a pattern of exurban /suburban disparities, where exurban districts typically receive dramatically more aid than their suburban peers.  The following examples are random and yet representative.

- Hamilton Township (DFG FG, 11,000 students) in Mercer County gets $6,062 per student. Clark, Bergenfield, Dumont, Fort Lee, Hasbrouck Heights, Maywood, New Milford, Northvale, Rochelle Park, Wood Ridge, Nutley combined get a (weighted) average of $1450 per student.

- Marlboro gets (DFG I, 5200 students) gets $11.6 million in state aid, or Berkeley Heights, Springfield, Scotch Plains-Fanwood, Cranford, Mountainside, and Westfield combined (DFG FG-I, 21,000 students) get $11.2 million, or $530 per student.

- West Windsor-Plainsboro (DFG J, 9800 students) gets $7.5 million, or $784 per student. Livingston, Glen Ridge, Verona, Oakland, and Summit combined (all DFG I, 18,700 students) only get $6.5 million, or $370 per student.

Exurban districts even get double the per student funding of districts that are 2-3 Factor Groups below them.

- Old Bridge (DFG FG) gets $533 per student. Clifton and Bloomfield (DFG CD and DEs) get $2636.

- Jefferson Township (DFG GH) gets $4835 per student. Hackensack, Lyndhurst, and Garwood combined (DFG CD-DE, 8,400 students) only get $15.3 million, $1841 per student.

Underaided middle-class and wealthy suburban districts are often able to make up for their aid gaps by accepting very high tax burdens, so the per pupil spending gaps are usually modest, but the Abbott/low-resource non-Abbott aid disparities translate into wide spending gaps, since the low-resource non-Abbotts lack the tax bases to make up for the lack of state aid.

The Abbott lawsuit was waged on behalf of poor districts, not poor students.  The New Jersey Supreme Court, in its wisdom, decided that poor students in Abbott districts had rights which poor students living in identical circumstances in non-Abbott districts did not have.  Despite Abbott - or because of Abbott - many poor children in New Jersey are left behind.

- Perth Amboy is 64% FRL eligible.  As an Abbott it receives $13,425 per student.  Carteret is 63% FRL eligible and receives $7,261.  Total spending in Perth Amboy is $15,759 per student, total spending in Carteret is $11,721.

- Passaic is 80% FRL eligible.  As an Abbott it receives $16,898. Prospect Park, a non-Abbott, is 75% FRL eligible and receives $9,372 per student.  Total spending in Passaic is $16,944 per student.  Total spending in Prospect Park is $12,140.

- Elizabeth is 88% FRL eligible.  As an Abbott it receives $15,931.  Its neighbor Hillside is 58% FRL eligible and receives $7,243 per pupil.  Total spending in Elizabeth is $17,444 per pupil, total spending in Hillside is $13,925 per pupil.

- Irvington is 69% FRL eligible.  As an Abbott it receives $16,395.  Belleville is 52% FRL eligible and receives $5394 per pupil.  Total spending is $16,825 in Irvington.  Total spending in Belleville is $10,868 per pupil.

These listings underestimate the disparities, since the Abbotts get the state to pay for almost all capital costs.

Pre-K’s Savage Inequalities

The disparities between Abbotts and low-resource non-Abbotts are even more intense in pre-K funding.

90% of New Jersey’s pre-K aid goes to the Abbotts, even though they have less than half of New Jersey’s poor children.  Jersey City alone gets $65 million, almost as much pre-K aid as all of the non-Abbotts combined.  There is no means testing, so “free” pre-K goes to children of high-income parents in several Abbotts.  Many towns with high rates of poverty, including Belleville, Bloomfield, Clifton, get (literally) $0.

The Myth of SFRA

New Jersey’s school funding law, the School Funding Reform Act of 2008 (SFRA) was supposed to do away with disparities like these.   SFRA was supposed to be the “one formula” that would fund Abbotts and non-Abbotts at equal levels per their needs.  SFRA promised that all districts where more than 40% of children were Free & Reduced Lunch eligible would get funds for pre-K.  SFRA was even supposed to help middle-resource suburbs.  So what happened?

What happened is that the School Funding Reform Act of 2008 was only a method of distributing new education aid. The idea behind SFRA is that all districts would get more aid, but underaided towns would get more new aid than others.

Even if a town has seen a large increase in wealth SFRA entrenches its aid level through a provision called “Adjustment Aid.”  The districts getting Adjustment Aid (a $555 million expense) are mostly rural and Shore districts where land values have risen and where poverty rates are low, but gentrified cities do immensely well.  Jersey City is the biggest recipient of Adjustment Aid, at $114 million, a fifth of all Adjustment Aid given.  Ocean Township (Ocean County) is the biggest winner in percentage terms, getting 86% of its aid (33% of its total budget) through Adjustment Aid. (See User Friendly Budgets)

Since SFRA is a formula for distributing new aid, and not a redistribution, without new aid SFRA “does not breathe,” and low-aid towns like Bloomfield, Guttenberg, and nearly all of suburbia languish underaided and must choose between having extremely high taxes or underfunded schools.

If New Jersey had billions more to spend on education, low-aid districts like Bloomfield and Guttenberg would gain more than high-aid districts like Hillsborough and Jersey City.  The Department of Education has not publicly released uncapped aid levels since 2009, but in that year the state projected that Bloomfield should get over $5,800 per student, versus $5,300 for Hillsborough.  Guttenberg should get $9,500 per student.  Jersey City is already overaided and should get no increase but retain its current $418 million aid level.

Assigning Blame?

The Education Law Center, the proponent of the Abbott cases, places a huge amount of the blame for underaided schools at Chris Christie’s feet.  “The Governor’s refusal to fund the SFRA formula has resulted in an accumulated funding shortfall of almost $4.5 billion during his first term in office....” and “Over the last four years, through a combination of aid cuts and minimal increases, Governor Christie has created a cumulative aid deficit of $5 billion statewide” being representative statements.

What this ignores is the recession and the fall in state revenue.  SFRA was signed in January 2008, at New Jersey’s employment and revenue peak, when New Jersey had 140,000 more jobs than it has today.  From 2008 to 2010 New Jersey’s Sales Tax, Business Tax, Income Tax, and Casino Tax revenue alone declined from $24.4 billion to $20.4 billion.   New Jersey also began to awaken to the $90 billion gaping hole in retiree benefits funds.  To simply say that Chris Christie has “refused” to fully fund SFRA is wrong; he cannot fully fund SFRA.  If Christie hadn’t decided to underfund state pensions by over $2 billion education aid would probably have been cut in 2014-15.   New Jersey’s history of underfunding its aid formulas has happened repeatedly in recessions and economic stagnation.

New Jersey’s economic recovery is so weak and our debt so high that the optimistic economic assumptions of 2008 have to be reviewed.  New revenue is needed through economic growth or tax increases, but we also have to allow money to move from where need is less to where it is more acute, i.e., redistribute aid. When 150 districts get less than half of the (uncapped) aid that SFRA promises, how can we allow districts to receive over 100% of what SFRA recommends through Adjustment Aid?

In the last two aid cycles Christie has refused to let any district lose aid, meaning he has treated overaided districts like Hoboken and Ocean Township the same as he has treated underaided districts like Bloomfield and Guttenberg.  Christie should be criticized for this, but Christie has been supported in this by groups like the New Jersey School Boards Association, the Education Law Center, and the legislature as a whole.  The fault is not Christie’s alone; the fault is the whole education establishment.

Communities constantly change.  They become wealthier, poorer, grow, and shrink.  Fairness in funding depends on an acceptance that New Jersey does not have unlimited resources and we can’t districts that have become wealthier or lost student population to hoard aid.  As communities change so must state aid.

(Jeffrey Bennett is a member of a Board of Education in Essex County. His views are his own and not those of his Board of Education.)

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