Op-Ed: Christie’s ‘Fairness Formula’ Versus Sweeney’s ‘Formula 4 Success’

Paul L. Tractenberg | July 11, 2016 | Opinion
Both schemes highlight deep problems with New Jersey’s school-funding system, but neither is the right solution

Paul Tractenberg
That odd political couple Chris Christie and Steve Sweeney have found something else they agree about — that the state school-funding system is deeply flawed, especially in its over-reliance on local property taxes. By doing so, they have performed a great public service. The problem has enormous implications for our state and its solution would have enormous benefits

However, neither has come up with a solution nearly equal to the challenge. Senate President Sweeney’s proposal for a four-member public commission to study how to modify the existing School Finance Reform Act is by far the better of the two, but it looks suspiciously like kicking the controversial can down the road until after the gubernatorial election. The commission, once constituted, would have a year to study the problem and submit its report, and then there would be legislative consideration. Even if the commission’s charge to achieve full state funding of an improved formula were approved, the Sweeney proposal provides for a five-year phase-in period. So it would be at least 2022 before full funding would be accomplished. Besides, the proposal has a limited focus on modifying the current school-funding law without addressing the underlying structural flaws in the way we operate and fund public education.

Gov. Christie’s proposal, the grossly misnamed “Fairness Formula,” is totally misguided, as the area’s major editorial boards and most other commentators have stressed. It would provide the state’s wealthiest communities with a huge windfall by stripping the state’s poorest communities of needed education funding. It may be a proposal that ingratiates Christie with Donald Trump, but it will devastate New Jersey’s education system.

The flaws in New Jersey’s school-funding system are structural and longstanding, not, as Christie would have it, the result of a runaway state supreme court or an excessive commitment to sending state money to poor urban school districts. Given the conflict between an arcane funding structure that favors communities with great property wealth and the state constitution’s clear mandate of high-quality education for all of the state’s children, the courts have had no options.

To explain, New Jersey’s flawed structure has three interacting elements:

1. Our school districts are too numerous, too small on average, and too dramatically unequal in many ways, including the amount they can tap through local property taxes. New Jersey has some of the nation’s wealthiest and poorest communities living side by side.

2. Education here and throughout the country is a state not local function; New Jersey relies much more heavily than most states on local property tax revenues derived from those grossly unequal bases. Consequently, education is by far the biggest line item in municipal budgets and our state’s property tax rates are the nation’s highest.

3. To equalize educational opportunities as our constitution commands, state education aid is currently the only way to offset these dramatic differences in local taxing capacity. If equality of educational opportunity is to have any real meaning, substantially more state aid must be directed to low-wealth school districts, which have both less ability to raise money through local property taxes and more children with profound educational needs.

These issues have been at the center of New Jersey’s school-funding litigation in Robinson v. Cahill during the 1970s and in Abbott v. Burke ever since. Because the New Jersey Supreme Court lacks the power to directly revamp the way in which the state operates and funds its schools, it has basically had a single arrow in its remedial quiver — state education aid. As a consequence, the justices have repeatedly ordered the other branches to increase the amount of state aid for the poor urban districts and to insist that the state fully fund its own statutory formula for those districts so they can equalize educational opportunities for their many at-risk students.

The state’s persistent failure to fully fund its own formula for other districts, whose students have not yet established the same constitutional claim on state education aid as the so-called Abbott students, has compounded the fiscal plight of other low-wealth and moderate-wealth school districts. The result is a tripartite school funding system:

  • The former Abbott Districts have been largely spared the state’s funding axe because of their students’ long-established constitutional rights and the Education Law Center’s persistence in representing them;
  • The highest-wealth districts, mostly white suburban districts with virtually no at-risk students, can generate sufficient funding with modest increases in their local property tax rates because of their huge tax bases and, in truth, really don’t need state education aid; and
  • All the districts in between lack the local property wealth to fund their own schools adequately and are being deeply hurt by the state’s failure to fully fund its own statutory school-aid formula.
  • The current situation is untenable and threatens our state’s future. Christie is to be commended for raising the issue, but the answer is not his Fairness Formula. That approach is neither constitutional nor practically workable—and amending the state constitution to validate its inequality is implausible. Giving every child in the state $6,599 of state education aid, and reducing property tax rates in high-wealth and some mid-wealth communities, may sound fair or at least tempting to some — until you think about it.

    How can such “equal treatment” of children and communities in dramatically unequal situations result in equality of opportunity? The simple answer is that it can’t. What will inevitably result is that the wealthy will get wealthier and the poor will get poorer, and the gap between them will grow. Indeed, some of the poor urban districts such as Union City whose educational successes Christie touted in his speech will be decimated by his Fairness Formula.

    The real answer to this existential threat is for New Jersey, at long last, to treat the underlying causes of our state’s malady. Major surgery may be necessary. Fortunately, several different procedures could work. Like all major surgery we would rather avoid it and we understand that it will be painful. Still, if the illness threatens our lives or our ability to function effectively, we may be out of options.

    One approach is to abandon our shared state-local funding system and adopt a system of full state funding of education. The state would have to raise substantially more revenue, but it would dramatically reduce the burden on local property taxes, substituting broadly based revenue for locally generated revenue. In the United States, only one state — Hawaii — has fully embraced that approach, but in many others the great bulk of education funding comes from the state. Centralized education funding is also the norm in many other educationally successful countries, and, close to home, a number of Canadian provinces, including Ontario, have adopted full state funding relatively recently with great success.

    Another approach is to replace our outmoded crazy quilt of too many undersized and grossly disparate school districts with fewer larger districts, perhaps on a county-wide basis, using criteria such as equalized local tax capacity and pupil diversity to form these larger districts. If we chose that approach, we might be able to continue relying on some version of shared state-local funding without violating the constitutional rights of students and thereby jeopardizing our state’s future.

    Either approach could move us toward the state constitution’s command that the legislature “provide for the maintenance and support” of a state education structure that not only delivers “thorough” education to all the state’s students, but also does so by means of an “efficient system of free public schools.”

    The first approach has the virtue of relative administrative simplicity since it would affect only the mechanism for generating state education funding. The second, although more complex, has the virtue of addressing a broader swath of the state’s educational and equity problems, including the state constitutional command that students be educated in a racially balanced setting wherever feasible. Of course, if we really wanted to be assured that we had cured our educational illness, we could adopt both approaches.

    As with all major surgery, the ultimate decision is the patient’s, but it’s a decision that has to be made before the patient succumbs. It also should be based on the best professional advice and evidence, not on cure-all elixirs. All good patients know that.