Op-Ed: Christie’s ‘Fairness Formula’ Reveals Problems with NJ’s School Funding

Paul L. Tractenberg | January 25, 2017 | Opinion
The state’s persistent failure to fully fund its own formula has compounded the fiscal plight of low- and moderate-wealth school districts

Paul Tractenberg
Gov. Chris Christie has performed a great public service by exposing the deep flaws in our state’s education-funding approach, especially its overreliance on local property taxes. His cynically named “Fairness Formula” is far off the mark, however. A variety of state legislators also have recognized that there are flaws in the current funding system. They have proposed much more modest, and better if insufficient, responses than Christie, mostly based on studying the problem and embracing fine-tuning improvements.

The flaws are structural and longstanding, however, not the result of a runaway state Supreme Court or an excessive commitment to sending state money to poor urban school districts or even the state’s persistent underfunding of its own formula. Given an arcane funding structure that favors communities with great property wealth and the state constitution’s clear mandate of high-quality education for all the state’s children, the courts have had no options but to intervene.

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.In funding its schools — 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, 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 Abbott v. Burke ever since. Because the New Jersey Supreme Court lacks the power to directly revamp the way in which the state funds and operates its schools, it has repeatedly ordered that the amount of required state aid for the poor urban districts be increased and that the state fully fund its own statutory formula so that those districts can equalize educational opportunities for their many at-risk students

The state’s persistent failure to fully fund its own formula 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 (although, since the last state Supreme Court decision in 2011 requiring full funding of those districts, even they have lost substantial ground).
  • 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.
  • 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. The answer, however, is not his Fairness Formula. That approach is neither constitutionally appropriate nor practically workable. 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 touts 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, or at least greatly increased, 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, the Canadian province of Ontario has adopted full state funding relatively recently with great success. Ironically, we actually have an old New Jersey model for how to shift more of the burden of funding education to the state. In 1972, Republican governor William Cahill (of Robinson v. Cahill fame) proposed a tax reform program that included the adoption of a statewide property tax to reduce reliance on local property tax revenues.

    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 countywide basis as many states do, using criteria such as equalized local tax capacity and pupil diversity. 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 education and equity problems, including the largely ignored 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 — essentially what Ontario has done through its highly successful education reform program of the past 15-20 years.

    By the way, based on PISA, the gold standard of international pupil achievement testing, Ontario students are the highest performing English-speaking students in the world. Ontario also spends barely half as much per pupil annually as New Jersey does. Those kinds of results argue strongly for our paying close attention to what Ontario has done.

    In the case of this serious illness, 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.