Earlier this month, state Senate President Steve Sweeney and Assembly Speaker Vincent Prieto reached an agreement on the allocation of state aid to school districts for the 2017-2018 school year. The original proposal added an additional $100 million in aid above Gov. Chris Christie’s proposed fiscal year 2018 budget. In addition — and more controversially — it reallocated an additional $46 million away from some districts and toward others.
On Monday, the New Jersey Education Policy Forum released my analysis of the original Sweeney-Prieto school-funding proposal. That proposal appears to have changed as of Monday; however, an examination of the original is still instructive.
The amount to be reallocated has been reduced to $31 million. But both the new and the old proposals appear to allocate aid in reaction to two factors: adjustment aid and the growth cap.
Adjustment aid was included in the School Funding Reform Act (SFRA) back in 2008 as a way for districts to ensure that they would never get less aid than they did back when the act was passed. Adjustment aid has resulted in accusations of districts being “overaided” — receiving more aid than the SFRA formula says they should.
The growth cap limits the increase in aid a district receives compared with the previous year. Critics contend it leads to “underaiding” of certain districts that have expanded quickly.
I am sympathetic to the argument that the state should take another look at adjustment aid and the growth gap. But I also contend much of the problem comes from chronically underfunding the state’s own law.
According to the Education Law Center, SFRA has been cumulatively underfunded since 2010 by $9.7 billion. The governor’s budget calls for $9.2 billion in direct aid to districts this year. Sweeney-Prieto’s total of $131 million in aid changes (along with, reportedly, another $25 million in extraordinary special education aid) is, ultimately, a tiny fraction of either of these figures.
Little overall effect
That said, while Sweeny-Prieto will have little overall effect on bringing the state’s school budgets to adequacy, it is clear the proposal will affect some individual districts significantly, either positively or negatively.
To understand why, think of school aid as a function of three factors: cost, capacity, and effort. Cost is the amount needed to provide an adequate education to a district’s students. Cost varies based on, among other factors, student need. The SFRA formula, for example, provides more funding for more at-risk students under the research-supported premise that these students need more resources to equalize their educational opportunities.
Capacity is the ability of a community to raise funds locally to support its schools. Affluent towns have much greater capacity to tax themselves than less-affluent towns; therefore, state aid flows to towns and cities that would otherwise have to tax themselves at much higher rates just to match the levies in wealthier places.
Effort is how much the community actually taxes itself to fund its schools. If two towns have equal costs and capacity, but one must exert more effort to reach adequacy, we would expect state aid to flow to that town in the interest of “fairness.”
Go with the flow
My analysis of the original proposal shows that Sweeney-Prieto aid changes do, on average, flow to towns and cities that make more effort, relative to their costs and capacities. I would expect an analysis of the new proposal to show the same.
There are consequences to the Sweeny-Prieto plan that must be considered before it is implemented. First, it appears that several districts will lose more aid than their cost, capacity, and effort would predict. It is especially problematic to ask these districts to make up for their loss in state aid just two months before the start of the school year.
Second, there appear to be unintended correlations between student characteristics and the original Sweeney-Prieto aid changes. Districts with higher percentages of special education students, for example, appear more likely to lose aid under the original proposal.
The allocation of SFRA aid for special education students is perhaps one of the formula’s most controversial aspects. The formula is premised on the equal distribution of classified students between all New Jersey school districts. There’s good reason to believe that’s not the case, and Sweeney-Prieto might make the situation even worse.
Before the Legislature passes the proposal, I urge it to look carefully at how individual districts will be affected by Sweeney-Prieto. Much of the attention has been focused on Jersey City and Toms River, large districts that will lose millions in aid. But there are smaller districts that will lose more per pupil. Is the Legislature’s leadership sure these losses are warranted in every case?
There is a large and growing body of high-quality research that confirms schools need adequate funding. Certainly, we must drive more aid to the districts that need it. But taking funds away from districts that are ostensibly “overaided” must be done with the greatest care.
Sweeney-Prieto may have good intentions, but its consequences could be dire for some districts. The Legislature needs to fully explore — and remedy, if necessary — those consequences before proceeding.