Sustainable Formula for Education Funding

By Vin Gopal


The Senate Education Committee is focused on developing a fairer school funding formula to address funding cuts to schools, many of which are being forced to reduce staff and eliminate programs as a result.

The real problem here is that we have not revamped the school funding formula, known as the School Funding Reform Act, since it became law in 2008. We amended the school funding formula in 2018 with a law known as S2 to correct historical imbalances in how much aid the state was providing districts. However, as a result of S2, many districts lost state aid, especially districts that saw their enrollment drop. At the same time, districts were restrained from raising taxes to make up for their budget shortfalls because of the state law capping annual property tax levies at 2 percent. With limited funding, many districts were forced to cut programs or staff or both. S2 expires at the end of the current school year. However, under the our bill any district that sees its aid reduced in the 2023-2024 school year or 2024-2025 school year would be allowed to go above the cap. 

Two weeks ago, the Senate Education Committee passed a bill which would help those districts meet rising costs without cutting programs by removing the 2 percent cap on increases in property tax levies for one year. The bill would enable districts facing state funding under S2 to raise property taxes to the level needed to meet state standards, known as “adequacy budgets.” This legislation also contains a provision to increase the tax levy cap for schools that would be spending below their adequacy budgets after the 2024-2025 academic year. 

We strongly support the single-year elimination of the 2 percent property tax levy increase for a year. Without the flexibility to raise their local tax levy above the 2 percent cap, districts that lose state aid have no choice but to make cuts.

This is one of several short-term solutions the Legislature is considering to help districts navigate the final year of S2, when they are scheduled to face their steepest cuts. Districts are facing a perfect storm of financial challenges, with the last year of S2 bringing cuts, the state economy trending down, and escalating costs for key services. The state needs to do everything it can to help districts weather this year, but the long term answer has to be a move to a more reliable and sustainable funding formula to avoid future crises.

Many school districts that have seen their enrollment decline in recent years were scheduled to receive larger-than-expected cuts through the state’s school funding formula last year. Recognizing that districts throughout the state are dealing with rising costs driven by inflation, increased demand for student mental health services, severe transportation shortages, and other shortfalls – we successfully passed legislation last year that provided additional Supplemental Stabilization Aid. 

These are temporary measures and we need a permanent solution that fairly and safely funds public education without taking programs and services away from students, forcing school districts to cut staff, or causing additional hardship to property taxpayers.

There is too much at stake here. New Jersey’s schools enjoy an excellent national reputation. A recent report based on data collected by Teach Simple, an educational resource site, found New Jersey is second only to Massachusetts when it comes to academics and other important scholastic details, such as strong student-to-teacher ratios and high SAT scores.

That’s important to New Jersey students applying to colleges. It’s important to our seniors and others struggling to hold onto their homes. It’s also important to the state economy because our schools are helping build a workforce that will keep our state competitive in business and industry. 

That’s why the Senate Education Committee, as well as your other LD11 state representatives, Assemblywomen Margie Donlon and Luanne Peterpaul, all remain focused on reforming the state school funding formula.