New Jersey Legislature Proposes Sweeping School Funding Changes

After three months of committee hearings, the New Jersey Legislature released in November nearly one hundred recommendations for what it has called “property tax reform.” The proposals are sweeping, involving major changes to the state’s school funding system, recommendations for consolidation of school districts and municipalities, and a wide range of other ideas. Many legislators have lauded the recommendations, citing both an additional one billion dollars proposed for schools and a large reduction in property taxes, but the proposals also face opposition on several fronts. Developing the recommendations was only one step in what is certain to be a much longer process of possible budgetary, school funding, and governance changes in New Jersey.

Sweeping Recommendations

Called into special session this summer, the legislature formed four joint committees to address what it has put under the heading “property tax reform”: Public School Funding Reform; Public Employee Benefits Reform; Constitutional Reform; and Government Consolidation and Shared Services. Since early August, the committees have heard testimony from experts, researchers, and state officials in order to gain input for their decisions. The legislature reached a milestone in the process in mid-November, when it released 98 recommendations developed by the four joint committees.

One set of recommendations would convert the state’s system of annual property tax rebate checks into direct tax credits with the goal of cutting property taxes for most homeowners by an average of 20 percent.

A second set of recommendations, from the Public School Funding Reform Committee, would suggested major revisions to that state’s school funding system and included a proposed $1 billion increase in school aid – approximately five percent of current education expenditures. In addition, the committee recommended eliminating the Abbott designation (the 31 low-income school districts identified in the Abbott v. Burke litigation), and funding districts using a new formula based on student need. The formula would take into account the results of a cost study performed by the state Department of Education in 2003, which the Education Law Center has criticized as “flawed and outdated.” Under the proposed plan, no district would see a decrease in aid from current levels, though the recommendations did include implementing a school district spending cap.

Other recommendations included reductions in pension and health benefit costs for new public employees, including teachers. New Jersey’s public employee unions picketed government buildings throughout the state on November 30, protesting the proposed benefits cuts. Though the committees explored the idea of consolidating the state’s school districts into 21 county-wide districts, the main recommendation on this front was only a pilot program in which districts can voluntarily consolidate, in order to test the feasibility and benefit of the idea.

Opposition and Concerns

While Senate President Richard Codey hailed the reforms as “the most dramatic undertaking on one single subject” that he has seen accomplished in his 32 years in the legislature, opponents of the proposals are wary. As reported by the Associated Press, Senate Minority Leader Leonard Lance stated that he had “great concerns about the sustainability of these programs.” Governor Jon Corzine also advised caution. “[Tax] relief is popular. Reform and sustainability are hard, very hard,” he said in response to the list of recommendations.

Educators in the Abbott districts are also concerned about the proposals. Stanley M. Sanger, the superintendent of the Union City school district, told Education Week that he credits the current funding structure with the increase in test scores and graduation rates that Union City has seen in recent years. If enacted, the proposals may undermine that structure.

The Road Ahead

While the recommendations of the committees are detailed, they are only one step in the process of reform in New Jersey. While the legislature may start considering some of the proposals as early as mid-December, action on most of the major proposals will likely not happen until 2007. With the proposals certain to generate a great deal of debate, there may still be a long road ahead for these recommendations or whatever modifications the legislature develops.

Prepared by Matthew Samberg, November 30, 2006