New Jersey

Recent Events | Costing Out

Historical Background

Judicial involvement in education finance reform in New Jersey began over three decades ago and deepened more recently because the state was slow to implement reforms. In 1973, the New Jersey Supreme Court declared, in Robinson v. Cahill, 303 A.2d 273, that New Jersey's school funding statute was unconstitutional because it violated the "thorough and efficient education" requirement of the state constitution. Since that decision, the supreme court has issued over a dozen school finance opinions, the latest in February, 2008. The Education Law Center (ELC) serves as counsel for plaintiff students, who comprise over 20 percent of the state's students and attend school in 30 low-wealth school districts (now known as the "Abbott districts").

“Parity,” Preschool and Other Entitlements

In its 1994 and 1997 Abbott v. Burke decisions, the New Jersey Supreme Court ordered “parity” funding, that is, state aid to bring per-pupil revenues in the Abbott districts up to the per-pupil expenditures in the state’s 110 successful, suburban districts. The court allowed the state a phase-in period, reaching parity for the first time in the 1997-1998 school year.

The court, in its 1998 decision, 710 A.2d 450, ordered an unprecedented series of entitlements for disadvantaged children, including full-day kindergarten, high quality preschool for 3- and 4-year-olds, a comprehensive facilities effort, after-school programs, and summer school.

After the State failed to comply with its own 1998 representations to the court regarding preschool, plaintiffs challenged the remedy. In Abbott v. Burke, 748 A.2d 82 (2000) (Abbott VI), the court spelled out the preschool requirements in more detail, including substantive educational standards, certified staff, and a maximum student/teacher ratio of 15:1. In 2002, the ELC and Rutgers University launched "Starting at 3," a preschool project.

In 2002, New Jersey announced a $10 - $12 billion school construction program, of which $6 billion was designated to build and renovate school buildings in the Abbott districts. While the School Construction Corporation provided financing for projects in suburban districts in a timely manner, it failed to finance most of the projects in the Abbott districts and was shut down when corruption came to light. Overcrowded classrooms and dilapidated facilities continue to hamper progress in the school districts educating most of the state’s most disadvantaged schoolchildren.

Costing Out

In 1996, the New Jersey Department of Education developed a "costing out model" described as determining the cost of a constitutional "thorough and efficient education," based on a hypothetical school district. The model concluded that the state's 30 poor "Abbott districts" had sufficient funding and that high-performing suburban school districts were spending wastefully. In response, numerous suburban superintendents testified before the legislature about the impact funding cuts would have on their programs and students.

Later that year, the legislature grandfathered the suburban spending into a new education funding statute but, effectively, held the Abbott districts to the lower spending levels in the model. In Abbott IV, 693 A.2d 417 (1997), the New Jersey Supreme Court rejected the funding statute as it applied to the Abbott districts and, instead, ordered the State to provide funding parity with the average expenditures of the state's 110 higher wealth districts.

In 2003, the state Department of Education hired an expert to conduct a cost study but did not release the results. The Education Law Center filed suit to obtain this information, and in October 2006 a Superior Court judge ordered the state to provide it.

Recent Events

A new school funding plan was approved by the legislature on January 7, 2008. Under the new formula, the state will allocate approximately $7.8 billion to K-12 education for fiscal year 2009, a 7% increase from 2008. All districts will see a boost in school funding ranging from 2 to 20% during the first two years of its implementation.

According to David Sciarra, attorney for the Abbott districts and executive director of the Education Law Center, the base funding proposed in the new formula would mean that Abbott districts would get funding amounts closer to the state average and not to the levels of the wealthiest districts, as mandated by the Supreme Court. Though Abbott districts will still receive more than half of all state aid under the new plan, 22 out of these 32 districts will receive the minimum 2% increase.

According to Education Commissioner Lucille E. Davy, the new formula “follows the basic principle that children with greater needs deserve greater resources” and it will better address the needs of the 49 percent of low-income students that live outside the Abbott districts, and have not been covered by the Abbott litigation. Under the plan, aid will be distributed through a foundation formula based on a costing-out study that determines the amount of money each district needs to spend to allow every student to attain New Jersey’s educational standards. The base amount varies with grade level, and additional weights will be used to account for at-risk, special education, and limited English proficiency students. The formula also includes an additional weighting for students in areas of high poverty concentration.

On March 17, 2008, Attorney General of the state of New Jersey, filed a motion claiming that the School Funding Reform Act (SFRA) addresses the constitutional deficiencies previously identified by the Court and asking the Court to terminate the case and eliminate the parity funding system it had ordered in the Abbott decisions.

On November 18, 2008, the state Supreme Court rejected the governor’s request to summarily dismiss the long-running Abbott vs. Burke school funding case. The court ordered a series of hearings in which the governor will have to demonstrate that the new funding formula for distributing $7.8 billion in state school aid satisfies the constitutional rights of students in the Abbott districts.

According to Education Commissioner Lucille E. Davy, the new formula “follows the basic principle that children with greater needs deserve greater resources,” and it will better address the needs of the 49% of low-income students that live outside the Abbott districts, who have not been covered by the Abbott litigation. But, David Sciarra, attorney for the Abbott districts and executive director of the Education Law Center, argues that the base funding proposed in the new formula shortchanges the 31 Abbott districts. Twenty-two out of these 31 districts will receive a minimum 2% increase in 2009 and could be denied an increase in future years.

On May 28, 2009, in its 20th decision in the two-decade old Abbott v. Burke litigation, the New Jersey Supreme Court ruled unanimously that the state’s new education funding system, the School Funding Reform Act of 2008, meets the constitutional requirement to provide all students a “thorough and efficient education.” The court’s order permits the funding system to go into effect statewide, including in the 31 poor urban school districts previously covered by the Abbott orders.

Repeating its prior finding, the court held that the Abbott case has led to “measurable educational improvement” for students in the Abbott districts. The court’s ruling ends the special remedies the court had ordered for the Abbott districts, including parity funding and funding for supplemental programs. Under “hold harmless” provisions in the new funding system, however, no district will receive less aid in the 2008-2009 school year than it received the previous year plus a 2% increase, and, absent a significant decrease in enrollment, no district will receive less than this amount in the future. For the Abbott districts, this means that their past levels of extra funding will form a guaranteed minimum base level for the future. However, as the plaintiffs argued, since districts face unavoidable cost increases, the flat funding provided under the new formula will force some districts to scale back their current programs.

The court’s finding of constitutionality for the new state funding system was explicitly premised on two major conditions. First, the state must continue to provide school funding aid during this and the next two years at the levels required under the new formula. Second, the court’s holding further requires the state to conduct a review of the formula weights and other operative parts of the cost analysis upon which the new system is based after three years of implementation.

The court accepted the factual findings and most of the recommendations of the special master it had appointed last November to hear evidence about the new formula and the cost studies upon which it was based. However, the court rejected the special master’s additional recommendation that the Abbott districts be permitted to continue to apply for extra funding for important supplemental programs during a three-year transitional period.

Related Litigations

In 2006, a class action complaint was filed against state officials and local boards of education, asking the court to order vouchers for students attending schools with low pass rates on state standardized tests. The suit was dismissed October 4, 2007, but this decision is currently on appeal.

Several rural school districts tried to qualify for additional state funding as Abbott districts, in Keaveney v. New Jersey Department of Education, 2000 N.J. AGEN LEXIS 814 (Dec. 26, 2000). One was approved. Also, the Superior Court, Appellate Division, in Stabaus v. Whitman, 770 A.2d 1222 (2001), dismissed a suit by taxpayers alleging unconstitutionally disparate tax burdens.

Last updated: June, 2009