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Block Grants, N.J. Discovers Lead to Unexpected Problems

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A widely praised voluntary school-desegregation program in Montclair, N.J., will be all but wiped out next year because the nearly $1 million in federal funds that supported it this year must, in the future, be shared by school systems throughout the state.

And school systems across the nation are likely to experience losses similar to Montclair's, according to state and federal education officials, because the Emergency School Aid Act (esaa)--a $149-million federal desegregation program--was repealed last sum-mer, along with 25 other federal education programs, when Congress passed the education block-grants package.

Montclair, which used its federal money to implement a program of "magnet" schools, teacher training, and extra instructional materials in lieu of mandatory busing, will receive only $50,000 next year because of the shift to block grants.

"There's just not enough money to concentrate on those big desegregation programs that were operated in some school systems," said Alan King, the acting deputy director of educational support programs in the U.S. Education Department. "There will be big losers all over the country; there's no way you can prevent it."

Loss of Funds Likely

School systems that aggressively pursued federal grants for other programs--such as library materials, teacher training, and classes for gifted and talented students--also are likely to experience a loss of funds, Mr. King said. (See chart on page 17 for a listing of the consolidated programs.)

Under the law that takes effect next July, every school system in the U.S. will be eligible to receive part of a $442-million program that replaces discretionary grants with a single, population-based grant. Federal officials say Congress intended that school systems spend the funds largely as they choose.

Montclair's share of the funds is small because, in establishing block grants, the new law eliminated for certain programs the method of doling out federal grants that has been used since 1965.

Under that method, in which school districts competed with each other for grants by submitting written proposals, Montclair was able to win almost as much money last year as the Newark school system, which has 10 times as many students as Montclair's 6,000.

The new law, the Education Consolidation and Improvement Act, divides the total federal grant among states based on the number of school-age residents, including public and private-school students. States then distribute the funds to the local school systems according to a formula that must meet broad federal guidelines.

The problem for school systems like Montclair is that the new law does not permit a school system's previous success at federal grantsmanship to be considered in distributing the block-grants funds.

Montclair officials found out the size of their loss two weeks ago, when the New Jersey Department of Education announced the state's proposed formula for distributing its $10.5-million allotment.

Under the state's plan, 119 school systems will lose money next year, while 477 will gain from the shift in funds. Montclair will lose the most--more than $850,000.

As a result, Stephanie G. Robinson, the school system's director of federal grants, sent a telegram to Secretary of Education Terrel H. Bell asking him to intervene in order to prevent "the impending demise of voluntary desegregation efforts in Montclair."

"It certainly took us by surprise," said Eve Marchiony, the school-board president. "We had assumed we would take our share of those lumps, but we didn't anticipate being cut almost totally."

Loss of Funds

Mrs. Marchiony said that because Montclair already has experienced a 27-percent drop in its total allotment of federal dollars since the 1980-81 school year, she has no idea how the school system will make up for the additional loss of funds.

She said school officials this year had sought foundation grants, had accepted tuition-paying students from other school systems, and had initiated other fund-raising ventures in an effort to avoid cutting programs or firing teachers.

Mrs. Marchiony said the current situation is "ironic" because the federal desegregation funds enabled Montclair--which has been under court order since 1972 to desegregate its schools--to eliminate a mandatory busing program that was unpopular with parents. "Our program is exactly the kind of voluntary desegregation plan that President Reagan supports," she said.

Private-School Students

She also said she was unable to predict the fate of the desegregation program because, according to the state formula, nearly $14,000 of the school system's $50,000 grant must be spent for the education of students who attend the private schools located within the district's boundaries.

"They are unlikely to need a desegregation program," she said.

Officials of the New Jersey Department of Education say they tried 88 different funding formulas--an effort that required 1.5 million lines of computer type--to figure out an equitable means of distributing the block-grants funds. According to Marvin Habas, the state's administrator of the block-grants program, school systems such as Montclair came up a loser every time.

"We tried every conceivable data base, but no matter what you do--unless you violate the law--certain districts are going to lose money," said Mr. Habas.

"Nothing in the block-grants law says that if you were sharp enough to get money in the antecedent programs, you will get money under block grants. In fact, it seems to say the opposite. What amazes me is, didn't people know this was going to happen when everybody thought block grants were so wonderful?"

Four Factors

The funding formula that was finally accepted by the state's block-grants advisory committee--a federally-required group whose members make recommendations on the block-grants program to the state education department--is based on four factors:

Total enrollment in public and private schools--35 percent;

Children from low socioeconomic areas--30 percent;

Children who need improvement in basic skills--30 percent;

Gifted and talented children--5 percent.

That formula "minimized the impact of the cuts on most school systems, within the requirements of the federal law," said Paul Muller, a special assistant to the New Jersey commissioner of education.

Mr. Muller explained that the funding formula had to be weighted so that large urban school systems, such as Newark, would not lose large amounts of funds. Under the proposed plan, Newark's inner-city school system will lose only 2 percent of its current $986,000 allotment.

State's Dilemma

The state's dilemma, he said, was that "you can't give funds to Montclair without hurting Newark."

Another problem for the state in distributing the block-grants funds comes from federal budget cuts. According to S. David Brandt, president of the state board of education and chairman of the block-grants advisory commission, the total block grant given to New Jersey school systems is one-third less than the total amount school systems received from the separate programs last year.

"Montclair used to receive in excess of $100 per student in federal funds. Now that we have to divide the money among all students in the state, it works out to about $8 per student," Mr. Brandt said.

Mr. Muller predicted that other states may face similar problems in determining their block-grants funding formulas.

Sharing Money

"A district that applied for money before to deal with a particular problem now has to share the money with school systems all over the state and with private schools," he said.

He added that state officials, anticipating the effect the block-grants program would have on certain New Jersey school systems, "have done damn near everything we can think of" to fight the block-grants law. "The commissioner has been in Washington two or three times. We tried to organize a lobbying effort, but it's fallen on deaf ears."

Although the Montclair school system has not received a reply to its telegram, Robert J. Wolfenbarger, a member of the state board of education, said he brought Montclair's situation to the attention of Secretary Bell at a meeting on Jan. 8.

Providing Assistance

Gary L. Jones, an Education Department deputy undersecretary who was present at the meeting, said his staff was "trying to evaluate the problem and see if we can provide technical assistance or support to [New Jersey education officials]. It's a pretty unfortunate turn of public policy for that particular school district, but all we have to do under the law is to see that [the state officials] followed the statute correctly."

Mr. Jones added that school officials "shouldn't lose sight of the fact that this is not a bill put together by this Administration; it was put together by a Congressional committee."

A legislative assistant to the member of Congress who proposed the consolidation act, John M. Ashbrook, Republican of Ohio, said that "it's tough for those school districts that had excellent proposal writers." Added the aide, Jennifer W. Vance, "There's nothing in the law to hold everybody to their last year's level. Montclair is just suffering what other school districts like it are suffering."

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