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Inequities Seen Persisting Five Years After Reform in N.J.

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A new analysis of New Jersey's 1975 school-finance-reform act gives weight to mounting criticism by school-board members and child advocates who claim that the reform has failed to narrow the gap between rich and poor school districts.

Money and Education in New Jersey: The Hard Choices Ahead contends that, despite a doubling in state aid, the disparity in per-pupil expenditures between low-spending and high-spending districts actually grew from $900 in 1975-76 to $1,322 in 1980-81.

"When adjusted for inflation, we find that the dollar difference is the same today as it was five years ago," writes the study's author, Margaret E. Goertz, a policy-research scientist with the Educational Testing Service's Education Policy Research Institute.

The reform was ordered in 1973 after the New Jersey Supreme Court, in the landmark case called Robinson v. Cahill, found that the state's public schools were overly reliant on property taxes, creating large disparities in school spending. This, the court found, violated the state constitution's guarantee of a "thorough and efficient" education.

Two years later, the legislature enacted the Public School Education Act of 1975 (known as Chapter 212), with the intent of narrowing the spending gap, and imposed the state's first general income tax to pay for it. The plan was also designed to bring the state's share of public-school costs from 23.6 percent to 40 percent.

"In the first two years of the law's operation," Ms. Goertz found, "this distribution became more equitable. Yet, in the last three years, there has been a slow but steady movement away from this position. ... Property wealth remains the primary factor in determining the level of educational expenditures in New Jersey."

Furthermore, state aid does not provide as high a level of support as had been hoped. When payments into the teachers' pension fund are accounted for, state aid makes up only about 33.8 percent of the average district's operating costs.

The report notes that the "property-poorest" districts spent an average of $2,419 per pupil in 1980-81, up $900 from five years before, while the wealthiest districts spent $2,992, or $1,240 more than in 1975-76.

Among the reasons for the continued disparity, according to the report:

Only 57 percent of all state aid is distributed according to school districts' need.

Property valuation is the state's sole measure of a district's wealth, making older cities appear to be wealthy when in fact many of their residents are poor. Factors such as demographic makeup and income should be considered, Ms. Goertz suggests.

The state's compensatory-education program does not take into account the high cost of educating children who are deficient in more than one skill, and it does not consider the additional burdens imposed on districts that have large concentrations of low-achieving students.

Because of a one-year lag in state aid to districts, school boards must finance any increased costs with local funds, placing "an undue burden on low-wealth communities," according to the report.

A state-imposed cap on growth in school spending prevents low-spending districts from increasing their budgets significantly.

Opposition to the current finance system is mounting, although many observers consider the legislature unlikely to take action on its own--particularly in the face of severe shortfalls in state revenue.

Two suits, both alleging inequities in the finance method, are pending in state courts. In 1980, the Newark school board sued then-Gov. Brendan Byrne (Sharif v. Byrne), claiming that urban systems do not receive enough money under Chapter 212 to provide adequate educational programs.

The second suit, Abbott v. Burke, was filed last year on behalf of children in four urban districts. It charges that the disparities between rich and poor districts are greater than they were before the enactment of Chapter 212. It also claims that children in low-wealth districts have greater educational needs than children in wealthier areas, but are consigned to substandard buildings, inferior programs, and fewer and less-well-paid teachers.

Evidence in the two cases will be heard together, but they will be decided separately.

On March 20, the delegate assembly of the New Jersey School Boards Association adopted a statement taking the position that the present school-finance system "has failed to provide equal educational opportunity for children," a spokesman said.

And Ernest C. Reock, who as a legislative aide helped to write Chapter 212 and continues to monitor its effects, agrees that the system is not working, although he said the expenditure gap is relatively smaller than it was before the enactment of the law.

"There wasn't a heck of a lot of money put into it to begin with," said Mr. Reock, who now directs the Bureau of Government Research at Rutgers University. "[The new money] was enough to make things come together for a few years, [but] the gap remains about as wide as it was in absolute terms."

"We'd better start thinking about a different form of state-aid formula."

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