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Lawsuit by Boards' Association Mires School-Finance Dispute in New Jersey

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The New Jersey School Boards Association has filed suit to force the state to raise school aid by $235 million above the governor's recommended budget, an amount it claims is needed to meet obligations to school districts under the state's school-finance formula.

The association's Feb. 24 action came one day after Commissioner of Education Saul Cooperman, acting is a separate legal dispute, rejected an administrative law judge's finding that state courts will probably rule that the current finance method fails to provide students in poor communities with a "thorough and efficient" education.

In that case, Abbott v. Burke, lawyers for schoolchildren in four urban districts contend that the finance formula is unconstitutional because it perpetuates inequities that result from their districts' inability to generate local revenue equal to that in more affluent districts.

Marilyn J. Morheuser, the lead attorney for the students, said she would appeal Mr. Cooperman's ruling to the state board of education.

The school boards' association, meanwhile, argues in its suit that the state supreme court upheld the constitutionality of the formula in 1975 on the assumption that it would be fully funded. Octavius T. Reid Jr., the association's executive director, said the formula has been adequately funded only three times in the past 13 years.

"Every dollar that the state's appropriation falls short is another dollar cut from our children's education or placed on the backs of already overtaxed local property taxpayers," said Mr. Reid. He added that the state has a responsibility to find new sources of revenue rather than cut school aid.

In January, Gov. Thomas H. Kean proposed an "austerity" budget that would raise school aid to $3.6 billion, up from $3.4 billion for fiscal 1989, the smallest rate of increase for schools in more than a decade. Mr. Kean later agreed to seek an additional $97 million, but njsba officials claim the revised budget request is still insufficient.

Frank Belluscio, a spokesman for the association, said the New Jersey Assembly has adopted and sent to the Senate a measure that would fully fund the formula.

Mercer County Judge Paul Levy has set a March 6 hearing date for the association's suit. The group has asked the judge to issue a ruling by the third week of March.

Observers said Mr. Cooperman's 233-page decision in the Abbott case basically outlines the position the state will take when the suit reaches the supreme court, as all parties agree it will.

In an earlier phase of the case, the supreme court told the plaintiffs they would have to exhaust all administrative remedies before the state courts would hear the case.

Under the state's administrative-law rules, hearings are held before an administrative law judge, who issues recommendations.

The education commissioner then reviews the recommendations and may accept, reject, or modify them. His decision, in turn, must first be appealed to the state board of education before the case can reach the state courts.

In his ruling, Mr. Cooperman argued that the state's finance formula was "was sufficient, if fully utilized" by districts.

The commissioner also rejected Administrative Law Judge Steven L. Lefelt's finding last August that urban districts have a "municipal overburden" that creates an unfair situation in which taxes are high but revenues are low. Mr. Cooperman contended that the situation is the result of districts' "perceived inability to raise sufficient funds through taxation."

Mr. Cooperman also noted that if a district fails to provide students with an adequate education, the state education department can begin proceedings to take over its schools. The state, he said, is "fully capable of ultimately assuring that all children will have access to a thorough and efficient education."

Seymour Weiss, director of the education department's bureau of controversies and disputes, said the commissioner "doesn't entirely buy the argument" made by urban districts that they cannot obtain the maximum amount of local revenue allowed for under the funding formula because they share their property-tax bases with municipal and county governments. Those bases, the districts say, cannot generate enough money to cover cities' disproportionately high education and social-service costs.

While he disagrees, Mr. Cooperman "recognizes the perception does exist," according to Mr. Weiss, and has recommended that the legislature reimburse districts for their current-year expenses, rather than for costs incurred in the prior year as under the current formula.

State officials explain that the change will help districts deal with the fact that, under the current system, they are often forced to raise local taxes in a given year to cover expenses that the state will not provide funding for until the next year.

The commissioner estimates, Mr. Weiss said, that 382 of the state's 600 districts would qualify for current-year reimbursements, at a total additional cost to the state of $250 million.

According to Ms. Morheuser, the plaintiffs' attorney, the commissioner based his ruling on facts that were not a part of the record in the trial, a situation that she said violated her clients' right to due process of law.

"It's a self-serving opinion," she said. "The commissioner has reviewed his own work and found it without fault."

Evidence presented during the hearings before Judge Lefelt showed, the lawyer said, that if the Camden school district, because of its municipal overburden, taxed up to its legal authority to provide its share of the revenue, its tax rate would be 288 percent above the state average.

"It's utterly impossible," she said.

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