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Revised School-Funding Plan Taking Shape in New Jersey

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After months of bitter public protest, the New Jersey legislature appeared last week to be ready to make major revisions in the controversial school-finance-reform and tax-increase law it approved last summer.

Even the supporters and beneficiaries of the Quality Education Act--notably the 30 urban school districts slated for massive increases in state aid--seemed resigned to changes.

"The winds would indicate that something is going to happen," said Kirk Smith, a spokesman for the Newark schools. "Let's go ahead and get started with it."

Since the QEA's passage last summer, Gov. James J. Florio's package has been the center of a storm that has rocked New Jersey politics.

Last November, after U.S. Senator Bill Bradley narrowly escaped re-election defeat, the Governor called for negotiations on the $1.1-billion spending plan, in part to stanch the hemorrhaging of support for the Democratic Party.

Democratic leaders have been working on two separate proposals aimed at placating voters angered by the $2.8 billion in new and increased taxes approved last June.

The first plan to emerge, co-sponsored by the Senate president, John A. Lynch, and majority leader, Daniel J. Dalton, would earmark $395 million for property-tax relief. The funds would be obtained by capping annual spending increases at 13.5 percent for the state's 30 poorest urban districts and 8.5 percent for all other districts.

Proponents of the proposal say that it would still provide enough for poor districts to satisfy the state supreme court, which ruled in Abbott v. Burke that the state's school-finance system was unfair.

The plan was scheduled for a Senate vote this Thursday. But observers predicted that the proposal, which is strongly opposed by the Florio administration and the education community, would be rejected.

Meanwhile, Speaker of the General Assembly Joseph V. Doria Jr. has been working on an alternative proposal, which has the administration's blessing and the education community's grudging assent.

Although Mr. Doria's staff refused to comment on the unfinished proposal, educators and state officials expect that he will suggest skimming off about $200 million from the QEA for property-tax relief. That money probably would come from transition aid earmarked for 146 affluent districts, whose state support is scheduled to dry up by 1995-96.

While expressing resigned support for the Doria plan, urban educators say both proposals would hurt their districts because both would at least temporarily shift teacher pensions back to the state--a change demanded by the powerful New Jersey Education Association.

Despite the pension provisions, the NJEA has come out strongly against the Lynch-Dalton plan.

Senator Lynch's estimates indicate that his bill would hit urban districts the hardest, cutting about $28.3 million from Newark's projected school aid, $30.3 million from Paterson's, and $7.7 million from Trenton's.

"It's a major threat," said Betty Kraemer, president of the NJEA ''It decimates the Quality Education Act and the whole purpose behind it."

Marilyn Morheuser, the attorney who represented the plaintiffs in Abbott v. Burke, said last week that she would take the state back to court if Mr. Lynch's proposal becomes law. She also promised to scrutinize any other proposal carefully to make sure it meets the court mandate.

But opponents conceded that the legislature has to provide some relief to calm anti-tax protests.

"The Democrats have to come up with something that leaves the money [for the poorer districts] intact but comes up with some property-tax relief," Ms. Kraemer said. "Taking it from transition aid would do that."

Dyke Pollitt, an aide to Mr. Lynch, noted that the legislature made two promises when it passed the QEA--to improve education and to lighten the property-tax burden.

But because income-tax receipts have been lower than expected, the state has been unable to reduce property-tax levels.

"They're very nervous they won't be able to deliver on their promise," observed Peg Goertz, director of the Educational Testing Service's education-policy-research division.

While lawmakers maneuver, officials of the state's 610 school districts have been struggling to draft their budgets without knowing how much state aid they will get. The figures were initially to be released Dec. 15, but had not been issued as of last week.

Because of the continuing uncertainty, the legislature also voted this month to push back regional school-board elections to April 30, from April 2.

The anxiety and impatience these delays have caused may work to the advantage of Senator Lynch, Mr. Pollitt said. School administrators have already begun pushing for any action that will allow them to get on with running their districts.

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