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N.J. Judge Declares Finance System Unconstitutional

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A New Jersey judge last week declared the legislature's most recent revision of the state school-finance system unconstitutional because it fails to close the funding gap between poorer and wealthier districts.

The ruling by Superior Court Judge Paul G. Levy is the latest turning point in the Garden State's two-decade search for a funding solution that satisfies political, educational, and constitutional aims.

Although New Jersey is one of about two dozen states currently embroiled in school-finance litigation, the ruling makes it only the second, along with Texas, in which a judge has overturned a legislative attempt to answer a finance-equity order by the state supreme court.

The ruling also promises to make education funding a key issue in New Jersey's gubernatorial and legislative elections in November.

"The court concludes that the Q.E.A. [the finance law known as the Quality Education Act] does not assure that funding for regular education for the 30 special-needs districts will be substantially equal to that of the [wealthier] districts within five years,'' Judge Levy wrote. "Instead, funding will be dependent on local budgeting and taxing decisions, in direct contravention to the supreme court's ruling.''

Noting that "further judicial intervention'' was necessary to provide a specific remedy, Judge Levy referred the matter to the supreme court, which has repeatedly found that the state's various school-funding schemes violated the constitutional mandate to provide all children with a "thorough and efficient'' education.

1991 Amendments Overturned

The most recent court ruling dates back to the 1990 case known as Abbott v. Burke II. In that case, the supreme court laid out a timetable for the state to provide funding parity between the 30 urban "special needs'' districts and the state's wealthiest systems, beginning in 1991-92. The court ordered that parity be achieved by 1995-96.

Soon after, Gov. James J. Florio and his fellow Democrats in the legislature passed the Quality Education Act of 1990, which revised the finance system and raised about $1.2 billion in taxes.

Accompanying the education-finance law, however, was an additional $1.6 billion in taxes, chiefly to close a state budget gap. Taxpayers revolted in middle- and upper-income communities, which were hit both by tax hikes and by the loss of state funding for schools.

Responding to the public outcry, the legislature in 1991 amended the Q.E.A. by diverting $360 million from school aid to property-tax relief.

But the action did little to assuage voter anger. In November 1991, Republicans won veto-proof majorities in both legislative chambers. Since then, funding has been increased, but not to the original Q.E.A. level.

Judge Levy's decision overturned the 1991 version of the Q.E.A.

Election Limelight

With elections looming this fall, Republican leaders and Mr. Florio agreed last December to create a commission to devise a new funding formula. To avoid the thorny issue at election time, the panel was given until Nov. 15--two weeks after Election Day--to report.

As a result of Judge Levy's decision, however, the school-aid issue has been thrust into the political limelight once again.

Republicans immediately seized upon the ruling to blame Mr. Florio.

"We said all along that Governor Florio's Q.E.A. was based on a flawed formula that the Democrats blindly accepted,'' said Sen. John H. Ewing, the chairman of the Senate education committee.

The ruling "was the inevitable result of a law that was railroaded through the legislature without any input from educators and those closest to the problem,'' Mr. Ewing added.

Similar comments were voiced by Christine Todd Whitman, the G.O.P. challenger to Mr. Florio.

"It is inescapable that the actions of the Florio administration did nothing to solve the problem; it made the problem worse,'' Ms. Whitman said.

The Republican assessment of the ruling was strongly disputed, however, by Marilyn J. Morheuser, the lawyer for the Newark-based Education Law Center, which brought the suit on behalf of the poor districts.

"The Republicans have done even worse since they were in authority,'' Ms. Morheuser said.

Before the Republicans took control of the legislature, she said, the average disparity between wealthy and poor districts per pupil was $1,700. For the 1993-94 school year, the average gap had dropped only slightly, to $1,673.

Tax Hikes Ahead?

Some analysts believe that parity probably cannot be achieved without raising taxes.

Satisfying the court "inevitably means some kind of tax increase,'' said William Firestone, the director of the Center for Educational Policy Analysis in New Jersey at Rutgers University.

What action lawmakers will take and when they will act is unclear. Some observers predict that policymakers will follow their plan to await the special panel's report.

"If I were a candidate running for election, I think I would use them for protection at this point,'' said Mr. Firestone.

As far as Ms. Morheuser is concerned, though, the commission can do only so much.

"Beginning in 1972, we've had at least three big blue-ribbon commission reports that are gathering dust on library shelves,'' she observed.

"There is nothing about the commission's recommendation that will make it law,'' Ms. Morheuser added. "It will still go through lawmakers who are under a continuing constitutional obligation.''

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