Published Online: January 15, 1997

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N.J. Finance Law Ties Funding and Standards

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After months of debate and frenetic horse-trading, New Jersey lawmakers wound up preserving the thrust of Gov. Christine Todd Whitman's plan to tie school funding to statewide curriculum standards.

The school finance measure, signed by the governor Dec. 20, moves New Jersey into the vanguard of states that are turning to academic standards as a means of reframing the decades-old debate over educational equity.

At the heart of the plan is the notion that the state is not obligated to equalize spending in rich and poor school systems as long as needy districts have enough cash to meet the state's expectations for schools.

"For the first time in state history, we have a public education funding law that is based on the provision of an educational program, not simply on the available dollars," Gov. Whitman said of the law last week.

But as expected, no sooner had state officials met their year-end deadline for rewriting the funding formula than they were back in court to defend it.

The finance-equity group that has clashed with the state since 1970 asked the state supreme court last week to nip the law in the bud. The court's 1994 ruling invalidated an earlier finance law on the grounds that it failed to close the spending gap between rich and poor districts. The court ordered the state to pass a plan to erase that disparity by the end of 1996.

The new law funnels an additional $138.6 million in aid to the 28 poor city school districts that are the focus of the court case, and increases their total state funding to $2 billion of the $4.3 billion the state spends on schools.

But the law makes no pretense of bridging the gap between the poor systems and the state's wealthiest suburbs, as the ruling directed.

"They thumbed their nose at the court," said David Sciarra, the director of the Education Law Center, the Newark-based advocacy group that represents children in poor urban schools. "It's what we've been fighting about for 25 years, and we're back to square one."

Standard of Equity Shifts

Gov. Whitman, however, praised the law and said that beyond moving toward a constitutional system, it also gives the justices something they had long been seeking: an alternative way to define equity among schools.

Instead of relying on equal spending as the ultimate measure, the Republican governor says, the court can now use school standards as the yardstick of whether poor urban schools are being shortchanged.

Mrs. Whitman is not alone in advocating that approach. Bucking the tradition of basing funding on little more than political calculation, other states have begun looking at ways to link funding levels to the actual cost of meeting the state's educational expectations. ("Redoing the Math: States Push To Tie Formulas to Real Costs," May 15, 1996.)

Still, no other state has explicitly tied funding levels to statewide curriculum standards in the manner that New Jersey has, said Allan R. Odden, a school finance expert at the University of Wisconsin-Madison.

Under the new law, the state sets a base per-pupil figure that it says is sufficient to meet the standards. The state will provide varying levels of aid to enable districts to meet that figure, depending on their wealth.

For the coming year, the figure is pegged at $6,720 for elementary school pupils, $7,526 for middle schools, and $8,064 for high schools. The amount refers to regular education only.

The New Jersey School Boards Association joined the Education Law Center and other critics in questioning the connection between the financial and educational sides of the equation.

"We don't see a link between the standards and the funding," Frank Belluscio, an NJSBA spokesman, said.

Mr. Sciarra went further: "It's concocted fiction. It's a phony number they cooked up."

State education officials will not say how their per-pupil spending targets compare on average with actual current spending. But they insist that the numbers reflect genuine estimates of what it takes to meet the standards.

Critics' claims to the contrary, said Peter Peretzman, an education department spokesman, are "sheer nonsense."

Flexibility Preserved

Under the law, the many wealthier school systems that spend above the targets may continue to do so.

When they bring their budgets before voters each year, however, they will have to state on the ballot that they have "proposed programs and services in addition to the core curriculum content standards adopted by the state board of education."

Poorer districts, which are more dependent on state aid, will be more likely to remain within the state's spending range. Yet the 28 needy urban districts targeted in the finance-equity case will receive various forms of extra aid.

Districts may spend below the state level as long as they can meet the standards.

In districts or schools that fail to meet the standards, the law authorizes the education commissioner to "summarily take such action as he deems necessary"--including curriculum changes, staff reassignments, funding shifts, and spending hikes--in addition to the extensive intervention powers he already had.

Reflecting the growing national interest in performance incentives, the law also creates a $10 million reward program for schools that score well on standards-based state tests. Under the new law, schools can qualify for the bonuses if 90 percent of their students achieve the standards or if they make unusual progress in improving their schoolwide scores.

Frank L. Smith, a professor of educational administration at Teachers College, Columbia University, predicted that the new law could come back to haunt the state by giving urban-education advocates new grounds for litigation.

"In the past, the state has studiously avoided guaranteeing that kids in Newark will learn the same as kids in Ridgewood," Mr. Smith said. "In five years, what happens when the students sue because they didn't learn what they were supposed to?

"So while [Gov. Whitman] thinks she's outsmarted them on dollar-for-dollar parity, I think she put the state in a worse situation," Mr. Smith said.

But Mr. Odden of the University of Wisconsin said the state was basically on the right track.

"What you've got is a much more interesting struggle than trying to make sure spending in Newark is the same as in Cherry Hill," he said. "We'll have to see how it works out."

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Related Stories
Web Resources
  • Read a statement from Gov. Whitman regarding New Jersey's school-funding lawsuit.
  • In Making Schools Work: Spending and Student Achievement, published by Heartland Policy Studies, University of Rochester professor Eric A. Hanushek writes that "perhaps reformers should really be asking not where new money for schools is to come from, but whether schools spend existing funds wisely."

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