New Jersey Revamps Funding Formula In Response to Demographic Shifts

By Daarel Burnette II — July 25, 2018 1 min read
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Democratic New Jersey Gov. Phil Murphy signed into law on Tuesday several changes to the way the state will go about funding school districts in order to better handle dramatic population shifts that have led to funding imbalances among the districts.

Several districts have growing tax bases and shrinking student enrollments, while others are in just the opposition situation. But because of the way the state’s current—and long-fought over—school funding formula caps and rewards state aid, many districts are left with either not enough money to serve all their students or more money than they need.

The new law, which goes into effect in 2020, eliminates enrollment caps that limit the amount of state aid districts receive due to enrollment fluctuations. And it phases out over seven years the state’s adjustment aid, which currently provides some districts extra money even if they don’t qualify for it.

“The necessary adjustments we are making today will bring fairness to the system and ensure our school children receive the quality education they deserve,” Murphy said at a news conference where he signed the legislation into law, according to local reports.

The changes attempt to assure that districts don’t experience dramatic fluctuations in funding by forcing some local municipalities to raise their tax rates. Analysts predict the state will need to pump more than $1 billion back into the state’s schools in order to get funding back to pre-Recession levels.

School funding was a divisive issue in last year’s governor’s race as candidates sparred over whether to increase school funding or send down a series of tax cuts to homeowners.

In recent years, there has been mounting pressure in New Jersey to completely overhaul its funding formula, crafted after a 1985 decision that required the state to better fund property-poor districts.

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A version of this news article first appeared in the State EdWatch blog.