New Jersey Aid System Is Flawed, Judge Finds

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New Jersey's school-finance system should be discarded because it shortchanges property-poor urban districts and the disadvantaged students they serve, a state administrative-law judge has ruled.

The long-awaited opinion, issued Aug. 25 by Judge Steven L. Lefelt, is the first ruling on the equity issues raised by Abbott v. Burke, the lawsuit filed in 1981 on behalf of 20 children attending schools in Camden, East Orange, Irvington, and Jersey City.

Judge Lefelt, a quasi-judicial officer assigned by the New Jersey Supreme Court to make recommendations to the state department of education, predicted that the state courts will find the finance system unconstitutional.

After hearing from 99 witnesses and viewing 745 exhibits during a nine-month hearing that ended last year, he concluded that educational opportunity in New Jersey is determined primarily by socioeconomic status and geographic location.

"[P]laintiffs proved there are unmet educational needs in poor urban districts and vast program and expenditure disparities between property-rich suburban and property-poor urban school districts," Judge Lefelt wrote.

'High Foundation' System

The judge recommended that the state adopt a "high foundation" finance system, which would establish a uniform statewide property-tax rate and provide districts that enroll high percentages of special-needs students with proportionately greater amounts of aid. Florida and New Mexico, he noted, have adopted such systems.

Judge Lefelt also suggested that the state redraw the boundaries of its 616 districts to eliminate those that are too large or too small to be run efficiently, and create magnet schools in suburban areas to improve racial balance and provide urban minority students with more opportunities.

Under the state's administrative-law procedures, Judge Lefelt's decision was forwarded to Commissioner of Education Saul Cooperman, who has 45 days in which to accept, reject, or modify the ruling. A spokesman for Mr. Cooperman said the commissioner had no comment on the case.

'Great News for the Children'

In an effort to shorten the appeals process, Marilyn J. Morheuser, the lawyer representing the students, said she would ask the state supreme court to assume immediate jurisdiction over the case, thus removing it from Mr. Cooperman's authority.

If the high court denies the motion, Mr. Cooperman's decision would have to be appealed to the state board of education before the matter could be transferred to the state courts. Those intermediate steps could take months or even years to complete.

Judge Lefelt's decision was greeted as a significant victory by Ms. Morheuser, who is director of the Education Law Center. The Princeton, N.J.-based public-interest firm has spent $1.25 million on the case thus far.

"This is great news for the children of New Jersey," said Ms. Morheuser. "What it should mean is that we will no longer have a caste system. All schools will provide what all children have a right to under the constitution, and that is an equal educational opportunity."

John Haggerty, a spokesman for the New Jersey attorney general's office, said state lawyers and officials were withholding comment while they reviewed the 607-page decision. He said the education department and its lawyers considered the ruling "a loss."

Decades-Long Fight

Judge Lefelt's decision was the latest milestone in a decades-old legal battle over New Jersey's school-funding methods.

In 1973, the state supreme court ruled in a landmark precursor case, Robinson v. Cahill, that New Jersey's then-existing school-aid system created financial disparities between rich and poor districts, thus violating the state constitution's mandate for a "thorough and efficient" system of education.

Lawmakers responded in 1975 by adopting a new funding program--the Public School Education Act--and instituted the state's first income tax in 1976 to finance it.

The Abbott plaintiffs filed their suit in 1981, arguing that the new funding scheme had failed to eliminate the spending disparities and in fact had allowed them to widen.

Legal arguments about the new system's constitutionality, however, were quickly sidetracked by a debate over procedure.

In 1983, a county chancery judge ruled that the plaintiffs had to exhaust state administrative remedies before the courts could rule on the matter. A state appeals court reversed that decision in 1984, but the New Jersey Supreme Court reinstated it in 1985 and assigned the case to Judge Lefelt.

State Arguments Rejected

In his decision, Judge Lefelt rejected the state's arguments that urban schools are being adequately financed and that political mismanagement is a chief cause of their problems.

"I do not believe," he wrote, "that poor urban districts, even with better management practices and the expulsion of politics, could raise sufficient funds and direct adequate administrative remedies to address all of the disparities and unmet needs that I believe must be addressed under our constitution."

Judge Lefelt also rejected the state's contentions that urban districts had not fully utilized their local taxing authority to raise additional revenues and that factors such as school leadership and climate were more important to school quality than finances.

The latter argument, which was derived from the developing literature on "effective schools," is said by school-finance experts to mark the first use of effective-schools research as a legal argument against funding equalization.

Some Praise, Some Criticism

The judge's decision drew praise from the New Jersey School Boards Association, which has endorsed the lawsuit.

"The decision is something we ap4plaud," said Frank Belluscio, a spokesman for the association. "Obviously, the administrative-law judge found the current system still relies too heavily on local property taxes to fund education."

However, Mr. Belluscio said the association would oppose any move to set a uniform property-tax rate to equalize spending. "We would not be opposed to a foundation for spending, but there should be some leeway for local districts," he said.

Joseph A. Palaia, chairman of the state Assembly's education committee, said he, too, objected to the high-foundation finance method proposed by the judge. He said he also disagreed with "the assumption that more money means better education."

Mr. Palaia said he planned to confer with his Senate counterpart, Matthew Feldman, and might schedule a series of joint committee hearings around the state to gather opinions from educators and the public.

Saying he hoped the legislature would act to change the school-funding formula before the end of 1989, Mr. Palaia predicted that "large, substantial tax increases" would be needed "to make up the difference" between rich and poor districts.

The assemblyman added that if urban districts receive more state money, they should prepare themselves for greater demands by taxpayers for accountability. As an example, Mr. Palaia cited the widely acclaimed "academic bankruptcy" law he sponsored that allows the state to take over mismanaged districts.

Takeover Said No Remedy

In his decision, Judge Lefelt wrote that the takeover law was not a sufficient remedy for funding inequities. The state education department recently initiated proceedings to assume control of the Jersey City district, one of the four districts whose students filed the lawsuit.

Franklin Williams, superintendent of the Jersey City schools, said the judge's opinion would bolster his district's argument in that dispute that inadequate state funding, rather than mismanagement, is at the root of the district's woes.

If Mr. Cooperman accepts Judge Lefelt's opinion in the Abbott case, then "he has to take another look at Jersey City," Mr. Williams said.

Vol. 08, Issue 01

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