Gov. Phil Murphy’s “historic” budget proposal for next year puts New Jersey K-12 public schools the closest they’ve been to receiving their full amount of state aid since at least 2009; however, 388 districts will still be underfunded by $261 million, according to an analysis of the proposal.
On the other side of the ledger, 189 districts are “overfunded” by $158 million or receiving more state aid than what the formula calls for. More than 80% of those districts are facing budget cuts under the proposal that was announced on March 2. (See district and county breakdown below.)
The Underfunded
For Paterson Public Schools —a predominately Black and Latino, urban school district in Passaic County — being underfunded by $10.8 million next year, didn’t come as a surprise.
Paterson has had to lay off hundreds of its teachers because for over a decade, the state hasn’t given them their complete formula aid amount, said Eileen Shafer, the district’s superintendent.
“We continue to do without,” Shafer said.
“For many years all we kept doing was riffing teachers... and that became kind of a norm for a period of time. We also have a need for bilingual education, but we don’t have the fiscal funds in order to provide what it is we need,” she said.
The $10.75 billion school aid proposal increases aid by $834 million, dispersing funds to underfunded schools like Paterson and bringing the state closer to closing spending disparities impacting poorer and predominately minority school districts.
Despite their aid being projected to increase by 7% next year, Paterson will be the district with the second largest underfunding deficit, after Newark and before Trenton, according to the analysis.
District officials say that although next year’s proposed aid increase will solve some of Paterson’s funding concerns, it isn’t enough to help them “catch up,” from the 15 years the school aid formula wasn’t properly funded.
“Once you're underfunded like we were to the tune of $280 million…whatever it is we get never makes up for that time and for what the district has had to do in order to balance the budget,” said Shafer.
Statewide, districts were owed over $617 million in state aid this year because the formula under the 2008 School Funding Reform Act (SFRA) wasn’t fully funded, according to the analysis.
If Murphy’s proposed budget gets approved in July, next school year the underfunding deficit could close by 58%, bringing the amount owed to districts to $260.7 million.
Here’s the county breakdown of the underfunded and overfunded districts next year.
New Jersey education policy experts say Murphy’s increase in state aid for next year is a step in the right direction to fully funding the SFRA by 2025, but more needs to be done to ensure students are getting the resources they need.
“We’ve been underfunding the formula from the state side ever since it was implemented,” said Danielle Farrie, a research director at Education Law Center.
“We have made significant progress in the last few years of closing those gaps but the students who have suffered the most are the low-income students, Black and Hispanic students who are in districts that not only are not getting the state aid that they're entitled to but also are often underfunded on the local side,” Farrie said.
The SFRA calculates the amount of funding each district should receive based on how much it would cost to “adequately” educate each student and the amount the district can raise through local revenue.
“Because districts like Newark don’t have the ability to raise its own taxes in the same way as very affluent communities out in the suburbs do that’s why we have state aid,” said Mark Weber, a professor at Rutgers University’s School of Education.
Funding gaps aren't as wide as they have been in recent years and seem to be leveling out across the state, experts say.
In fact, no district will receive any less than 89% of the aid the formula calls for next year, according to the analysis.
To put this into perspective, this school year Loch Arbour in Monmouth County received 69% of its “fully funded,” formula aid amount — the smallest percentage dispersed statewide. For the 2023-24 school year, the district is projected to get 102% of its formula funding amount.
While additional aid is being allocated to underfunded districts, money is slowly being phased out from “overfunded” districts, causing some to face steep budget cuts.
The "Overfunded"
Statewide, 157 districts will see a funding decrease next school year and most of them are considered overfunded, under the new budget proposal.
Collectively, the overfunded districts could account for a $158 million surplus next school year, according to the analysis.
This is a 32% decrease from this year’s surplus, reflecting Murphy’s 7-year plan to phase out money from overfunded districts to underfunded ones through a bill passed in 2018 known as “S-2.”
Wildwood City is proposed to get $1.9 million in state aid next year, an amount that “overfunds” the district by 55% according to the analysis.
The district is also proposed to lose more than half of its state funding next school year, according to aid figures.
This cuts Wildwood’s operating budget by 12%, a large reduction that they could not have predicted, said Wildwood City’s district superintendent, John Kummings.
The only way to make up for that decrease would be to increase property taxes by more than 2%, so the district could raise more local revenue for the schools, according to Wildwood officials, but by law, the state’s property tax cap is 2%.
“Our issue is if this is happening and if it's happening throughout the state, this is not a time to be divisive,” said Kummings. “It seems that there's something systemically wrong with the formula and it can't handle this level of inflation… that it experienced coming out of the pandemic.”
Concerns about the aid cuts have caused state lawmakers to start fast-tracking a plan to allocate $102.7 million in supplemental aid to those New Jersey school districts facing reduced funding under the new budget.
With “overfunded” schools like Wildwood being burdened by steep budget cuts and schools like Paterson dealing with the cumulative impacts of chronic underfunding, the New Jersey School Board Association is tasked with trying to advocate for the interests of both.
“We want the state to continue to provide the resources that the law says they should be providing to districts,” said Jonathan Pushman, director of governmental relations at the NJSBA.
“But we also want to make sure that they give the districts who are seeing reductions in state aid the tools that they need and resources that they need in order to continue providing an adequate education to their students, such as providing them with relief from the 2% property tax cap,” Pushman said.
Education policy experts say that these disparities also point to why it’s time to reevaluate the way the state calculates school aid.
“The SFRA is overdue for a rigorous assessment of whether it reflects the resources needed to meet today’s standards and aligns with new developments in the field of education practice,” Farrie said.
Standardized tests have gotten harder and there are more demands for school mental health services, security aid and technology since the SFRA was designed more than 15 years ago, according to advocates.
These factors should alter the formula of how the state calculates what each district should be receiving each year, said Weber, who is also the co-author of the study New Jersey School Funding: The Higher the Goals, the Higher the Costs.
“It would be a big mistake to think fully funding the formula is all we need to do,” said Weber, “We have to take a look at the formula regularly to make
See where your district stands for next year under the projected aid budget that gets approved in July.
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