Friday, May 13, 2016

School Formula Underfunding Started Way Before Christie

One troublesome myth about state aid in New Jersey is that New Jersey only started to underfund its school aid law after Chris Christie became governor.

This myth is repeatedly perpetuated by the Education Law Center in its constant denunciations of Christie for underfunding SFRA without any historical, economic, or debt context.

For instance, this is the ELC from May 2016:

Since Governor Chris Christie took office in 2010, the promise of fair and adequate funding for all students under the SFRA, regardless of district or zip code, has been broken. Governor Christie has shortchanged districts through a combination of state aid cuts and flat funding over six years. The level of SFRA underfunding in the current school year is $1 billion. The Governor’s proposed FY17 State Budget is more of the same, with a paltry $36 million increase, an amount that hardly makes a dent in the $0.9 billion owed school districts in the coming school year.

Under Governor Christie, 40% of New Jersey districts now have funding levels below their SFRA “adequacy budgets,” or the amount needed to provide a thorough and efficient education to all students. The underfunding is particularly acute in districts with growing enrollment and those with rising numbers of at-risk students, who require additional resources to meet State academic standards.
Or this Education Law Center denunciation from the year before:

If Governor Christie’s proposed FY16 State Budget is allowed to stand, 2015-16 will mark the eighth year since New Jersey’s School Funding Reform Act (SFRA) was enacted and the seventh year in which it is not being properly funded. The law was passed with the promise of dramatically changing the way that state school aid is distributed to districts, using an “equitable and predictable” weighted student formula that links resources to the costs of achieving the state’s academic standards. The State has failed to follow through on that promise and has underfunded the formula by over $6 billion in six years, with another $1 billion shortfall proposed for FY16.
Tom Kean was a moderate
Republican who repeatedly
raised taxes, but even he under-
funded its aid law by $950 mil.
($950 million = $2.1 billion in
2016 dollars)
The above statements are factually true, but are so lacking in context that they misinform more than they inform.  

First, SFRA has never been fully funded in a real sense.  In 2008-09, districts got their capped aid, but not their uncapped aid and uncapped aid = real full funding.  The K-12 deficit for 2008-09 was over $1 billion. (see "SFRA Was Never Fully Funded")

Second, New Jersey has rarely fully funded its aid formulas since the inception of significant state aid in 1976. 

Tom Kean repeatedly increased taxes as the governor of New Jersey.  Under Kean, state spending increased by 9% a year, compared to a national average of 7.9% a year.  26% of Kean's spending increases went to school aid too.

Because of a good economy and tax increases in the 1980s, school aid increased from $1.6 billion to $3.6 billion under Kean.

Yet the 1976 Public School Education Aid was still underfunded and the New Jersey School Boards Association sued the state, demanding that the state fully fund its school law.

The NJSBA lost the case when the courts said they did not have the authority to order spending. (a modesty that would be shattered in the Abbott II decision.)

This 1989 Star-Ledger article about the case sheds light on how common and deep school aid underfunding was during even Kean's time.


SCHOOL BOARDS LOSE A ROUND ON 'FULL FUNDS' FOR EDUCATION
by James Berzok.

A state appeals court yesterday upheld the dismissal of a lawsuit filed by the New Jersey School Boards Association (NJSBA) in an effort to force the Legislature and Governor to provide full funding for public education in the state. 
The three-judge appeals panel unanimously affirmed the decision of Superior Court Judge Paul G. Levy, sitting in Trenton, who in March held the courts had no authorization to grant the request. Levy said the courts had no authority to order the Legislature to appropriate funds. 
The NJSBA argued the Legislature had to provide the entire amount called for to fund education in the state, as determined by a complex formula embodied in New Jersey's "thorough and efficient" education law. For the 1990 fiscal year, which began July 1, 1989, the Legislature appropriated $3.58 billion for public education, which reflected a $164 million increase proposed by Gov. Thomas Kean. However, the appropriation was $240 million short of full funding. 
"We're very disappointed with the decision because we argued the case on constitutional grounds," said NJSBA spokesman Frank Belluscio. 
Belluscio said the NJSBA is considering either requesting the Supreme Court review the case, taking it back into Superior Court or both. 
"We also weren't talking about the shortfall for just this year. The formula has been fully funded maybe three times since the law was enacted in 1975," Belluscio added. 
The largest previous shortfall was $82 million in the 1987-88 budget. Last year, the appropriation was $74 million short of full funding. 
While the NJSBA's lawsuit argued the state Constitution mandated the formula be fully funded, and that the Legislature and Governor are obligated to do so, a similar challenge is expected to be heard by the state Supreme Court. 
That case, Abbott v. Burke, challenges the formula itself on behalf of 20 students in four urban school districts. The plaintiffs argue the finance formula creates a disparity between urban and suburban school districts. 
The "thorough and efficient" law, technically known as Chapter 212, was enacted in 1975, after the state Supreme Court found the state's previous method of funding public schools denied students the education the state Constitution guarantees.

However, that new money wasn't enough: according to contemporary legislative testimony in 1989, Governor Thomas Kean underfunded NJ's aid law by a cumulative $950 million.

New Jersey has always set overly ambitious targets for its aid laws since the Public School Education Act was passed in 1975. The aid laws have only been fully funded at times of fantastic abundance, like the late 1990s, or when New Jersey abandoned its pension contributions, also the late 1990s.
The good education funding
of the late '90s was enabled by
abandoning pension contribs.

IF in the 1980s, when New Jersey's economy was outperforming the country's, we had a AAA rating, a less ambitious aid formula, and we had little debt, New Jersey could not fully fund its aid law, by what logic are we going to be able to fund SFRA it in the era of pension meltdown and chronic economic stagnation?

Things are worse now than they were before. Thomas Kean's aid increase in 1989, $164 million, would be $315 million in 2016 dollars, so things were better then, but the problems began way before Chris Christie became governor and they will outlast him.

New Jersey is never going to be able to fully fund SFRA and New Jersey's underaided districts can't wait.  New Jersey needs to create a plan to redistribute state aid now!

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1. For $950 million Kean-era verification, see 2 AUTHORS OF SCHOOL FINANCING LAW CITE 'THOROUGH AND EFFICIENT' FAILINGS.

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