The bill to revamp how school funding works advanced by a party-line vote, but it needs approval from several more committees before the full Legislature can vote on it. (Danielle P. Richards for New Jersey Monitor)
The Senate Education Committee approved a rewrite of the state’s funding formula in a party-line vote Thursday despite amendments that removed controversial provisions that would have allowed certain districts to exceed New Jersey’s 2% cap on property tax growth.
The legislation, which must be approved by a Senate budget panel and multiple committees in the Assembly before reaching the full Legislature for final votes, would limit cuts to state school aid to 2% of a district’s spending in the prior year and increase the state’s distribution of extraordinary special education aid over a period of years.
“Our goal is to try to get something done that helps districts plan better,” said Sen. Vin Gopal (D-Monmouth), the committee’s chairman.
Some school officials and education advocates have urged lawmakers to loosen the 2% cap on property tax growth, arguing it leaves schools unable to meet the costs of education amid steep shifts in state aid in recent years.
The provision was controversial with Republican members from the outset, and Gopal on Thursday said it had met with opposition from leadership in his own party that made it politically unsalable.
“There was a lot of concern from my friends on the other side of the aisle for the ability for local school districts to increase local taxes at any percentage … There’s just not any appetite from leadership at this moment to have that in the bill, so that was taken out,” said Gopal, the bill’s prime sponsor.
Last year, Gov. Phil Murphy signed legislation that allows districts spending below their local fair share — the portion of school funding a district is responsible for under the school funding formula enacted in 2008 — to increase local taxes by up to 9.9%, but that provision was only active for a single year.
The one-time allowance was meant to give schools flexibility in meeting their local obligations as inflation, enrollment growth, and increased property values combined to reduce state assistance.
Supporters of the provision that would have allowed — but not required — school districts to raise taxes above the 2% cap said it would have provided funding flexibility to school districts, particularly in those that have faced successive cuts as the state moved to phase out adjustment aid and fully implement the funding formula more than a decade after its enactment.
“We’re not naive and understand that this is a politically contentious issue, however this is a tool we know several districts want and — in many instances — need to maintain high quality educational programs. Many of them could take advantage of such flexibility without placing a significant burden on their taxpayers,” said Jonathan Pushman, director of government relations for the New Jersey School Boards Association.
But critics said allowing districts to raise taxes above the cap would have only increased the cost of living in a state that already boasts the highest property taxes in the nation.
“The state must be more intentional about addressing one of the key cost drivers that contributes to unaffordability in our state: property taxes. Until assessment and reforms are made, the 2% cap must remain in place to safeguard against excessive tax increases, even for the most laudable of causes,” said Althea Ford, vice president of government affairs for the New Jersey Business and Industry Association.
The amended bill maintains its cap on annual state aid reductions. That provision bars the state from reducing school aid by more than 2% of a district’s spending in the most recent budget year. It is meant to limit steep cuts, allow for more predictability in school budgeting, and prevent multimillion-dollar cuts some districts have seen since 2018.
Though the provision received unanimous praise from witnesses Thursday, some urged the committee to limit aid reductions to 2% of the state aid a district received in the prior year, rather than a district’s total spending. They argued the latter could still leave districts with cuts too large to fill with tax increases under the 2% levy cap.
“Our reasoning is that larger districts with multimillion-dollar budgets could still face deep losses due to the large size of their total operating budget, whereas smaller districts may have a greater proportional loss,” said Debbie Bradley, director of government relations for the New Jersey Principals and Supervisors Association.
Other amendments adjust language on requiring the state to reimburse districts for extraordinary special education costs — the provisions now say this aid must increase annually but do not prescribe specific levels — and create a special education review task force that would be assigned to study the feasibility of tiering state special education aid based on a student’s actual needs and the severity of their disability.
That 11-member task force would be required to hold at least three public hearings and issue a report on its findings within a year of its creation before dissolving.
Some witnesses recommended the state’s review of special education aid include transportation costs for those students, warning those expenses could exceed costs associated with direct classroom supports in those cases.
“The cost of transportation for special education students, particularly those in the extraordinary aid categories, has skyrocketed,” said Betsy Ginsburg, executive director of the Garden State Coalition of Schools.
Gopal, the panel’s chair, said he agreed, adding he expects the bill to see more changes as it continues to move through committees in either chamber. As of Thursday morning, the bill did not have an Assembly companion.
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