Fine Print: School-funding changes easily pass Senate and Assembly

June 22, 2018

What it is: Led by Democratic majorities, Senate Bill 2 and Assembly Bill 2 easily passed each chamber yesterday, making significant changes over both the short and long term to how and how much New Jersey provides in aid to its public schools. 

What the bill would do: The measure would provide additional state aid next year to more than 300 districts that have not seen full funding under the School Funding Reform Act almost since its inception in 2008. In some cases, the underfunding was significant. At the same time, the bills would begin the phaseout of more than $600 million in hold-harmless aid to nearly 200 other districts, leading to cuts in those schools totaling about $32 million next year.

Political compromise: The bill was negotiated between Senate and Assembly leaders and Gov. Phil Murphy’s office and appeared earlier this week to have the governor’s support. Murphy in February had initially proposed a state budget that included $283 million in state aid increases without making any cuts to districts. 

A big caveat: Murphy has since indicated he could veto the measure if he did not reach agreement with the Legislature on the revenue side of the budget, namely taxes. Yesterday, budget talks between Murphy and legislative leaders broke down.

A caveat on the caveat: The Legislature could override that veto, but yesterday’s vote gave no assurance that the leaderships have the support for the override, even among Democrats. The Senate approved the measure 25-13, two votes shy of the two-thirds needed for override. Three Democrats voted against the bill. The Assembly had a wider margin, approving it by 54-17. 

Sweeney’s comeback: Senate President Steve Sweeney has led the legislative fight, pressing these moves for two years through public hearings and legislation. Yesterday, he told NJ Spotlight that he would not let it be “held hostage” now by Murphy’s potential veto pen. “Shame on him if he is going to hurt the kids in this state,” Sweeney said of the governor. “There is no reason for him not to sign it.”

Coughlin more diplomatic: Assembly Speaker Craig Coughlin in an interview called the votes “historic” and “a colossal step forward,” and he was confident the bill would survive. “I don’t pretend to speak for the governor, but when he reflects on the importance of this and what it means to all of New Jersey, he’s going to realize this is a good bill.”

Effective almost immediately: Coupled with budget language for fiscal 2019, the changes if passed would take effect in the 2018-2019 school year. 

*District by district: How the bill would impact your district can be found here

On average: In a state aid package of nearly $9 billion, the increases in the first year would total more than $380 million, with 394 districts seeing nearly $970,000 more. The cuts would total $32 million in the first year, averaging about $170,000 for each of the 193 districts effected. 

Frees growing districts: The bill is an amalgam of technical changes to the law that would steer the state to fully funding the formula within seven years, including lifting previous caps on increases based on enrollment. Districts have been underfunded by as much as $1.5 billion a year over the course of the past eight years under former Gov. Chris Christie.

Slows impact on shrinking districts: At the same time, the bill would provide some protection to those that would lose aid by phasing out so-called adjustment aid over the course of those seven years. In the first year, the cut would be 5 percent of the aid category, but would increase each subsequent year. 

*Amendments: The Democratic lawmakers, led by Sweeney and Coughlin, negotiated amendments to the bill that would further protect districts losing aid. For example, Jersey City would face the steepest cut in the first year and overall, but would be permitted to enact a 1 percent payroll tax to help make up the difference. More than 100 other districts facing cuts but still spending below the formula’s “adequacy” levels would be mandated to raise local taxes by a minimum of 2 percent to help close the gaps. 

Not the end of it: Sweeney said these changes are only a start, and he hopes to address other shortcomings in the existing law. “I am so happy we took the first step in addressing school funding, but there are other steps,” he said. “For one we have to deal with special education funding. It’s a major component that would actually help all districts.”