THE FACTS ON HOLD HARMLESS AID IN NJ’S SCHOOL FUNDING FORMULA
October 7, 2015
Education Law Center has issued a new policy brief on the role of hold harmless aid – called “adjustment aid” – in New Jersey’s statewide, weighted student funding formula established by the Legislature in the School Funding Reform Act (SFRA).
The brief is intended to clear up confusion and provide answers to questions about the amount, purpose and distribution of adjustment aid through the SFRA.
When the SFRA was enacted in 2008, legislators included adjustment aid to prevent a sudden drop in funding to districts receiving less state aid under the new formula. Adjustment aid was intended to hold districts harmless at pre-SFRA state aid levels. Districts received adjustment aid if their 2008-09 SFRA state aid allocation was less than their state aid level in 2007-08, the year prior to implementation of the new formula.
Adjustment aid was also intended to steadily decrease over time. However, because the formula has been “frozen” since 2011-12, the aid distributed by the State no longer bears any relationship to what districts should be receiving under the SFRA. This includes adjustment aid. Compounding the problem, the NJ Department of Education (NJDOE) issues an annual notice to districts using a flawed calculation that distorts the level of adjustment aid required by the formula.
The NJDOE’s distortion of adjustment aid has led to several misconceptions about which districts are eligible for the aid, why they receive it, and whether it can be taken away from districts with little or no negative impact.
ELC’s policy brief addresses these misconceptions and provides a thorough analysis of who receives adjustment aid and why. It also recommends that the NJDOE change the method for calculating the level of aid. The main conclusions in the brief include:
- The NJDOE’s most recent calculations of the SFRA formula overstate the amount of adjustment aid by nearly $200 million. If the NJDOE changed the base year for calculating adjustment aid, the total amount of that aid would be reduced from $754 million to $579 million.
- All types of districts across the state would receive adjustment aid under the SFRA. A little over a third of the aid would be allocated to the so-called “former Abbott” urban districts.
- About half of all adjustment aid would be allocated to districts that are above adequacy according to the funding formula, and about half would be provided to below adequacy districts. In the latter case, adjustment aid provides needed resources to schools in communities that are unable to raise their local share of the adequacy budget.
“The goal of this policy brief is to clear up common misconceptions about hold harmless aid in the SFRA formula. Much of this aid is used to support the adequacy budgets of districts that are unable to, or restricted from, raising those funds themselves,” said Danielle Farrie, ELC Research Director and policy brief co-author. “It’s time to focus on the key task at hand – getting back on track to full funding of the SFRA to make sure all students receive the resources they need and a meaningful opportunity to succeed in school.”
Policy and Outreach Director
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