UNDERFUNDING THE SFRA: THE LEGACY FOR NJ SCHOOL CHILDREN
April 21, 2015
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.
With state aid nearly flat for the last few years, and local revenues constrained by an annual 2% cap, resources are completely out of sync with the actual costs of providing an adequate education. The growing gap between what New Jersey students need and what they are provided is illustrated below.
The SFRA’s “adequacy budget” determines the costs required to ensure all students have the resources necessary to meet state standards using a base cost per pupil and additional funding for students who are at risk (low-income), learning English, or require special education services. Districts’ adequacy budgets, due to rising costs and significant growth in New Jersey’s low-income population, grew by 28% statewide between 2009 and 2016. The sources of revenue that support the adequacy budgets have not kept pace. Local revenues increased by 18%, and state aid grew by a mere 5%.
The combination of flat state aid and rising adequacy budgets has resulted in tremendous state aid deficits for some school districts. Under the proposed FY16 budget, 99 school districts would receive more than $1,000 per pupil less than what full SFRA funding would provide them. Twenty-one districts are underfunded by more than $2,000 per pupil.
The cumulative impact of seven years of underfunding is even greater. The SFRA limits annual increases to 10% for above adequacy districts and 20% for below adequacy districts, allowing the state to phase-in aid increases over time. If the formula had been fully funded with the proper annual increases, most districts would have reached so-called “uncapped” state aid levels by now. Instead, the gap between the state aid provided and what is needed to support the adequacy budgets has grown. The per pupil gaps in uncapped aid levels in some districts are astounding: in 25 districts the state should be providing more than $5,000 in additional state aid per pupil. Four of those districts are owed over $8,000 per pupil (Passaic County Manchester Regional, Bound Brook Borough, East Newark Borough, and Fairview Borough). [See SFRA Funding Gaps By District]
Because funding has not kept pace with rising costs, more districts are now below adequacy than ever before. Currently 247 districts (45%) are below adequacy, including a disproportionate number of low wealth districts. Three-quarters of low wealth districts are currently below adequacy compared to only 16% of high wealth districts. In fact, low wealth districts are below adequacy by an average of $3,552 per pupil, while high wealth districts are on average $1,781 per pupil above adequacy levels.
For a state and district summaries of funding under the SFRA, visit ELC’s School Funding Research Page.
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