Funding--Sampson Testimony--Assembly--2-23-17

Thank you to members of the Assembly Education Committee and to Assembly Education Chair Caride for allowing me the opportunity to testify about school funding this afternoon. My name is Charles Sampson, and I am the Superintendent of the Freehold Regional High School District. I am also the immediate past president of the Garden State Coalition of Schools, the father of four public school aged children and a board of education member in my hometown of Clinton New Jersey.  Freehold Regional is the largest limited purpose district in the state, serving 11,000+ students from eight municipalities with a wide range of DFG’s spanning from CD to I.  I’m proud of the district’s outstanding track record in both academic and fiscal performance measures, and I thank you for the opportunity to share my perspective on the important issue of school funding fairness.

Rather than restate some of the powerful points made by other GSCS members including our Executive Director Elizabeth Ginsburg and current President, Dr. Jordan Schiff, I would like to provide greater context to an understanding of some of the areas of concern with the existing funding formula – the School Funding Reform Act of 2008 (SRFA).  I understand that pie in the sky expectation for full funding of the SFRA may not be possible at this moment, but do believe the SFRA can be utilized to fairly fund all school districts in New Jersey over time without creating a system of winners and losers. However, as we seek that equitable end, members of the committee must be aware of areas of the SFRA that need to be more closely examined. The SFRA is simply defined in the opening paragraph of A Formula for Success:  All Children, All Communities:

“…to develop an equitable and predictable way to distribute State aid for education.”

More specifically, the formula attempted to address the need for a “permanent, formulaic remedy…based on actual community characteristics…that can equitably be applied to all school districts.”   

Equalization Aid represented approximately 75% of SFRA based state aid to schools for FY17.  Each component of the Equalization Aid calculation has specific vulnerabilities that, if left unrecognized, can undermine the structural integrity of this otherwise well designed funding formula. As we seek solutions to our funding disparities, we cannot provide solutions without fully understanding the context of the SFRA and areas that need closer scrutiny. These include:

  • Adequacy Budget:  a district-by-district measure of the amount of money necessary to provide a thorough and efficient education.  Vulnerability – the underlying cost model fails to faithfully provide for the scope of required services at current cost levels. 
  • Local Fair Share:  a community’s ability to locally fund the adequacy budget.  Vulnerability – conversion of wealth indicators (income and property value) into ability to pay property tax is unpredictable and/or unrealistic.
  • Equalized Aid:  the state’s share of adequacy budget funding.  Adequacy Budget - Local Fair Share = Equalized Aid.  Vulnerability – insufficient state funds available.

Of particular concern is the volatility of the Local Fair Share calculation.  Specifically, the wealth multipliers do not consistently interpret income and property value and, as a result, the calculation generates large swings in the community’s capacity to pay property tax – swings that are inconsistent with actual changes in income and property value.

For example, Freehold Regional’s Local Fair Share increased by more than 50% from FY09 to FY17 despite property value and district income only increasing 3.7% and 34.8% respectively.  If the wealth multipliers had remained the same during that time, Freehold Regional’s Local Fair Share would have increased by 20% instead of 50%.  Essentially, increases in the multipliers force citizens to pay more taxes in addition to the taxes associated with increased wealth.

The Local Fair Share is billed as a measure of the community’s ability to locally fund education. However, since the multipliers are part of a larger economic picture, the reality is that the Local Fair Share represents what the community is required to pay, rather than able to pay.  This issue has not fully come to light since Adjustment Aid continues to hold districts harmless.  However, the tax impact of a fully realized Local Fair Share calculation will drive up property taxes far more than the 2% levy cap allows.

The notion of a pure measure of a community’s ability to locally fund education lends credibility to any funding formula.  Likewise, it would be irresponsible for the SFRA to ignore the overall economic condition and not provide for a mechanism to distribute additional burden to both taxpayers and the State.  While I believe that the SFRA is well suited as the framework for our state’s funding formula, modifications are necessary to ensure an equitable, predictable and fairly presented funding model. As you embark on the difficult journey of finding an equitable solution that fairly and predictably funds all school districts in New Jersey, the SFRA provides a strong framework provided that all components of that framework accurately reflect the capacity of the community to support their schools in a manner that our students deserve. Thank you for your time today, it is greatly appreciated.