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1-25-07 GSCS: No School Aid = No Real Tax Relief...again
Testimony before the Assembly Education Committee Department of Education Costing Out Study: School Funding Formula Proposal

GIVEN: For the sake of quality education, stable school budgeting, and property taxpayers alike, a new school funding formula that is reasonable and workable for all communities needs to be put in place for FY 2007-08.

AN OVERALL CONCERN: The public deserves the opportunity to see, review and respond to the Administration’s formula proposal scheduled for Fiscal Year 2007-08. Regular operating districts have not received updated formula aid since 2001-02. Not funding the school formula, to the approximate cumulative amount of $2.2B in recent past, and $846M just this past year, is the root cause of New Jersey’s property tax problems {see Reock report: “Estimated Financial Impact of the “Freeze” of State Aid on New Jersey School Districts 2002-03 to 2005-06”}. New Jersey’s regular operating districts have been put on hold for the last five years, receiving no increases in formula aid. We need to take advantage of the opportunity to critique the new funding proposal to see if it’s viable enough to move through the legislative process now. CEIFA had numerous amendments to it prior to its becoming law. That is standard. Not to have the chance to take a good hard look at the proposal would set the process back several years. If the proposal does not appear to be viable, at least the process can move ahead this year rather than be stuck in a holding pattern which would serve no New Jerseyan well.

• While timelines have been abbreviated to date for full in-depth analyses, open discussion and understanding of the district-by-district impact that a new school funding formula requires, we are clearly near that point and must take advantage of this point in time to assess the reality of the proposed formula as it applies to each district in the state.

• We are at the pressure point now. Let’s see if we can work together in a productive and expeditious way that can result in a formula that works for all students; one which will also supply aid to all communities to address property tax burden on local taxpayers.

(FYI - A recent graph demonstrates that the burden of paying high property taxes is now falling on the low middle to upper middle income communities across our state. {See attached chart/ ‘2003 Average Equalized Net Tax Rate and 2003 Personal Income for Groups of Municipalities Ranked by 2003 Equalized Valuation per Capita.})

INITIAL CONCERNS: Department of Education School Funding Formula Cost Study

 

Concern: Leveling down of quality education. Per pupil cost measures must be substantial enough to assure that they can support effective student achievement goals and objectives.

Concern: Wealth equalizing of special education aid – Keep as a categorical aid

 Since special education programs are mandated for individual children no matter where they live, it is reasonable for the funding support & programs for those individual children to be the same no matter where they live. Special education support for students should not be reduced due a wealth-based calculation distributed according to district wealth, as opposed to individual student needs.

Concern: Minimum Aid is proposed for all districts

GSCS supports the concept, but points out that this can be better achieve both in terms of equity and effectiveness, by increasing the state share of special education categorical aid to classified students in all districts.  No district over another is favored in the categorical aid method.

Concern: Ability-to-Pay

This formula needs to be disclosed, and the data run and published as soon as possible so that it can be reviewed, with an eye on significant change possibilities, and the probability of unintended consequences.

Attendant Concern: “Hard Caps”

Reasonable caps differ from hard caps. In the proposed funding plan, hard caps apply cross the board with no exception allowed other than enrollment growth…. The data speaks loudly – these two factors alone (increase in health benefits and special education costs) made up 61.5% of local levy growth from FY02 to FY06- and makes clear that hard caps will have a negative impact on quality education. There is further stress on local districts now due to uncertainty concerning health benefits since the Governor’s recent removal of health benefits reform from the special session legislative proposal package.

1

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

Dollars

Growth in ROD (Regular Operating District) Health Benefits &

Special Ed Expenditures vs. Local Levy Growth:

'01-02 & '05-06

Growth in Sp Ed & Health Ben Costs

 1,462,550,083

Growth In Local Levy

 2,378,240,756

1

61.5% of the growth in local levy in regular operating districts from FY02 to FY06 (the same years that the state school aid formula, CEIFA, has not been implemented) has been due to increases in cost driver increases in special education and health benefits alone.

FY02 to FY06 SPECIAL EDUCATION & HEALTH BENEFITS EXPENDITURES

IN REGULAR OPERATING DISTRICTS (RODs) v. GROWTH IN LOCAL LEVIES

ROD Levy Growth 0206

2,378,240,758

 

ROD Sp Ed Growth 0206

678,570,214

.2853% of ROD levy growth

ROD Health Bens Growth 0206

783,979,869

.3296% of ROD levy growth

ROD Sp Ed+ Health Ben Growth =

1,462,550,083

.61497% of ROD levy growth


Garden State Coalition of Schools
160 W. State Street, Trenton New Jersey 08608
609-394-2828