Some NJ School Districts Could See State Aid Cuts Restored

TRENTON, NJ — When Gov. Phil Murphy signed New Jersey’s $46.4 billion budget into law in late June, it included increases and added funding for a variety of projects and needs.

It also included another round of funding cuts for nearly 200 school districts affected by the 2018 passage of S2, the amendment to the School Funding Reform Act of 2008 that pushes cuts to state aid to districts that are considered to be “overfunded.”

But a clause in the budget Murphy signed could restore funding to at least some of those districts, depending on the outcome of discussions with the federal Department of Education. That’s because the cuts may not be legal under the rules of the American Rescue Plan, the Education Law Center said.

At issue is a provision of the American Rescue Plan that requires “maintenance of equity,” to make sure districts with large numbers of low-income families, students of color, English learners, students with disabilities, and students experiencing homelessness, receive equitable funding.

The maintenance of equity provision was a condition of accepting the funding under the American Rescue Plan, said Danielle Farrie, research director for the Education Law Center. It is there to make sure students who already were in need of educational supports weren’t left farther behind from a double whammy of the pandemic and financial pressures.

The Education Law Center has been an advocate for public schools and equitable funding for years, and fought for the landmark Abbott vs. Burke case that forced the state to increase funding in the districts with the highest needs.

Farrie said the group has identified 81 districts that are ”highest poverty level” and “high need” — definitions that are based on Census calculations of towns’ poverty levels — that are receiving less funding from New Jersey even as the state accepts $2.7 billion in pandemic relief funding under the American Rescue Plan.

“We raised this with the administration before the budget passed,” Farrie said, adding the maintenance of equity guidelines came out earlier this spring.

When the state moved forward with the cuts, the Education Law Center contacted the U.S. Department of Education urging it to take a closer look.

"The Department is currently working with the US Department of Education to better understand the guidance and requirements under the American Rescue Plan and how that may impact school funding for New Jersey," a department spokesman said. "As this conversation is ongoing, no final determinations have yet been made."

The amount of aid New Jersey gave to districts the 2021-2022 school year was supposed to match what it gave in the 2019-2020 school year, Farrie said, under the maintenance of equity provision.

“We had advocated putting these cuts on pause,” she said of the S2 cuts that are in their fourth year.
When the American Rescue Plan first was announced, “our hope was, OK we have to meet these federal requirements, so there shouldn’t be any cuts,” Farrie said.

The budget language inserted late in the process gives the state the ability to undo the cuts to the districts that meet the “highest poverty” and “high need” thresholds. But that’s fewer than half of the districts affected by S2.

One of the districts hit hard by S2 is Jersey City. The city district is raising its property taxes by $1,000 per home to fund its $814 million budget and fill a gap of more than $150 million, the bulk of which is due to state aid cuts. It is classified among the highest-poverty districts by the Education Law Center, with 60 percent of its 30,000 students receiving free or reduced lunch, 14 percent with special needs and 13 percent English Language learners, according to a letter from New Jersey Together, a coalition advocating for Jersey City Schools and other districts affected by the maintenance of equity issue.

Farrie said the Education Law Center estimates Jersey City is due more than $126 millionot meet the maintenance of equity. In total, it estimates the state owes more than $177 million to districts whose aid was cut.

The Education Law Center list does not include all of the districts that are losing funding under S2, nor does it include some of the ones that have been vocal about the pain caused by state aid cuts, including Toms River, Brick, Middletown, Jackson and the Freehold Regional High School District. Those districts do not meet the high-need threshold set by the federal government for the maintenance of equity provision, she said.

The ELC list also does not include Lakewood, which has been in dire straits financially for several years, in part because of its private busing burden.

Farrie said the matter is still under discussion with state and federal officials, “but we have made it clear we expect the federal government to hold New Jersey to the standards they have laid out.”

U.S. Education Secretary Miguel Cardona told New Jersey Spotlight the federal government is working with New Jersey on the equity issue, and added New Jersey isn’t the only state where it’s being addressed.

"We put those provisions in place to make sure the funds from the federal government are adding to the experience for the students and providing them support post-pandemic," Cardona said. "But we are also working with the states to make sure we’re clear on what the expectations are … and at the end of the day, the provisions that were put in place are being followed."

Maintenance of Equity Estimates by Education Law Center by Karen Wall on Scribd

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