School Aid Fight: Toms River To Lose $18M Under Sweeney Plan

TOMS RIVER, NJ — The fight over state school funding that began in 2017 could cost the Toms River Regional School District more than $18 million over the next seven years if state Senate President Stephen Sweeney has his way.

Sweeney has been seeking to push through changes to school funding to help schools in his constituency that have been chronically underfunded. In doing so, his plan would remove so-called "adjustment aid" from districts around the state, including Toms River — districts Sweeney insists are overfunded because of the adjustment aid.

It's a move affected districts around the state are fighting, in part because they say the wealth calculation of the School Funding Reform Act formula has inherent flaws.

Under Sweeney's bill, the adjustment aid each district received in the 2017-18 school year would be reduced over seven years, beginning in 2018-19 through the 2024-25 school year, by the following percentages: 5 percent, 13 percent, 23 percent, 37 percent, 55 percent, 76 percent and 100 percent.

Toms River would see a cut of $988,678 for 2018-19, and a total cut of $18,572,932 over the seven years, according to figures released by the NJ Office of Legislative Services and reported by NJ.com.

William Doering, business administrator for the Toms River Regional Schools, has said there are three big issues with the state's determination of a municipality's ability to fund schools: up-to-date property values; PILOTs, or payments in lieu of taxes; and income calculations, all of which go into a wealth calculation the state uses to determine how much of the burden the town's taxpayers should be shouldering.

Some towns haven't had a property revaluation in years, meaning the values of homes don't reflect the current realities of what they might sell for in the real estate market. That means that for a town such as Toms River, which went through a reassessment in 2013-14, the values of homes are more accurate than in a town such as Elizabeth, which as of 2016 had not updated the values of properties in the city in nearly 40 years and was fighting state efforts to force a revaluation.

Skewed property values can make for a significant under-representation in a town's wealth, Doering said.

PILOTs, meanwhile — incentives offered to developers to get them to bring development to a town that they might not otherwise do — reduce the tax payments from properties, often commercial development. Those and other forms of tax abatement also decrease a town's overall "wealth" and mean reduced tax collection from those cities and towns.

Matthew Boxer, who was the state comptroller under former Gov. Chris Christie, said the net effect of PILOTs is other towns and taxpayers across the state end up picking up the tab of property taxes that should have been paid.

"For school districts, the impact is more direct," Boxer wrote in a 2010 report on the effect of tax abatements, including PILOTs. "When a property tax abatement occurs, the school district receives no portion ofthe new PILOT revenue and thus loses out on the new wealth of the municipality." Sometimes property taxes that were being paid get wiped out as part of the abatement.

In addition, "When new development occurs in connection with a long-term abatement, the PILOT revenue is not reflected in its ratable base, meaning formula state aid continues to provide enhanced funding based on artificially low community wealth." And the district still needs help because it isn't receiving the PILOT money, Boxer said.

"This system allows the municipality, in essence, to hide its true wealth from the school district and the state," Boxer said in the report, which went to the state Legislature at the time, including Sweeney and Sheila Oliver, the current lieutenant governor.

The income calculation, meanwhile, only looks at personal income of the town's residents; commercial income is excluded, he said.

Sweeney, in a statement at the end of May, threatened to shut down state government if he does not get his way, according to an NJ.com report. He insists that districts receiving adjustment aid are being overfunded by the state and that money should be redirected to districts that are not receiving adequate funding. The state spends more than $9 billion on aid to public schools.

Districts and education advocacy groups, such at the Education Law Center, say the proposed cuts will leave districts unable to meet the state's constitutional mandate to provide a "thorough and efficient education" to all students.

"In many districts, the aid cuts are so large that there is no realistic way for the districts to make up the loss by raising local revenue," said David Sciarra, executive director of the Education Law Center. "Even worse, the cuts will drive many district budgets below the level of spending for a constitutional 'thorough and efficient' education under the SFRA formula."

Under the state formula, the state determines how much it should cost to provide a thorough and efficient education for a child, with differing numbers for elementary, middle and high school students. Aid is provided for special education students, and other specific categories.

Once the state determines how much a district should be spending per child, it then determines how much of that burden should be shouldered by the town's taxpayers. It then doles out equalization aid — the amount intended to balance out the economic differences between districts — based on what the state believes the town's taxpayers can afford to pay.

In Brick Township, Business Administrator James Edwards has told the school board and residents that according to the state, Brick taxpayers should be paying more than $128 million in property taxes to support the state's definition of adequate funding. Brick is currently budgeting $116 million for 2018-19, Edwards has said. The $128 million is a number Brick could not possibly have reached, he said.

"Even if the district had increased the tax levy by 2 percent each year" since 2011, the year the 2 percent cap on the tax levy went into effect, Brick's tax levy for 2018-19 would only be at $110 million, Edwards said. The district's levy for 2018-19 is $107 million.

Toms River school officials, in a letter to Sweeney, Gov. Phil Murphy, Assembly Speaker Craig Coughlin and Acting Commissioner of Education Lamont Repollet, said the wealth calculations fail to take into account that Toms River still has not fully recovered from the devastation of Superstorm Sandy.

"Out of over $2.2 billion in lost ratables, Toms River still has approximately $600 million yet to come back on the tax rolls," the letter said. "Toms River has the third highest foreclosure rate in New Jersey, which leads the nation in foreclosures."

Toms River also is the fourth-lowest in total per-pupil spending for districts over 3,500 students, and its budget is already $31 million under the number the state says it should be spending. In 2015-16, the state average for K-12 districts with 3,500 or more students was $20,219; Toms River spent $16,318 per pupil, according to the Taxpayer Spending Guide maintained by the state.

Sweeney contents districts receiving the adjustment aid have been padding schools with programs and tablets unfairly and cutting the aid will force them to "right-size their school district," according to the NJ.com report.

Toms River has cut 32 staff positions in the last two years, the district's letter to Sweeney notes. It also points out that $9.8 million in aid was cut from Toms River in 2009-10.

"(The district) should be rewarded — not penalized — under the SFRA for keeping its per-pupil costs so low," the letter said.

"The bottom line is how can they propose to impact the taxes and programs in districts in such a way, when they are relying on a state aid formula that has a wealth calculation that they know is significantly inaccurate," Doering said.

"If this trend continues, the district will no longer be able to provide its students with their constitutionally mandated right to a thorough and efficient education."

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