About two weeks ago I wrote that, amid the frantic calls to fix New Jersey’s (broken) school funding formula, we should think more strategically about getting the best return on taxpayer investment for the $12.4 billion in state funding proposed this year for K-12 public schools. Of course there are problems endemic to an almost two-decade old funding formula that legislators are loath to touch. Two examples that come up frequently: in 2010 the State Legislature passed a law restricting school tax rate increases to 2% in order to control property taxes; it actually worked but now, with payroll and other expenses exceeding that cap every year, districts have cut so much  fat from their budgets that they’re cutting meat: lots of headlines out there about lay-offs and cuts to clubs, support services, etc. And in 2018 the Legislature passed a law called S2, which got rid of “Adjustment Aid,” a kind of hold-harmless provision that was supposed to be phased out but wasn’t. Now the cuts are real and that’s hurting, especially as districts lose enrollment. We also need to stabilize and reform the way we calculate Local Fair Share, the amount of money local property taxpayers are supposed to chip in for their local school districts.

But let’s stay big-picture.

New Jersey has a long proud  history of progressively and generously funding our schools. Not unrelated: we’re subject to court rulings (Abbott v. Burke) that require the state to equitably fund low-income districts (the genesis of our income tax). In fact, over the last decade NJ has increased school aid by 50%, way above the rate of inflation. Yet what are getting for our tax money, given that our student outcomes don’t seem the better for it, growing at rates lower than states that spend half of what we do? Is there a smarter and more effective way to fund our school system?

Time for change, especially with new Education Commissioner Lily Laux saying, straight up, we need to “actually look substantively at how we can ensure the formula works better and how we drive down costs.” Governor Mikie Sherrill agrees, pointing to increased spending and lagging student achievement. “We’re not getting enough bang for our buck,” she says. And, even if our kids were learning at acceptable rates (they’re not), it’s unclear how long NJ taxpayers can tolerate the highest property taxes in the country.

So, let’s review some possibilities out there for fixing the formula and reining in costs.

First, it’s important to acknowledge that all districts can’t be served in a cookie-cutter manner. (Analogy: Until recently we funded special education on the false assumption that all districts have exactly the same percentage of students with special needs; now we do it based on actual student counts.)  In Jefferson Township, for instance, the superintendent described to me the impact of a 2004 law called the Highlands Act which put 88% of the municipality in a preservation area, restricting growth and property tax income. All nearby districts are suffering. (See here for public outrage.) On the other end of the state the Pinelands Act severely restricts development so districts like Plumstead are laying off teachers and class size is huge. In a more famous example,  Lakewood pays millions of dollars in transportation and special education for 50,000 non-public school students who attend religious schools. These outliers deserve attention.

On the other hand, there are some districts in tight spots where fiscal accountability is so loosey-goosey it’s hard to summon anything more empathetic than an eye-roll: Incompetence by Montclair officials landing the district in a $20 million hole; Hackensack with a $17 million deficit (it’s a “catastrophic failure,” exclaimed a teacher; an audit that found “gross financial mismanagement” in Perth Amboy. 

Taxpayers (let alone students) shouldn’t pay the price for district incompetence. 

So where do we start?

Here are six ideas to provoke better conversation:

With fiscal accountability, start with the DOE: A recent audit focused on just a few areas of concern found our Department of Education didn’t verify that all districts were participating in the “most cost effective health insurance plans… Districts and their employees could have potentially saved a combined $91 million in fiscal year 2023.” That’s just one example, small potatoes. But who knows what more careful oversight would yield in the way of savings? Also, over the last decade “the number of active employees in the department declined from 775 to 658, an overall reduction of 117 employees (15 percent).” We live in a state that valorizes local control over top-down authority but maybe we’ve gotten carried away. Should the DOE staff up?

Let’s stop the deluded thinking that more is more. Is there ever a point when increasing aid to a district like Newark or Asbury Park reaches a point of diminishing return? Why isn’t the state, if not the individual districts themselves, exploring how Union City students, just as burdened as our most impoverished districts (and with even higher multilingual student need), have far better outcomes with less money per pupil? (The answers are out there: data-driven systemic reforms, strict accountability from long-term leaders, great community buy-in and parent involvement.) In what ways can Union City be a statewide model for sustained academic growth and fiscal solvency?

Everyone is talking about merging districts: During a debate in September then-candidate Mikie Sherrill said, “I’d start by offering the carrot to help the areas that want to consolidate, but when there are areas that are not putting enough money into students, into educators, into the buildings, and then they are taking a lot of money in property taxes and from the state level, then we’ll have to start to look at compulsory movements.”

We’ve done this dance before, going back to at least John Corzine. The current bill proposal by Sen. Vin Gopal, which originally mandated consolidation, might make it voluntary. (Find me a NJ politician who willingly cedes his or her fiefdom.) Yes, it is unclear how money this would save, if any; I’ve heard different estimates. But do we really need to have school boards and superintendents for districts with total enrollments below 500 kids? Wouldn’t it save DOE staff time (time is money and it’s all your money) with fewer districts to oversee? (Former Sen. Steve Sweeney says making all districts K-12 would get rid of 250 districts.)  Wouldn’t larger districts mean more academic options for kids? Would mergers give special education administrators the opportunity to create large enough cohorts of students with similar special needs and  allow more of them to remain in their communities, potentially saving money? (Right now NJ is third in the nation in special education costs and first in the nation for segregating students with disabilities from their typical peers.) As a bonus, wouldn’t a little more infrastructural unity be a positive cultural and ethical development for our ragtag crazyquilt of 600+ school districts?

Sure, NJEA will hate it: fewer bargaining units means fewer NJEA members in power.  Sure, NJ School Boards Association will hate it; fewer school boards means fewer board members in power. But isn’t this supposed to be about what’s best for kids and taxpayers? 

Open Enrollment: A core principle of our school funding formula is state funding is based on enrollment. When a school has fewer kids, it gets less money.  Currently we have a tiny program (Interdistrict Public School Choice Program) that lets districts with open seats offer them to kids from other districts; it’s been frozen due to its funding model, which puts the financial onus on the state. What if we expand the program and put the onus on the sending districts? We’d take a baby step away from red-lined school districts where your assignment is based on your parents’ income, insert a tiny bit of healthy competition within counties, enable desirable schools to recover students, and add a little choice to the system? (Bonus: the interdistrict program has been proposed as a way to counter NJ’s harshly segregated schools.)

Expand charter schools: Same principle, different model. Unlike traditional districts, charters are granted autonomy for much higher degrees of accountability. The cost per pupil is less than traditional schools and – biggie here — the teachers only join NJEA if they want to. The result is most charters aren’t shackled to NJEA’s step and ladder salary guide where you automatically get a raise for every year of added seniority; instead,  they can pay their most effective teachers more. 

Maybe that is one reason charter school students vastly outperform their cohorts in traditional public schools. Talk about bang for your buck.

Opt into the new federal scholarship program, which allows people across the country to get federal tax credits in exchange for contributions of up to $1,700 to nonprofits for tutoring, afterschool programs, tuition, and, well, we’re not completely sure because DC has yet to release the regulations. But if there is a way to use the money in a way that benefits students and taxpayers, why should we say no? We should leave cash on the table because the program came from the Trump Administration? Applaud those in charge who choose performative politicking over what may prove a benefit for kids and families?  From an editorial yesterday by two Democrats: “A scarcity mindset looks around and sees danger; an abundance mindset sees opportunity.” (Also, opting in is reversible; if the regs are too onerous or too non-Jersey, we can retroactively opt out.)

New Jersey has opportunities to get control over spending while improving student outcomes. This will take more than minor tweaks to an old school funding formula. If those in positions of authority are serious about addressing the needs of schoolchildren and taxpayers, they’ll step outside our fusty old formula and start thinking strategically.