School districts throughout America are confronting the “fiscal cliff” they’ll face next year after the federal Covid emergency funds expire. In New Jersey we have an extra cliff to fall over: According to Gov. Phil Murphy’s 2024-25 state budget, for the first time ever our school funding formula will be fully-funded, with districts getting enough to top off what the State Department of Education calculates as “adequate.” The catch is the increase in extra funds is coming from a line item called “Adjustment Aid,” which is now fully phased out.  This means that long-overfunded districts that had been relying on  extra state cash to balance their books (and may have not been raising local taxes to maximum allowable  levels) are facing big budget holes.

Take Jackson Public Schools with its  $30 million budget gap due to losing  $22.4 million in state aid since 2018. The district says it will lay off teachers and eliminate all sports, extracurricular activities, tutoring, and other programs. Superintendent Nicole Pormilli  says the district has been increasing taxes by two percent each year but that is not enough to cover the increases in expenses. The school board tried to pass a $4 million bond (the only way to skirt the tax cap) but voters said “no.” Then the board asked for a loan from the state, which also said “no.”

In Lacey Township, Superintendent Vanessa Pereira says there is a $7 million budget gap after the state whittled down aid from $21 million in 2018 to $7.3 million now. The Asbury Park Press reports that without that extra aid, the district will have to lay off 57 teachers, stop buying office supplies, and cut some special education and guidance department services.

Next school year, said Pereira,  “we’re talking class sizes in the 40s. We are talking about a pay-to-participate (setup) for all athletic programs, the elimination of all co-curricular activities, and the list goes on.”

Then there’s Toms River:

“Toms River Regional School district certainly believes that the state school aid formula is fatally flawed for too many districts,” Toms River School District Superintendent Michael Citta and Business Administrator Bill Doering said Thursday in a news release. “The formula needs to be significantly revamped and state aid funding losses need to be addressed immediately, before irreparable harm is done to the students these districts are entrusted to educate.”

Here’s the headline from today’s Shore News: “New Jersey Students, Districts Being Burned to the Ground by Murphy S2 Funding.”

Yes, the school funding formula is flawed and the tax cap increase (known as “S2”) has got to go. How can districts manage  budgets when the 2 percent cap doesn’t even keep up with inflation and salary increases?

Add in the cessation of Covid funding (New Jersey K-12 schools got almost $3 billion) and suddenly the status quo gets shaky, which is true across the nation.  That’s because many school districts used the money to for recurring costs—hiring extra teachers and other staff—through a funding stream that was non-recurring.  Example: Wealthy Ann Arbor Public Schools, reports the Detroit Free Press, is laying off 480 teachers.

Chad Aldeman does the math: 

 Imagine if staffing counts fell back to the same levels they were in the last year before the pandemic, in 2018-19. If that scenario plays out, districts will need to lay off 384,000 full-time staff, or an equivalent number of part-time staff. Since schools tend to lay off part-timers first, this figure may be undercounting the total jobs at risk. 

To put these numbers in perspective, layoffs of this magnitude would be worse than the Great Recession that hit schools in 2009-10. At that time, public schools shed the equivalent of 110,000 full-time teaching jobs and 364,000 full- and part-time positions overall. 

(Aldeman’s advice to school districts: Stop using teacher seniority as the only metric in deciding who to lay off, i.e., protect your best teachers, even if they are younger; close under-enrolled schools; compete for all eligible students; and carefully evaluate all programs to ensure you cut the less-effective ones.)

On top of these impediments, K-12  enrollment is declining, which could also hit state aid because one of the factors is how many students a district is serving.

Currently the State Legislature is considering a number of bills to solve district budget problems, both short-term and long-term fixes. In the former category are bill proposals  like this one which would give back the state aid taken out this year. In the latter category is a proposal to allow school districts to increase tax levies beyond the two percent cap to keep up with inflation. 

There is no need to fall off a cliff or burn to the ground, especially because the school funding formula will stabilize starting next year. But the money tree —at both the federal and state level–is out of cash and school district leaders will be forced to make tough choices.