On Tuesday, June 19, the state Senate and Assembly budget committees amended and approved legislation modifying school funding, S-2 and A-2, respectively.

The amendments adopted by both committees would eliminate the caps on state aid increases resulting from enrollment growth. At the same time, they would make changes in the proposed phase-out of adjustment aid and other “over-funded” aid categories. Legislators indicated that this amendment would provide districts more time to prepare for negative changes to their state aid figures.

A news release posted by the Senate Democratic Office, however, indicated that S-2 “is accompanied by language in the [2018-2019] budget bill that will shift $60 million in aid from adjustment aid districts and increase state aid by $65 million more than the $283 million recommended in the governor’s budget in order to bring the overwhelming majority of underfunded districts to 58% funding.”

The news release states, “The budget bill includes a five percent reduction in adjustment aid for the upcoming 2018-2019 school year, and [S-2] calls for additional reductions of eight percent in 2019-2020, then by 10 percent, 14 percent, 18 percent, 21 percent and 24 percent through 2024-2025, when all ‘hold harmless’ funding would be eliminated and these districts would be at 100 percent funding.”

At press time, NJSBA was seeking further clarification on the matter. The budget bills were being finalized in committee on June 19 for a vote by the Senate and Assembly on June 21.

Under S-2 and A-2, three groups of school districts would be exempt from the reductions:

  • county vocational school districts;
  • SDA (former Abbott) districts that spend below adequacy and whose municipal tax rate exceeds the state average; and
  • non-SDA districts that spend below adequacy by at least 10 percent and whose municipal tax rate exceeds the state average by more than 10 percent.

Additionally, in the case of an SDA district spending above adequacy and whose municipal tax rate exceeds the state average, the total state aid reduction would be limited to the amount by which the district is spending above adequacy multiplied by the percentage above adequacy for the corresponding school year.

School districts receiving less than what the School Funding Reform Act (SFRA) calls for would receive an increase in state aid. Specifically, each district would receive a proportionate share of the total state aid reduction from “over-funded” districts and any additional revenue included in the annual appropriations act for the purpose of providing direct state aid to school districts.

The bill, A-2/S-2, also requires that, for school years 2019-2020 through 2004-2025, a school district that is spending below adequacy and experiences a reduction in state school aid must increase its general fund tax levy by 2 percent over the prior school year. It also permits an SDA district that is taxing below its local share to increase its tax levy in an amount greater than the tax levy growth limitation.

Both bills are schedule to be voted on by the full Senate and the General Assembly on Thursday, June 21. If passed, they will go to the governor for his approval or veto.

As originally proposed, A-2/S-2 would have eliminated growth caps on state aid; would have recalculated state aid based on most recent enrollment and local tax figures; and would have phased out “over-funding” of certain districts over seven years, beginning in 2018-2019, redistributing such funds to under-aided districts.