Paul Mulshine had an interesting column on school funding yesterday. He was reporting on the unanimous passage of a bill providing supplemental school aid the ease the pain many districts feel due to the reduction in school aid. Although agreeing that the statutory formula for the distribution of school aid needs to be fixed, the only recommendation I see from Mulshine is that there should be a limit on property taxes and property tax increases. Indeed, there should, but that does not tell us anything about how the distribution of state tax dollars for education funding should be reformed. I believe that school funding (and just about everything else involving the running of schools) should be handled by the state and strict limits to the remaining spending supported by the property tax should be imposed.
Let’s start with some basics. The New Jersey Constitution provides: “The Legislature shall provide for the maintenance and support of a thorough and efficient system of free public schools for the instruction of all the children in the State between the ages of five and eighteen years.” [NJ Const. (1947), art. VIII, s. 2, p. 1.] Education is, according to the plain text of the constitution, a state, not a local responsibility. Yet, forever has it been administered, and in large part funded, by local revenues arising from the taxation of real property.((Let me state early on that I understand that money alone does not assure that the school district will provide a good education, but it is certainly a factor.))
The sting of the property tax was supposed to be relieved by the adoption of a state income tax. Article VIII, Section I, paragraph 7, adopted in 1976, provides: “No tax shall be levied on personal incomes of individuals, estates and trusts of this State unless the entire net receipts therefrom shall be received into the treasury, placed in a perpetual fund designated the Property Tax Relief Fund and be annually appropriated, pursuant to formulas established from time to time by the Legislature, to the several counties, municipalities and school districts of this State exclusively for the purpose of reducing or offsetting property taxes. ” Both property taxes and income taxes have increased since then.
As onerous as property taxes are, in many districts they are simply not sufficient to fund the constitutionally required thorough and efficient education.((And no doubt in many others the issues are waste, fraud, and abuse.)) Two things arise from this fact: the Legislature channels state tax funds to local school districts and the courts have mandated certain minimum funding for poorer districts. The allocation of state funding among school districts has been a perennial problem. The more state funding the less the local politicians have to rely upon the property tax, so favored districts would get more money so that they could tax at a lower rate and still have the same dollars to spend. Other districts were not so fortunate.
This was supposed to have been solved when the Legislature adopted the “School Funding Reform Act of 2008” (SFRA) to assure that districts could provide a thorough and efficient education so long as they generated local revenues in accordance with the formula. The basic idea of the SFRA was that there would be a formula based upon the relative ability of the residents of the district to support their schools via the property tax to determine the local share and state aid would make up the difference.((The SFRA is complex, and I do not pretend to understand it in any great detail.))
The SFRA resulted in winners and losers. The winners were those districts that were not able to provide a thorough and efficient education because the money they could raise locally, even when state aid was added, was simply insufficient.((I have come to understand that we expect our school to do much more than teach our children. The cost of these other social responsibilities is higher in poorer districts, much the education goal even harder to attain.)) The losers were those districts whose state aid allocation enabled them to tax less. They were supposed to see relatively less state aid and generate more local revenues.
Instead of being grateful for their long-enjoyed ability to have the residents of other parts of the state pay a portion of the local share, these loser districts complained about how unfair it was and for a long time they were sheltered from any real aid reductions. Finally, the state started to phase in the reductions and the howls have been loud and unceasing. Now, as Mulsine points out, in an election year, the Legislature is taking the politically popular step of using the non-recurring surplus to soften the blow.
We will face the same complaints year after year. The desire for more education funding is infinite. We must determine exactly what resources we are going to devote to this effort. (I thought that was the goal of the SFRA; whether it achieved the right result, I do not know). Local school districts want the delight of spending while leaving the burden of taxing on others.
Despite the huge state funding for education, the quality of education is still far too dependent on where the student lives. Municipal land use decisions are driven to too high a degree by the impetus to avoid school children. I simply do not believe that the constitutional obligation of thorough and efficient schools statewide is consistent with home rule.
I do not believe that we will ever have a fair education system until we place responsibility where the constitution puts it, the State. With the obligation to fund comes not only the right, but also the responsibility, to see that the money is used efficiently. The State should run our public schools with substantially equal facilities and opportunities for all. How that can be done without simply moving the spoils system that is any large government undertaking to a more cental location is another question entirely.
Jay Bohn
April 3, 2023.