New Jersey’s Approach to Educational Funding Formula Review

New Jersey’s educational funding formula and structure was largely established under the School Funding Reform Act (SFRA) in 2008. The formula allocates a base-per-pupil amount that changes regularly, and then allocates a small proportion of additional aid to schools based on their estimated student population of low-income, ESL (English Second Language) learning, or disabled students. However, since the formula was established in 2008 without a clear process in the bill for adjustments or updates, it has faced criticism from many New Jersey residents. They question its effectiveness in addressing contemporary concerns and needs in New Jersey, as well as its ability to distribute school funding fairly and efficiently. Some of the new contemporary state needs that are not reflected in the 2008 formula include an increase in school security concerns, an increase in the population of ESL learning students, an increase in demand for mental health services in schools, among others.

A state that has recently passed a substantial piece of legislature in regard to educational funding is Mississippi. The Magnolia State’s bill not only included a new formula and base-per-pupil amount, but it also included an outlined plan to keep the formula relevant and updated for years to come. In summary, the bill states that on an annual basis until 2029 (and then every 4 fiscal years starting in 2029), inflationary adjustment will be applied along with the consideration of changes in instructional cost, administrative cost, ancillary personnel and expenses, and operation/maintenance of the plant to derive an updated and efficient funding plan.

Massachusetts is a leader in educational standards and is a state with a similar funding structure to New Jersey; it has an outlined process of formula review in their funding bill, called Chapter 70. Section 4 of Chapter 70 requires a review every 10 years by a foundation budget review commission. This review covers Section 3 of Chapter 70, and any updates made to the foundation budget through new laws. Section 3 of Chapter 70 describes the formula used, including specific weights for students with special needs, which decide how extra funds are allocated.

The SFRA in New Jersey does not have such a plan to keep its 16-year-old formula relevant and reflective of the state’s needs. What the bill does outline is a required analysis of school funding in the form of the Educational Adequacy Report (EAR), which is a detailed evaluation of the adequacy and equity of funding for public education done every 3 years. The report is responsible for making recommendations to tweak the weights and nuances in the formula (while not actually touching the formula itself, creating a significant limitation of the report), but no clear process is outlined to integrate such recommendations into the system. Thus, the state’s ongoing criticism of underfunding schools with higher need, resulting in band-aid solution grants, displays that this arrangement of an outside report to make policy changes is not efficient. The EAR mimics a third party, outsourced analysis which does not work as closely with the SRFA.

A change to the SRFA is needed. Inspired by other states, the EAR should be regularly reviewing not only the individual aspects of variables and weights but also the formula itself every 3 years as currently done, and should be responsible for reviewing and taking into account changes in instructional cost, administrative cost, ancillary personnel and expenses, operation and maintenance of plant, and then reflecting these changes in the formula. A closer relationship between the EAR and the SRFA is needed to ensure the SRFA is getting the revisions necessary, as currently, these revisions are not as strong as they should be, reflecting on the efficiency of the EAR and the SFRA. The SRFA bill fails to outline a strong plan to keep the funding formula up to date and reflective of needs, as the revisions are outsourced to the EAR with little expectations or roadmap to incorporate its analysis. This would ensure that changes in state culture, demographics, and economic needs are regularly being considered, such as recent shifts in demand/need for mental health services, security services, and ESL learning services.

Addressing the issue of NJ’s stagnant funding formula is imperative to ensuring the younger generation of New Jerseyans are receiving the quality and equitable education they deserve to equip them with tools and resources to flourish after their K-12 education. A funding system that does not meet newer state needs and also leaves many districts with funding disparities, especially in rural and middle-class areas, is not a system that can accomplish this. Every student should feel confident that their education is worthwhile and that their needs are being met in their schools, meaning more than just one-time grants are needed to shift the state’s funding towards a more tailored and efficient system.

Randall is a member of GSI’s 2024 Summer Internship program and is a student at the University of California – Irvine majoring in International Studies. He is a resident of Roxbury, New Jersey.