New Jersey Democrats and Republicans agree that the state’s school funding formula needs updating. It’s a complex calculation that considers many factors, and the result determines the amount of money given to the state’s almost 600 public school districts to supplement their local tax revenue as a funding source.
Tony Trongone, executive director of Great Schools of New Jersey, an association of high-needs districts, explains how the formula determines what each school district needs. Trongone is also the former head of the New Jersey Association of School Administrators and an ex-superintendent in Millville. This interview has been lightly edited.
Joanna Gagis, anchor: In layman’s terms, can you explain how this formula is calculated? A lot of folks have a problem with it, but how does it calculate the needs per student per district?
Tony Trongone: We’ll talk about the adequacy budget. And the word “budget” confuses people because it’s not a budget, it’s just the theoretical cost for educating kids in that particular school district. So they look at enrollment, they look at free or reduced lunch, they look at what they call at-risk children. They look at ELL, English language learners. They look at combined English language learners and free or reduced lunch. They look at special ed and then they look at speech. And that’s the adequacy budget. They multiply students in each category by a number, and the commissioner uses a consumer price index to multiply it.
For instance, there was a district when you multiply it all out, it was almost $40 million. That’s what it costs to educate children in that district. And it was a district of 2about ,000 students. Now there is a second step. And it’s actually putting money to that theoretical piece. And so you look at the adequacy budget, and the Department of Education, along with the Treasury, they figure out what it cost, what’s the ability for the local municipality to pay for that education.
JG: And that’s based on tax ratables, that’s based on what folks pay in property taxes and other income that the municipality has.
TT: Correct. And so you look at those ratables and it’s equalized valuation. And then also the district income of that municipality, they put it together. It’s a 50-50 split. That’s part of the problem right now, the volatility of the property value. But they figure it out. Boom: It’s going to cost $30 million for the local municipality to pay towards that $40 million.
JG: And then the state will make up the balance. Folks have said this is a political process. We’ve heard it from countless districts that were on the losing end. You say no. Explain.
TT: You’ve got to go back to 1976 when Gov. Brendan Byrne put in the gross income tax because there was a legal issue going on. It was Cahill v. Robinson. Then came Abbott v. Burke where the state needed money to provide to districts and municipalities that did not have the ability to raise local taxes to provide a thorough and efficient education. The gross income tax in New Jersey started in 1977 and the moneys went towards a needs-based education for students.
‘That’s not fair’
JG: We’ve seen districts on the winning end, districts on the losing end. Those on the winning end have been underfunded for years based on enrollment numbers. Those on the losing end were getting overfunded even though there are enrollment was dropping. And yet they say that the amount of loss and gain haven’t been fair.
Are there any changes you would make to the formula right now, that many agree does need to be reevaluated? What would that change look like?
TT: It would be the equalized valuation, the property value, because there lies the volatility where a district, like the district I talked about, went from a $30 million obligation to educate their kids to $34 million in one school year. From one year to the next, $4 million. That municipality, they didn’t get the wealth in their pocket of $4 million. So therefore they got shorted because it subtracts from the adequacy budget, $4 million less than next year. And so that’s not fair.
JG: Right. They’re seeing the value of the home property, although property taxes can’t increase by more than 2%. And if the property owner hasn’t sold that property, there’s no additional revenue for the municipality. Do I have that right?
TT: Yes. So my friend is a teacher, makes $80,000 a year. He moved to Ventnor. He bought the house for $300,000. Now, four years later, that house is worth $1,000,000. He did not get an increase in his salary of three times. I’m not seeing the wealth of his property commensurate to his salary working as a teacher.
Circuit breakers
JG: And so therefore, neither is the municipality. But what would you do to update this formula?
TT: I would put in circuit breakers where if a district had a significant increase because of their property value, that district would be held harmless for a certain amount. That’s what I would do at first to kind of stabilize what’s going on there. And then the other piece is you do have to look at the adequacy budget to see exactly what those costs are for that district, because it hasn’t been revised since 2008-09.
So it’s a bifurcated piece here. Look at the property value and put in some circuit breakers so that you mitigate the volatility. But then we do have to look at the cost of educating students in New Jersey in 2027-28.
JG: And of course, we know that health care costs increase. We know that transportation costs have skyrocketed, especially since the pandemic. Are you having any conversations? Have you reached out to the governor’s office? Do you know if these conversations are going on with her office or the Legislature?
TT: Yes, I have been a champion for education, as has been Sen. Vin Gopal. And then I talk to his office and I also talk to the governor’s office. And also the new commissioner’s office has been very obliging to all educators, meeting with the various stakeholder groups to get our input. The big word right now is input from the practitioner about what’s going on in the field.
JG: Of course, it’s going to be an ongoing process as the budget plays out. We have until the end of June, and a lot to happen before then.
