Health insurance costs rocketing 30% or more. Aging roofs and boilers. Budget shortfalls hitting $100 million.
For New Jersey school districts facing financial pressure like never before, Gov. Mikie Sherrill last week offered some relief: $12.4 billion in school aid, for a $370 million increase. At the same time, she recommended savings to be found in consolidation and shared services among almost 600 school districts. And she committed to adding state Department of Education staff to guide school boards through the worst fiscal challenges.
Still, education advocates and lawmakers say they’re facing projected holes that not even state aid, projected at an historic high, can fill. As public budget hearings begin in Trenton this week, educators, lawmakers, advocates and others say few debates will top those about school funding.
“What we’re seeing right now is a perfect storm,” said Betsy Ginsburg, executive director of the Garden State Coalition of Schools, which advocates for school boards. “All the factors that are big cost drivers for districts — transportation, special education, health care, salaries — have gone up exponentially.”
Sherrill’s plan includes funding increases for roughly 400 of the state’s nearly 600 school districts, decreases for 167 districts and flat levels for about seven districts.
Newark, the state’s largest school system, is slated to see a $60.6 million increase, the largest in terms of dollars. Another big system, Jersey City, which lost $300 million over almost a decade, is facing a $3.9 million cut, among the steepest declines. Next year’s projected deficit puts the the system “one crisis away from catastrophe,” Superintendent Norma Fernandez told NJ Spotlight News.
Sherrill, in her March 10 budget address, urged schools to cut costs by sharing services or merging. Some say that would require a years-long process with no guaranteed payoff.
“There are savings to be achieved through shared services,” said Jonathan Pushman, senior director of advocacy for the New Jersey School Boards Association. “But consolidation isn’t necessarily the panacea that some folks would like to portray it as. It doesn’t always save money.”
‘Thorough and efficient’
Lawmakers starting on Wednesday will consider Sherrill’s $60.7 billion proposed budget for the fiscal year that starts July 1. School aid accounts for one-fifth of the total.
New Jersey’s constitution mandates a “thorough and efficient” education, and to achieve that the 2008 School Funding Reform Act devised a complex formula to distribute aid to districts. The goal was to ease the hit to homeowners who pay the nation’s highest property taxes, which help fund schools.
In 2018, the law was tweaked to shift aid to districts that were historically underfunded from those deemed overfunded. One assistance category, called equalization aid, complicates the process further, as it gives greater state resources to needy districts based on demographics and tax bases.
Sherrill used a three-year district wealth average to determine the “local share” slice from property taxes. To reduce fluctuating numbers that complicated budgeting, she capped state aid cuts at 3% and increases at 6%, as her predecessor, fellow Democrat Phil Murphy, had done.
For some, the increase limit is an insult.
“This is simply unfair to students, families and taxpayers in communities that have been carrying the burden for far too long,” said Sen. Declan O’Scanlon (R-Monmouth), referring to suburban districts whose state aid has shrunk for years.
Almost all stakeholders say the funding formula is outdated, pointing to a Department of Education report that cites the need for greater year-to-year stability and recognition of rising costs.
“We don’t need to scrap the current funding formula, but I do think we need an overhaul,” Ginsburg said.
‘Never seen it like this’
The K-12 Westwood Regional School District, serving Westwood and Washington Township in Bergen County, is in line for a 6% aid increase. Still, it announced potential staff cuts due to a 30% spike in health-insurance costs.
“I have never seen it like this,” Ginsburg said of the increasing number of districts announcing budget deficits and examining such spending reductions. “All of my districts — no matter where they stand today with regards to state aid increases, decreases or flat funding — their biggest worry is costs.”
Pushman, from the state School Boards Association, said the crisis goes well beyond the “difficult choices” faced by districts each year.
“Many of them have now reached a fiscal cliff, where they have found no more areas left to cut without harming students or staff,” Pushman said.
In Jersey City, Fernandez, the superintendent, plans to deliver a budget proposal this month. A $100 million projected deficit may force the loss of 200 jobs, including entry-level and administrative, she said, though her “commitment is to eliminate as few positions as possible.”
“We’re implementing a number of efficiencies,” Fernandez said, but they likely won’t be enough to offset higher costs for health insurance, salaries, special education and charter schools. Maintenance for the city’s school buildings, most 90-120 years old, also are being examined.
“We’ve replaced a number of boilers and roofs, but we won’t be able to continue that investment in facilities,” Fernandez said. “We’re one crisis away from catastrophe if a major event were to happen to our buildings.”
Fernandez said she takes issue with the funding formula’s wealth measures. Low-income areas make the city rank among the state’s neediest districts while a downtown building boom over several decades has coaxed New Yorkers to relocate to luxury high-rises and brownstones. In 2022 the listing website Rent.com declared Jersey City the most expensive place in the country to lease a home, with a monthly average of $5,500.
“We’re caught between what the state says the wealth of Jersey City is and the reality of not being able to fund our schools,” Fernandez said.
