New Jersey Policy Perspective report advocates school funding reforms aligned with Republican proposal, DiMaio says
NEW JERSEY – A recent New Jersey Policy Perspective report recommends reforms to New Jersey’s school funding formula that align with the Republican proposal, says Assemblyman John DiMaio.
The report calls for the Department of Education to monitor equity in school property taxes and ensure taxpayers aren’t overly burdened by their local fair share amounts, particularly in New Jersey’s underserved communities.
“New Jersey has a constitutional responsibility to fund schools equitably. A lot of people agree and advocate for the Republican proposal without even realizing it,” said DiMaio (R-Warren), the Assembly GOP Leader. “It is absolutely achievable if priorities are in the right order. Fully funding schools, increasing their savings, and lowering property taxes in low- and middle-income communities should be nonnegotiable.”
Recommendations in the report suggest developing a set of indicators on property tax equity across the state, and using the indicators to reassess the balance of property and income rates used to determine local share in the School Funding Reform Act – known as the SFRA.
DiMaio’s bill (A1125) directly addresses tax equity by lowering school property taxes in towns where the total tax levy is more than 5% of its district’s personal income. It would provide more state aid to schools in communities that can’t afford New Jersey’s nation-high property taxes.
The report illustrated that need: “Again, the theory behind LFS [local fair share] is that communities with less wealth — and, therefore, less tax capacity — should receive more state aid to fund their schools as they generate less from local property taxes than wealthier communities. This approach aims to make tax rates less regressive, if not fully progressive. However, in practice, the outcome doesn’t always align with this theory.”
Approximately 300 school districts pay more than their local fair share, according to state data, and dozens of school districts are below adequacy. Funding changes due to the law known as S2 were phased in over seven years and completed this year. The state claims schools are fully funded on their end, leaving property taxpayers to fill in the gaps.
Had the bill been enacted before this school year, every district would have been funded up to adequacy. Nearly 340 school districts would have received more aid in this school year. None would have lost aid.
It would have cost about $1.3 billion – less than StayNJ while cutting property taxes for more people. Taxpayers’ would have saved $874 on average.
“The Republican plan does exactly what the New Jersey Policy Perspective report recommends,” said DiMaio. “We can actually lower property tax bills annually while significantly helping schools financially. Fully funding schools means fully funding each school up to adequacy.”
The SFRA distorts how much taxpayers can afford by including property wealth in the local fair share calculation. As a result, skyrocketing property values have resulted in less aid and outright cuts for many districts despite taxpayers’ income not increasing as much.
“[T]he relationship between local fair share and taxable property wealth is stronger than the relationship between local fair share and median household income,” the report emphasized. “The property and income rates set by SFRA have profound consequences for both school funding and local taxes.”
Recommendations in the report also included updating the data that determine school funding in the SFRA every three years – a long-time priority for the state’s Education Law Center – and implementing data driven approaches to better keep up with changing education standards and student needs.
“Where there is a will, there is a way. Republicans have the will and found the way. The state needs to update the formula and the data it uses,” said DiMaio, who also sponsors A1127 to further protect school districts during a recession.
