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COURT HOUSE - When New Jersey announced K-12 state aid figures for fiscal year 2022, Cape May County school districts took another reduction in funding, this one totaling $6.3 million.  

Only Ocean City and West Wildwood school districts did not see a funding cut. 

The reductions in state aid are the latest installments on a seven-year phase-out of state adjustment funds that will leave Cape May County school districts by fiscal year 2025, according to the Education Law Center (ELC), collectively down $25 million from the level of funding they received in fiscal year 2018. See nearby graph of annual cuts since 2018, and county map showing cumulative losses of funding as a percentage of each district’s 2018 total budget.  

In Cape May County, the greatest impact of the reductions is concentrated in the four township school districts (Dennis, Lower, Middle and Upper townships), Wildwood and Lower Cape May Regional. These five municipal districts, plus the county’s one regional district, absorbed 98% of the aid reductions that began in fiscal year 2019. 

The 2020 Covid year, one that placed a heavy burden on schools across the state, resulted in relief funding that may blunt some of the impacts of the ongoing funding cuts.  

The American Rescue Plan Act (ARPA) provides $125 billion for K-12 and state education departments. New Jersey should see $2.8 billion of that funding, with some monies going directly to school districts, based on a proportional distribution of low-income students. 

Yet, relief funding through ARPA or other sources is temporary. The state aid funding cuts are permanent, and more are expected.   

Background 

By the 1970s, New Jersey’s long-standing process of funding elementary and secondary schools through property taxes produced wide disparities in education expenditures.  

Court challenges, beginning in 1973, established a state obligation to provide a “thorough and efficient” education for all children, leading to the eventual passage of a state income tax and the state assuming a larger portion of the costs for public schools.  

Thirty years of litigation followed during which the courts continuously struck down state school funding statutes. In 2009, the state Legislature put in place a weighted student funding formula that would govern the distribution of state education aid.  

This came in the form of the School Funding Reform Act (SFRA) passed the prior year.   

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The new legislation intended to redirect state aid to districts that needed it most and have the least ability to raise their own sources of revenue. It was immediately clear that many school districts, especially in the lower-populated, rural areas in South Jersey, would lose significant amounts of funding under the new plan.  

Protections were put in place to prevent those school districts from losing aid funds. Additional funds were provided to those districts over and above what the formula would otherwise dictate. The funds were known as adjustment aid, which lasted for nine years.  

In 2018, Senate bill 2 (S-2) took away the protections put in place when SFRA was passed 10 years before, which began a phase-out of adjustment aid that is the source of the county’s current funding cuts.  

The Process  

Key concepts in this process are: 

  • The adequacy budget, which is calculated by the state and represents the amount of spending necessary to provide “thorough and efficient” education to a district’s students. 

  • The community cost share or fair share, which is a calculation of how much a district should be able to raise through taxation based on community income levels and property values. 

  • State aid is what is needed to meet the adequacy budget given the amount of community share through taxation. Subtract the community fair share from the adequacy budget, and what is left, if anything, should be the state share.  

As one would expect, things are never that clear. Often, the state has put in what legislators determine it can afford, leaving any gaps to the school districts.  

Also, the state share is governed by the calculation of the local fair share, which is, and has been, controversial. Save Our Students (SOS), a coalition of school districts opposed to the reductions imposed by S-2, argue the state calculations lack transparency.  

The Cuts 

Cape May County has two county school districts, one regional district, and 16 municipal districts, three of which - Sea Isle City, Cape May Point and West Wildwood - operate no schools. 

A district-level analysis, using the state formula, shows seven county school districts have school tax levies below the level necessary to meet the district’s fair share.  

In each case, the analysis says spending is supported by higher levels of state aid than the SFRA formula modified by S-2 would dictate.  

These are the same six districts experiencing the greatest aid reduction – the four township districts, Wildwood, and Lower Cape May Regional.  

The process has produced endless controversy. Several school districts joined in an Open Public Records Act (OPRA) request seeking data on how the state calculations are done and how the multiples used are derived. The OPRA request was denied, leading to discussions of possible litigation.  

While requesting district parents voice their opposition to the cuts, Upper Township School District Superintendent Vincent Palmieri said the growing loss of state aid “will have a catastrophic impact on each of our schools.”  

The Impact 

One year ago, just before the pandemic began causing havoc on school districts, Wildwood Superintendent J. Kenyon Kummings addressed the Senate Budget and Appropriations Committee on the damage being done by the annual reductions in state aid. 

“Now that we are living with these cuts and are able to model the long-term negative effects that result from them,” Kummings said, it was incumbent on the Legislature to halt the process until “a thorough investigation of the SFRA is completed.”  

Kummings reiterated criticisms that many districts in the state leveled at the new process - that it lacks transparency, especially concerning the multiples the state uses to determine key numbers.  

Kummings argued the unique nature of Cape May County, as well as the importance of the schools as a “vital safety net” for students, pointing to the highest unemployment rate in the state, one of the lowest median household incomes, the highest per capita substance abuse rate, and almost 50% of students qualified for the free or reduced lunch program, among other factors.  

In his testimony, Kummings argued the cuts will result in the loss of “invaluable programs and supports that our students require and deserve.” The cuts continued. 

Most recently, SOS urged the Legislature to pause the cuts, as school districts seek to return to some new normalcy during the ongoing health emergency. The relentless phase-out of adjustment aid continues. 

According to the ELC analysis, the $6.3 million in cuts county districts experienced for fiscal year 2022 will be followed by $4.6 million more in fiscal year 2023.  

The one-time injection of stimulus money is no substitute for the permanent aid losses in county districts. Lower Cape May Regional Superintendent Joseph Castellucci called the local fair share calculation “arbitrary.”  

Using language similar to Palmieri, Castellucci calls the impact of the cuts “catastrophic.” He argues that the cuts in funding will produce “considerable and irreversible damage.”  

Senate President Stephen Sweeney argued the school districts experiencing cuts had nine years of adjustment aid to prepare for reduced funding. His answer may be new legislation making its way through committees, in Trenton. 

That legislation seeks to start a process of consolidation of K-12 regional and countywide school districts, which, Sweeney said, would improve educational quality and result in long-term savings.  

To contact Vince Conti, email vconti@cmcherald.com. 

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