Gov. Phil Murphy campaigned on a pledge to ramp up education spending, and Newark school leaders are watching closely to see if he’ll keep that promise – or if they might have to slash their budgets.
Murphy is set to unveil his first-ever budget plan Tuesday. While districts will not get detailed aid figures for a few more days, Murphy’s budget proposal should give them a sense of how much of a boost — if any — to expect.
Expectations are high in Newark, where flat state funding and rapid charter school growth has left district officials scrambling to plug gaping budget holes. They’re hoping Murphy will give them some portion of the $140 million in additional aid that the city is owed under state law.
“This budget season is very, very important for us,” Interim Superintendent Robert Gregory told Chalkbeat earlier this year.
To help you understand what’s at stake for the city’s schools, Chalkbeat Newark created a state budget guide. It explains how school funding is set and what that means for Newark’s district and charter schools, whose financial fate is controlled by politicians in Trenton.
How are New Jersey schools funded?
New Jersey schools are funded according to a formula that was adopted in 2008 and has been touted as a national model for distributing school aid according to need.
The formula calculates two things: How much money each district needs to adequately educate its students (its “adequacy budget”), and what portion of the budget should be paid by the district (its “fair share”). The budget amount is determined by how many students a district enrolls, with extra money allocated for each student who is poor, still learning English, or has a disability. The share each district must chip in is based on its wealth and taxing capacity.
That’s how things are supposed to work, anyway.
Due to budget cuts that followed the Great Recession, the formula has not been properly enacted since 2009. Today, about 31 percent of the state’s nearly 600 school districts receive less school aid than the formula says they’re owed, according to the Education Law Center. To fully fund the formula, the state would need to boost its school spending by nearly $1 billion.
What might change this year?
If the governor keeps his promise, schools will get a lot more money.
Still, any serious funding boost will be costly. To raise the additional revenue, Murphy has proposed hiking income taxes on households making more than $1 million, among other measures.
But Murphy’s “millionaire’s tax” has become a harder sell following the Republican federal tax overhaul, which capped the amount people can deduct on their taxes. Last week, the state’s top Democratic lawmaker, Senate President Stephen Sweeney, unveiled an alternative proposal: a tax on corporations earning more than $1 million in net annual income. Either plan would generate more than $600 million in new revenue for the state — though it remains to be seen how much of that would go toward education.
While Murphy and lawmakers have until June 30 to hash out the state budget, districts are on the hook to set their own preliminary budgets by the end of March. That means they must rely on Murphy’s spending plan for now, then make adjustments once a final compromise is reached.
“It’s totally crazy,” said Danielle Farrie, the Education Law Center’s research director.
What will the budget mean for Newark Public Schools?
Newark’s limited tax base leaves it at the mercy of the state, which provides about 80 percent of its school funding.
This school year, the state sent Newark about $750 million — about $140 million less than what it’s entitled to under the school-funding formula. Gregory told Chalkbeat in January that if the district gets even a fraction of what it’s owed, “we’ll be in a better place.”
The Newark school system has faced whopping budget gaps in recent years. Two factors have driven the deficits: the rapid growth of charter schools and flat state funding.
Because charter school funding comes out of district budgets, Newark spending on charters has soared as those schools enroll ever more students. This school year, the district will transfer about $237 million — or a quarter of its budget — to charter schools, up from $60 million in the 2008-09 school year.
Meanwhile, state aid to Newark has not kept up with its rising expenses. The result is that the district’s per-pupil spending shrank by nearly $2,000 from 2008-09 to 2016-17, according to an Education Law Center analysis that adjusted for inflation. (The state boosted Newark’s budget each of the past two years.)
To balance the budget, Newark officials have had to sell off school buildings, switch employee insurance providers, and raise local taxes, among other measures. The district has mostly avoided cutting school budgets — though it did recently shift some funds from high schools to elementary schools. But if state funding is flat this year, officials worry they will be left with few other options.
“The last place to go is in school buildings,” Gregory said. However, “if we face flat funding again, that could lead to an immediate impact on students.”
What about Newark’s charter schools?
Today, about one third of Newark’s public-school students — or roughly 16,000 children — attend charter schools.
About 90 percent of the district’s local and state funding for each of those students follows them to their charter schools — though charters are excluded from certain funding streams. Murphy has been more skeptical of charters than his predecessor. But advocates hope that his budget will, at the very least, not leave them with less money.
“We’re just generally looking for charters to be unharmed — for us not to go backwards,” said Nicole Cole, president and CEO of the New Jersey Charter Schools Association. “The families that we serve can’t afford for us to take a step backwards.”