New Jersey Department of Education

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School Finance

2008-09 State Aid Summaries

School Funding Formula Overview

Governor Corzine’s goal in developing the new school funding formula was to bring greater equity and predictability to State funding for school districts in a manner that fulfills the State’s constitutional obligation to provide a “thorough and efficient” system of education to all students in the State.

The new formula replaces the former unpredictable, ad-hoc system of distributing state aid with a more streamlined approach that accounts for the needs of all students.  As evidence of this more streamlined approach, the new formula collapses 23 aid categories into eight.  When all state aid and local contributions are combined (including state on-behalf payments), national statistics show that New Jersey’s current per pupil spending on education is the highest in the nation.

School aid is distributed through a foundation formula.  Calculations are based on a per-pupil adequacy budget, which represents the amount necessary to allow each student to attain New Jersey's educational standards.  The base amount is set for elementary school students and is increased for middle school students, high school students and vocational school students because it grows more expensive to meet students' needs as they progress through school.

Additional weights are added to the basic formula for at-risk students (those eligible for free or reduced lunch) and  students with limited English proficiency (LEP).  A combination weight is calculated for students who are both at-risk and LEP.

The formula also recognizes that there are additional challenges in meeting students' needs when there is a high concentration of poverty in a district, so the additional at-risk weight increases as the poverty weight in a community increases.  In addition, the formula encourages districts to provide full-day kindergarten by accounting for a full-day program and funding it as part of each district's adequacy budget.  Finally, because there are cost differentials in different parts of the state, the adequacy budget is adjusted by a geographic cost index.

The development of the new formula was done carefully to ensure that the new system is constitutional; the adequacy budget allocates similar resources to similar districts, regardless of their zip code.  By calculating aid based on the characteristics of the student population rather than district location, the new formula will distribute aid equitably during periods of changing demographics and enrollment shifts.

The formula also changes the way special education is funded in New Jersey, recognizing and addressing the true statewide cost of special education.  The approach followed, which is used by the federal government and several other states, is known as the "census method." Each district's adequacy budget for special education costs will be calculated by multiplying the statewide average 14.69 percent classification rate by the per pupil special education excess cost of $10,897. For each district, one-third of this special education component will be funded on a categorical basis and two-thirds will be funded on a wealth-equalized basis.

Districts' adequacy budgets are supported by both state and local funding. The calculation of each district's local share is based on the wealth of each community as measured by aggregate income and property value.

FY 2008-09 State Aid

The aid summary released today is a result of the School Funding Reform Act of 2008 and shows the aid payments that districts will receive in their General Fund Payments beginning in September 2008 in the following categories:  Equalization Aid, Education Adequacy Aid, Choice Aid, Special Education Categorical Aid, Transportation Aid, Security Aid, Adjustment Aid, Adult Education Aid, and Preschool Aid.  Extraordinary Aid is not included because it is a reimbursement for the prior year’s expenditure.

Aid Increases

All districts will receive at least a 2% increase in aid relative to 2007-08.  In fact, of the 594 regular and vocational districts, almost a third will receive 10% or more in aid and almost a fourth of all districts will receive a 20% increase.

A total of 23 districts will receive increases relative to the amounts contained in the December 12 notices due to Choice Aid and updates to some of the data used in the formula.  Forty-five districts received increases due to Adult Education Aid, and 146 districts now have their Preschool Aid included in their state aid totals.