Funding an Adequate Education in Urban Schools: Lessons from New Jersey (US)

1. Funding an Adequate Education in Urban Schools: Lessons from New Jersey (US) International Conference on Education Finance and Decentralization World Bank January 13, 2005

2. Education Funding in the US • Education is the responsibility of State governments under the U.S. Constitution • Leads to 50 different school finance systems • Sources of revenues (average): 8% federal, 49% state, 43% local • Range in state share: 32% to 72% • Range in local share: 13% to 63%

3. Education Funding in the US (cont’d) • Level of local revenues is related to size of tax base in community. • Heavy reliance on local revenues leads to disparities in education resources across school districts. • Poor and under-resourced districts have challenged the constitutionality of state funding systems in 45 of the 50 states.

4. New Jersey Context • 8.6 million people • 1.4 million public school students (41% non-White students) • 4th highest per pupil education spending in the US • Wealthy state, but large differences in wealth, student demographics and education spending across its 600 school districts • Source of revenues: 4% federal, 43% state, 53% local

5. New Jersey Context (cont’d) • State Constitution guarantees the provision of a “thorough and efficient” (T&E) education to all children ages 5-18. • Abbott v. Burke litigation focused on spending and resource disparities between state’s poor urban and wealthy suburban school districts.

6. Abbott v. Burke: Defining “T&E” • “Thorough and efficient means more than teaching the skills needed to compete in the labor market.” • “Thorough and efficient” education is one that enables disadvantaged children to compete in, and contribute to, the society entered by relatively advantaged students. • This sets a high “adequacy” standard for poor urban students

7. Abbott v. Burke: The Court’s Mandates • Applies to 31 poor, urban districts (so-called Abbott districts) • Equalizes funding for regular education with property-rich districts • Parity level is $11,300 per pupil in 2004-05 • Additional funds to meet special educational needs of urban students

8. The Court’s Mandates (cont’d) • Programs to meet the extra-educational needs of students • Research-based whole school reform designs • Full day kindergarten • Half-day pre-school for 3- and 4-year old children • Off-site coordination/referral for social and health services • Security, technology, alternate school and other programs based on demonstrated need of the school.

9. The Court’s Mandates (cont’d) • State funds to address facilities deficiencies and additional classrooms in Abbott districts • Funding must be assured and cannot rely on the budgeting and taxing decisions of Abbott districts.

10. Court-Ordered Framework for Educational Adequacy Standards Based Reform Whole School Reform Children in Abbott Districts Preschool Supplemental Programs Facilities Source: Education Law Center

11. Fiscal Impact • Funded with new dollars, not redistribution • About $1.1 billion in 2004-05 for parity aid and supplemental programs • An additional $4000 per pupil for Abbott students • About $500 million in early childhood education aid • Together, represents about 18% of total state aid to education • Another $6 billion for facilities • Parity plus: Higher per pupil spending in Abbott districts than high wealth districts

12. Impact: Preschool • 40,000 children enrolled in 2003-04 • 68% of eligible universe • 70% in community providers • $10,000 per pupil • Highest quality standards and highest funding level in nation (NIEER)

13. Language Arts Achievement: Grade 4

14. Mathematics Achievement: Grade 4

15. Fiscal Issues • Dual formulas • State aid is calculated separately for Abbott districts • Non-Abbott districts fall under a less generous foundation aid formula • Middle-wealth districts are “caught in the middle.” • Spend less than Abbott and high wealth districts • Maintain significantly higher tax rates

16. Political Issues • Public pressure to reduce reliance on local property taxes • Call for constitutional convention to restructure state/local tax system • Pressure to restructure state aid formula • Growing cost of Abbott aid in time of budget shortfalls • Parity aid rising about 4-6% a year

17. Implementation Issues • Governance • Power shifted from district to schools and state. • State approved school budgets and programs, although district legally responsible for raising revenues. • Monies reallocated from district to support school budgets. • Concern now about lack of coherent district-wide curriculum and support.

18. Implementation Issues (cont’d) • Resource allocation • Schools lacked capacity to develop school budgets. • Schools lacked true budgetary authority—to hire personnel, to deviate from “model” budget designed by state. • Continued litigation over nature and extent of supplemental services identified by schools and districts (e.g., after school programs, additional security).

19. Implementation Issues (cont’d) • Capacity • State has insufficient personnel to support, monitor, evaluate Abbott schools. • Support by developers of whole school reform models has been uneven. • Implementation was more successful in districts where superintendents managed developer relationships, supplemented training, and supported model implementation.

20. Implementation Issues (cont’d) • Accountability • Fiscal accountability limited to state approval of school budgets. • No clear programmatic accountability. • No local or statewide evaluation of Abbott remedies or of whole school reform models. • Limited outcome accountability due to insufficient student data.

21. References • M. E. Goertz and M. Edwards (1999). “In Search of Excellence for All: The Courts and New Jersey School Finance Reform” Journal of Education Finance 25(1): 5-32. • B. A. Erlichson and M. E. Goertz (2002). “Whole School Reform and School-based Budgeting in New Jersey” in C. Roellke and J. K. Rice (Eds.) Fiscal Policy in Urban Education , pp. 37-64 (Greenwich CT: Information Age Publishing). • G. W. Ritter and S. C. Lauver (2003). “School Finance Reform in New Jersey: A Piecemeal Response to a Systemic Problem,” Journal of Education Finance 28(4): 575-598. • Education Law Center: www.edlawcenter.org