Getting to the Square Root of School Funding

At Issue

By Althea D. Ford, NJBIA Vice President of Government Affairs On Apr 30, 2024

Businesses large and small pay nearly half of all local property taxes collected in New Jersey, where the state education funding formula is often criticized for relying too heavily on local property taxes to run public schools.

This significant outlay of funds is an investment in a K-12 system which is part of the economic and workforce development pipeline, shaping the next generation of employees as well as business owners. While businesses and residents can show our commitment to investing in the school system, the return on investment is not so readily apparent. 

Considering the number of students who come through New Jersey’s K-12 system that are either unprepared for the workforce, out-migrate and/or are unable to return to New Jersey due to a lack of affordability, the state must be more intentional about addressing one of the key cost drivers that contributes to unaffordability in our state: Property taxes. 

Study Cost Drivers. What are the key cost drivers for delivering quality education to K-12 students and how effective is the current funding formula in meeting the needs of school districts? NJBIA supports Senate Bill S-1986, bipartisan legislation sponsored by Senate Education Committee Chairman Vin Gopal, to establish a school funding formula task force that would evaluate and make recommendations to improve the formula. 

Let the Formula Run. The School Funding Reform Act of 2008 and the current funding tribulations of S-2 have taught us that attempting to right-size, apply an approved formula and approach 100% funding of equalization aid causes school districts to experience sizeable funding changes from year to year. 

Correcting these issues will require the state to smooth-out the formula to improve its predictability and stability for schools and taxpayers from one year to the next. Bill A-942, sponsored by Assemblyman Roy Freiman, would use a five-year average of equalized property valuation and make other adjustments. Next Steps. It is imperative that we establish a school funding formula that best utilizes the significant tax dollars paid by businesses and residents and best serves our children without exacerbating the tax burden in an already over-taxed and unaffordable state. 

To access more business news, visit NJB News Now.

Related Articles: