The rising power of state government (Fusarelli & Cooper, 2009) over education has grown from the states’ increasing domination of school finance and policy making because of the strings attached to state funding. Legal challenges to funding inequities and disparities led to court decisions such as Serrano v. Priest establishing financial neutrality as the basis for school funding. Subsequent rulings focused on adequacy and required state governments to provide resources to disadvantaged school districts such that the provision of education adequately met their constitutional requirements. States have tried to remedy the disparities among districts with the infusion of incremental state funds, regulation, and new or revised school funding formulae. The courts’ decisions concerning the states’ school funding formulae rely on key provisions of the state constitution in New Jersey and New York. The New Jersey State Constitution provides “for the maintenance of a thorough and efficient system of free public schools for the instruction of all children in the state between the ages of five and eighteen years” (Goertz & Weiss, 2009, p. 10) whereas the New York State Constitution has an education clause known as “the Education Article” (Article 11, section 1) which mandates that “the legislature shall provide for the maintenance and support of a system of free common schools wherein all the children can be educated” (Shrader, 2007, p. 84).
Ladson-Billings (2006) underscores the importance of having state school funding formulae that meet or exceed constitutional requirements with her education debt concept that refutes the achievement gap notion because it ignores the importance for schools to have the proper financial and human resources with which to achieve proper academic outcomes. The assumption embedded in the achievement gap is that the blame for schools failing to produce equal test score results among minority and majority students is placed on the students and teachers rather than on the unequal distribution of essential educational inputs. Ladson-Billings’ (2006) education debt concept reframes the achievement gap in critical race theory’s (CRT) terms of educational inequality by shifting the paradigm to the equity gaps in school funding.
The educational equity gap is a function of the unequal distribution of educational resources among schools that disenfranchises low income urban school districts especially those with concentrations of minorities. This results in continuing educational inequality. Ladson-Billings (2006) explains how closing the educational equity gap by redistributing financial, material, and human resources requires that schools have the necessary capacity to improve the achievement of all students especially those who are racially, ethnically, and economically disadvantaged.
CRTtakes to task school reformers who fail to recognize that property is a powerful determinant of academic advantage. Without a commitment to redesign funding formulas, one of the basic inequities of schooling will remain in place and virtually guarantee the reproduction of the status quo. (Ladson-Billings, 2009, p. 32)
Shifting the paradigm to equalizing school funding for all schools according to race, ethnicity, socioeconomic status, and unique student needs is at the core of the school finance litigation and funding formulae forNew JerseyandNew York.
The judiciary’s heightened role inNew Jerseyschool finance reform began in 1970 when four cities (East Orange,Jersey City,Paterson, andPlainfield) challenged the constitutionality of state’s school funding system, arguing that large wealth based variations in per pupil expenditures across districts deprived students in low-wealth communities of achieving a thorough and efficient education. The large disparities in school funding were a function of large disparities in property tax bases especially among affluent and poor districts. New Jersey’s education finance system had used a guaranteed tax base formula (GTB) to address these disparities that enabled affluent districts to raise disproportionately more property taxes at correspondingly lower tax rates with which to fund their schools at higher levels than poor districts.
The New Jersey Supreme Court ruled in favor of the plaintiffs in Robinson v. Cahill and defined a “thorough and efficient” (T&E) education as one that “Embraces that educational opportunity which is needed in the contemporary setting to equip a child for his role as a citizen and competitor in the labor market” (Robinson I, 1973, p. 295). BecauseNew Jersey’s GTB formula failed to equalize school spending across districts, these inequalities disproportionately disadvantaged poor urban districts from providing at least an adequate education. But the Robinson litigation focused more on the intricacies of the school funding formulae and its resource equalization effects across school districts than on the educational components of a thorough and efficient system of free public schools.
The New Jersey Supreme Court “accepted the legislature’s definition of T&E, the input and process standards included in the state’s school finance reform law – the Public School Education Act of 1975 (more commonly called Chapter 212)” (Goertz & Weiss, 2009, p. 10) and struck down the state’s school funding system in Robinson v. Cahill based on the state constitution’s education clause. These actions culminated in Robinson v. Cahill V in 1976 in which the New Jersey Supreme Court shifted their standard for adequacy from economic disparities to substantial educational content. Goertz and Edwards (1999) explain how spending parity would no longer be the main criteria in the Court’s determining whether a school funding formula was constitutional, “without sufficient resources, other measures of an adequate education will not satisfy the constitutional mandate” (Goertz & Edwards, 1999, p. 10).
The New Jersey Supreme Court used the “thorough and efficient system of free public schools” clause more as a unifying concept to address fiscal resources and the relationship of financial resources to educational outcomes in Robinson v. Cahill while focusing increasingly on “thorough” education in terms of financial and programmatic inputs and outcomes in its Abbott v. Burke decisions. The Court defined the role that school funding plays in enabling a district to provide a thorough and efficient education and “broadened its definition of a T&E education especially as it applied to disadvantaged students in urban communities” in its Abbott rulings (Goertz & Weiss, 2009, p. 11) as Goertz and Weiss explain:
In 1981, five years after the implementation of Chapter 212, the Education Law Center (ELC) challenged the constitutionality of this funding law on behalf of students from four cities (Camden, East Orange, Irvington, and Jersey City). Addressing the court’s new focus on substantive educational opportunities, the plaintiffs charged in this new case, Abbott v. Burke, thatNew Jersey’s education finance system caused not only significant educational expenditure disparities but also vast programmatic differences between poor urban and wealthy suburban school districts. (Goertz & Weiss, 2009, p. 11)
In its Abbott v. Burke decisions, the Court’s ruled that the unequal distribution of financial, material, and human resources inputs resulted in funding disparities among the Abbott and affluent districts that prevented the Abbott school districts from providing a thorough and efficient education.
The Court increasingly raised the threshold for meeting its constitutional standard for a T&E education in its Abbott rulings. The Court decided in Abbott v. Burke, 1990, the second Abbott case, that spending disparities among the Abbott and affluent districts especially those with a district factor group (DFG) code of I or J demonstrated an inadequate level of education in poor urban districts and consequently established the kinds and quality levels of the educational programs, personnel, and facilities in affluent suburban districts as the adequacy standards for poor urban districts. As a result, the Court ordered the legislature to design a new or revised funding system to equalize spending for the regular education programs among poor urban districts and property rich districts as well as to provide additional funds to meet the special educational needs of urban districts to redress their disadvantages. This ruling led to the Quality of Education Act (QEA) which replaced the state’s GTB formula with a foundation aid formula. Although the foundation level less the amount raised by a school district at a minimum tax rate was defined as the minimum spending level, the “maximum foundation budget” (Firestone, Goertz, & Natriello, 1997, p. 27) was defined as the combined amount from all governmental sources (Firestone et al., 1997, p. 28).
The Court declared QEA unconstitutional in Abbott v. Burke III, 1994, because it failed to equalize funding among Abbott and property rich districts as well as to meet the special needs of urban students. The New Jersey State legislature enacted the Comprehensive Educational Improvement and Financing Act of 1996 (CEIFA) that focused more on academic outcomes and established “a set of input standards, such as class size, administrators/teachers per student, schools per district, and types and amount of classroom supplies, services and materials, that are considered to be sufficient to achieve the state content standards” (Goertz & Edwards, 2009, p. 19) in response to the Court’s decision. Baker, Green, and Richards (2008) explain:
The CEIFA defined an adequate education in terms of academic standards and provided funding on the basis of what a hypothetical school district would need to achieve these standards. The CEIFA also provided aid for two supplemental programs designed to address the disadvantages of SNDs: demonstrably effective program aid (DEPA), and early childhood program aid (ECPA). (Baker, Green, & Richards, 2008, p. 158).
But instead of fully funding CEIFA’s school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs, and state and federal unfunded mandates. The shortfall’s impact was hardest on those districts that were most dependent upon state aid. During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-AbbottDFGA and B districts, $758 inDFGC through H districts, $386DFGI and J districts, and $188 in Abbott districts (Reock, 2007, pp. 1-9). Dr. Reock found that “the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state” (Sciarra, 2008, p. 4).
The Court declared CEIFA unconstitutional in Abbott v. Burke IV, 1997, because it neither linked outcome standards for all districts nor met adequacy goals. The Court found that the state failed to show how its resource delivery system model underlying the foundation amount was tied to the state’s Core Curriculum Content Standards:
In the absence of documentation demonstrating that the CEIFA model provided sufficient resources to educate students in districts with high concentrations of poverty, the Court required an interim remedy: Abbott districts would receive “parity aid,” or an amount equal to the average regular education per pupil expenditures in the State’s wealthiest districts. (New Jersey Department of Education, 2007, p. 4)
In addition, CEIFA failed to meet the Court’s three fundamental tests of constitutionality:
The Court established a three-prong test of the constitutionality of CEIFA. First, does the law establish standards for defining a thorough and efficient education? Second, does the State provide adequate resources to ensure the achievement of a T&E education? And, third, does the law meet the special needs of disadvantaged urban students? (Goertz & Edwards, 2009, p. 21)
CEIFA failed to address the special needs of Abbott districts because its efficient school district model was not based on the characteristics of the Abbott districts. The Court ordered the state to provide parity aid to remedy the unconstitutional funding and educational disparities as well as to equalize per pupil expenditures among affluent and Abbott districts. Although the Court ordered “whole school reform designs” in Abbott v. Burke V, 1998 (Goertz & Edwards, 2009, p. 26) and ruled in Abbott XX, 2009, that the School Finance Reform Act of 2008 (SFRA) was constitutional, Superior Court Judge Doyne, who was appointed as special master by the Court, found that Governor Christie’s school funding reductions “violate the state’s mandate to provide children ‘a thorough and efficient’ education” (Rundquist & Calefati, 2011, p. 1) and, therefore, whether SFRA continues to be found constitutional depends on how the Court rules on Judge Doyne’s findings.
In 1978, several property-poor Long Island, New YorkCity, and other large urban districts combined to challenge the state’s school finance formula in Levittown v. Nyquist because of the funding disparities among their school districts and the property-rich districts. The New York State Court of Appeals ruled “that the state’s constitution guaranteed all New York children an opportunity for a ‘sound basic education’” (Chambers, Levin, & Parrish, 2006, p. 3) based on the New York State Constitution’s education clause, known as the Education Article, which states that “the legislature shall provide for the maintenance and support of a system of free common schools wherein all the children can be educated” (Shrader, 2007, p. 84) even though the Court found that the constitution did not mandate equal funding. Although the finding in Levittown v. Nyquist was that funding inequities did not violate the state’s Education Article, the Court did not define a sound basic education (Chambers, et al., 2006, p. 3).
The New York State Education Department (NYSED) assembled a task force to define a “sound basic education” in response to the Court’s decision. The task force defined a “sound basic education” in terms of learning standards that resulted in a “state sponsored research and public engagement process culminating in 1996 in the issuance of the Regents Learning Standards” (Chambers, et al., 2006, p. 4). These standards established benchmarks for student achievement in seven academic content areas and ultimately the definition of adequacy “as providing to all students a full opportunity to meet the Regents Learning Standards” (Chambers, et al., 2006, p. 3).
Standards are at the core of the Campaign for Fiscal Equity’s (CFE) lawsuit challenging the constitutionality of New YorkState’s education funding system in CFE v. State of New York, 1993. CFE argued that the state’s school finance system failed to provide students with a sufficient opportunity to receive a state constitutionally guaranteed “sound basic education” particularly inNew York City (Shrader, 2007, p. 84). In CFE I, 1995, the Court of Appeals ruled that the state has an “obligation to provide ‘a sound basic education to all the children of the state,’” including “the basic literacy, calculating, and verbal skills necessary to enable children to eventually function productively as civic participants capable of voting and serving on a jury” but the Court declared that even adequate facilities and teachers fulfill the state’s responsibility (Shrader, 2007, pp. 84-85). As a result, the Court of Appeals overturned the Appellate Division.
In CFE II, 2001, CFE prevailed in trial court and State Supreme Court Justice DeGrasse declared that “the school funding formula unconstitutional because it failed to supply New York City school children with a ‘sound basic education’ as required” and affirmed the essential components of “a sound basic education” (Shrader, 2007, pp. 85-86). Justice DeGrasse required the State of New York to ensure that all of its public schools provided an equal opportunity for a sound basic education for all of its students, to ensure that all of the Court’s standards were met, and to perform a costing-out study to determine the costs of providing a sound basic education as well as to serve as the basis for a new school funding formula.
In CFE III, 2002, the Appellate Division reversed Justice DeGrasse’s 2001 decision declaring that “Justice DeGrasse exceeded the ‘minimally adequate’ standards stipulated in the Court of Appeals’ 1995 ruling” (Shrader, 2007, p. 88). But in CFE IV, 2003, the New York Court of Appeals overturned the Appellate Court’s decision as it “rejected the state’s argument that it had satisfied its duty to provide a ‘sound basic’ education by providing New York City students with an 8th- or 9th-grade education” (Baker, et al., 2008, p. 157) and, therefore, “New York State’s current educational funding arrangements were definitively determined to be unconstitutional and required to be altered to ensure that school funding is adequate” (Chambers, et al., 2006, p. 4). As a result, in CFE V, 2003, “the New York Court of Appeals commissioned a study to determine the cost of providing an adequate education for the students ofNew York City” (Baker, et al., 2008, p. 159).
State Finance Formula
The impetus behind the School Finance Reform Act of 2008 (SFRA) was the need for a “formulaic remedy for all districts” based on actual community characteristics that could be applied equitably to all school districts and would address the increased funding targeted primarily to Abbott districts as well as the inequities that had resulted from the imbalance of resources among districts (New Jersey Department of Education, 2007, p. 4). SFRA replaced CEIFA and the state’s unique Abbott remedies of parity aid and supplemental funding with one formula because the New Jersey State Supreme Court found CEIFA’s funding provisions unconstitutional. Although SFRA’s formula contains “three major components: equalization aid, categorical aid, and adjustment aid” (Goertz & Weiss, 2009, p. 28), it calculates aid in two ways: “wealth-equalized and categorical” (New Jersey Department of Education, 2007, p. 19).
SFRA’s wealth-equalized aid is allocated according to each district’s ability to raise enough local revenue based on its equalized property valuation and aggregate district income, both of which are indexed using the state wealth multipliers, to support its adequacy budget. The adequacy budget represents the amount of resources necessary for a district to meet state imposed standards or outcomes such as the Core Curriculum Content Standards (CCCS) and includes:
- The base amount for elementary, middle, and high school students
- The weights for at-risk and limited English proficiency (LEP) and county vocational students
- Two-thirds of the census-based costs for the general special education category
- All of the census-based costs for speech (New Jersey Department of Education, 2007, p. 19)
New Jersey’s adequacy based school funding formula seems to have been developed in response to the Court’s demands for “standard-based reforms” that “have ‘judicially manageable’ tools that allow them to devise effective remedial orders” (Rebell, 2002, p. 219).
Equalization aid is calculated using a “foundation formula based on an ‘adequacy budget’” which includes “funding for the regular education program and costs for student poverty (“at-risk” aid), limited English proficiency (LEP) students, and special education services” (Goertz & Weiss, 2009, p. 28). A district’s adequacy budget, therefore, equals the amount calculated according to the following formula:
A district’s adequacy budget equals the total of all of the base student costs plus at-risk student costs plus LEP student costs plus the combined costs of all LEP students who are also eligible for free or reduced-price lunch plus the special education census-based costs that are wealth-equalized together times the Geographic Cost Adjustment (GCA). (New Jersey Department of Education, 2007, pp. 19-20)
In contrast to wealth-equalized aid, categorical aid is not based on a district’s ability to levy local property taxes but is determined by multiplying the cost factor for a particular category by the number of students that qualify for the aid (New Jersey Department of Education, 2007, p. 19). The purpose of SFRA’s adjustment aid is to hold districts harmless but only in the short term:
Adjustment aid is a save-harmless program for districts that receive less state aid under SFRA than they did in 2007-2008, particularly Abbott districts where state approved expenditures exceeded their SFRA adequacy budgets. For 2009-09, the state guarantees that all districts will receive a minimum of 102% of their 2007- 08 state aid. Adjustment aid will be reduced in the out-years as equalization and categorical aids grow. (Goertz & Weiss, 2009, p. 28)
A district’s state aid allocation equals the amount calculated according to the following formula: state aid equals a district’s adequacy budget amount less the district’s local fair share amount to which the district’s amount of categorical aid is added (New Jersey Department of Education, 2007, p. 25).
SFRA’s impact on the Abbott districts was significant because it eliminated the Abbott’s special needs district designation and rescinded the Court prescribed remedies such as requiring spending parity with affluent districts and providing additional funding for supplemental programs. Although SFRA maintained the Abbott districts’ facilities aid, it increased:
The “fair share” or expected local tax revenues from the Abbott districts. The local share attributed to Abbott districts under SFRA is nearly double what they currently raise in local taxes. This provision overrides the court’s requirement that increases in local revenues be limited due to high levels of municipal overburden in these districts. (Goertz & Weiss, 2009, p. 31)
Abbott districts received less equalization aid as a result of having to raise their required local fair share even though Abbott districts were prevented from levying the necessary amount of property taxes to raise their local fair share beyond a four percent increase (Goertz & Weiss, 2009, p. 31). Although SFRA benefited most low and middle income non-Abbott districts but only if these districts also increased their local property tax levies by the four percent state maximum, most high income districts with DFGcode I or J lost aid especially “categorical aid for special needs students” as a result of SFRA’s wealth equalizing (Goertz & Weiss, 2009, p. 32). The New Jersey Supreme Court ruled in Abbott XX, 2009, that “SFRA provides the appropriate ‘measuring stick’ against which to gauge the resources needed to achieve a thorough and efficient education for every child in the state” (Goertz & Weiss, 2009, p. 35).
The conceptual framework that has framed school finance inNew YorkStateis focused on achieving adequacy. This conceptual framework is based on trying to achieve wealth and need equalization among school districts. To meet this definition of adequacy,New YorkStateuses the Regents Learning Standards as the barometer against which to determine whether a district is meeting its adequacy requirements as established by the school funding formula. This adequacy concept focuses on the provision of an adequate education that equalizes outcomes rather than inputs so that all students will have an equal opportunity to receive an education which meets or exceeds state standards. The rationale undergirding the adequacy concept is that a district’s financial resources should be sufficient and adjusted for cost variations beyond a local school district’s control to enable the district to meet or exceed the adequacy standards and to provide an opportunity for all students to meet the Regents Learning Standards.
TheNew Yorkschool finance formula is similar to the SFRA formula in terms of the ways in which it distributes aid: flat grants, wealth-equalized aid, and effort or expense-based aid. Wealth equalized aid is distributed by the state “in inverse proportion to local fiscal capacity to offset dramatic differences in the ability of school districts to raise local revenues” and in terms of an equalized per pupil amount while expense-based aid is based on the state share of a district’s actual approved spending (University of the State of New York & The New York State Education Department, 2010, p. 9). Although flat grants per pupil such as the School Tax Relief (STAR) program distribute the same amount of state aid per pupil in every district and this aid is not wealth equalized, the New York school finance formula’s formulaic aid relies on a foundation amount. Total foundation aid equals selected foundation aid (a district’s foundation aid per pupil but not less than $500) times selected Total Aidable Foundation Pupil Units (TAFPU) (University of the State of New York & The New York State Education Department, 2010, p. 21). This aid is based on the cost of providing general education services, compared to the instructional costs of a successful school district, and is adjusted annually for the percentage increase in the consumer price index (CPI) (University of the State of New York & The New York State Education Department, 2010, p. 21).
A district’s foundation aid equals its foundation amount times the Pupil Need Index (PNI) times the Regional Cost Index (RCI) all combined, less its expected minimum local contribution or what would be referred to as their local fair share inNew Jersey. The RCI reflects regional variations in purchasing power aroundNew YorkStatebased on the wages of non-school professionals. The PNI reflects the costs of providing extra time and help for students to succeed. PNI equals one plus the district’s Extraordinary Needs (EN) percentage and ranges between one and two. The PNI adjustments are based on a district’s concentrations of at-risk and disadvantaged students (University of the State of New York & The New York State Education Department, 2010, pp. 21-22). The expected minimum local contribution is an amount that a district is expected to spend as its share of the total cost of general education which equals the lesser of the two following calculations:
- The selected actual value per pupil times a tax factor of 0.0137 times income per pupil relative to the state average which is capped between 0.65 and 2.00.
- The district’s foundation amount times its PNI times its RCI all together times one minus its Foundation Aid State Sharing Ratio.
The foundation aid state sharing ratio compares a district’s wealth measures to the state average wealth measures. It is computed by calculating the district’s Combined Wealth Ratio (CWR) that is a measure of district’s fiscal capacity. A district’s CWR is calculated by multiplying a district’s actual value per pupil and then dividing this amount by $564,900 which is then multiplied by 0.50. This amount is then added to the total of the district’s income per pupil which is divided by $177,200 and then multiplied by 0.50 (University of the State of New York & The New York State Education Department, 2010, pp. 24-27). The state sharing ratio is the state aid to local fiscal capacity ratio which is inversely related to a district’s wealth as compared to the state average and this ratio is multiplied by 1.05 for high need/resource capacity districts (University of the State of New York & The New York State Education Department, 2010, p. 25).
Although the school funding formulae for bothNew JerseyandNew Yorkare the result of years of litigation brought primarily by representatives of disadvantaged students and schools, the formulae for both states have adequacy as their goal. SFRA and theNew Yorkschool finance formula are similar in terms of the types of aid the state distributes such as foundation aid, wealth equalization aid, categorical aid, and specific adjustment aid. Both states use standards as the barometer against which to determine whether a district is meeting its adequacy requirements as established by the state school funding formula. New Jerseycompares a district’s educational outcomes to the Core Curriculum Content Standards (CCCS) whileNew YorkStateuses the Regents Learning Standards.
But both state formulae have components that are easily manipulated such as New Jersey’s cost indices and its formulaic restrictions on the Abbott districts’ equalization aid that resulted from the state requiring the Abbott districts to raise their required local fair share despite the fact that the state prevented the Abbott districts from levying the necessary amount of property taxes to raise their local fair share beyond a four percent increase (Goertz & Weiss, 2009, p. 31). New York’s foundation funding level is generated by the state aid formula as derived from an adequacy filter based upon a successful school district approach that is “easily politically manipulated to generate a desired foundation level and is not a sound method for calculating the costs of meeting constitutional educational standards” (Baker, 2011, p. 4). Funding gaps in the adequacy of educational inputs result in concomitant gaps in student achievement and educational outcomes especially in under funded school districts inNew JerseyandNew York.
Achieving educational adequacy means enabling all of the students within a state to meet or exceed the educational outcome standards established by the state. The central problem withNew JerseyandNew YorkStatedefining educational adequacy in this way is that it can result in the following:
In the aggregate, a state’s education system could be deemed adequate merely on the basis that a sufficient number of students overall achieve an adequate educational outcome – for example, 80% of all students, statewide scoring proficient or higher on state assessments. That is, adequacy, in isolation means only that a sufficient number of students perform sufficiently well, regardless of who may or may not be left out and regardless of the extent that some children far exceed the “adequacy” threshold. Significant equity concerns may arise when statewide adequacy is the exclusive focus.
At the intersection of educational adequacy and equal opportunity lies the notion that all children, regardless of their individual differences or where they attend school in a state are deserving of equal opportunity to achieve adequate educational outcomes. (Baker, 2011)
In conclusion, the fundamental problem with New Jersey and New York’s state education funding formulae is that even if their goals are achieved, the state will most likely have supported a level of education that is inadequate particularly for those students attending the state’s large urban or economically disadvantaged school districts rather than providing an excellent education that meets the unique needs and priorities of every student.
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