New Jersey

STATE ISSUES AFFECTING P–12 AND/OR HIGHER EDUCATION FUNDING

School funding reform in the Garden State will be an area of focus for incoming Democratic governor Phil Murphy. Murphy replaces two-term Republican governor Chris Christie as the head of the executive branch of New Jersey's state government. Murphy's proposed policies are to fully fund the state's existing School Funding Reform Act, lessen charter schools, and decrease focus on standardized testing. Approximately two-thirds of a homeowner's property taxes and roughly one third of the state's budget is spent on public education in New Jersey.

CHANGES TO FUNDING FORMULA FOR P–12 AND/OR HIGHER EDUCATION

There have not been any major edits to the P-12 funding formula for New Jersey. The mechanism has both wealth-equalized and categorical aid. Wealth-equalized aid requires equality by assuring that each district has adequate funds based on the ability to generate local revenue. Categorical aid is disbursed with a combination of student data and the cost associated with that category.

Adequacy Budget = (Base Cost + At-Risk Cost (Based on eligibility for free and reduced lunches) +Limited English Proficient Cost + Combination (of Limited English Proficient and At-Risk) Cost + Special Education Census) × Geographic Cost Adjustment

Categorical aid is still provided based on the following seven categories: special education, security, transportation, pre-school, debt service aid/benefit payments, and school choice aid.¹ Further, the decentralized nature of the higher education structure in New Jersey, and the lack of a clear strategic plan, mean that funding for appropriations and financial aid are on an ad hoc basis and are primarily influenced by previous allocations.

EFFECT ON SCHOOL DISTRICT OR HIGHER EDUCATION BUDGETS

New Jersey is ranked among the states that generate the most revenue for public education. The majority of New Jersey's public elementary and secondary education comes from local sources of revenue. The vast majority of local sources of revenue are derived from property taxes. Since New Jersey relies heavily on property taxes to fund its schools, it is no surprise that the Garden State is well known for having very high property taxes. New Jersey was ranked among the highest median property tax states and not surprisingly ranked among the states with the highest overall property taxes.