In 2008, the New Jersey state legislature passed the School Funding Reform Act to rebalance state aid according to changing economic circumstances and district characteristics. At the time, New Jersey was operating under a decades-old funding law that did not reflect current economic realities and left some districts significantly overfunded while others struggled.
The School Funding Reform Act distributes aid according to district need and accounts for such things as the number of students in poverty, students who are English language learners, special education students, and numerous other factors. The formula considers all of these elements and establishes an “adequacy budget,” or what funding it would take to adequately meet the needs of students in a district.
It also calculates how much a district should be able to raise from its own taxbase according to resident’s income and equalized property values, known as the “local fair share” or “local cost share.” The plan was that the state would then contribute the difference (equalization aid) between what a district could raise on its own (local fair share) and what it needed (adequacy).
However, there was zero political appetite for taking funding away from districts that had been enjoying extra state money for years or raising the funds necessary to adequately educate all students in N.J., so the School Funding Reform Act was immediately diluted with provisions that more or less kept all funding levels as they had been in years prior.
In 2018, the legislature made a new push to fully fund the School Funding Reform Act and rebalance state aid as intended. This bill, known as S2, would phase in the changes over six years beginning in the 2019–20 school year. During this time, Robbinsville experienced steadily increasing state aid until the 2023–24 school year.
For 2023–24, Robbinsville’s aid was held flat from the previous year, as the district is now considered fully funded by the School Funding Reform Act. What happened?
Enrollment changes and a rapid increase in town wealth as determined through incomes and property values led to a large jump in Robbinsville’s local fair share, negating any increase we would have seen in state aid.
If we consider the adequacy number a reflection of the cost of educating our students, from 2018–19 to 2023–24, this cost has increased by $6,375,733. Our tax levy (what we actually collected) has only increased by $4,781,287. However, our local fair share (what we are expected to contribute) has increased by $11,154,600.
The trend is clear: our tax collections haven’t kept pace with the cost of education while the wealth of the town has increased substantially. Some may argue that these numbers do not perfectly reflect real-world conditions, but the broad strokes are hard to miss. Regardless, these are the numbers upon which decisions are made.
Further complicating matters, districts are not allowed to raise their tax rate above a 2% cap per year without voter approval, with a few exceptions such as enrollment changes and increases in healthcare costs. Any unused cap can be accessed for up to three years before it expires (cap bank).
There is another important point we must note: Robbinsville has not reached its local fair share since 2018–19. We have been underfunding ourselves by millions of dollars. Any expectation of aid is based on demanding fealty to one part of the School Funding Reform Act formula while ignoring another.
How might we have avoided this situation, and what can we learn for the future?
Communications from the board (before the school board’s Aug. 9 referendum approval, see page 1)) varied and stated an expectation for an increase in state aid of anywhere from $1.3-2 million for the 2023-24 school year. Earlier emails said the district expected “about $2 million.”
in March of 2022, $1.6 million was shown as still available if the School Funding Reform Act was fully funded from a state-issued budget document, and in their April 2023 budget presentation, the board said they were anticipating $1.3 million. Our total shortfall for 2023–24 is $2.2 million.
According to the board, this missing ($1.3, 1.6 or 2 million) in state aid is the reason for our current crisis, meaning the 2023–24 levy ($41,274,979) + ($1.3, 1.6 or 2 million) is the line between crisis and business as usual.
It is difficult to surmise what the plan was here, as the numbers have varied, but suffice it to say that even if the state aid had materialized— the best-case scenario the board could have hoped for—their planning would still have left us short.
Let’s look at what it would have taken for Robbinsville to erase the entire $2.2 million shortfall, and then we can dial it back to examine the other scenarios.
If we had responsibly increased our levy from 2018–19, the year state aid increases began under S2, we could have erased the entire 2023–24 shortfall.
In other words, even though we’d still be facing flat state aid, we’d be over the “crisis line” of 2023–24 actual levy + 2.2 million.
To pay the 2023–24 bills and make up the $2.2 million shortfall, our school tax rate would have to be 1.8057 cents per $100 of assessed valuation.
This would leave a home assessed at 400k with:
School tax bill: $7,223
Increase over 23-34 actual: $330
Daily cost increase in tax bill: $.90
To completely erase the 2023–24 shortfall, the levy and rate only had to grow in prior years to the point where a home assessed at 400k contributes an extra $.90 a day in 2023–24. And our children wouldn’t have to face the funding crisis they do now.
To make up all of the state aid that was shown as still available, ($1,645,184), our total school tax rate would be 1.7823 cents per $100 of assessed valuation. A home assessed at 400k would pay $7,140 in school taxes—a $247 increase over the actual 23–24 tax bill.
To make up just the board’s “anticipated” state aid ($1,346,055) our total school tax rate would be 1.7737. A home assessed at 400k would pay 7,095. A $202 increase over the actual 23–24 tax bill.
None of these numbers are attainable now, they all exceed the amount the levy can increase over last year due to the constraints of the cap. But there were many ways this crisis could have been prevented. For example, in 19–20 there was 1.85 million in banked cap available. In 20–21, there was 2.1 million in banked cap available. 1.8 million in banked cap from 18–19 and 19–20 was allowed to expire.
We had multiple opportunities to responsibly grow the levy and place ourselves in a position where flat state aid wouldn’t cause the cuts and staff loss we will now experience. However, legacy board members and town leaders prioritized keeping taxes flat as much as possible. They reduced the rate in 19–20 and kept it flat for three years.
(It would be possible to raise as much as 2.9 million above the 23–24 levy for an additional $1.19 a day on a house assessed at 400k over the six years between 18–19 and 23–24)
The board has used very strong language regarding our flat state aid this year, saying that an increase was promised, that we are “entitled” to more aid, that we “deserve” it, and that we should “demand” we receive our “fair share.” But we are only ever owed what the formula dictates, and using language like this promotes the idea that Robbinsville is somehow being treated unfairly. While a rapid increase in town wealth as determined by the formula and the constraints of the 2% cap have left us in a bind, we could have at the very least better positioned ourselves to weather the situation. More importantly, this gives us an indication of what we will have to do in the future.
We weren’t seeing aid increases between 18–19 and 22–23 because our inputs into the formula were significantly changing, we were simply riding the ramp up to full funding which was going to level off in 24–25. While there may be tweaks to make funding less volatile, the overall structure of School Funding Reform Act is unlikely to change. We are now above “fully funded” according to the formula. We may have shifts in enrollment or changes in town wealth/local fair share, but the fundamentals are going to remain the same.
That means this crisis was always coming. If we were constantly living on the margin and letting the ramp up in funding balance our budget, we always ran the risk of finding ourselves in trouble. It simply happened a little earlier due to changes in enrollment and a rapid increase in town wealth. Passing up on the opportunity to grow the levy and letting banked cap expire left us vulnerable, contributed to our current funding crisis, and made it much harder to correct.
The argument has been made that steadily growing our tax base wouldn’t have mattered because school districts cannot sit on giant surplus funds, but this is predicated on the idea that we didn’t have things to spend on. With leaky roofs and the lowest paid staff in Mercer County, this is hard to accept. Furthermore, many are quick to point out that our current situation is doubly unfair because of how underfunded we were prior to S2. This is true, we were underfunded, but now we aren’t. Regardless, if excess cash in the past that we raised ourselves “couldn’t have been spent,” then why would excess money from the state have been any different?
Growing our tax levy responsibly would not be spending for the sake of spending, it would be growing our investment in public education and protecting it from disruption due to external forces. We now have to endure a crisis, raise taxes to the maximum allowed under the cap for several years, and possibly pass a referendum to exceed the cap.In the long run, will the taxpayers really have saved significant money? Was running the system as inexpensively as possible worth it?
This is not to say these numbers are the only way, or the precise way we could have avoided this crisis. It is simply to illustrate the point that a steady investment in our schools is preferable to keeping taxes flat whenever possible. But legacy board members prioritized and boasted about keeping taxes flat, and advocated for giving as much as possible back to the taxpayer when new aid became available. As recently as last year, legacy board members, the mayor, and other local officials specifically mentioned flattening taxes while endorsing and supporting a slate of candidates who proposed more of the same. The claim was always that this was in search of “balance,” but instead, we find ourselves unable to meet the needs of our students.
Ultimately, this is our community, these are our schools, these are our children, and they are our responsibility. Maintaining local control over a high-quality three-school district comes at a cost. As we look towards the future, we need to think about what kind of town we want to live in and what kind of school system we want to have. The answer lies somewhere at the intersection of development, taxes, and a host of other issues that may or may not be within the school district’s purview. But there is plenty of suburbia in NJ, and you choose Robbinsville over the surrounding areas. Chances are, the school system played a part in that decision. We may have different visions of what we want our town to be, but I doubt that most people think the 23–24 school year with all of its impending cuts is what our schools should look like.
We need to understand what prioritizing the needs of our students actually means, and make sure that those tasked with leading our schools share these goals.
Don’t feel much wealthier than years prior? Wondering why a big increase in our local fair share due to town wealth isn’t reflected in our actual tax levy?
The School Funding Reform Act does include incomes as part of the local fair share calculation, so your income did play a part in the local fair share increase. But the different ways property values are assessed helps explain the disparity between local fair share and our actual tax levy.
The School Funding Reform Act uses equalized property values, which are adjusted every year in an attempt to reflect true market value. Our property taxes are collected based on your home’s current assessment, not what you could sell it for. So when property values increase dramatically, as they have over the past few years in Robbinsville, the School Funding Reform Act is able to account for this because it uses a much more flexible tool. But our tax levy cannot, because we do not reassess every home every year.
Consider this, from 17–18 to 23–24, our net taxable evaluation (the total value of Robbinsville, which we pay taxes on like one giant house) increased 232,614,736. But our equalized valuation increased 720,971,465. Our equalized valuation grew 488,356,729 more than our net taxable evaluation, and that means the state is basing their aid numbers off of a Robbinsville that is 583,513,069 wealthier than we view ourselves.
One of the original intentions behind funding schools through property taxes (based on assessed value) was that they tend to be more stable than incomes. But when coupled with the 2% cap and the equalized values used in the School Funding Reform Act, this can leave districts stuck during real estate booms. Changing the School Funding Reform Act to use a slower moving multi-year average of equalized values would help correct this.
Greg DeLuca is a resident of Robbinsville Township.
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