Jul 31, 12:40 PM EDT

New Jersey gets ready to examine disputed school funding

Associated Press

TRENTON, N.J. (AP) -- Most of New Jerseyans' sky-high property taxes go to pay for their local schools. The state also helps, sending more than 30 cents of every $1 it spends each year to public schools.

The combination has led to New Jersey having the highest property taxes in the nation, and to increasing scrutiny of how the state pays for education as hefty aid continues to go to city schools compared to those in other districts.

In the coming weeks, a special legislative committee plans to pick up the baton. It has until Nov. 15 to decide whether to recommend changing New Jersey's school funding formula, which Gov. Jon S. Corzine has called "outright unfair."

The committee is among four panels that will look to cut the state's reliance on property taxes.
 
The average New Jersey property owner pays about $6,000 in property taxes, twice the national average. Of that $6,000, a bit more than half, on average, goes toward educating children.

"We desperately need a new school funding formula that is fairer to children and to taxpayers," said Sen. John Adler, D-Camden.

Some questions and answers on what the school funding panel may consider:

Q. Why is school funding so important?

A. New Jersey governments collect $20 billion per year in property taxes. Of that amount, $11 billion goes to the state's 616 school districts.

Q. Doesn't the state also support public schools?

A. Aid for schools is the single largest expenditure by the state. In all, New Jersey plans to spend about $31 billion this fiscal year; of that, about $10.5 billion will go to schools.

Q. With so much money for public schools, why the turmoil?

A. The state Supreme Court has demanded financial parity between the state's poorest and wealthiest schools. The decision was known as the Abbott ruling so the poorest schools are often called Abbott districts.

Thus, 31 school districts, most considered poor and in large cities, receive heavy state funding. They represent about 25 percent of state school children, but get 38 percent of state aid to schools.

Q. Children in those districts face serious obstacles, so what's the problem?

A. Though some feel the state sends too much money to these districts, more often the complaint focuses on how little money is sent to the others. The state hasn't increased aid to nearly all school districts in five years, with the Abbotts the only ones to receive aid hikes.

That has left the other districts with property taxes as the only means to fund annual spending increases for teacher salaries, debt on new school buildings and other costs.

Meanwhile, property taxes have increased about 7 percent per year.

Q. Can the state cut its heavy funding for the Abbott districts and spread money around?

A. It would have to challenge the state Supreme Court to do so.

Corzine got the court to agree to freeze Abbott funding this fiscal year, to save money and so auditors can examine how that money is spent, but didn't ask the court to allow the state to cut funding.

Some have talked about saving state money by cutting the number of Abbott districts.

Hoboken, for instance, was once considered a poor city, but now ranks among the more wealthier school districts. Yet it still receives heavy state funding.

Q. So what can be done?

A. Corzine proposed devising a new funding formula, but didn't detail how that might be accomplished.

Q. Do others have ideas?

A. The New Jersey School Boards Association often notes most state governments pay half of public school costs, but New Jersey pays about 40 percent, pushing heavy reliance onto property taxes.

The association has supported a bill proposed by Sen. Joseph Doria and Assemblyman Lou Manzo, both D-Hudson, that would increase income taxes to pay for schools and lower property taxes. Doria has called the bill "the only feasible way to reform the state's unnecessary dependence on property taxes to help fund public education," but the bill hasn't received much support in the Legislature.

Q. How will politics come into play?

A. Many Abbott districts are represented by influential Democrats who may be loath to cut funding for their schools. Politicians are also wary of increasing other taxes to cut reliance on property tax for schools, fearing retribution from angry voters. Republicans represent many districts hit hard by scant state aid, but they lack power in the Legislature.