School aid formula ignored, panel told Education funds tied to rising property tax Friday, August 11, 2006 • BY DUNSTAN McNICHOL • Star-Ledger Staff New Jersey has shortchanged local school districts by at least $1.1 billion over the past five years by ignoring the provisions of the last school aid formula the Legislature set up, an expert told lawmakers yesterday as they set out to revamp the way the state hands out $7.3 billion in public school funding each year. "We need to understand that the funding formula that's been in existence is not really in existence because it hasn't been funded," said Sen. Joseph V. Doria (D-Hudson), one of six lawmakers on the special legislative committee. "We need to put together a formula that will continue to exist." The inaugural two-hour meeting of the committee -- one of four panels studying ways to reduce property taxes -- was held in a meeting room packed with lobbyists for teachers, principals and school boards. They heard a seminar on three previous failed attempts to set up a school aid formula. Since 1975, lawmakers have set up three formulas, and each was declared unconstitutional by the state Supreme Court, which ordered additional funds for the state's poorest districts. Meanwhile, aid was dispensed to other districts without following the formula. The court's orders and statewide school spending have driven the overall cost of state aid from about $2 billion in 1980 to $7.35 billion in the current state budget. Education funding accounts for 34 percent of this year's state budget, the highest share in history, said Ted Settle, an Office of Legislative Services aide who presented the school aid information to the committee. Meanwhile, on the local level, education spending has consumed a growing share of property tax revenues since 1988, Settle reported. Since 1988, when school taxes made up just under 50 percent of the typical property tax bill, that share has steadily risen to the current level of 55.1 percent. And the reliance on local taxes is steepest in the state's communities with the highest taxes. In the 25 percent of communities with the highest property tax bills in the state, Settle said, school taxes make up about two-thirds of the tab. Lawmakers agreed in their opening statements that the cur rent school funding system is bro ken, but there was far less consensus on how to resolve the problem. Doria, a Democrat, and Assemblyman David Wolfe, a Republican from Ocean County, agreed that any new funding law must contain provisions to force future Legislatures to follow its provisions. Sen. Gerald Cardinale (R-Ber gen) and Doria both cited administrative costs as an area ripe for po tential savings and said they would push for more regional consolidation. Cardinale proposed limiting compensation for school superintendents and other administrators, saying it is improper to pay school officials more than the governor makes. And each of the six lawmakers on the special committee said their new school formula must meet the needs of all students and taxpayers, a standard that they acknowledged the Legislature's three earlier tries have failed to meet. "Our mission is to reduce this state's reliance on property taxes to fund schools while continuing to provide a first-rate education," said Assemblyman Herb Conaway (D- Burlington), a co-chairman of the committee. "Through shared perseverance, commitment and cooperation, I am certain that this committee can plow forward and pave a new path for equitable funding for our public schools." Dunstan McNichol covers state government issues. He may be reached at dmcnichol@starledger.com © 2006 The Star-Ledger. Used by NJ.com with permission.