School Funding Cases in New Jersey

in New Jersey Litigation

Historical Background

Judicial involvement in education finance reform in New Jersey began over three decades ago and deepened more recently because the state was slow to implement reforms. In 1973, the New Jersey Supreme Court declared, in Robinson v. Cahill, 303 A.2d 273, that New Jersey’s school funding statute was unconstitutional because it violated the “thorough and efficient education” requirement of the state constitution. Since that decision, the supreme court has issued over a dozen school finance opinions, the latest in February, 2008. The Education Law Center (ELC) serves as counsel for plaintiff students, who comprise over 20 percent of the state’s students and attend school in 30 low-wealth school districts (now known as the “Abbott districts”).

“Parity,” Preschool and Other Entitlements

In its 1994 and 1997 Abbott v. Burke decisions, the New Jersey Supreme Court ordered “parity” funding, that is, state aid to bring per-pupil revenues in the Abbott districts up to the per-pupil expenditures in the state’s 110 successful, suburban districts. The court allowed the state a phase-in period, reaching parity for the first time in the 1997-1998 school year.

The court, in its 1998 decision, 710 A.2d 450, ordered an unprecedented series of entitlements for disadvantaged children, including full-day kindergarten, high quality preschool for 3- and 4-year-olds, a comprehensive facilities effort, after-school programs, and summer school.

After the State failed to comply with its own 1998 representations to the court regarding preschool, plaintiffs challenged the remedy. In Abbott v. Burke, 748 A.2d 82 (2000) (Abbott VI), the court spelled out the preschool requirements in more detail, including substantive educational standards, certified staff, and a maximum student/teacher ratio of 15:1.

In 2002, New Jersey announced a $10 – $12 billion school construction program, of which $6 billion was designated to build and renovate school buildings in the Abbott districts. While the School Construction Corporation provided financing for projects in suburban districts in a timely manner, it failed to finance most of the projects in the Abbott districts and was shut down when corruption came to light. Overcrowded classrooms and dilapidated facilities continue to hamper progress in the school districts educating most of the state’s most disadvantaged schoolchildren.

Recent Events

A new school funding plan was approved by the legislature on January 7, 2008. Under the new formula, the state allocated approximately $7.8 billion to K-12 education for fiscal year 2009, a 7% increase from 2008. All districts saw a boost in school funding ranging from 2 to 20% during the first two years of its implementation.

The Abbott plaintiffs challenged the new formula, claiming that under the base funding proposed in the new formula Abbott districts would get funding amounts closer to the state average and not to the levels of the wealthiest districts, as mandated by the Supreme Court. Though Abbott districts would still receive more than half of all state aid under the new plan, 22 out of these 32 districts will receive only the minimum 2% increase. The state countered that the new formula would better address the needs of the 49 percent of low-income students who live outside the Abbott districts, and have not been covered by the Abbott litigation. It claimed that the new formula addresses the constitutional deficiencies previously identified by the Court and asked the Court to terminate the case and eliminate the parity funding system it had ordered in the Abbott decisions.

On May 28, 2009, in its 20th decision in the two-decade old Abbott v. Burke litigation, the New Jersey Supreme Court ruled unanimously that the state’s new education funding system meets the constitutional requirement to provide all students a “thorough and efficient education.” The court’s order permits the funding system to go into effect statewide, including in the 31 poor urban school districts previously covered by the Abbott orders.

Repeating its prior finding, the court held that the Abbott case has led to “measurable educational improvement” for students in the Abbott districts. The court’s ruling ended the special remedies the court had ordered for the Abbott districts, including parity funding and funding for supplemental programs. Under “hold harmless” provisions in the new funding system, however, no district received less aid in the 2008-2009 school year than it received the previous year plus a 2% increase, and, absent a significant decrease in enrollment, no district will receive less than this amount in the future. For the Abbott districts, this means that their past levels of extra funding will form a guaranteed minimum base level for the future. However, as the plaintiffs argued, since districts face unavoidable cost increases, the flat funding provided under the new formula will force some districts to scale back their current programs.

The court’s finding of constitutionality for the new state funding system was explicitly premised on two major conditions. First, the state must continue to provide school funding aid during 2009-10 and the next two years at the levels required under the new formula. Second, the court’s holding further requires the state to conduct a review of the formula weights and other operative parts of the cost analysis upon which the new system is based after three years of implementation. The court accepted the factual findings and most of the recommendations of the special master it had appointed to hear evidence about the new formula and the cost studies upon which it was based. However, the court rejected the special master’s additional recommendation that the Abbott districts be permitted to continue to apply for extra funding for important supplemental programs during a three-year transitional period.

In the Spring of 2010, newly elected governor Chris Christie and the state legislature adopted an austerity budget that cut education funding $1.08 billion, or 13.6%. In June 2010, the Education Law Center (ELC), on behalf of the Abbott v. Burke litigants, filed a motion requesting the state’s high court to block implementation of the 2010-2011 budget, because it failed to fund schools at the levels required by the 2008 School Funding Reform Act (SFRA). Oral arguments were held before the New Jersey Supreme Court on January 5, 2011 on plaintiffs’ motion.  Plaintiffs’ main claim was State had violated the condition the court had laid down in its decision approving the new formula, i.e. that the new formula be fully funded.

On January 13, 2011, the New Jersey Supreme Court appointed Hon. Peter E. Doyne, a Bergen County Court judge, a special master to determine whether the current levels of funding are sufficient to provide New Jersey school children a thorough and efficient education. The report will be issued to the Supreme Court by March 31, 2011, and the parties are required to file their briefs by April 21, 2011.

On February 1, 2011, the Court issued a further order denying the state’s request for clarification of the remand order to include consideration of the state’s fiscal condition. The Court also denied the state’s motion for an extension of time.

On March 22, 2011, special master Hon. Peter E. Doyne, issued an opinion that held that the state is not meeting the constitutional mandate to provide New Jersey school children a “thorough and efficient education.” Judge Doyne heard extensive evidence on the actual impact of the cuts in six districts in various parts of the state. Although he acknowledged that a number of efficiencies had been effectuated in these districts, he held that “without quantification of the savings achieved or to be achieved by all districts for the FY 11 fiscal year, it is impossible to find, based on anecdotal evidence alone, [sic] these efficiencies would significantly impact the effectuated reductions.”

Subsequently, the New Jersey Supreme Court invalidated the state’s budget cuts to the Abbott districts, ruling in May, 2011 that funding for the 31 Abbott districts in FY 2012 must be provided at the full level called for by the SFRA. This would provide an estimated $500 million increase over current funding levels for these districts. M129309AbbottvBurke-1. The Court stated in no uncertain terms that “Like anyone else, the State is not free to walk away from judicial orders enforcing constitutional obligations.”

The court, by a narrow 3-2 majority, agreed with the plaintiffs that the state had breached the key premises underlying the Court’s 2009 Order, which had approved the new SFRA with the express provision that the formula be fully funded. The Court held that “When we granted the State the relief it requested, this Court did not authorize the State to replace the parity remedy with some underfunded version of the SFRA.”

One of the members of the majority would have required the State to fully fund the formula for all districts in the state, based on the special master’s express finding that children throughout the state, and not just in the Abbott districts, were being denied a thorough and efficient education. The other two members of the majority held, however, that the Court’s jurisdiction was limited to the 31 Abbott districts and that its order, therefore, would extend only to them. The Education Law Center, attorneys for the plaintiffs, had requested state-wide relief and indicated that they would continue to press the legislature to fully fund the SFRA for all districts and not just the Abbott districts.

Although the Abbott plaintiffs sought to reinstate full SFRA funding for all school districts in the state, the court, in an order issued in May, 2011, limited its order for funding reinstatement to the original Abbott plaintiffs ( i.e. the 31 urban Abbott districts). Abbott-XXI.  A number of rural districts that have been seeking for a number of years to obtain judicial enforcement of their right to a thorough and efficient education, ( see, Bacon v. N.J. Dep’t of Educ., 942 A. 2d 827 ( N. J. Super Ct. App Div., 2008), have now filed a motion in the Appellate Division, asking that they be accorded the same relief that the Abbott districts obtained. They argue that they, like their urban counterparts, have been denied a “thorough and efficient education” and that being similarly situated, they also are entitled to have the full amount of their promised SFRA funding reinstated.

Governor Chris Christie’s alleged failure to follow funding procedures previously mandated by the New Jersey Supreme Court caused the Abbott plaintiffs to once again ask the Court for relief. In Abbott XXI the Court directed the state to undertake a re-examination of the workings of the formula every three years to ensure that it “continues to operate in optimal fashion.” For this review, the governor, in consultation with the commissioner of education, is required to prepare a report to the legislature concerning his evaluation of the workings of the formula and recommend any necessary adjustments to the costs, weights, and other formula components for the next three years. In his 2012 report Gov. Christie recommended certain inflation adjustments, but he also adjusted downward the at-risk, bilingual and combination per-pupil weights, as well as certain special education aid. After reviewing the report, the legislature passed a concurrent resolution rejecting the reductions in the weights and in special education aid.

In 2013, the commissioner ignored the legislative resolution and based state aid allocations on the reduced weights and special education allocations. In 2014, according to plaintiffs, the commissioner ignored other aspects of the formula and gave school districts exactly the same level of formula aid as last year plus a flat $20 per student increase, without providing them any information regarding the adequacy amounts they would be entitled to under the formula.

Plaintiffs’ attorney, David Sciarra of the Education Law Center, is asking the Court to direct the commissioner to issue state aid notices by May 2, 2014 based on the maximum amount of state aid that would be allow by the formula. “It is critical that the Court order the Commissioner to issue these notices forthwith so that district officials and parents know how much funding schools need to deliver State academic standards, and the amount of funding they should be receiving under the formula,” said Mr. Sciarra. “Legislators must have this information to evaluate the paltry $36 million school aid increase offered by the Governor and to decide how much additional aid to appropriate in the FY15 State budget to meet student needs.”

Related Litigations

In 2006, a class action complaint was filed against state officials and local boards of education, asking the court to order vouchers for students attending schools with low pass rates on state standardized tests. The suit was dismissed by the lower courts.

Several rural school districts tried to qualify for additional state funding as Abbott districts, in Keaveney v. New Jersey Department of Education, 2000 N.J. AGEN LEXIS 814 (Dec. 26, 2000). One was approved. Also, the Superior Court, Appellate Division, in Stabaus v. Whitman, 770 A.2d 1222 (2001), dismissed a suit by taxpayers alleging unconstitutionally disparate tax burdens.

Bacon v. New Jersey Department of Education

On December 11, a judge from the Superior Court of New Jersey Law Division – Mercer County heard oral arguments in the long-pending challenge to New Jersey’s statewide school funding system  by  16 poor, rural New Jersey school districts.

The rural school districts and a coalition of parents had originally brought suit challenging New Jersey’s school funding formula as unconstitutional almost two decades ago.   In a 2006 ruling, the NJ State Board of Education had found that the education and funding in these districts was so inadequate it violated the district students’ right to a “thorough and efficient” education under the New Jersey Constitution. In a 2008 ruling, an appeals court upheld the State Board’s ruling and remanded to the State Education Commissioner to determine whether the newly enacted weighted student funding formula – the School Funding Reform Act (SFRA) – provided the resources necessary to remedy the constitutional violation. In 2009, the State Education Commissioner ruled that the newly-enacted School Reform Act of 2008 (“SFRA”) would address the districts’ needs and enable the districts to improve educational opportunities for all students.

In 2010-11, however, Governor Christie cut over $1 billion in state funding from the SFRA formula, effectively wiping out the increases received by the districts. Since 2012, the Christie Administration has not restored the cut, nor provided any of the increases in K-12 and preschool funding required by the formula.

A summary action brought by the plaintiffs in 2014 sought an order from the state Superior Court to enforce needs assessments for these districts that had been undertaken by the state education department. The trial judge ruled that the district-specific needs assessments which they sought to enforce did not require the Department to fully fund the districts under the SFRA or otherwise provide for specific relief. That decision was affirmed by the Appellate Division of the Superior Court in November 2015.
Costing Out

In 1996, the New Jersey Department of Education developed a “costing out model” described as determining the cost of a constitutional “thorough and efficient education,” based on a hypothetical school district. The model concluded that the state’s 30 poor “Abbott districts” had sufficient funding and that high-performing suburban school districts were spending wastefully. In response, numerous suburban superintendents testified before the legislature about the impact funding cuts would have on their programs and students.

Later that year, the legislature grandfathered the suburban spending into a new education funding statute but, effectively, held the Abbott districts to the lower spending levels in the model. In Abbott IV, 693 A.2d 417 (1997), the New Jersey Supreme Court rejected the funding statute as it applied to the Abbott districts and, instead, ordered the State to provide funding parity with the average expenditures of the state’s 110 higher wealth districts.

The state conducted a cost study as part of the process of developing the 2008 School Funding Reform Act and retained a number of national experts to review its methodology and its findings. Plaintiffs challenged the validity of these studies in the evidentiary hearings that were held as part of their challenge to the constitutionality of the 2008 act. The special master and the court largely accepted the cost study and the testimony of the state’s expert witnesses in its Abbott XX ruling.

Last updated: July 2016

 

 

 

Although the Abbott plaintiffs sought to reinstate full SFRA funding
for all school districts in the state, the court, in an order issued
in May, 2011, limited its order for funding reinstatement to the
original Abbott plaintiffs ( i.e. the 31 urban Abbott districts).
Abbott-XXI.  A number of rural districts that have been seeking for a
number of years to obtain judicial enforcement of their right to a
throough and efficient education, ( see, Bacon v. N.J. Dep’t of Educ.,
942 A. 2d 827 ( N. J. Super Ct. App Div., 2008), have now filed a
motion in the Appellate Division, asking that they be accorded the
same relief that the Abbott districts obtained. They argue that they,
like their urban counterparts, have been denied a “thorough and
efficient education” and that being similarly situated, they also are
entitled to have the full amount of their promised SFRA funding
reinstated.

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