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New Jersey

Recent Events | Costing Out

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. [Click HERE for decision.] 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.

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.

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: March 2011