Budget Guide

What will Gov. Murphy’s budget mean for Newark schools? Here’s what you need to know.

PHOTO: Phil Murphy for Governor
Gov. Phil Murphy, shown here in a photo from 2014, will release his first-ever budget plan on Tuesday.

Gov. Phil Murphy campaigned on a pledge to ramp up education spending, and Newark school leaders are watching closely to see if he’ll keep that promise – or if they might have to slash their budgets.

Murphy is set to unveil his first-ever budget plan Tuesday. While districts will not get detailed aid figures for a few more days, Murphy’s budget proposal should give them a sense of how much of a boost — if any — to expect.

Expectations are high in Newark, where flat state funding and rapid charter school growth has left district officials scrambling to plug gaping budget holes. They’re hoping Murphy will give them some portion of the $140 million in additional aid that the city is owed under state law.

“This budget season is very, very important for us,” Interim Superintendent Robert Gregory told Chalkbeat earlier this year.

To help you understand what’s at stake for the city’s schools, Chalkbeat Newark created a state budget guide. It explains how school funding is set and what that means for Newark’s district and charter schools, whose financial fate is controlled by politicians in Trenton.

How are New Jersey schools funded?

New Jersey schools are funded according to a formula that was adopted in 2008 and has been touted as a national model for distributing school aid according to need.

The formula calculates two things: How much money each district needs to adequately educate its students (its “adequacy budget”), and what portion of the budget should be paid by the district (its “fair share”). The budget amount is determined by how many students a district enrolls, with extra money allocated for each student who is poor, still learning English, or has a disability. The share each district must chip in is based on its wealth and taxing capacity.

That’s how things are supposed to work, anyway.

Due to budget cuts that followed the Great Recession, the formula has not been properly enacted since 2009. Today, about 31 percent of the state’s nearly 600 school districts receive less school aid than the formula says they’re owed, according to the Education Law Center. To fully fund the formula, the state would need to boost its school spending by nearly $1 billion.

What might change this year?

If the governor keeps his promise, schools will get a lot more money.

On the campaign trail, Murphy, a Democrat, vowed to fully fund the school-aid formula “immediately.” However, he recently appeared to waver on that timeline — and few observers consider it realistic.

Still, any serious funding boost will be costly. To raise the additional revenue, Murphy has proposed hiking income taxes on households making more than $1 million, among other measures.

But Murphy’s “millionaire’s tax” has become a harder sell following the Republican federal tax overhaul, which capped the amount people can deduct on their taxes. Last week, the state’s top Democratic lawmaker, Senate President Stephen Sweeney, unveiled an alternative proposal: a tax on corporations earning more than $1 million in net annual income. Either plan would generate more than $600 million in new revenue for the state — though it remains to be seen how much of that would go toward education.

While Murphy and lawmakers have until June 30 to hash out the state budget, districts are on the hook to set their own preliminary budgets by the end of March. That means they must rely on Murphy’s spending plan for now, then make adjustments once a final compromise is reached.

“It’s totally crazy,” said Danielle Farrie, the Education Law Center’s research director.

What will the budget mean for Newark Public Schools?

Newark’s limited tax base leaves it at the mercy of the state, which provides about 80 percent of its school funding.

This school year, the state sent Newark about $750 million — about $140 million less than what it’s entitled to under the school-funding formula. Gregory told Chalkbeat in January that if the district gets even a fraction of what it’s owed, “we’ll be in a better place.”

The Newark school system has faced whopping budget gaps in recent years. Two factors have driven the deficits: the rapid growth of charter schools and flat state funding.

Because charter school funding comes out of district budgets, Newark spending on charters has soared as those schools enroll ever more students. This school year, the district will transfer about $237 million — or a quarter of its budget — to charter schools, up from $60 million in the 2008-09 school year.

Meanwhile, state aid to Newark has not kept up with its rising expenses. The result is that the district’s per-pupil spending shrank by nearly $2,000 from 2008-09 to 2016-17, according to an Education Law Center analysis that adjusted for inflation. (The state boosted Newark’s budget each of the past two years.)

To balance the budget, Newark officials have had to sell off school buildings, switch employee insurance providers, and raise local taxes, among other measures. The district has mostly avoided cutting school budgets — though it did recently shift some funds from high schools to elementary schools. But if state funding is flat this year, officials worry they will be left with few other options.

“The last place to go is in school buildings,” Gregory said. However, “if we face flat funding again, that could lead to an immediate impact on students.”

What about Newark’s charter schools?

Today, about one third of Newark’s public-school students — or roughly 16,000 children — attend charter schools.

About 90 percent of the district’s local and state funding for each of those students follows them to their charter schools — though charters are excluded from certain funding streams. Murphy has been more skeptical of charters than his predecessor. But advocates hope that his budget will, at the very least, not leave them with less money.

“We’re just generally looking for charters to be unharmed — for us not to go backwards,” said Nicole Cole, president and CEO of the New Jersey Charter Schools Association. “The families that we serve can’t afford for us to take a step backwards.”


Colorado schools are getting a major bump in the state’s 2018-19 budget

Students waiting to enter their sixth-grade classroom at Kearney Middle School in Commerce City. (Photo by Craig Walker, The Denver Post)

Colorado’s strong economy has opened the door for state lawmakers to send a major cash infusion to the state’s public schools.

As they finalized the recommended budget for 2018-19, the Joint Budget Committee set aside $150 million, an additional $50 million beyond what Democratic Gov. John Hickenlooper had asked for, to increase funding to schools.

“We believe this is the most significant reduction in what used to be called the negative factor since it was born,” said state Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee.

Colorado’s constitution calls for per pupil spending to increase at least by inflation every year, but the state hasn’t been able to meet that obligation since the Great Recession. The amount by which schools get shorted, officially called the budget stabilization factor, is $822 million in 2017-18. Under state law, this number isn’t supposed to get bigger from one year to the next, but in recent years, it hasn’t gotten much smaller either. 

But a booming economy coupled with more capacity in the state budget created by a historic compromise on hospital funding last year means Colorado has a lot more money to spend this year. In their March forecast, legislative economists told lawmakers they have an extra $1.3 billion to spend or save in 2018-19.

The recommended shortfall for next year is now just $672.4 million. That would bring average per-pupil spending above $8,100, compared to $7,662 this year.

Total program spending on K-12 education, after the budget stabilization factor is deducted, should be a little more than $7 billion, with the state picking up about $4.5 billion and the rest coming from local property taxes.

The budget debate this year has featured Republicans pressing for more ongoing money for transportation and Democrats resisting in the interest of spreading more money around to other needs. The positive March forecast reduced much of that tension, as a $500 million allocation for transportation allowed a compromise on roads funding in the Republican-controlled Senate. That compromise still needs the approval of the Democratic-controlled House, but suddenly a lot of things are seeming possible.

“We knew we were going to have more revenue than we’ve ever had to work with,” Hamner said of the status at the beginning of the session. But that presented its own challenges, as so many interest groups and constituencies sought to address long-standing needs.

“The fact that we’ve been able to reach such incredible compromises on transportation and K-12 funding, I think most members will be very pleased with this outcome,” Hamner said. “Where we ended up is a pretty good place.”

The big outstanding issue is proposed reforms to the Public Employees Retirement Association or PERA fund to address unfunded liabilities. A bill that is likely to see significant changes in the House is wending its way through the process. The Joint Budget Committee has set aside $225 million to deal with costs associated with that fix, which has major implications for teachers and school districts budgets.

The Joint Budget Committee has also set aside $30 million for rural schools, $10 million for programs to address teacher shortages, and $7 million for school safety grants.

The budget will be introduced in the House on Monday. Many of the school funding elements will appear in a separate school finance bill.

Going forward, there is a question about how sustainable these higher funding levels will be.

“It does put more pressure on the general fund,” Hamner said. “If we see a downturn in the economy, it’s going to be a challenge.”

outside the box

Program to bring back dropout students is one of 10 new ideas Jeffco is investing in

File photo of Wheat Ridge High School students. (Photo by Nic Garcia/Chalkbeat)

Jeffco students who drop out will have another option for completing high school starting this fall, thanks to a program that is being started with money from a district “innovation fund.”

The new program would allow students, particularly those who are older and significantly behind on credits, to get district help to prepare for taking a high school equivalency test, such as the GED, while also taking college courses paid for by the district.

The idea for the program was pitched by Dave Kollar, who has worked for Jeffco Public Schools for almost 20 years, most recently as the district’s director of student engagement.

In part, Kollar’s idea is meant to give students hope and to allow them to see college as a possibility, instead of having to slowly walk back as they recover credits missing in their transcripts.

“For some kids, they look at you, and rightfully so, like ‘I’m going to be filling in holes for a year or two? This doesn’t seem realistic,’” Kollar said. “They’re kind of defeated by that. As a student, I’m constantly looking backwards at my failures. This is about giving kids something like a light at the end of the tunnel.”

Jeffco’s dropout rate has decreased in the last few years, like it has across the state. At 1.7 percent, the rate isn’t high, but still represents 731 students who dropped out last year.

Kollar’s was one of ten winning ideas announced earlier this month in the district’s first run at giving out mini-grants to kick-start innovative ideas. Kollar’s idea received $160,000 to get the program started and to recruit students who have dropped out and are willing to come back to school.

The other ideas that the district gave money to range from school building improvements to comply with the Americans with Disabilities Act at Fletcher Miller Special School, from new school health centers to a new district position to help work on safety in schools. One school, Stott Elementary, will create a “tinker lab” where students will have space and supplies to work on projects as part of the school’s project-based learning model.

The Jeffco school board approved $1 million for the awards earlier this year. It was an idea proposed by Superintendent Jason Glass as a way of encouraging innovation in the district. This spring process is meant as a test run. The board will decide whether to continue investing in it once they see how the projects are going later this spring.

Officials say they learned a lot already. Tom McDermott, who oversaw the process, will present findings and recommendations to the board at a meeting next month.

If the board agrees to continue the innovation fund, McDermott wants to find different ways of supporting more of the ideas that educators present, even if there aren’t dollars for all of them.

That’s because in this first process — even though educators had short notice — teachers and other Jeffco staff still completed and submitted more than 100 proposals. Of those, 51 ideas scored high enough to move to the second round of the process in which the applicants were invited to pitch their ideas to a committee made up of Jeffco educators.

“We’re extremely proud of the 10,” McDermott said, but added, “we want to be more supportive of more of the ideas.”

McDermott said he thinks another positive change might be to create tiers so that smaller requests compete with each other in one category, and larger or broader asks compete with one another in a separate category.

This year, the applicants also had a chance to request money over time, but those parts of the awards hang on the board allocating more money.

Kollar’s idea for the GED preparation program for instance, includes a request for $348,800 next year. In total, among the 10 awards already granted, an extra $601,487 would be needed to fund the projects in full over the next two years.

Awards for innovation fund. Provided by Jeffco Public Schools.

The projects are not meant to be sustained by the award in the long-term, and some are one-time asks.

Kollar said that if that second phase of money doesn’t come through for his program, it should still be able to move forward. School districts are funded per student, so by bringing more students back to the district, the program would at least get the district’s student-based budget based on however many students are enrolled.

A similar program started in Greeley this fall is funded with those dollars the state allocates to districts for each student. So far, eight students there already completed a GED certificate, and there are now 102 other students enrolled, according to a spokeswoman for the Greeley-Evans school district.

But, having Jeffco’s innovation money could help Kollar’s program provide additional services to the students, such as a case manager that can help connect students to food or housing resources if needed.

And right now Kollar is working on setting up systems to track data around how many students end up completing the program, earning a high school equivalency certificate, enrolling in a college or trade-school, or getting jobs.

Helping more students on a path toward a career is the gold standard, he said, and what makes the program innovative.

“It’s not just about if the student completes high school,” Kollar said. “It’s are we making sure we are intentionally bridging them into whatever the next pathway is?”