For decades, school funding has been a hot-button issue in New Jersey.
The current school funding formula, under the School Funding Reform Act, became law in 2008 and is only in its second year of being fully funded.
It is the first funding formula to be deemed constitutional by the New Jersey Supreme Court, but it has not gone unchallenged. The state Supreme Court deemed the current formula constitutionally acceptable in a 2009 decision, after several previous versions failed to meet the state Constitution’s standards.
In the most recent challenge, a state appeals court last week said the school funding formula is constitutional in a challenge over Lakewood’s public-school funding. The court upheld the statewide funding formula, even though public-school students in Lakewood are not receiving a “thorough and efficient” education, which is required under the state Constitution.
A three-judge panel ruled that Lakewood’s struggles are due to fiscal mismanagement, failure to raise taxes, and transportation and special education spending issues, not the school funding formula.
Long-running legal battle
This is the latest round in a legal battle that has lasted more than a decade centering on the quality of public education in Lakewood, where most of the township’s students attend private religious schools, straining the district’s budget.
“While we conclude that Lakewood’s failure to provide a thorough and efficient education for its public school students is not due, in significant part, to the [School Funding Reform Act], the search for an equitable, effective and efficient solution to the plight of these children must not end here,” the decision reads.
Lakewood Township’s population has grown significantly in recent decades, in large part due to a thriving Orthodox Jewish community. In 2023, the township had about 37,000 school-aged children, but only 6,000 enrolled in secular public schools, according to Judge Mary Whipple’s opinion in the case from that year. About 84% attended private religious schools.
At the time, over half of the district’s budget went to transportation and special education tuition for nonpublic students that is required under state and federal laws. This is an “abnormal and unsustainable imbalance,” Whipple’s opinion said.
State aid to the district is calculated based on the number of students that attend Lakewood public schools, but the district is also required to pay for transportation and special education tuition for many of the private-school students who live in town. This has put a strain on the district’s budget.
‘Deeply disappointing’
Paul Tractenberg, an attorney for the parents of children attending Lakewood public schools who sued, called the Sept. 8 ruling “deeply disappointing and bereft of any serious constitutional analysis.” He said the parents will likely seek the court’s leave to appeal, which “is not all that easy to obtain.”
The office of the attorney general, who argued the case for the state, declined a request for comment.
The case started when parents of children enrolled in the school district filed an administrative appeal in 2014 over the district’s state aid, arguing that the state’s funding formula prevented their children from receiving a thorough and efficient education. In 2021, an administrative law judge found that students were not receiving a thorough and efficient education, but that the school funding formula was not to blame. In 2024, then-Commissioner of Education Angelica Allen-McMillan reaffirmed that finding in a final decision.
Allen-McMillan determined the lack of a thorough and efficient education was due to “Lakewood’s tax-related choices that decreased revenue, the significant deficiencies in Lakewood’s spending practices, and Lakewood’s failure to control its transportation and special education costs.” State funding and higher taxes would be enough to pay for a thorough and efficient education, Allen-McMillan said in her decision.
Under the school funding formula, districts are advised but not required to raise taxes to the “local fair share,” a figure determined by the formula. The state gives districts the money needed to cover the gap between the local fair share and the amount required for an “adequate” education, as determined by the state law.
State funds, drawn from the state income tax and known as “equalization aid,” are distributed unevenly, with the bulk going to lower-income municipalities that cannot raise as much money through property taxes as higher-income municipalities. Some districts that have not raised taxes to meet that local fair share now face budget shortfalls that cannot be closed by typical small tax increases or increases in state aid.
Parents sought more state aid
The parents involved in the Lakewood case argued that because the town’s public-school students suffer from shortcomings in education, they must receive the same constitutional status of “wards of the state” that’s given to the 31 high-poverty, urban “Abbott” districts based on a series of landmark court rulings in the 1980s. The appeals court judges declined to give Lakewood the special status, since unlike the Abbott districts Lakewood receives full state funding, as determined by the state’s funding formula.
The parents argued that the state has the constitutional responsibility to ensure the students receive a thorough and efficient education, which Tractenberg, their attorney, noted was not mentioned in the opinion.
“Petitioners, in effect, ask us to declare the SFRA unconstitutional because it doesn’t yield enough state aid to cover the shortfalls caused by Lakewood’s budget and spending choices, particularly in the areas of transportation and special education,” the appeal court judges’ opinion reads. “These choices, the record shows, have drained resources away from Lakewood’s public school students, and are consistently at odds with cost saving recommendations made by respondents.”