Makes various changes to school funding law.

A5221

ASSEMBLY, No. 5221

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 4, 2026

Sponsored by:

Assemblywoman� ROSAURA "ROSY" BAGOLIE

District 27 (Essex and Passaic)

SYNOPSIS

���� Makes various changes to school funding law.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning State school aid, amending various parts of
the statutory law, and supplementing P.L.1996, c.138 and P.L.2007, c.260.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 5 of P.L.1996,
c.138 (C.18A:7F-5) is amended to read as follows:

���� 5.��� As used in this section,
"cost of living" means the CPI as defined in section 3 of P.L.2007,
c.260 (C.18A:7F-45).

���� a.���� Within 30 days
following the approval of the Educational Adequacy Report, the commissioner
shall notify each district of the base per pupil amount, the per pupil amounts
for full-day preschool, the weights for grade level, county vocational school
districts, at-risk pupils, bilingual pupils, and combination pupils, the cost
coefficients for security aid and for transportation aid,
[
the State
average classification rate and
]

the excess cost for general special education services pupils,
[
the State
average classification rate and
]

the excess cost for speech-only pupils, and the geographic cost adjustment for
each of the school years to which the report is applicable.

����
Annually, no later than
August 1 of each year, the commissioner shall issue a public memorandum
providing the timelines for the availability and certification of equalized
valuation data and district income data from the Division of Taxation and the
Department of Community Affairs, which data is utilized in the calculation of
local share pursuant to section 10 of P.L.2007, c.260 (C.18A:7F-52).

����
Beginning with State school
aid calculated for the first full school year following the enactment of
P.L.��� , c.���� (C.������� ) (pending before the Legislature as this bill),
the commissioner shall annually, within 15 days following the receipt of
finalized equalized valuation and district income figures but no later than
January 15, provide each district with a preliminary State aid notice that estimates
the amount of State aid payable to the district in the succeeding school year
pursuant to the provisions of P.L.2007, c.260 (C.18A:7F-43 et al.).

���� Annually, within two days
following the transmittal of the State budget message to the Legislature by the
Governor pursuant to section 11 of P.L.1944, c.112 (C.52:27B-20), the
commissioner shall notify each district of the maximum amount of aid payable to
the district in the succeeding school year pursuant to the provisions of
P.L.2007, c.260 (C.18A:7F-43 et al.), and shall notify each district of the
district's adequacy budget for the succeeding school year.

���� For the 2008-2009 school year
and thereafter, unless otherwise specified within P.L.2007, c.260 (C.18A:7F-43
et al.), aid amounts payable for the budget year shall be based on budget year
pupil counts, which shall be projected by the commissioner using data from
prior years.� Adjustments for the actual pupil counts of the budget year shall
be made to State aid amounts payable during the school year succeeding the
budget year.� Additional amounts payable shall be reflected as revenue and an
account receivable for the budget year.

���� Notwithstanding any other
provision of this act to the contrary, each district's State aid payable for
the 2008-2009 school year, with the exception of aid for school facilities
projects, shall be based on simulations employing the various formulas and State
aid amounts contained in P.L.2007, c.260 (C.18A:7F-43 et al.).� The
commissioner shall prepare a report dated December 12, 2007 reflecting the
State aid amounts payable by category for each district and shall submit the
report to the Legislature prior to the adoption of P.L.2007, c.260 (C.18A:7F-43
et al.).� Except as otherwise provided pursuant to this subsection and
paragraph (3) of subsection d. of section 5 of P.L.2007, c.260 (C.18A:7F-47),
the amounts contained in the commissioner's report shall be the final amounts
payable and shall not be subsequently adjusted other than to reflect the
phase-in of the required general fund local levy pursuant to paragraph (4) of
subsection b. of section 16 of P.L.2007, c.260 (C.18A:7F-58) and to reflect
school choice aid to which a district may be entitled pursuant to section 20 of
that act. The projected pupil counts and equalized valuations used for the
calculation of State aid shall also be used for the calculation of adequacy
budget, local share, and required local share.� For 2008-2009, extraordinary
special education State aid shall be included as a projected amount in the
commissioner's report dated December 12, 2007 pending the final approval of
applications for the aid.� If the actual award of extraordinary special
education State aid is greater than the projected amount, the district shall
receive the increase in the aid payable in the subsequent school year pursuant
to the provisions of subsection c. of section 13 of P.L.2007, c.260
(C.18A:7F-55).� If the actual award of extraordinary special education State
aid is less than the projected amount, other State aid categories shall be
adjusted accordingly so that the district shall not receive less State aid than
as provided in accordance with the provisions of sections 5 and 16 of P.L.2007,
c.260 (C.18A:7F-47 and C.18A:7F-58).

���� In the event that the
commissioner determines, following the enactment of P.L.2007, c.260
(C.18A:7F-43 et al.) but prior to the issuance of State aid notices for the
2008-2009 school year, that a significant district-specific change in data
warrants an increase in State aid for that district, the commissioner may
adjust the State aid amount provided for the district in the December 12, 2007
report to reflect the increase.

���� b.��� Each district shall have
a required local share.� For districts that receive educational adequacy aid
pursuant to subsection b. of section 16 of P.L.2007, c.260 (C.18A:7F-58), the
required local share shall be calculated in accordance with the provisions of
that subsection.

���� For all other districts, the
required local share shall equal the lesser of the local share calculated at
the district's adequacy budget pursuant to section 9 of P.L.2007, c.260
(C.18A:7F-51), or the district's budgeted local share for the prebudget year.

���� In order to meet this
requirement, each district shall raise a general fund tax levy which equals its
required local share.

���� No municipal governing body or
bodies or board of school estimate, as appropriate, shall certify a general
fund tax levy which does not meet the required local share provisions of this
section.

���� c.���� Annually, on or before
March 4, or on or before March 20 in the case of a school district with an
annual school election in November, each district board of education shall
adopt, and submit to the commissioner for approval, together with such
supporting documentation as the commissioner may prescribe, a budget that
provides for a thorough and efficient education. Notwithstanding the provisions
of this subsection to the contrary, the commissioner may adjust the date for
the submission of district budgets if the commissioner determines that the
availability of preliminary aid numbers for the subsequent school year warrants
such adjustment.

���� Notwithstanding any provision
of this section to the contrary, for the 2005-2006 school year each district
board of education shall submit a proposed budget in which the advertised per
pupil administrative costs do not exceed the lower of the following:

���� (1)�� the district's
advertised per pupil administrative costs for the 2004-2005 school year
inflated by the cost of living or 2.5 percent, whichever is greater; or

���� (2)�� the per pupil
administrative cost limits for the district's region as determined by the
commissioner based on audited expenditures for the 2003-2004 school year.

���� The executive county
superintendent of schools may disapprove the school district's 2005-2006
proposed budget if he determines that the district has not implemented all
potential efficiencies in the administrative operations of the district.� The
executive county superintendent shall work with each school district in the
county during the 2004-2005 school year to identify administrative
inefficiencies in the operations of the district that might cause the
superintendent to reject the district's proposed 2005-2006 school year budget.

���� For the 2006-2007 school year
and each school year thereafter, each district board of education shall submit
a proposed budget in which the advertised per pupil administrative costs do not
exceed the lower of the following:

���� (1)�� the district's prior
year per pupil administrative costs; except that the district may submit a
request to the commissioner for approval to exceed the district's prior year
per pupil administrative costs due to increases in enrollment, administrative
positions necessary as a result of mandated programs, administrative vacancies,
nondiscretionary fixed costs, and such other items as defined in accordance
with regulations adopted pursuant to section 7 of P.L.2004, c.73.� In the event
that the commissioner approves a district's request to exceed its prior year
per pupil administrative costs, the increase authorized by the commissioner
shall not exceed the cost of living or 2.5 percent, whichever is greater; or

���� (2)�� the prior year per pupil
administrative cost limits for the district's region inflated by the cost of
living or 2.5 percent, whichever is greater.

���� d.��� (1) A district's general
fund tax levy shall not exceed the district's adjusted tax levy as calculated
pursuant to sections 3 and 4 of P.L.2007, c.62 (C.18A:7F-38 and 18A:7F-39).

���� (2)�� (Deleted by amendment,
P.L.2007, c.260).

���� (3)�� (Deleted by amendment,
P.L.2007, c.260).

���� (4)�� Any debt service payment
made by a school district during the budget year shall not be included in the
calculation of the district's adjusted tax levy.

���� (5)�� (Deleted by amendment,
P.L.2007, c.260).

���� (6)�� (Deleted by amendment,
P.L.2007, c.260).

���� (7)�� (Deleted by amendment,
P.L.2004, c.73).

���� (8)�� (Deleted by amendment,
P.L.2010, c.44)

���� (9)�� Any district may submit
at the annual school budget election, in accordance with subsection c. of
section 4 of P.L.2007, c.62 (C.18A:7F-39), a separate proposal or proposals for
additional funds, including interpretive statements, specifically identifying
the program purposes for which the proposed funds shall be used, to the voters,
who may, by voter approval, authorize the raising of an additional general fund
tax levy for such purposes.� In the case of a district with a board of school
estimate, one proposal for the additional spending shall be submitted to the
board of school estimate. Any proposal or proposals submitted to the voters or
the board of school estimate shall not: include any programs and services that
were included in the district's prebudget year net budget unless the proposal
is approved by the commissioner upon submission by the district of sufficient
reason for an exemption to this requirement; or include any new programs and
services necessary for students to achieve the thoroughness standards
established pursuant to subsection a. of section 4 of P.L.2007, c.260
(C.18A:7F-46).

���� A district without a board of
school estimate may also submit to the voters at a special election authorized
pursuant to section 2 of P.L.1995, c.278 (C.19:60-2), a separate proposal or
proposals for additional funds for the subsequent budget year, including
interpretive statements, specifically identifying the program purposes for
which the proposed funds shall be used.� A proposal submitted at a special
election shall comply with the requirements of this paragraph and section 4 of
P.L.2007, c.62 (C.18A:7F-39).� A separate proposal or proposals for additional
funds may only be submitted on a date of a special election once during a
school year.� Nothing in this paragraph shall be construed to prohibit the
submission to the voters of a question or questions for the approval of a
capital project or projects on the same special election date as the submission
of a separate proposal or proposals for additional funds.

���� In the case of a school
district in which the annual school election has been moved to November
pursuant to subsection a. of section 1 of P.L.2011, c.202 (C.19:60-1.1), the
school district may submit a separate proposal for additional funds for the
budget year, or a separate proposal for additional funds for the subsequent
budget year, or separate proposals for additional funds for each of those
budget years.� In the event that a school district submits a separate proposal
for additional funds for the subsequent budget year and the separate proposal
is approved, the school district shall not add to its adjusted tax levy for the
subsequent budget year any amount authorized pursuant to subsection e. of
section 4 of P.L.2007, c.62 (C.18A:7F-39).

���� The executive county
superintendent of schools may prohibit the submission of a separate proposal or
proposals to the voters or board of school estimate if he determines that the
district has not implemented all potential efficiencies in the administrative
operations of the district, which efficiencies would eliminate the need for the
raising of an additional general fund tax levy.

���� (10) �Notwithstanding any
provision of law to the contrary, if a district proposes a budget with a
general fund tax levy and equalization aid which exceed the adequacy budget,
the following statement shall be published in the legal notice of public
hearing on the budget pursuant to N.J.S.18A:22-28, and posted at the public
hearing held on the budget pursuant to N.J.S.18A:22-29:

���� "Your school district has
proposed programs and services in addition to the core curriculum content
standards adopted by the State Board of Education.� Information on this budget
and the programs and services it provides is available from your local school
district."

���� (11) �Any reduction that may
be required to be made to programs and services included in a district's
prebudget year net budget in order for the district to limit the growth in its
budget between the prebudget and budget years by its tax levy growth limitation
as calculated pursuant to sections 3 and 4 of P.L.2007, c.62 (C.18A:7F-38 and
18A:7F-39), shall only include reductions to excessive administration or
programs and services that are inefficient or ineffective.

���� e. �(1)� In the case of a
district having a board of school estimate, other than a Type II district with
a board of school estimate, which has a proposed budget that includes a general
fund tax levy and equalization aid in excess of the adequacy budget, the general
fund tax levy shall be submitted to the board for determination of the amount
that should be expended.� If the board of school estimate reduces the
district's proposed budget, the district may appeal any of the reductions to
the commissioner on the grounds that the reductions will negatively impact on
the stability of the district given the need for long term planning and
budgeting.� In considering the appeal, the commissioner shall consider
enrollment increases or decreases within the district, the impact on the local
levy, and whether the reductions will impact on the ability of the district to
fulfill its contractual obligations.� A district may not appeal any reductions
on the grounds that the amount is necessary for a thorough and efficient education.

���� (2) In the case of a district
having a board of school estimate, other than a Type II district with a board
of school estimate, which has a proposed budget that includes a general fund
tax levy and equalization aid at or below the adequacy budget, the general fund
tax levy shall be submitted to the board for determination.� Any reductions may
be appealed to the commissioner on the grounds that the amount is necessary for
a thorough and efficient education or that the reductions will negatively
impact on the stability of the district given the need for long term planning
and budgeting.� In considering the appeal, the commissioner shall also consider
the factors outlined in paragraph (1) of this subsection.

���� In addition, the board of
school estimate shall be required to demonstrate clearly to the commissioner
that the proposed budget reductions shall not adversely affect the ability of
the school district to provide a thorough and efficient education or the stability
of the district given the need for long term planning and budgeting.

���� (3)�� In lieu of any budget
reduction appeal provided for pursuant to paragraphs (1) and (2) of this
subsection, the State board may establish pursuant to the "Administrative
Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), an expedited budget
review process based on a district's application to the commissioner for an
order to restore a budget reduction.

���� (4)�� When the board of
education or the board of school estimate authorize the general fund tax levy,
the district shall submit the resulting budget to the commissioner within 15
days of the authorization.

���� f.���� (Deleted by amendment,
P.L.2007, c.260)

���� g.��� (Deleted by amendment,
P.L.2007, c.260)

(cf: P.L.2025, c.234, s.1)

���� 2.��� (New section) Beginning
with the first full school year following the date of enactment of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill) and each
school year thereafter, the Department of Education shall annually, within two days
following the transmittal of the State budget message to the Legislature by the
Governor pursuant to section 11 of P.L.1944, c.112 (C.52:27B-20), make publicly
available on the department�s Internet website the calculation of each category
of aid payable to each school district in the succeeding year pursuant to the
provisions of P.L.2007, c.260 (C.18A:7F-43 et al.).� The calculations shall be
written in a user-friendly manner and shall include, at a minimum, explanations
of the variables used to determine the district�s aid.

���� 3. �Section 2 of P.L.2007,
c.260 (C.18A:7F-44) is amended to read as follows:

���� 2.��� The Legislature finds
and declares that:

���� a.���� The Constitution of the
State of New Jersey states that the Legislature shall provide for the
maintenance and support of a thorough and efficient system of free public
schools for the instruction of all children in the State between the ages of
five and eighteen years.� (N.J. Const. art. VIII, sec. 4, par.1).

���� b.��� The State, in addition
to any constitutional mandates, has a moral obligation to ensure that New
Jersey's children, wherever they reside, are provided the skills and knowledge
necessary to succeed.� Any school funding formula should provide resources in a
manner that optimizes the likelihood that children will receive an education
that will make them productive members of society.

���� c.���� Although the Supreme
Court of New Jersey has held that prior school funding statutes did not
establish a system of public education that was thorough and efficient as to
certain districts, the Court has consistently held that the Legislature has the
responsibility to substantively define what constitutes a thorough and
efficient system of education responsive to that constitutional requirement.

���� d.��� Every child in New
Jersey must have an opportunity for an education based on academic standards
that satisfy constitutional requirements regardless of where the child resides,
and public funds allocated to this purpose must be expended to support schools
that are thorough and efficient in delivering those educational standards.� In
turn, school districts must be assured the financial support necessary to
provide those constitutionally compelled educational standards.� Any school
funding formula should provide State aid for every school district based on the
characteristics of the student population and up-to-date measures of the
individual district's ability to pay.

���� e.���� New Jersey's current
public school funding formula, established under the provisions of the
"Comprehensive Educational Improvement and Financing Act of 1996,"
(CEIFA) P.L.1996, c.138, has not been used to calculate State aid for public
schools since the 2001-02 school year.� Any new school funding formula should
account for changes in enrollment and other significant developments, providing
relief to those districts that have experienced substantial enrollment
increases.

���� f.���� The decisions in the
Abbott cases have resulted in frequent litigation and a fragmented system of
funding under which limited resources cannot be distributed equitably to all
districts where at-risk children reside, instead dividing the districts sharply
into Abbott and non-Abbott categories for funding purposes without regard to a
district's particular pupil characteristics and leading to needlessly
adversarial relationships among school districts and between districts and the
State.�

���� g.��� In the absence of a
clear, unitary, enforceable statutory formula to govern appropriations for
education, crucial funding decisions are made annually, in competition for
limited State resources with other needs and requirements as part of the annual
budget negotiation process, utilizing many different classes and categories of
aid, leading to an uncertain, unpredictable, and untenable funding situation
for the State and school districts alike.�

���� h.��� This act represents the
culmination of five years of diligent efforts by both the Executive and
Legislative branches of State government to develop an equitable and
predictable way to distribute State aid that addresses the deficiencies found
in past formulas as identified by the Supreme Court.� Working together toward
this common goal, the Department of Education and the Legislature engaged
nationally recognized experts in education funding and provided significant
opportunities for stakeholder involvement and public input to assist in
formulating and refining a comprehensive school funding model that has been
validated by experts.� The formula accounts for the individual characteristics
of school districts and the realities of their surroundings, including the need
for additional resources to address the increased disadvantages created by high
concentrations of children at-risk.

���� i.���� The formula established
under this act is the product of a careful and deliberative process that first
involved determining the educational inputs necessary to provide a high-quality
education, including specifically addressing the supplemental needs of at-risk
students and those with limited English proficiency (LEP), and a determination
of the actual cost of providing those programs.� The formula provides adequate
funding that is realistically geared to the core curriculum content standards,
thus linking those standards to the actual funding needed to deliver that
content.

���� j.���� In recognition of the
unique problems and cost disadvantages faced by districts with high
concentrations of at-risk students, it is appropriate to reflect in the formula
a greater weight as the district's proportion of at-risk students increases.�
In addition, the new formula recognizes the disadvantages of an expanded group
of students by including in the definition of at-risk those students who
qualify for free or reduced-price lunch.� Expanding the definition of at-risk
students in this manner will significantly increase the resources flowing to
districts with high concentrations of these low-income students.

���� k.��� In light of the
demonstrable, beneficial results and success of the current Abbott preschool
program, it is appropriate to build upon this success by incorporating in the
formula an expanded high-quality preschool program for all children who qualify
for free and reduced price meals in all districts.� It is appropriate for the
formula to acknowledge that at-risk children do not always receive the same
educational exposure at an early age as their peers and to provide the
additional resources necessary through high-quality preschool to prepare every
child to learn and succeed.

���� l.���� It is appropriate to
reflect in this formula the inherent value of educating a child in the least
restrictive environment and, whenever possible, in that child's neighborhood
school alongside his peers.� The new funding formula should provide incentives for
keeping classified students in district.

���� m.�� It is also appropriate to
recognize in the formula the need for all schools to incorporate effective
security measures, which may vary from district to district depending upon the
at-risk student population and other factors, and to provide categorical funding
to address these important requirements.

���� n.��� In recognition of the
potentially wide variability in special education costs, even for the same
category of disability, from district to district, it is appropriate for the
[
new
]
funding
formula to
[
mitigate
the impact of that variability by establishing a census model based on the
actual Statewide average excess cost of educating special education students
and by providing for an increase in State aid for extraordinary costs incurred
by districts.
]

provide State aid in accordance with the number of students requiring
special education services in each school district to ensure an equitable
distribution of resources and to provide State aid for extraordinary costs
incurred by districts in the provision of special education services.

���� o.��� It is imperative that
any
[
new
]
school
funding formula work in conjunction with the key school accountability measures
that have been enacted
[
in
recent years
]

to promote greater oversight, transparency, and efficiency in the delivery of
educational services.� These accountability measures include the New Jersey
Quality Single Accountability Continuum, the "School District Fiscal
Accountability Act," P.L.2006, c.15 (C.18A:7A-54 et seq.), P.L.2007, c.63
(C.40A:65-1 et al.) which established the duties and responsibilities of the
executive county superintendent of schools, and P.L.2007, c.53 (C.18A:55-3 et
al.).

���� p.��� Together with a renewed
legislative focus on and commitment to providing sufficient means to maintain
and support a high-quality system of free public schools in the State, a new
funding formula supported by significantly increased State resources will ensure
compliance with all statutory and constitutional mandates.� Districts that were
formerly designated as Abbott districts will be provided sufficient resources
to continue those Court-identified programs, positions, and services that have
proven effective while being provided the flexibility to shift resources and
programmatic focus based on the needs of their students and current research.�

���� q.��� The time has come for
the State to resolve the question of the level of funding required to provide a
thorough and efficient system of education for all New Jersey school children.�
The development and implementation of an equitable and adequate school funding
formula will not only ensure that the State's students have access to a
constitutional education as defined by the core curriculum content standards,
but also may help to reduce property taxes and assist communities in planning
to meet their educational expenses.� The development of a predictable,
transparent school funding formula is essential for school districts to plan
effectively and deliver
the quality education that our
citizens expect and our Constitution requires
.

����
r.���� It is appropriate,
from time to time, to revisit the structure of school funding to ensure that
the funding formula continues to provide a thorough and efficient system of
education for all New Jersey school children while meeting the operational and
fiscal needs of school districts.

����
s.���� Changes in the
economic environment of the State have highlighted areas of volatility within
the existing funding formula and structural concerns that create challenges for
school districts in developing balanced budgets while continuing to provide
high-quality educational opportunities to all students.

����
t. ��� School districts,
and by extension students, would benefit from increased stability in district
wealth metrics to reduce year-to-year fluctuations in State school aid, relieve
the burden on taxpayers, and ensure adequate funding that provides for staffing
stability and the continuation of existing academic and extracurricular
programming.

����
u.��� It is important that
school districts, particularly districts experiencing reductions in State
school aid, have adequate time to prepare and submit budgets, including time to
ensure that the budget proposal creates the best possible chances of future
financial success for the school district.

����
v.��� In light of
developing challenges, the time has come to consider improvements to the
existing funding formula to better provide for stability and transparency in
school budgets so that school districts can continue to deliver the quality
education that our citizens expect and our Constitution requires.

(cf: P.L.2007, c.260, s.2)

���� 4.� Section 3 of P.L.2007,
c.260 (C.18A:7F-45) is amended to read as follows:

���� 3.��� As used in P.L.2007,
c.260 (C.18A:7F-43 et al.) and P.L.1996, c.138 (C.18A:7F-1 et al.), unless the
context clearly requires a different meaning:

���� "At-risk pupils"
means those resident pupils from households with a household income at or below
the most recent federal poverty guidelines available on October 15 of the
prebudget year multiplied by 1.85;

���� "Base per pupil
amount" means the cost per elementary pupil of delivering the core
curriculum content standards and extracurricular and cocurricular activities
necessary for a thorough and efficient education;

���� "Bilingual education
pupil" means a resident pupil enrolled in a program of bilingual education
or in an English as a second language program approved by the State Board of
Education;

���� "Budgeted local
share" means the district's local tax levy contained in the budget
certified for taxation purposes;

���� "Capital outlay"
means capital outlay as defined in GAAP;

���� "Combination pupil"
means a resident pupil who is both an at-risk pupil and a bilingual education
pupil;

���� "Commissioner" means
the Commissioner of Education;

���� "Concentration of at-risk
pupils" shall be based on prebudget year pupil data and means, for a
school district or a county vocational school district, the number of at-risk
pupils among those counted in resident enrollment, divided by resident enrollment;

���� "County special services
school district" means any entity established pursuant to article 8 of
chapter 46 of Title 18A of the New Jersey Statutes;

���� "County vocational school
district" means any entity established pursuant to article 3 of chapter 54
of Title 18A of the New Jersey Statutes;

���� "CPI" means the
increase, expressed as a decimal, in the average annualized consumer price
index for the New York City and Philadelphia areas in the fiscal year preceding
the prebudget year relative to the previous fiscal year as reported by the
United States Department of Labor;

���� "Debt service" means
payments of principal and interest upon school bonds and other obligations
issued to finance the purchase or construction of school facilities, additions
to school facilities, or the reconstruction, remodeling, alteration, modernization,
renovation or repair of school facilities, including furnishings, equipment,
architect fees, and the costs of issuance of such obligations and shall include
payments of principal and interest upon bonds heretofore issued to fund or
refund such obligations, and upon municipal bonds and other obligations which
the commissioner approves as having been issued for such purposes;

���� "District income"
means the aggregate income of the residents of the taxing district or taxing
districts
multiplied by the ratio of the median household income to the
average income of the residents of the taxing district or taxing districts
,
based upon data provided by the Division of Taxation in the New Jersey
Department of the Treasury and contained on the New Jersey State Income Tax
forms for the calendar year ending two years prior to the prebudget year.� The
commissioner may supplement data contained on the State Income Tax forms with
data available from other State or federal agencies in order to better
correlate the data to that collected on the federal census.� With respect to
regional districts and their constituent districts, however, the district
income
[
as
described above
]

shall be
[
allocated
]

calculated
by first allocating the aggregate income
among the regional and constituent
districts in proportion to the number of pupils resident in each of them
and
then multiplying each district�s allocation by the ratio of the district�s
median household income to the district�s average income
;

���� "Equalized
valuation" means the equalized valuation of the taxing district or taxing
districts, as certified by the Director of the Division of Taxation on October
1, or subsequently revised by the tax court by January 15, of the prebudget
year.� With respect to regional districts and their constituent districts,
however, the equalized valuations as described above shall be allocated among
the regional and constituent districts in proportion to the number of pupils
resident in each of them. In the event that the equalized table certified by
the director shall be revised by the tax court after January 15 of the
prebudget year, the revised valuations shall be used in the recomputation of
aid for an individual school district filing an appeal, but shall have no
effect upon the calculation of the property value rate, Statewide average
equalized school tax rate, or Statewide equalized total tax rate;

���� "Full-day preschool"
means a preschool day consisting of a minimum six-hour comprehensive
educational program in accordance with the district's kindergarten through
grade 12 school calendar;

���� "GAAP" means the
generally accepted accounting principles established by the Governmental
Accounting Standards Board as prescribed by the State board pursuant to
N.J.S.18A:4-14;

���� "General special
education services pupil" means a pupil receiving specific services
pursuant to chapter 46 of Title 18A of the New Jersey Statutes;

���� "Geographic cost
adjustment" means an adjustment that reflects county differences in the
cost of providing educational services that are outside the control of the
district;

���� "Household income"
means income as defined in 7 CFR ss.245.2 and 245.6 or any subsequent
superseding federal law or regulation;

���� "Net budget" means
the sum of the district's general fund tax levy, State aid received pursuant to
the provisions of this act other than preschool education aid, miscellaneous
revenue estimated pursuant to GAAP, and designated general fund balance;

���� "Nonpreschool ECPA"
means the amount of early childhood program aid, excluding prior year
carry-forward amounts, included in a district's 2007-2008 school year budget
certified for taxes that was allocated to grades K through 3;

���� "Prebudget year"
means the school fiscal year preceding the year in which the school budget is
implemented;

���� "Preschool expansion
grant" means any grant funded by a portion of preschool education aid
allocated by the Commissioner of Education or any other State funds
appropriated for the purpose of expanding free access to high-quality preschool
for resident three- and four-year old children in districts that do not, at the
time of application for a grant, provide State-funded, high-quality, free
preschool programs;

���� "Report" means the
Educational Adequacy Report issued by the commissioner pursuant to section 4 of
this act;

���� "Resident
enrollment" means the number of pupils other than preschool pupils,
post-graduate pupils, and post-secondary vocational pupils who, on the last
school day prior to October 16 of the current school year, are residents of the
district and are enrolled in:� (1) the public schools of the district,
excluding evening schools, (2) another school district, other than a county
vocational school district in the same county on a full-time basis, or a State
college demonstration school or private school to which the district of
residence pays tuition, or (3) a State facility in which they are placed by the
district; or are residents of the district and are:� (1) receiving home
instruction, or (2) in a shared-time vocational program and are regularly
attending a school in the district and a county vocational school district. In
addition, resident enrollment shall include the number of pupils who, on the
last school day prior to October 16 of the prebudget year, are residents of the
district and in a State facility in which they were placed by the State.�
Pupils in a shared-time vocational program shall be counted on an equated
full-time basis in accordance with procedures to be established by the
commissioner.� Resident enrollment shall include regardless of nonresidence,
the enrolled children of teaching staff members of the school district or
county vocational school district who are permitted, by contract or local
district policy, to enroll their children in the educational program of the
school district or county vocational school district without payment of
tuition.� Disabled children between three and five years of age and receiving
programs and services pursuant to N.J.S.18A:46-6 shall be included in the
resident enrollment of the district;

���� "School district"
means any local or regional school district established pursuant to chapter 8
or chapter 13 of Title 18A of the New Jersey Statutes;

���� "State facility"
means a State developmental center, a State Division of Youth and Family
Services' residential center, a State residential mental health center, a
Department of Children and Families Regional Day School, a State training
school/secure care facility, a State juvenile community program, a juvenile
detention center or a boot camp under the supervisional authority of the Youth
Justice Commission pursuant to P.L.1995, c.284 (C.52:17B-169 et seq.), or an
institution operated by or under contract with the Department of Corrections,
Children and Families or Human Services, or the Youth Justice Commission;

���� "Statewide equalized
school tax rate" means the amount calculated by dividing the general fund
tax levy for all school districts, which excludes county vocational school
districts and county special services school districts as defined pursuant to
this section, in the State for the prebudget year by the equalized valuations
certified in the year prior to the prebudget year of all taxing districts in
the State except taxing districts for which there are not school tax levies;

���� "Tax levy growth
limitation" means the permitted annual increase in the adjusted tax levy
for a school district as calculated pursuant to sections 3 and 4 of P.L.2007,
c.62 (C.18A:7F-38 and 18A:7F-39).

(cf: P.L.2025, c.100, s.4)

���� 5.��� Section 4 of P.L.2007,
c.260 (C.18A:7F-46) is amended to read as follows:

���� 4.��� a.� The State Board of
Education shall review and update the core curriculum content standards every
five years.� The standards shall ensure that all children are provided the
educational opportunity needed to equip them for the role of citizen and labor
market competitor.

���� The Commissioner of Education
shall develop and establish, through the report issued pursuant to subsection
b. of this section, efficiency standards which define the types of programs,
services, activities, and materials necessary to achieve a thorough and
efficient education.

���� b.��� By September 1 of 2010
and by September 1 every three years thereafter, the Governor, after
consultation with the commissioner, shall recommend to the Legislature through
the issuance of the Educational Adequacy Report for the three school years to
which the report is applicable:

���� (1)�� the base per pupil
amount based upon the core curriculum content standards established pursuant to
subsection a. of this section;

���� (2)�� the per pupil amounts
for full-day preschool;

���� (3)�� the weights for grade
level, county vocational school districts, at-risk pupils, bilingual pupils,
and combination pupils;

���� (4)�� the cost coefficients
for security aid and transportation aid;

���� (5)��
[
the State
average classification rate for general special education services pupils and
for speech-only pupils;
]

(Deleted by amendment, P.L.��� , c.�� )�� (pending before the Legislature as
this bill)

���� (6)�� the excess cost for
general special education services pupils and for speech-only pupils; and

���� (7)�� the extraordinary
special education aid thresholds.

���� The base per pupil amount, the
per pupil amounts for full-day preschool, the excess costs for general special
education services pupils and for speech-only pupils, and the cost-coefficients
for security aid and transportation aid shall be adjusted by the CPI for each
of the two school years following the first school year to which the report is
applicable.

���� The amounts shall be deemed
approved for the three successive fiscal years beginning from the subsequent
July 1, unless between the date of transmittal and the subsequent November 30,
the Legislature adopts a concurrent resolution stating that the Legislature is
not in agreement with all or any specific part of the report.� The concurrent
resolution shall advise the Governor of the Legislature's specific objections
to the report and shall direct the commissioner to submit to the Legislature a
revised report which responds to those objections by January 1.

(cf: P.L.2007, c.260, s.4)

���� 6.� Section 6 of P.L.2007,
c.260 (C.18A:7F-48) is amended to read as follows:

���� 6.���
a.
Beginning in
the 2009-2010 school year and for each school year
[
thereafter
]

until the
first full school year following the enactment of P.L.��� , c.���� (C.������� )
(pending before the Legislature as this bill)
, the amount of equalization
aid for the budget year shall equal the total Statewide equalization aid
calculated pursuant to section 11 of
[
this
act
]

P.L.2007,
c.260 (C.18A:7F-53)
for the prebudget year and prior to the application of
section 5 of
[
this
act
]

P.L.2007,
c.260 (C.18A:7F-47)
indexed by the sum of 1.0, the CPI, and the State
average enrollment growth percentage between the prebudget year and the budget
year as projected by the commissioner.�

����
b. Beginning in the first
full school year following the enactment of P.L.��� , c.���� (C.������� )
(pending before the Legislature as this bill) and for each school year
thereafter, the amount of equalization aid for the budget year shall be equal
to 33.67 percent of the sum of all school districts� adequacy budgets for the
budget year as calculated pursuant to section 9 of P.L.2007, c.260
(C.18A:7F-51).

(cf: P.L.2007, c.260, s.6)

���� 7.��� Section 9 of P.L.2007,
c.260 (C.18A:7F-51) is amended to read as follows:

���� 9.��� a.� The adequacy budget
for each school district and county vocational school district shall be
calculated as follows:

���� AB = (BC + AR Cost + LEP Cost
+ COMB Cost +
[
SE
Census
]
SE
Cost
) x GCA

where

���� BC is the district's or county
vocational school district's base cost as calculated pursuant to section 8 of
this act;

���� AR Cost is the cost of
providing educational and other services for at-risk pupils as calculated
pursuant to subsection b. of this section;

���� LEP Cost is the cost of
providing educational and other services for bilingual education pupils as
calculated pursuant to subsection c. of this section;

���� COMB Cost is the cost of
providing educational and other services for pupils who are both at-risk and
bilingual as calculated pursuant to subsection d. of this section;

����
[
SE Census
]

SE Cost

is the cost of providing programs and services to general special education
services pupils and speech-only pupils as calculated pursuant to subsection e.
of this section; and

���� GCA is geographic cost
adjustment.

���� The GCA shall be the
geographic cost adjustment developed by the commissioner and revised by the
commissioner every five years in accordance with receipt of census data.

���� b.��� AR Cost shall be
calculated as follows:

���� AR Cost = BPA x ARWENR x AR
Weight

where�

���� BPA is the base per pupil
amount;

���� ARWENR is the weighted
enrollment for at-risk pupils of the school district or county vocational
school district, which shall not include combination pupils; and

���� AR Weight is the at-risk
weight.

���� For the 2008-2009 through
2010-2011 school years the at-risk weight shall be as follows:

���� for a district in which the
concentration of at-risk pupils is less than
[
20%
]

20 percent

of resident enrollment, the at-risk weight shall equal 0.47;

���� for a district in which the
concentration of at-risk pupils is equal to
[
20%
]

20 percent

but less than
[
60%
]

60 percent

of resident enrollment, the at-risk weight shall equal the district's ((at-risk
% - 0.20) x 0.25)) + 0.47; and

���� for a district in which the
concentration of at-risk pupils is equal to or greater than
[
60%
]

60 percent

of resident enrollment, the at-risk weight shall equal 0.57.

���� For subsequent school years,
the AR weight shall be established in the Educational Adequacy Report.

���� c.���� LEP Cost shall be
calculated as follows:

���� LEP Cost = BPA x LWENR x LEP
Weight

where

���� BPA is the base per pupil
amount;

���� LWENR is the weighted
enrollment for the bilingual education pupils of the school district or county
vocational school district, which shall not include combination pupils; and

���� LEP Weight is the bilingual
pupil weight.

For the 2008-2009 through 2010-2011
school years the LEP weight shall be 0.5.� For subsequent school years, the LEP
weight shall be established in the Educational Adequacy Report.

���� d.��� COMB Cost shall be
calculated as follows:

���� COMB Cost = BPA x CWENR x (AR
Weight + COMB Weight)

where

���� BPA is the base per pupil
amount;

���� CWENR is the weighted
enrollment for pupils who are both at-risk and bilingual;

���� AR Weight is the at-risk
weight; and

���� COMB Weight is the combination
pupil weight.

���� For the 2008-2009 through
2010-2011 school years the COMB weight shall be 0.125.� For subsequent school
years, the COMB weight shall be established in the Educational Adequacy Report.

���� e.����
[
SE Census
]

SE Cost

shall be calculated as follows:

����
[
SE Census
]

SE Cost

= (
[
RE
x SEACR
]

SEENR
x AEC x 2/3) + (
[
RE
x SACR
]

SPEONLY
x SEC)

where

����
[
RE is the resident enrollment of
the school district or county vocational school district;

���� SEACR is the State average
classification rate for general special education services pupils
]

����
SEENR is the number of
general special education services pupils included in the school district�s or
county vocational school district�s resident enrollment
;

���� AEC is the excess cost for
general special education services pupils;

����
[
SACR is the State average
classification rate for speech-only pupils
]

����
SPEONLY is the number of
speech-only pupils included in the school district�s or county vocational
school district�s resident enrollment
; and

���� SEC is the excess cost for
speech-only pupils.

����
[
For the 2008-2009 through
2010-2011 school years the State average classification rate shall be 14.69%
for general special education services pupils and 1.897% for speech-only
pupils.� For subsequent school years, the State average classification rates shall
be established in the Educational Adequacy Report.
]

���� For the 2008-2009 school year
the excess cost shall be $10,898 for general special education services pupils
and $1,082 for speech-only pupils.� The excess cost amounts shall be adjusted
by the CPI in the 2009-2010 and 2010-2011 school years as required pursuant to
subsection b. of section 4 of this act.� For subsequent school years, the
excess cost amounts shall be established in the Educational Adequacy Report,
with the amounts adjusted by the CPI for each of the two school years following
the first school year to which the report is applicable.

(cf: P.L.2007, c.260, s.9)

���� 8.��� Section 10 of P.L.2007,
c.260 (C.18A:7F-52) is amended to read as follows:

���� 10.� Each school district and
county vocational school district shall receive equalization aid predicated on
a local share determined by district property wealth and district income.

���� a.���� Each district's local
share shall be calculated as follows:

���� LSHARE = (EQVAL x PVR x 50%) +
(INC x INR x 50%)

where

���� EQVAL is the
average of the

district's
[
prebudget
year
]

equalized valuation
amounts for the preceding three school years
;

���� PVR is the Statewide property
value rate determined pursuant to subsection c. of this section;

���� INC is the
average of the

district's income
for the calendar year ending two years prior to the
prebudget year and the two calendar years prior to that
; and

���� INR is the Statewide income
rate determined pursuant to subsection c. of this section.

���� b.��� The local share for each
county vocational school district shall be calculated as follows:

���� LSHARE = (COLSHARE/COAB) x AB

where�

���� COLSHARE is the sum of the
local shares for all school districts in the county calculated pursuant to
subsection a. of this section;

���� COAB is the sum of the
adequacy budgets for all school districts in the county calculated pursuant to
section 9 of
[
this
act
]

P.L.2007,
c.260 (C.18A:7F-51)
; and

���� AB is the county vocational
school district's adequacy budget calculated pursuant to section 9 of
[
this act
]

P.L.2007,
c.260 (C.18A:7F-51)
.

���� c.���� For the 2008-2009
school year, the property value rate shall be set at 0.0092690802 and the
income value rate shall be set at 0.04546684.� For subsequent school years the
values for the property value rate and the income value rate shall be annually
determined by the commissioner as follows:

���� the property value rate shall
be determined such that equalization aid equals the Statewide available
equalization aid for all districts determined according to
[
this act
]

P.L.2007,
c.260 (C.18A:7F-43 et al.)
had each school district's local share equaled
the product of the property value rate and the district's equalized valuation
and each county vocational school district's local share equaled the product of
the county vocational school district's adequacy budget and the average local
share, expressed as a percent, of the school districts located in the county;
and

���� the income rate shall be
determined such that equalization aid equals the Statewide available
equalization aid for all districts determined according to
[
this act
]

P.L.2007,
c.260 (C.18A:7F-43 et al.)
had each school district's local share equaled
the product of the income rate and the district's income and each county
vocational school district's local share equaled the product of the county
vocational school district's adequacy budget and the average local share,
expressed as a percent, of the school districts located in the county.

���� In the event that these rates,
when used in accordance with the provisions of this section and assuming that
each district's general fund levy is equal to its local share, do not result in
equalization aid for all districts equal to the Statewide available
equalization aid, the commissioner shall adjust these rates appropriately,
[
giving equal
weight to each
]

so that any change in the property value rate is accompanied by a change in
the income rate of the same amount, multiplied by the ratio of total equalized
valuation to total district income for all districts receiving equalization aid
.

(cf: P.L.2007, c.260, s.10)

���� 9.� Section 11 of P.L.2007,
c.260 (C.18A:7F-53) is amended to read as follows:

���� 11.� Each school district's
and county vocational school district's equalization aid shall be calculated as
follows:

���� EQAID = AB - LSHARE provided
that EQAID shall not be less than zero; and

where

���� AB is the district's adequacy
budget calculated pursuant to section 9 of
[
this
act
]

P.L.2007,
c.260 (C.18A:7F-43 et al.)
; and

���� LSHARE is the district's local
share calculated pursuant to section 10 of
[
this
act
]

P.L.2007,
c.260 (C.18A:7F-43 et al.)
.

���� Each district's equalization
aid for general fund expenses shall be expended to provide a thorough and
efficient system of education consistent with the core curriculum content
standards established pursuant to section 4 of
[
this act
]

P.L.2007,
c.260 (C.18A:7F-43 et al.)
.

����
[
A school district may make an
appeal to the commissioner on the amount of its equalization aid on the basis
that the calculation of income within the local share formula under section 10
of this act does not accurately reflect the district's income wealth.
]

(cf: P.L.2007, c.260, s.11)

���� 10.� Section 13 of P.L.2007,
c.260 (C.18A:7F-55) is amended to read as follows:

���� 13.� a.� Special education
categorical aid for each school district and county vocational school district
shall be calculated as follows:�

���� SE = (
[
RE x SEACR
]

SEENR

x AEC x 1/3) x GCA

where

����
[
RE is the resident enrollment of
the school district or county vocational school district;

���� SEACR is the State average
classification rate for general special education services pupils
]

����
SEENR is the number of
general special education services pupils included in the school district�s or
county vocational school district�s resident enrollment
;

���� AEC is the excess cost for
general special education services pupils; and

���� GCA is the geographic cost
adjustment as developed by the commissioner.

For the 2008-2009 school year the
excess cost shall be $10,898 for general special education services pupils.�
The excess cost amount shall be adjusted by the CPI in the 2009-2010 and
2010-2011 school years as required pursuant to subsection b. of section 4 of
[
this act
]

P.L.2007,
c.260 (C.18A:7F-46)
.� For subsequent school years, the excess cost amount
shall be established in the Educational Adequacy Report, with the amount
adjusted by the CPI for each of the two school years following the first school
year to which the report is applicable.

���� b.��� Extraordinary special
education aid for an individual classified pupil shall be available when the
student is educated in a general education classroom, special education
program, including but not limited to a resource program or special class
program, or any combination of general education and special education programs
and services, subject to the requirements and thresholds set forth in this
section.

���� (1)�� In those instances in
which a pupil is educated in an in-district public school program with
non-disabled peers, whether run by a public school or by a private school for
the disabled, and the cost of providing direct instructional and support
services for an individual classified pupil exceeds $40,000, for those direct
instructional and support services costs in excess of $40,000 a district shall
receive extraordinary special education State aid equal to
[
90%
]

90 percent

of the amount of that excess in accordance with the provisions of paragraph (4)
of this subsection.

���� (2)�� In those instances in
which a pupil is educated in a separate public school program for students with
disabilities and the cost of providing direct instructional and support
services for an individual classified pupil exceeds $40,000, for those direct
instructional and support services costs in excess of $40,000 a district shall
receive extraordinary special education State aid equal to
[
75%
]

75 percent

of the amount of that excess in accordance with the provisions of paragraph (4)
of this subsection.

���� (3)�� In those instances in
which a pupil is educated in a separate private school for students with
disabilities and the tuition for an individual classified pupil exceeds
$55,000, for tuition costs in excess of $55,000 a district shall receive
extraordinary special education State aid equal to
[
75%
]

75 percent
of the amount
of that excess in accordance with the provisions of paragraph (4) of this
subsection.

���� (4)�� Extraordinary special
education State aid for an individual classified pupil shall be calculated as
follows:

���� EA = ((ADC -

$40,000) x
.90) + (((AIC - $40,000) + (ASC - $55,000)) x .75)

where

���� ADC equals the district's
actual cost for the direct instructional and support services in an in-district
public school program as set forth in paragraph (1) of this subsection;

���� AIC equals the district's
actual cost for direct instructional and support services in a separate public
school program as set forth in paragraph (2) of this subsection; and

���� ASC equals the district's
actual cost for tuition paid to a separate private school as set forth in
paragraph (3) of this subsection.

���� (5)�� The receipt of
extraordinary special education State aid for an individual classified pupil
shall be conditioned upon a demonstration by the district that the pupil's
Individualized Education Plan requires the provision of intensive services,
pursuant to factors determined by the commissioner.

���� c.���� In order to receive
funding pursuant to this section, a district shall file an application with the
department that details the expenses incurred on behalf of the particular
classified pupil for which the district is seeking reimbursement.� Additional
State aid awarded for extraordinary special education costs shall be recorded
by the district as revenue in the current school year and paid to the district
in the subsequent school year.

���� d.��� A school district may
apply to the commissioner to receive emergency special education aid for any
classified pupil who enrolls in the district prior to March of the budget year
and who is in a placement with a cost in excess of
[
$40,000 or $55,000, as applicable
]
the
applicable extraordinary special education aid thresholds enumerated in
subsection b. of this section
.� The commissioner may debit from the
student's former district of residence any special education aid which was paid
to that district on behalf of the student.

���� e.���� The department shall
review expenditures of federal and State special education aid by a district in
every instance in which special education monitoring identifies a failure on
the part of the district to provide services consistent with a pupil's Individualized
Education Plan.

���� f.����
[
The
commissioner shall commission an independent study of the special education
census funding methodology to determine if adjustments in the special education
funding formulas are needed in future years to address the variations in
incidence of students with severe disabilities requiring high cost programs and
to make recommendations for any such adjustments.� The study and
recommendations shall be completed by June 30, 2010.
]

(Deleted by amendment,
P.L.��� , c.��� ) (pending before the Legislature as this bill)

���� g.���
[
A school
district may apply to the commissioner to receive additional special education
categorical aid if the district has an unusually high rate of low-incidence
disabilities, such as autism, deaf/blindness, severe cognitive impairment, and
medically fragile.� In applying for the aid the district shall: demonstrate the
impact of the unusually high rate of low-incidence disabilities on the school
district budget and the extent to which the costs to the district are not
sufficiently addressed through special education aid and extraordinary special
education aid; and provide details of all special education expenditures,
including details on the use of federal funds to support those expenditures.
]

(Deleted
by amendment, P.L.��� , c.��� ) (pending before the Legislature as this bill)

(cf: P.L.2007, c.260, s.13)

���� 11.� Section 4 of P.L.2018,
c.67 (C.18A:7F-68) is amended to read as follows:

���� 4.� a.� Notwithstanding the
provisions of P.L.2007, c.260 (C.18A:7F-43 et al.) or any other law to the
contrary, in the 2019-2020 through 2024-2025 school years, a school district or
county vocational school district in which the State aid differential calculated
is negative shall receive State school aid in an amount equal to the sum of the
district's State aid in the prior school year plus the district's proportionate
share of the sum of any increase in State aid included in the annual
appropriations act for that fiscal year and the total State aid reduction
pursuant to subsection b. of this section based on the district's State aid
differential as a percent of the Statewide total State aid differential among
all school districts and county vocational school districts for which the State
aid differential is negative.� Any increase in State aid pursuant to this
subsection shall first be allocated to equalization aid, followed by special
education categorical aid, security categorical aid, and transportation aid,
except that no category shall exceed the total amount as calculated in
accordance with the provisions of sections 11, 13, 14, and 15 of P.L.2007,
c.260 (C.18A:7F-53, C.18A:7F-55, C.18A:7F-56, and C.18A:7F-57), respectively.

���� b.��� Except as provided
pursuant to subsection c. of this section, and notwithstanding the provisions
of P.L.2007, c.260 (C.18A:7F-43 et al.) or any other law to the contrary, in
the 2019-2020 through 2024-2025 school years, a school district or county
vocational school district in which the State aid differential is positive
shall receive State school aid in an amount equal to the district's State aid
in the prior school year minus a percent of the State aid differential
according to the following schedule:

���� (1)� 13 percent in the 2019-2020 school year;

���� (2)� 23 percent in the
2020-2021 school year;

���� (3)� 37 percent in the
2021-2022 school year;

���� (4)� 55 percent in the
2022-2023 school year;

���� (5)� 76 percent in the
2023-2024 school year; and

���� (6)� 100 percent in the
2024-2025 school year.

���� c.� (1)� An SDA district that
is located in a municipality in which the equalized total tax rate is greater
than the Statewide average equalized total tax rate for the most recent
available calendar year and is spending below adequacy as calculated pursuant
to section 1 of P.L.2018, c.67 (C.18A:7F-70) shall not be subject to a
reduction in State aid pursuant to subsection b. of this section.

���� (2)� An SDA district that is
located in a municipality in which the equalized total tax rate is greater than
the Statewide average equalized total tax rate for the most recent available
calendar year and is spending above adequacy as calculated pursuant to section
1 of P.L.2018, c.67 (C.18A:7F-70) shall be subject to a reduction not to exceed
the amount by which the district is spending above adequacy multiplied by the
corresponding percentage included in subsection b. of this section.

���� (3)� A school district, other
than an SDA district, that is located in a municipality in which the equalized
total tax rate is at least 10 percent greater than the Statewide average
equalized total tax rate for the most recent available calendar year and is
spending at least 10 percent below adequacy as calculated pursuant to section 1
of P.L.2018, c.67 (C.18A:7F-70) shall not be subject to a reduction in State
aid pursuant to subsection b. of this section.

���� (4)�
[
A
]

Except as
provided in section 12 and section 13 of
P.L. , c. (C. )
(pending before the Legislature as this bill), a
school district that is a
participating district under an application that is approved for a grant
pursuant to subsection a. of section 4 of P.L.2021, c.402 (C.18A:13-47.4) or a
school district that is a participating district under an application that receives
preliminary approval pursuant to subsection b. of section 4 of P.L.2021, c.402
(C.18A:13-47.4) and that has a State aid differential that is positive may
elect to receive State school aid in an amount equal to the district's State
aid in the prior school year minus a percent of the State aid differential
according to the following schedule:

���� (a)� 30 percent in the
2021-2022 school year;

���� (b)� 37 percent in the
2022-2023 school year;

���� (c)� 46 percent in the
2023-2024 school year;

���� (d)� 55 percent in the
2024-2025 school year;

���� (e)� 65.5 percent in the
2025-2026 school year;

���� (f)� 76 percent in the
2026-2027 school year;

���� (g)� 88 percent in the
2027-2028 school year; and

���� (h)� 100 percent in the
2028-2029 school year.

���� A school district with a State
aid differential that is positive, which is a participating district under an
application that is approved for a grant pursuant to subsection a. of section 4
of P.L.2021, c.402 (C.18A:13-47.4) or that receives preliminary approval under
subsection b. of section 4 of P.L.2021, c.402 (C.18A:13-47.4) but has not
created or joined a limited purpose or all purpose regional school district
within two years following the grant application approval or preliminary
approval shall not be eligible to receive State aid according to the schedule
enumerated in this paragraph.

���� As used in this paragraph,
"participating district" means a school district whose board of
education by resolution certifies a commitment to participate in a feasibility
study submitted as part of an application under the grant program established
pursuant to section 2 of P.L.2021, c.402 (C.18A:13-47.2).

���� (5)� Notwithstanding the
provisions of section 32 of P.L.1996, c.138 (C.18A:7F-32) or any other law,
rule, or regulation to the contrary, a school district that is a regional
school district created following the approval of a grant application pursuant to
section 4 of P.L.2021, c.402 (C.18A:13-47.4) shall, from the first full school
year following the creation of the regional school district through the
2028-2029 school year, receive State school aid in an amount that is the
greater of:

���� (a)� the amount of State
school aid that the newly created regional school district would receive as a
regional school district; or

���� (b)� the sum of the amount of
State school aid received by each school district constituting the newly
created regional school district prior to the creation of such regional school
district.

���� (6)� A school district shall
not be not be subject to a reduction in State aid pursuant to this section
provided that:

���� (a)� the district is a
regional school district consisting of at least five constituent school
districts;

���� (b)� the district has
mitigated costs of regionalization, as determined by the Commissioner of
Education;

���� (c)� for the most recent
school year for which data is available, the district's administrative costs
per pupil are 15 percent lower than the Statewide average administrative costs
per pupil for regional school districts; and

���� (d)� the district's general
fund tax levy has been increased by the maximum amount permitted pursuant to
section 3 of P.L.2007, c.62 (C.18A:7F-38) in each of the last five school
years.

���� A school district that is
exempt from a reduction in State aid pursuant to paragraph (6) of subsection c.
of this section shall provide courtesy busing to pupils who reside in the
district, provided that the district was providing courtesy busing prior to the
school year in which it is exempt from a reduction in State aid.

���� d.��� Any decrease in State
aid pursuant to subsection b. or c. of this section shall first be deducted
from a school district's or county vocational school district's allotment of
adjustment aid.� Any additional reduction shall be deducted from the school district's
or county vocational school district's allotment of non-SFRA aids, followed by
equalization aid, special education categorical aid, security aid, and
transportation aid.

���� e.���� Any remaining
adjustment aid or non-SFRA aids shall be reallocated to other State aid
categories in a manner to be determined by the commissioner.

(cf: P.L.2023, c.140, s.1)

���� 12.� (New section)� a.� As
used in this section, �total operating budget� means the sum of a district�s
general fund revenues from local sources, State sources, federal sources, and
other sources.� Total operating budget shall not include withdrawals made by
the district from any reserve account established pursuant to section 6 of
P.L.2007, c.62 (C.18A:7F-41) or reimbursements paid to the district for
extraordinary special education aid pursuant to section 13 of P.L.2007, c.260
(C.18A:7F-55).�

���� b.� Notwithstanding the
provisions of P.L.2007, c.260 (C.18A:7F-43 et al.), P.L.2018, c.67 (C.18A:7F-67
et al.), or any other provision of law, rule, or regulation to the contrary, for
the first three full school years following the date of enactment of P.L. , c.���
(C.������� ) (pending before the Legislature as this bill), a school district
shall receive an allocation of reduction adjustment aid to ensure that the
amount of State school aid provided to a school district is not decreased by
more than two percent of the district�s prebudget year total operating budget.
In no school year during the first three full school years following the date
of enactment of P.L.��� , c.��� (C. �������) (pending before the Legislature as
this bill) shall a school district receive an amount of State school aid that
has been reduced from the amount of aid disbursed in the prebudget year by an
amount that exceeds two percent of the district�s prebudget year total
operating budget.

���� 13.� (New section) a.� Notwithstanding
the provisions of P.L.2007, c.260 (C.18A:7F-43 et al.), P.L.2018, c.67
(C.18A:7F-67 et al.), or any other law, rule, or regulation to the contrary, a
school district that is spending above adequacy as calculated pursuant to
section 1 of P.L.2018, c.67 (C.18A:7F-70) shall not be subject to a reduction
in State school aid that exceeds the amount by which the district is spending
above adequacy.

���� b.� Notwithstanding the
provisions of P.L.2007, c.260 (C.18A:7F-43 et al.), P.L.2018, c.67 (C.18A:7F-67
et al.), or any other law, rule, or regulation to the contrary, a school
district shall not be subject to a reduction in State school aid if the
district is spending below adequacy as calculated pursuant to section 1 of
P.L.2018, c.67 (C.18A:7F-70) and the district has a projected resident
enrollment for the budget year that is greater than 8,000 students.

���� 14. Sections 1, 3, 4 and 6
through 13 of this act shall take effect immediately and shall first apply to
the first full school year following the date of enactment.� Section 2 of this
act shall take effect immediately.� Section 5 of this act shall take effect
immediately and shall first apply to the Educational Adequacy Report to be
issued next following the date of enactment.�

STATEMENT

���� This bill modifies various provisions
of school funding law, including timelines for the provision of State aid
notices, the definition of district income, calculations of local share and
special education costs, and limits on State aid reductions.

���� The bill requires the
commissioner to annually issue a public memorandum providing the timelines for
the availability and certification of equalized valuation data and district
income used in the calculation of local share. The commissioner is also
required, under the bill, to provide school districts with a preliminary State
aid notice that estimates the amount of State aid payable to the district in
the succeeding school year within 15 days of receiving finalized equalized
valuation and district income data but no later than January 15 of each year.

���� The bill also requires the
Department of Education to make available on the department�s Internet website
the calculation of aid payable to each school district in the succeeding year
in a user-friendly manner, including explanations of the variables used to
determine the district�s aid. The information is required to be posted each
year within two days of the Governor�s Budget Message.

���� Additionally, the bill revises
the definition of equalized valuation and district income used in a school
district�s calculation of local share to provide that both measures are equal
to the average of the district�s values for the preceding three years for which
data is available. �The definition of district income is further modified under
the bill to use aggregate income multiplied by the ratio of median household
income to average income. It is the sponsor�s belief that this will provide a
fairer representation of each district�s income and protect against outliers
that skew the assessment of a town�s actual wealth and, consequently, a
district�s local fair share.

���� Additionally, the bill amends
the calculation of equalization aid to ensure that the total amount of
available equalization aid Statewide is 33.67 percent of the sum of all school
districts� adequacy budgets.

���� The bill also changes how
special education aid to school districts is calculated. Under the provisions
of the �School Funding Reform Act of 2008,� the State provides special
education aid to school districts using the census-based method. Under this method,
districts receive funding for special education based on the assumption that a
fixed percent of the total student population requires special education
services, rather than using the actual number of special education students to
determine the amount of State aid that school districts will receive. This bill
eliminates the use of the census-based methodology and calculates State aid for
special education based on the actual number of special education students
included in the district�s resident enrollment.

���� Additionally, the bill
establishes municipal overburden protections to prevent certain school districts
from receiving a reduction in State school aid.� Pursuant to the bill, a school
district that is spending above adequacy would not be subject to a reduction in
State aid that exceeds the amount by which the district is spending above
adequacy.� Meanwhile, a school district that is spending below adequacy and has
a projected resident enrollment greater than 8,000 students would not be
subject to a State school aid decrease.

���� Finally, the bill establishes
a category of aid known as �reduction adjustment aid,� which would only be
provided for the first three full school years following the date of enactment
of the bill.� The aid would ensure that the total amount of State school aid
provided to a school district is not decreased by more than two percent of the
district�s prebudget year total operating budget.