A5174

An Act concerning the calculation of State aid to school districts and amending P.L.2007, c.260.

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

1. 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 district's prebudget year equalized valuation;

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

INC is the district's income; 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; and

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

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 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 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.

d. Notwithstanding the provisions of subsection c. of this section to the contrary, for the 2019-2020 school year through the 2027-2028 school year, the Statewide property value rate shall be set at 0.0092690802.

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

2. This act shall take effect immediately.

STATEMENT

Under the provisions of the “School Funding Reform Act of 2008,” P.L.2007, c.260, a school district’s equalization aid is calculated as the difference between the district’s adequacy budget, the estimated cost of providing appropriate educational opportunities to its students, and the district’s local share, the amount that the district can afford to raise locally based on the district’s total equalized property valuation and the total income of its residents. The local share is calculated by multiplying the district’s equalized valuation by a Statewide property value rate and its total income by a Statewide income rate. These two products are then summed and divided by two to yield the district’s local share. The Statewide property and income rates are adjusted annually to ensure that the total amount of equalization aid awarded to school districts does not exceed the statutorily determined amount of aid that is available to be disbursed.

This bill provides that in each school year, through the 2027-2028 school year, the Statewide property value rate will be fixed at 0.0092690802. This would result in only the Statewide income rate changing annually, and would yield a different allocation of equalization aid among school districts.