S4166

An Act concerning the allocation of State aid to school districts in the Highlands Region and amending P.L.2018, c.67.

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

1. 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 school district or county vocational school district, located in the Highlands Region as defined in section 3 of P.L.2004, c.120 (C.13:20-3), 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) 14 percent in the 2020-2021 school year;

(3) 15 percent in the 2021-2022 school year;

(4) 30 percent in the 2022-2023 school year;

(5) 45 percent in the 2023-2024 school year;

(6) 60 percent in the 2024-2025 school year;

(7) 75 percent in the 2025-2026 school year;

(8) 90 percent in the 2026-2027 school year; and

(9) 100 percent in the 2027-2028 school year.

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.2018, c.67, s.4)

2. This act shall take effect immediately.

STATEMENT

P.L.2018, c.67 (C.18A:7F-67 et al.), commonly referred to as S-2, established a schedule for the reduction in the State aid of school districts with a positive State aid differential. A district’s State aid differential is the difference between the amount of State aid received by the district in the prior school year, not including preschool education, educational adequacy, and school choice aids, and the sum of equalization, special education, security, and transportation aids that the district would receive under the corresponding sections of the “School Funding Reform Act of 2008,” P.L.2007, c.260 (C.18A:7F-43 et al.). Under the current law, the State aid will be reduced annually between the 2019-2020 and 2024-2025 school years by a percentage established under that law.

This bill modifies both the schedule for the reduction of the State aid and the amount of the reduction to be made in each school year in the case of school districts and county vocational school districts that are located in the Highlands Region. For districts in the Highlands Region, the State aid differential will be eliminated by the 2027-2028 school year rather than the 2024-2025 school year, and the percentage of the reduction made in those school years will be reduced.

The provisions of this bill recognize the fact that under the “Highlands Water Protection and Planning Act,” P.L.2004, c.120 (C.13:20-1 et al.), development in the municipalities located in the Highlands Region that comprise these school districts is strictly regulated and in light of that fact, it may be difficult for these communities to raise the increased taxes that the elimination of State school aid may require. Consequently, it seems only fair to reduce the State aid to these districts over a longer period of time in order to provide them with the opportunity to determine how they will address this challenge.