Statements on the School Funding Reform Act

Statement from Dr. Kwame R. Morton, Sr., Superintendent of Schools,
and Mr. Jason Schimpf, Assistant Superintendent and Business Administrator, Cherry Hill Public Schools

On behalf of the nearly 11,000 students and 1,800 staff members who comprise the Cherry Hill Public Schools community, we extend our sincerest gratitude for the opportunity to share our recommendations and concerns regarding the School Funding Reform Act (SFRA). We deeply appreciate your willingness to listen to our perspective and consider our suggestions as we collectively strive to ensure equitable and sustainable funding for our district and all New Jersey public schools.

We firmly believe that strong public schools are the foundation of a thriving community. When schools face financial instability, the ripple effects are felt throughout the entire community. Over the past two years, Cherry Hill Public Schools has experienced significant fluctuations in state aid, which have created operational challenges and uncertainty. The prospect of additional multi-million-dollar losses in state aid poses a severe threat to the well-being of our district and the broader Cherry Hill community. It is with this urgency that we present the following recommendations for your consideration:

Equalized Valuation and District Income Factors
In FY26, the NJDOE implemented a 3-year averaging method for equalized valuation and district income calculations, which resulted in increased equalization aid for some districts. While we acknowledge and appreciate the introduction of -3% and +6% limits on one-year state aid decreases or increases, the variability in the multipliers remains a concern. To promote greater stability and predictability, we recommend the adoption of a 5-year rolling average or the implementation of a variance cap for these calculations. This approach would help mitigate the impact of sudden fluctuations and provide districts with a more reliable foundation for financial planning.

Transportation Costs
Between FY19 and FY25, Cherry Hill Public Schools experienced a 49.6% increase in total student transportation expenses, amounting to a $5.6 million rise. During this same period, categorical transportation aid remained frozen, leaving the district to absorb these escalating costs. We strongly recommend revising the transportation aid formula to reflect actual, current expenditures. Additionally, we propose the creation of a student transportation spending growth limitation adjustment, which would allow districts to exceed the 2% tax levy cap to address rising transportation costs. Without these adjustments, districts like ours will continue to face unsustainable financial pressures in this critical area.

Special Education and Extraordinary Aid Expenditures
Special education expenditures in Cherry Hill Public Schools increased from $39.2 million in FY19 to $46.2 million in FY25. While state special education funding has increased, the year-over-year expenditure growth consistently exceeds the 2% tax levy cap, placing an undue burden on the district. Furthermore, the state’s funding of extraordinary aid requests has declined significantly, from 90.1% in FY21 to just 51.6% in FY25. We recommend the following actions:

Fully fund extraordinary aid expenditures to ensure districts can meet the needs of their most vulnerable students.

Incorporate special education transportation costs into the extraordinary aid reimbursement eligibility to address the growing financial demands associated with these services.

Tax Levy Cap
The statutory 2% tax levy cap continues to hinder districts’ ability to meet their local fair share (LFS) obligations as calculated by the SFRA formula. Inflationary costs and uncontrollable expenditures, such as energy costs, PERS assessments, legal expenses, and health benefits, exacerbate this challenge. While we appreciate the temporary provisions introduced in FY25 and FY26, including the tax levy incentive program, these measures were short-term solutions. We recommend the following:

Allow districts that are below their LFS to exceed the 2% levy cap until they meet their LFS, if so desired by the district.

Move certain uncontrollable expenditures, such as energy costs, PERS assessments, legal expenses, and health benefits, outside the 2% levy cap to provide districts with greater financial flexibility.

The Cherry Hill Public Schools community is committed to providing a high-quality education for all students, but we cannot do so without a stable and equitable funding framework. The recommendations outlined above are essential to ensuring that our district, and others across the state can continue to meet the needs of our students and staff while maintaining fiscal responsibility. We urge the NJDOE to consider these proposals as part of its ongoing efforts to refine and improve the School Funding Reform Act.

Thank you for your time, attention, and commitment to supporting New Jersey’s public schools. We remain hopeful that, together, we can create a funding system that reflects the values and priorities of our state.

Sincerely,

Dr. Kwame R. Morton, Sr.                                          Mr. Jason Schimpf
Superintendent of Schools                                         Assistant Superintendent & Business Administrator

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Statement from Mrs. Gina Winters, Board President, Cherry Hill Public Schools

I am writing on behalf of the Cherry Hill Board of Education in response to your request for comments regarding the current school funding formula (SFRA). We appreciate the opportunity to provide input on this critical issue affecting our schools, and most importantly, the almost 11,000 students we serve each day.

We support the following revisions to SFRA to create greater predictability in the amount of State aid districts receive annually and to modernize the formula to meet the needs of districts in 2026 and beyond.

Calculation of State Aid:
Cherry Hill received an increase of $6,787,979 in formula aid in FY24 (July 1, 2023 - June 30, 2024). In FY25, we originally faced a $6,900,182 reduction in formula aid. Due to the advocacy efforts of this Board, district administration, and the Cherry Hill community, the Legislature provided the district with a much needed additional $3,105,082 in "Stabilized School Budget Aid," which brought the actual decrease down to $3,795,100. In FY26, the district's aid decreased again by $3,989,399, which included the loss of the $3,105,082 in Stabilized School Budget Aid. Under the formula as it stands, the district would have lost a total of $11,393,868 in FY26 but instead held to a maximum decrease of 3% from FY25 (-$884,317) due to the additional language in the annual appropriations act. Therefore, the total reduction in FY26 included 1) the loss of $3,105,082 in stabilized aid and 2) the capped 3% reduction of $884,317, resulting in an actual total loss of $3,989,399. Of note, under the current formula the district received zero equalization aid in FY26. This contrasts with $22,107,422 in equalization aid received in FY24 and $15,207,240 received in FY25.

The calculation of local fair share relies heavily on local property values, which have risen drastically in recent years, as low inventory has driven up new home purchase prices. While home values have increased overall, residents who purchased their homes prior to the pandemic have not benefited from their increased home valuations, therefore this factor does not reflect the actual ability of the majority of residents to pay. Relying on this "wealth factor" ignores the real financial situation of the large majority of homeowners.

Additionally, volatility in the measures of wealth used in the formula has led to large and unpredictable fluctuations in State aid that impede districts’ ability to plan and budget accordingly. As stated above, Cherry Hill experienced an almost $7 million increase in aid in FY24, followed by a decrease of almost $7 million in the initial aid calculation for FY25, resulting in an approximate $14 million fluctuation in aid as calculated under the formula.

For FY26, our district lost approximately another $4 million due to the loss of stabilization aid plus an additional reduction. If not for the 3% cap on losses that was included in the language of the annual appropriations act, under the current formula the district would have lost $11 million. Additionally, despite increases in our most vulnerable student populations, we lost 100% of our equalization aid. Fluctuations like these destabilize the district budgeting process, making it impossible to effectively plan for the future.

Given the disconnect between property values and actual wealth (and corresponding ability to bear additional financial burden), we recommend decreasing the reliance on property values as a measure of wealth in the formula. We further recommend the continued use of multi-year averages to provide greater stability and predictability in the amount of State aid to be received.

We additionally support the codification of the 3% cap on losses so districts can begin their budgeting process earlier and be better prepared once the actual aid numbers are released. Finally, we recommend greater consistency in the multipliers used each year; this would provide greater stability in the amount of aid districts can expect to receive and assist in planning.

Tax cap flexibility:
We have always been mindful of the tax burden our district budget places on the Cherry Hill community; nearly 80% of our annual budget is supported by local property taxes, while State aid accounts for just 12%. In addition, due to over 20 years of chronic underfunding, Cherry Hill taxpayers also passed the largest bond referendum in State history in 2022 - over $363 million - to provide critical repairs to our infrastructure. This is an annual local property tax increase above and beyond any increase we must enact to support the annual budget. In short, we have grown increasingly concerned about the financial burden placed upon the citizens of the Cherry Hill Public Schools.

While tax cap flexibility may be a tool needed by some districts to reach local fair share, giving Cherry Hill additional taxing authority does not address the long-term systemic problems created by SFRA.

Transportation aid:
Transportation aid should be responsive to rising costs and reflect the actual number of students being transported. Despite the fact that our transportation costs increased from $11.3 million in FY19 to $16.9 million in FY25, our transportation aid remained flat at $2.88 million, which covered only 17% of actual expenditures. Our transportation aid increased in FY26 but was offset by the total loss of equalization aid.

Rising transportation costs are a result of two factors: the price of bus contracts increasing due to annual inflation, and more students being transported. According to a demographic study commissioned by our Board, our student population will significantly increase over the next five years, especially for our preschool and elementary populations.

Preschool transportation, which is not an eligible use of Preschool Expansion Aid (PEA), transportation for special education students, and transportation for McKinney-Vento students place additional demands on our annual transportation budget.

We recommend that transportation aid increase with the number of students being transported and reflect rising annual costs to support our growing PreK-12 population. We also recommend that preschool transportation costs become an acceptable use of PEA funds, and that further assistance is provided to districts to support transportation for special education students and McKinney-Vento students.

Special Education:
Cherry Hill has a large special education population, with 26% of our students receiving special education services. The current funding formula uses an average number for allocating special education aid rather than the actual number of students receiving services. Last year, through annual appropriations act language, the actual number of special education students was used when determining special education aid.

We recommend the continued use of the actual number of special education students that districts serve when calculating the amount of special education aid received, and the codification of this change in SFRA.

Thank you for this opportunity to comment on the current school funding formula and recommend possible updates. If you have any questions or need further clarification on any of the information provided, please do not hesitate to contact us.

 

Best,

Gina Winters
President
Board of Education
Cherry Hill Public School