Opinion ID: 1898472
Heading Depth: 2
Heading Rank: 2

Heading: Educational Funding Disparities

Text: Plaintiffs intended to prove that the funding and spending disparities referred to in Robinson I are worse now than they were before adoption of the Act. They have done so. Prior to the Act, in 1971-72, the spread between the lowest and highest spending districts was $700 per pupil to $1,500 per pupil, a difference of $800. Robinson V, supra, 69 N.J. at 480 n. 4, 355 A. 2d 129. This difference of $800 per pupil reflects the range between the absolute highest spending districts and the absolute lowest. Plaintiffs' expert calculated the range of expenditure disparity from 1975-76 through 1984-85 from the fifth to the ninety-fifth percentiles, i.e., she excluded from her analysis those districts, each containing five percent of the pupils in the state, with expenditures at the highest and lowest extremes. Expenditures were measured by current expenditures per weighted pupil, including some federal funds (excluding, however, federal aid under Chapter 1, 20 U.S.C.A. § 2701 et seq., which is the major source of federal aid). In 1975-76, the year immediately prior to the Act, districts at the fifth percentile spent $1,076, while districts at the ninety-fifth spent $1,974, a difference of $898. For a few years after the Act was funded, the disparity diminished, but thereafter it generally increased to the point where in 1984-85 districts at the fifth percentile spent $2,687, while districts at the ninety-fifth percentile spent $4,755, a disparity of $2,068 per pupil. The disparity in expenditures is significant even when adjusted for inflation  in 1975-dollars, the disparity grew from $898 per pupil in 1975-76 to $1,135 per pupil in 1984-85. The impact of this disparity, solely in dollar terms, is that on the average, in 1984-85, a group of richer districts with 189,484 students spend 40% more per pupil than a group of poorer districts with 355,612 students; one provides an education worth $4,029 per pupil, the other, $2,861. [15] For instance, a 3,000 pupil district in a poorer area has a budget of $8.6 million, while a relatively wealthy suburban district with 3,000 pupils has a budget of $12.1 million. The disparity is not as pronounced in the middle, which covers 339 districts and 575,181 students. That disadvantage in expenditures per pupil is clearly related to all of the other aspects of poverty that define poorer urban districts and their youth. Although the statistical relationships are the subject of considerable dispute, we conclude that generally they show that the poorer the district  measured by equalized valuation per pupil, or by other indicators of poverty  the less the per pupil expenditure; the poorer and more urban the district, the heavier its municipal property tax, the greater the school tax burden; whatever the measure of disadvantage, need, and poverty  the greater it is, the less there is to spend. Statisticians advise that the relationships suggested in this record do not prove causal connection, that the poorer the district the lower its expenditures per pupil does not mean that low property valuations per student cause low expenditures per pupil. It is only when the relationship is strong and when other statistical techniques are applied  so as to exclude other causes  that a fair conclusion may be reached, one that inevitably depends on the experience and logic that suggests a causal relationship in the first place. Here the strength and consistency of the relationship between dollars per pupil and these other factors convince us that there is such a causal relationship, although that conclusion is not essential to our determination. We note the sharp dispute between the statisticians for plaintiffs and those for the State despite their total agreement on the underlying facts. The experts used by the Board and Commissioner, some outside consultants, some DOE officials, all of admitted qualifications, deny the strength, consistency, and even the existence of these relationships. Without in any way impugning plaintiffs' experts' overall qualifications as education finance analysts, the State's witnesses argue that plaintiffs' statistical analysis is rudimentary, consisting largely of comparisons between districts at the high and low ends of the spectrum. They claim that more sophisticated methods should be used to test the asserted relationship against the entire distribution. They claim, for instance, that such analysis demonstrates that property wealth accounts for only 21% of the differences in per pupil expenditures between districts, a figure that excludes federal aid. Plaintiffs, however, claim that this figure ignores differences in the effort needed to raise the funds  the school tax rate  and that if this factor is considered, the figure is 47%. Most of all, however, the State's expert witnesses' fire is aimed at the undeniable aspects of inconsistency in the relationships: some low property value districts spend more than the State average per pupil; large groups of districts spend more than other large groups with higher property values per pupil; and in the vast number of districts whose indicators of property wealth or poverty fall between the extremes, not only are there numerous district-by-district inconsistencies with the asserted property wealth/expenditure per pupil relationship, but even when averages of the property wealth of groups of districts are examined, the corresponding increase in per pupil expenditures is less than substantial. For most districts, plaintiffs have failed to prove substantively that a thorough and efficient education does not exist. Furthermore, their proofs of expenditure disparity in those districts are not sufficient to overcome the deference owed to the conclusions of the Commissioner and the Board. Given the State's attempt to achieve thorough and efficient education, we doubt that any showing of expenditure disparity in the absence of some independent evidence of substantive failure would warrant a conclusion that a thorough and efficient education does not exist. But expenditure disparity does play a role, an important one, in our conclusion that the constitutional level has not been achieved in the poorer urban districts. This disparity has multiple relevance: to the extent educational quality is deemed related to dollar expenditures, it tends to prove inadequate quality of education in the poorer districts, unless we were to assume that the substantial differential in expenditures is attributable to an education in the richer districts far beyond anything that thorough and efficient demands; it indicates even more strongly the probability that the poorer districts' students will be unable to compete in the society entered by the richer districts' students; and by its consistency over the years, it suggests that the system as it now operates is unable to correct this. Our reasoning at this point can be compared with Robinson I where we concluded that the expenditure disparity could not be remedied under the existing system, given its heavy reliance on the property tax. Upon the record before us, it may be doubted that the thorough and efficient system of schools required by the 1875 amendment can realistically be met by reliance upon local taxation. The discordant correlations between the educational needs of the school districts and their respective tax bases suggest any such effort would likely fail.... [ Robinson I, supra, 62 N.J. at 520, 303 A. 2d 273.] So too here we do not believe a thorough and efficient education in the poorer urban districts can realistically be met by reliance on the system now in place. While local taxation no longer has the same impact, it is still significant. More than that, however, we believe that because of the complex factors leading to a failure of thorough and efficient in the poorer urban districts, including disparity of expenditures, we are no more likely ever to achieve thorough and efficient than we believed we could by relying on local taxation in Robinson I. Combined with these disparities of wealth and expenditure are the much more serious disparities of educational need, students in the poorer urban districts dramatically disadvantaged compared to their peers in the affluent suburbs. These intractable differences of wealth and need between the poorer and the richer, and the discordant correlations within a poorer district between its students' educational needs and its ability to spend, are more than the present funding system can overcome. The failure has gone on too long; the factors are ingrained; the remedy must be systemic. The present scheme cannot cure it. In order to understand the statistical comparisons between districts, some explanation of terms and methodology is required. One of the key statistical elements is the listing and division of districts by socioeconomic status (SES) prepared some time ago by the DOE. Districts are arranged in ten groups, known as District Factor Groups (DFGs), and designated DFG A through DFG J, A being the group with the lowest socioeconomic status, J the highest. The DOE in 1974 devised this method of measuring socioeconomic status through a numerical ranking of every district in the state. The measurement consisted of seven factors: 1) per capita income level, 2) occupation level, 3) education level, 4) percent of residents below the poverty level, 5) density (the average number of persons per household), 6) urbanization (percent of district considered urban), and 7) unemployment (percent of those in the work force who received some unemployment compensation). Each factor is weighted in accordance with the DOE's evaluation of its relative importance as an indicator of such status, then combined by a formula that produces a numerical result. Both by its usual meaning and by examining the factors, one can divine the clear intent of the measurement as quantifying the advantages and disadvantages of a district and its students for educational purposes in terms of their social and economic background and environment. The DOE divided all districts into ten groups, each having approximately fifty districts but with differing numbers of students in each group. DFG A, therefore, includes the lowest fifty-five districts in terms of socioeconomic status of all ten groups with 257,000 students in 1984-85, and DFG J, the highest fifty-two districts, with 69,576 students in 1984-85. Although the particular test for which this array was designed has been abandoned, the DOE continued to update the socioeconomic status measurement, revising it in 1984 in accordance with the 1980 Census. It has been used extensively in this case. The possible significance of the origin of this SES comparison is worth noting. It was initiated to enable districts of a particular SES to measure their performance against others like them. [16] The DOE wanted to assist Trenton, for instance, in comparing its students' performance with those of Newark or Jersey City. Implicit is the conclusion that it would be pointless to make the comparison with Princeton or Cherry Hill. Without disputing the possible insight gained from such limited comparisons, we cannot avoid another side of this measurement. Such comparison, limited to districts with a similarly low SES, accepts the proposition that low SES districts should not be discouraged by their students' failure to perform at the level of high SES districts, or should not expect them to. The overall performance of their students should not be evaluated by measuring it against the performance of those in the affluent suburbs. However helpful such analysis might be to administrators in particular districts, when used as a tool to evaluate a district's performance, it inevitably reinforces the belief that urban districts can go just so far and no farther. Newark simply cannot equal Millburn, Camden cannot equal Cherry Hill. We are aware of the fact that a student's SES is considered by many to be the most important factor in predicting tests scores and other measures of performance; and the belief of some that it is an intractable factor. The other side of that issue is that the students of low socioeconomic status are just as capable, just as bright and industrious as those of higher SES, but that their socioeconomic status has overwhelmed their native talents. The significance of a student's socioeconomic status and the ability of effective education to overcome it have been and are the subject of intensive study and debate. Like most other critical issues in education, there is no conclusive resolution. We are left with common wisdom: children in the poorest urban districts generally perform unsatisfactorily on tests; many, however, excel despite their SES. Effective education can help all of this, but to what extent is the subject of strong and learned disagreement. We have decided this case on the premise that the children of poorer urban districts are as capable as all others; that their deficiencies stem from their socioeconomic status; and that through effective education and changes in that socioeconomic status, they can perform as well as others. Our constitutional mandate does not allow us to consign poorer children permanently to an inferior education on the theory that they cannot afford a better one or that they would not benefit from it. Another statistical category used in this case is the urban district, a category adopted by the DOE but originally compiled by the Department of Community Affairs pursuant to statute. There are fifty-six such districts, each an urban municipality. In 1984, Governor Kean, wishing to improve education in poorer urban areas, initiated a series of pilot projects to be undertaken by the DOE. The Governor provided some funding for these programs. He made it clear that his concern was with the quality of education in urban areas, in particular, the poorer urban areas. The Commissioner, in his implementation of the program, initially selected the school districts of forty-nine municipalities as potential sites for the pilot projects. These were the municipalities commonly known as urban aid districts, qualified by statute and implementing regulations of the Department of Community Affairs to receive annual state aid under N.J.S.A. 52:27D-178 to -181. The purpose of that statute was to identify those municipalities in the state requiring financial aid because of factors of poverty and need. It sets forth the factors to be measured by the Department of Community Affairs  to some extent overlapping those used in defining DFGs  in determining which municipalities are urban aid districts and the formula for apportioning the state aid among them. For many years, ever since the inception of such aid, the Legislature has regularly appropriated substantial sums for payment to these municipalities. The Commissioner considered the characteristics that led the Legislature and the Department of Community Affairs to designate these urban areas for continued aid to significantly define their educational needs and deficiencies. He subsequently added seven districts to the list. Five of these were districts in DFGs A and B that had not been included under the Department of Community Affairs' formula. [17] These urban districts are the poorest and most needy municipalities in the state. The clear intent of the statute and its implementation was to enable such municipalities to maintain and upgrade municipal services and to offset local property taxes, N.J.S.A. 52:27D-179  in other words, to enable them to provide municipal services without inordinate taxation. To qualify as an urban aid district, the municipality must be of a certain size or density, have a certain number of children whose families are on welfare, have public housing, and a higher tax rate or lower property valuation per capita. Its share of the urban aid is measured by a formula that includes all of those factors. N.J.S.A. 52:27D-178. Of these fifty-six urban school districts, those in DFGs A and B have the strongest characteristics of poverty and need. The factors that define both categories (DFG A or B and urban district) compel that conclusion; their official designation by the DOE confirms and reinforces it. [18] The DOE's use of these factors for analysis of educational needs in connection with the districts' and students' performance demonstrates the direct relevance of these categories to some of the issues before us  the ability of the twenty-nine poorer urban districts in DFG A and B to achieve thorough and efficient, now and in the foreseeable future; these students' need for an education beyond the norm based on their disadvantaged status; the excessive tax burden of municipal services. When these factors are combined with the evidence in the record of substantive failure of thorough and efficient education in these districts, including their failure to achieve what the DOE considers passing levels of performance on the High School Proficiency Test (HSPT), the constitutional failure becomes apparent, the need for a remedy urgent, and the focus of that need clear. That the overwhelming proportion of all minorities in the state are educated in these poorer urban districts is of further significance. [19] These are the districts where not only the students and education are failing, these are the districts where society is failing. These twenty-nine poorer urban districts are not only in the lowest SES classification (DFGs A and B), but even their ranking within DFGs A and B is among the lowest. In the districts with the lowest SES ranking within DFG A (twenty-eight districts, urban and non-urban), there are 195,000 students of which 186,000 are from the poorer urban districts. In other words, the overwhelming majority of students in districts with the lowest SES ranking in the state are from the poorer urban districts. Because these poorer urban districts in DFGs A and B become the sole object of the remedy we impose, we note their difference from the districts that have some similarities but are not included in the remedy. They fall into two categories  the rural poor and some older suburban districts that have become heavily populated but are also relatively poor. These non-included districts do not have the characteristics that lead to classification as urban districts by the Department of Community Affairs or by the Commissioner: they are therefore not as poor or needy; many are not within DFG A or B, their socioeconomic status is not as compelling; furthermore, there is no direct substantive evidence on this record of their failure to provide a thorough and efficient education. Plaintiffs offer another statistical device. In various analyses the pupils in all districts were grouped into seven approximately equal parts (the DFG classification grouped districts without regard to the number of children in each DFG). [20] The ranking of the pupils into septiles is done on different bases, usually in accordance with expenditures per pupil. Septile 1, with approximately one-seventh of the state's students, includes districts with the lowest level of expenditures per pupil. Septile 7 includes districts with the highest level of expenditures per pupil, again including approximately one-seventh of the state's students. Correlated with this septile ranking of students by expenditures per pupil is a corresponding variable, for instance, equalized valuation per pupil, the combination tending to show the relationship of the two variables. Other factors are also measured, like the concentration of minorities or the school tax rate of the district. In other instances, the septiles are arranged by equalized valuation per pupil, and similar comparisons are made. The information contained in the septile analysis is comparable to that found in the DFG comparisons, as are the conclusions arising therefrom. The septiles describe a relationship between specific factors; the DFGs between a complex generalized characteristic, socioeconomic status, and specific factors. Each tells a different story, but they add up essentially to the same conclusion: the poorer the district and the greater its need, the less the money available, and the worse the education. First of all, between the highest and lowest DFGs the disparity and the apparent relationship are vivid. In terms of NCEB, while the state average is $3,329 per pupil (in 1984-85), the average expenditure per pupil in DFG A is $2,909; in DFG J, $4,154; in DFGs A and B, $2,861, and in DFGs I and J, $4,029. Thus, the average total NCEB of a 10,000 pupil district in DFG A or B is $11.7 million lower than it would be in a DFG I or J district of the same size. As for the relationship in terms of property wealth, while the state average equalized valuation per pupil in 1984-85 was $190,401, the average in DFG A was $78,222, in DFG J, $360,101; the average in DFGs A and B was $94,998, and in DFGs I and J, $302,593. The septile analysis produces substantially the same results: in Septile 1, arranged by NCEB per pupil and containing about 160,000 students, the range of expenditures (measured by NCEB) in 1984-85 runs from $932 to $2,634 per pupil; and Septile 7, from $4,055 to $10,103 per pupil; Septile 1 (again, arranged by NCEB) has an average equalized valuation per pupil of $88,907, Septile 7, $360,359. The twenty-eight poorer urban districts (excluding Atlantic City, which has a tax base in excess of the GTB amount) have an average per pupil expenditure (measured by NCEB) in 1984-85 of $2,880 and an average equalized valuation per pupil in 1984-85 of $63,066; again, compared to DFGs I and J the comparable figures are $4,029 and $360,101, and compared to Septile 7 $4,432 and $360,359. No sophisticated analysis can destroy the conclusion: the richer districts spend more than the poorer, and their ability to do so is strongly correlated to their wealth. The State does not challenge these disparities, although it claims that no relationship to equalized valuation per pupil has been proved. That claim is based largely on an analysis of the entire spectrum of districts as well as on the fact that when all total expenditures are considered  not just equalization aid, but categorical and federal aid as well, the disparities and the relationships diminish substantially. If one accepts the premise of the State's analysis, its conclusions follow to some degree. As noted above, however, we have concluded that federal aid should not be considered in determining the extent to which funding disparities and their relationships bear on the question of whether New Jersey is providing its students their constitutionally mandated education. The State further claims that the most intensive study conducted by plaintiffs, including the study of funding disparities, is limited to comparisons between plaintiffs' districts (Camden, East Orange, Jersey City and Irvington) and three others  Newark, Paterson, and Trenton, all contrasted with certain richer suburban districts (Paramus, Princeton, Millburn, Scotch Plains-Fanwood, Livingston, South Brunswick, Cherry Hill, Moorestown, Montclair, and South Orange-Maplewood). We agree that plaintiffs' most complete study of the characteristics of districts, including substantive education, was made in the form just mentioned. But when it came to funding disparities and their relationships, plaintiffs' comparisons were across the board. These responses by the State are substantial when weighed against plaintiffs' claims for relief, including what amounts to a complete overhaul of our system of financing education. We have rejected those claims primarily because of the lack of proof, in terms both of funding and substantive education, as to the vast majority of New Jersey districts. When considered against plaintiffs' claim of lack of a thorough and efficient education in poorer urban districts, however, the State's contentions of weakness in the plaintiffs' proofs are unpersuasive. While it is true that plaintiffs' proofs were the fullest as to the comparison districts mentioned above, they were still adequate across a sufficient number of poorer urban districts. [21] Disparity of funding, its relationship to poverty, the critical needs  educational and otherwise  of its pupils, the practical inability to raise further funds through taxation (municipal overburden), the likelihood of the permanence of these factors, the level of substantive education actually being given, the failure rate of its students, their dropout rate, were all sufficiently shown, and dramatically contrasted with the situation of students in richer districts. And even when federal and categorical aid are included, the disparities in this range, not just the extremes of the comparison districts, but the disparities between the poorer urban districts and the richer suburban districts are still significant: in 1984-85, the average day school expenditures per pupil in DFGs A and B was $3,751, while in DFGs I and J, the average was $4,493. [22] When the comparison is made, as we conclude it should be, without federal aid, and if categorical aid is excluded  on the theory that it is intended to benefit neither richer nor poorer districts, but rather, like transportation aid, intended to address special needs in all districts  it is dramatic ($2,861 compared to $4,029 per pupil). This disparity relates to what is generally considered the figure (NCEB) that best indicates the regular education afforded a student. We note the obvious: the State may be correct in its contention that measured against the entire spectrum of districts in the state, the disparities and their relationships are not sufficient to condemn the system, because they exist significantly only when the extremes are compared. That gives little comfort to those students confined to the poorest districts, and they number in the hundreds of thousands (in 1984-85 there were 280,081 resident students in the twenty-nine poorer urban districts, about 25% of the entire public school population). Their deprivation is real, of constitutional magnitude, and not blunted in the least by the State's statistical analysis.