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Abbott v. Burke

Decided: June 5, 1990.


On certification to the State Board of Education.

For reversal -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. For affirmance -- None. The opinion of the Court was delivered by Wilentz, C.J.



I. Description of the Issues 300

II. The Constitutional Provision 303

III. Summary of the Issues 316

IV. Facts and Conclusions 322

A. The Funding Scheme 324

B. Educational Funding Disparities 334

C. Substantive Educational Opportunity: The

Administration of the Act by the Commis-

sioner and the Board 347

1. Municipal Overburden 355

D. The Quality of Education in the Poorer Ur-

ban Districts 357

E. The Quality of Students' Needs in the Poor-

er Urban Districts 369

F. Impact of the Level of Funding on the Quali-

ty of Education 375

V. Findings 384

VI. Remedy 385

VII. Conclusion 391

We again face the question of the constitutionality of our school system. We are asked in this case to rule that the

Public School Education Act of 1975, L. 1975, c. 212, N.J.S.A. 18A:7A-1 to -52 (the Act) violates our Constitution's thorough and efficient clause.*fn1 We find that under the present system the evidence compels but one conclusion: the poorer the district and the greater its need, the less the money available, and the worse the education. That system is neither thorough nor efficient. We hold the Act unconstitutional as applied to poorer urban school districts. Education has failed there, for both the students and the State. We hold that the Act must be amended to assure funding of education in poorer urban districts at the level of property-rich districts; that such funding cannot be allowed to depend on the ability of local school districts to tax; that such funding must be guaranteed and mandated by the State; and that the level of funding must also be adequate to provide for the special educational needs of these poorer urban districts in order to redress their extreme disadvantages.

We note the convincing proofs in this record that funding alone will not achieve the constitutional mandate of an equal education in these poorer urban districts; that without educational reform, the money may accomplish nothing; and that in these districts, substantial, far-reaching change in education is absolutely essential to success. The proofs compellingly demonstrate that the traditional and prevailing educational programs in these poorer urban schools were not designed to meet and are not sufficiently addressing the pervasive array of problems that inhibit the education of poorer urban children. Unless a new approach is taken, these schools -- even if adequately funded -- will not provide a thorough and efficient education.

We reject the argument, however, that funding should not be supplied because it may be mismanaged and wasted. Money

can make a difference if effectively used, it can provide the students with an equal educational opportunity, a chance to succeed. They are entitled to that chance, constitutionally entitled. They have the right to the same educational opportunity that money buys for others.

On this record we find a constitutional deficiency only in the poorer urban districts, and our remedy is limited to those districts. We leave unaffected the disparity in substantive education and funding found in other districts throughout the state, although that disparity too may some day become a matter of constitutional dimension. We do so without implying in any way that such disparity is not important when considered as a matter of policy. Our decision deals not with optimum educational policy but with constitutional compliance.

At various points in this opinion, we refer to the administration of the Act by the State Board of Education (Board) and the Commissioner of Education (Commissioner). The record is replete with evidence of their dedication, industriousness, perseverance and, ultimately, their considerable accomplishments. The problems they face have bedeviled the entire nation. No one has solved them. Our constitutional conclusion in no way belittles their prodigious efforts and their many achievements.

This litigation is described in Abbott v. Burke, 100 N.J. 269, 495 A.2d 376 (1985) (Abbott I), in which we decided it should be contested before the administrative agency rather than the courts. Plaintiffs are school children from Camden, East Orange, Jersey City, and Irvington. Claiming that the Act violates the constitutional provision, they commenced suit in the Superior Court for a declaration of its unconstitutionality and other appropriate relief. The trial court, conceiving of the action as raising a dispute or controversy under the education laws of the state, ruled that the issue should be determined by the administrative agency with jurisdiction over such controversies -- the Department of Education (DOE) -- and therefore dismissed the complaint for failure to exhaust the administrative

remedy.*fn2 On appeal the Appellate Division reversed, 195 N.J. Super. 59, 477 A.2d 1278 (1984), holding that since the case required adjudication of a constitutional issue, "beyond the power of the Commissioner to decide", id. at 74, 477 A.2d 1278, jurisdiction in the Superior Court was required. It found the "doctrine of exhaustion of administrative remedies . . . inapplicable." Ibid. (citation omitted). We granted certification, 97 N.J. 669, 483 A.2d 187 (1984). Finding that the "considerations . . . relevant to the exhaustion requirement [were] in near-equipoise," Abbott I, supra, 100 N.J. at 298, 495 A.2d 376, we decided on an administrative determination in order to develop a record adequate for the complex issues involved, a record informed by the presumed expertise of the Administrative Law Judge (ALJ), the Commissioner, and the Board. Noting that the Commissioner was a defendant, we indicated that the initial hearing and fact-finding should be before an ALJ. Id. at 302, 495 A.2d 376.

After extensive hearings and other proceedings spanning a period of over eight months, the ALJ found that evidence of substantial disparities in educational input (such as course offerings, teacher staffing, and per pupil expeditures) were related to disparities in school district wealth; that the plaintiffs' districts, and others, were not providing the constitutionally mandated thorough and efficient education; that the inequality of educational opportunity statewide itself constituted a denial of a thorough and efficient education; that the failure was systemic; and that the statute and its funding were unconstitutional. Recognizing limitations on his authority, the ALJ, while declining to rule on remedies, nevertheless recommended various options, including a "high foundation" program of funding. Implicit in the ALJ's view of the thorough and

efficient clause was a constitutional requirement of substantial equality of educational opportunity throughout the State.

The Commissioner declined to accept the ALJ's recommendations. He rejected the ALJ's factual finding of a strong relationship between property wealth and per pupil expenditures, or between either of those factors and certain indicators commonly thought of as related to educational quality -- staffing ratios, teacher experience and training, and the like. The Commissioner noted the inconsistencies in the relationship between per pupil expenditures and property wealth, some property-poor districts spending more than richer ones; and the lack of consistency in the relationship between per pupil expenditure and, e.g., staffing ratios. He noted that plaintiffs' most thorough analysis was limited largely to comparisons between the poorest and the richest districts, leaving, in his view, a very substantial gap in between, where the record was insufficient to prove any of the relationships claimed. He found more persuasive the characterization of the data by certain experts as demonstrating an idiosyncratic pattern rather than one of consistent relationships. He further rejected the ALJ's findings of substantially greater breadth of course offerings in the more affluent districts, noting that the evidence was largely anecdotal and, in any event, was limited to subjects not critically related to a thorough and efficient education.

The Commissioner's most basic disagreement with the ALJ was in his evaluation of the record concerning the relationship of educational expenditures to the quality of education offered, the educational opportunity offered; and the "production-function" question, whether input was related to output.*fn3 The

Commissioner ruled that plaintiffs had failed to prove that such relationships existed, that most studies showed the relationship could not be established; he characterized the ALJ's belief that greater funding was needed to assure thorough and efficient education across the state as enthroning "naivete."

The Commissioner concluded, as a legal matter, that our Constitution did not require equal expenditures per pupil but rather required a minimum substantive level of education as defined in the Act and the rules and regulations of the Board and the Commissioner; that this Court had ruled that this statutory definition of thorough and efficient was constitutional; and that the procedure put in place by the Board and administered by the Commissioner was sufficient to assure, and indeed had already largely achieved, a thorough and efficient education throughout the state. He concluded that far from a systemic constitutional failure, the Act guaranteed a thorough and efficient education by virtue of the school districts' unlimited power to raise funds to satisfy their constitutional obligation, the Commissioner's power to require them to do so, and the Commissioner's power to take over the operation of any district that fails. The sufficiency of the educational opportunity now in place and to be achieved in the future was assured, according to the Commissioner, not through money but through the reporting, monitoring, and corrective provisions of the Act, rules, and regulations. Furthermore, the Commissioner found that if there was indeed any failure of a district to achieve the constitutional standard, the remedy was in the Act and in its

enforcement. Indeed, the Commissioner noted several districts that were not achieving the level of education expected and the steps being taken, under the rules and regulations, to compel improvement and compliance. The Commissioner concluded that any failure to provide the constitutional standard -- and he conceded none -- was district-specific and remediable under the existing educational funding system.

On review, the Board adopted the Commissioner's decision in almost all respects. While recognizing the severe problems faced by disadvantaged children, the Board observed that the school system cannot solve all the problems of our society, and conceded that three of the plaintiffs' districts (Jersey City, East Orange, and Camden) are not affording a thorough and efficient education today, but agreed with the Commissioner that a constitutionally sufficient system was in place, and that through its funding and administration the Act assured a thorough and efficient education. As did the Commissioner, the Board noted certain deficiencies in the present funding statute (mainly the provision of equalization aid based not on the district's present need but on the prior year's budget) and its inability to address capital construction needs. It recommended corrective legislation. The Board also ordered that rules and regulations be adopted to strengthen the reporting, monitoring, and corrective functions. The ultimate conclusion of the Board, however, was that even without new regulations, the Act as implemented was constitutional as applied throughout the entire state.

We certified plaintiffs' appeal to the Appellate Division. 117 N.J. 51, 563 A.2d 818 (1989).


Description of the Issue

Predictably flowing from our decision in Robinson v. Cahill, 69 N.J. 449, 355 A.2d 129 (1976) (Robinson V), the issue now before us is whether the Act, declared facially constitutional, is

constitutional as applied. Despite that declaration, we recognized the possibility that in fact some districts might not provide a thorough and efficient education. Indeed, three of the Court's members expressed serious reservations on that question -- two of them dissenting.

The positions of the parties suggest a delineation of that issue: the plaintiffs contend that the Act as applied is systemically productive of such financial and educational disparities as to render it unconstitutional in toto. A potential subsidiary issue, if that contention is rejected, is whether the Act as applied is unconstitutional for specific districts or for a specific class of districts. If either contention is accepted, plaintiffs' claims concerning remedies raise further issues. The State's position raises the issue of whether the Act, through its definition of a thorough and efficient education, its statement of goals and guidelines, its requirement of subsidiary goals at the district level, and its enforcement through the combined powers of the Board, Commissioner, and the district, has in fact resulted in the constitutional standard of education throughout the state. If not, the subsidiary question is whether the failure, if any, is systemic, requiring a declaration of unconstitutionality or is district-specific, requiring corrective action under the Act in a limited number of failing districts. Another statement of the issue is whether plaintiffs' demonstration of substantial disparity in expenditures and educational input between the poorest and richest districts compels the conclusion that the Act is unconstitutional; or whether, as the State contends, the actual substantive education provided to the students in the poorest districts is thorough and efficient or subject to being readily corrected; whether, as the State contends, thorough and efficient education under the Constitution requires a minimum level of education, and not equality.

If plaintiffs are correct in their contention that the Constitution requires substantial equality in educational funding, one of several radical changes must result in addition to the change from the inequality that has always existed to the equality that

plaintiffs say is mandated. The State would, through some means, have to assure -- make certain -- that practically all districts spend the same amount per pupil. If that figure were to be pegged at the level of the more affluent suburban districts, it would require a massive infusion of public funds. If, on the other hand, the equality level were to be pegged somewhere near the average, and if strict limits were to be placed on any district's ability to exceed that amount in spending, a significant number of suburban districts would be compelled to substantially decrease their educational expenditures, in effect, to diminish the quality of education now provided to their students. The implications of the former -- a vast infusion of funds -- are particularly pointed in view of the fact that New Jersey is already one of the highest spending states in the nation in terms of per pupil expenditures.*fn4 The implications of the latter -- a uniform funding standard at the average rate requiring a leveling down -- would be unusual in a state that has regarded home rule in the area of education, including gross disparity in expenditures between the rich and the poor, as an accepted part of the system.

The implications of the State's position are similarly unsettling. The inadequacy of poorer urban students' present education measured against their needs is glaring. Whatever the cause, these school districts are failing abysmally, dramatically, and tragically. Poorer students need a special supportive educational effort in order to give them a chance to succeed as citizens and workers. Their educational needs are often dramatically different from those of students in affluent districts.

They are getting the least education for the greatest need. The implications of that fact on their future and on the state's future is the central theme of plaintiffs' case.


The Constitutional Provision

In order to pass on plaintiffs' contention, we must once again, in the context of this case, define the scope and content of the constitutional provision. That definition is critical to our determination of a remedy. While precision in such definition is desirable, certain considerations suggest caution against constitutional absolutism in this area. First, what a thorough and efficient education consists of is a continually changing concept. As the Legislature stated:

Because the sufficiency of education is a growing and evolving concept, the definition of a thorough and efficient system of education and the delineation of all the factors necessary to be included therein, depend upon the economic, historical, social and cultural context in which that education is delivered. The Legislature must, nevertheless, make explicit provision for the design of State and local systems by which such education is delivered, and should, therefore, explicitly provide after 4 years from the effective date of this act for a major and comprehensive evaluation of both the State and local systems, and the sufficiency of education provided thereby . . . . [ N.J.S.A. 18A:7A-2a(4).]

We observed in Robinson V that "[t]his statement reveals a perceptive recognition on the part of the Legislature of the constantly evolving nature of the concept being considered. It manifests an awareness that what seems sufficient today may be proved inadequate tomorrow, and even more importantly that only in the light of experience can one ever come to know whether a particular program is achieving the desired end." Robinson V, supra, 69 N.J. at 457-58, 355 A.2d 129. Second, whatever the content of a thorough and efficient education may be, the question of what must be done to achieve it is debatable, as this case well illustrates. Third, embedded in the constitutional provision itself, at least in its construction thus far by this Court, are various objectives and permissible outcomes -- equality, uniformity, diversity, and disparity -- that may require,

if they are to be allowed, a continued general definition of the constitutional mandate.

Finally, any definition of the constitutional obligation must operate in an area where confrontation between the branches of government is not only a distinct possibility but has been an unfortunate reality. See, e.g., Robinson v. Cahill, 69 N.J. 133, 351 A.2d 713 (1975) (Robinson IV); Robinson V, supra, 69 N.J. at 468, 355 A.2d 129; and Robinson v. Cahill, 70 N.J. 155, 358 A.2d 457 (1976) (Robinson VI). That potential confrontation concerns one of the most important functions of government -- education -- and involves substantial public funds, implicates the taxing power, and is potentially of a continuing nature. The Legislature's role in education is fundamental and primary; this Court's function is limited strictly to constitutional review. The definition of the constitutional provision by this Court, therefore, must allow the fullest scope to the exercise of the Legislature's legitimate power.

The initial construction of the thorough and efficient clause was permeated by the concept of equality. In Landis v. Ashworth (School District No. 44), 57 N.J.L. 509, 31 A. 1017 (Sup.Ct.1895), the court construed the constitutional provision (effected by the 1875 amendment to our former Constitution of 1844) as requiring "equality within the intended range of that amendment . . . ." Robinson v. Cahill, 62 N.J. 473, 514, 303 A.2d 273 (1973), cert. denied sub nom. Dickey v. Robinson, 414 U.S. 976, 94 S. Ct. 292, 38 L. Ed. 2d 219 (1973) (Robinson I). The qualifying language that we added, "permitting local decisions only above and beyond that mandated education," ibid., reflected our understanding of Landis as allowing local districts the option of operating high schools, at that time a level of education not generally available. As Landis noted, if absolute equality were mandated by the thorough and efficient clause, it would mean either that all districts must have high schools or that none could -- "[n]either of these consequences . . . contemplated by the amendment of 1875." Robinson I, supra, 62 N.J. at 514, 303 A.2d 273 (quoting Landis, supra, 57 N.J.L. at 512,

31 A. 1017). Implicit in our discussion was that education below the level of high school -- "the intended range [of the] amendment" -- must be equal in all districts. We noted that without doubt, today high schools were very much a part of "the rights of all," Robinson I, supra, 62 N.J. at 514, 303 A.2d 273 (quoting Landis, supra, 57 N.J.L. at 512, 31 A. 1017), and that "a system of public education which did not offer high school education would hardly be thorough and efficient." Id. 62 N.J. at 515, 303 A.2d 273. That requirement of equality of educational opportunity through high school appears again in our observation, after our rejection of the claim that the constitutional provision required taxpayer equality, that "we do not doubt that an equal educational opportunity for children was precisely in mind." Id. at 513, 303 A.2d 273.

What that equality meant, while not precisely defined, was indicated in several ways. First, in deciding that the statute then in place was unconstitutional as not affording a thorough and efficient education, we relied solely on the disparity of funding, i.e., on the fact that the dollars spent on education per pupil varied from one district to another (from below $700 per pupil to over $1,500 per pupil, Robinson V, supra, 69 N.J. at 480 n. 4, 355 A.2d 129). As we stated:

The trial court found the constitutional demand had not been met and did so on the basis of discrepancies in dollar input per pupil. We agree. We deal with the problem in those terms because dollar input is plainly relevant and because we have been shown no other viable criterion for measuring compliance with the constitutional mandate. The constitutional mandate could not be said to be satisfied unless we were to suppose the unlikely proposition that the lowest level of dollar performance happens to coincide with the constitutional mandate and that all efforts beyond the lowest level are attributable to local decisions to do more than the State was obliged to do. [ Robinson I, supra, 62 N.J. at 515-16, 303 A.2d 273.]

Rather than on equality, our decision was based on the proposition that the Constitution required a certain level of education, that which equates with thorough and efficient; it is that level that all must attain; that is the only equality required by the Constitution. Embedded in our observation that if the lowest level of expenditures per pupil constituted a thorough and

efficient education, then the constitutional mandate would be met was the clear implication that no matter how many districts were spending well beyond that level, the system would be constitutional. Second, we noted that the State, while assigning the obligation to local government to afford a thorough and efficient education, had never defined "in some discernible way the educational obligation," "the content of the constitutionally mandated educational opportunity"; it was "an unstated standard." Id. at 519, 303 A.2d 273. Again, the clear import is not of a constitutional mandate governing expenditures per pupil, equal or otherwise, but a requirement of a specific substantive level of education. Equality of expenditures per pupil could not have been constitutionally mandated when we recognized the right of districts to spend more to address students' special needs (the "need for additional dollar input to equip classes of disadvantaged children for the educational opportunity") and disclaimed any intent to deprive the State of the power to "authorize local government to go further" than "the constitutionally mandated education" and "to tax to that further end." Id. at 520, 303 A.2d 273. Our only condition was that such excess "not become a device for diluting the State's mandated responsibility." Ibid.

Our decision in Robinson I was necessarily general because of the narrow record in that case, consisting primarily of dollar per pupil information and related socioeconomic data. Although general, however, our holding in Robinson I was clear and formed the basis for our holding in Robinson V: a thorough and efficient education requires a certain level of educational opportunity, a minimum level, that will equip the student to become "a citizen and . . . a competitor in the labor market." Robinson I, supra, 62 N.J. at 515, 303 A.2d 273. The State's obligation to attain that minimum is absolute -- any district that fails must be compelled to comply. If, however, that level is reached, the constitutional mandate is fully satisfied regardless of the fact that some districts may exceed it. In other words, the Constitution does not mandate equal expenditures

per pupil. We implied that the level can -- and should -- be defined in terms of substantive educational content. But while disparity was explicitly permitted, there was a caveat -- the excess spending could not somehow be allowed to mask a failure to achieve thoroughness and efficiency in other districts.

This holding in Robinson I was reaffirmed in Robinson IV, supra, 69 N.J. 133, 351 A.2d 713. After the Legislature failed to act within the time limits set by the Court, we afforded a "contingent or provisional remedy," Robinson IV, supra, 69 N.J. at 146, 351 A.2d 713, that substantially increased equalization aid. Id. at 150, 351 A.2d 713. In the course of our opinion we referred to our statement of the constitutional command in Robinson I that the State afford "an equal educational opportunity for children", id. at 140, 351 A.2d 713 (citation omitted), and shortly thereafter acknowledged "the legitimacy of permitting any school district wishing to do so to spend more on its educational program through local effort" provided, again in the words of Robinson I, such did not become "a device for diluting the State's mandated responsibility." Id. at 141 n. 3, 351 A.2d 713. Foreshadowing what was to come, we also observed that while disparity in expenditures per student was the sole criterion in our decision in Robinson I, that was because "we [had] been shown no other viable criterion for measuring compliance with the constitutional mandate." Id. at 141, 351 A.2d 713 (citation omitted). We noted that in addition to the Robinson I record, the Court now had further material showing that "a multitude of other factors play a vital role in the educational result," and that therefore "while funding is an undeniable pragmatic consideration, it is not the overriding answer to the educational problem, whatever the constitutional solution ultimately required." Id. at 141 n. 3, 351 A.2d 713.

The Legislature acted in response to Robinson IV. In addition to defining and providing for the achievement of a thorough and efficient education through administrative measures, it provided a new funding mechanism to finance the substantive education defined in the Act as constituting "thorough and

efficient." It firmly placed responsibility on the State to assure achievement of the thorough and efficient level in every district. It did so, however, through a scheme that continued to allow disparity in both dollars per pupil and educational content. Indeed, while the statute was sustained as facially constitutional, the doubts and qualifications expressed by some members of the Court suggested the inevitability of the litigation now before us. We reaffirmed the concept of a constitutionally required level of education, equivalent to thorough and efficient, and the corresponding power to exceed that level; but we gave no further content to the warning that any excess spending must not dilute the constitutional obligation. We spoke in the context of a statute that guaranteed continuation of substantial disparities among school districts in educational expenditures per pupil. Despite the certainty of those disparities, we held the statute facially constitutional and awaited the day of its return when it would be attacked as applied.

The change of focus from the dollar disparity in Robinson I to substantive educational content in Robinson V is clear; it was the main theme underlying the Court's determination that the Act was constitutional. Noting at the outset that for the first time we had before us a statute that defined the constitutional obligation, provided for its implementation through both state and local administration, required that implementation to be monitored, directed the State to compel compliance where that monitoring revealed deficiencies, and provided a funding mechanism to achieve the constitutional goal, we observed that the state's school-aid provisions "must be considered, not in comparative isolation, but as part of the whole proposal formulated by the Legislature." Robinson V, supra, 69 N.J. at 463, 355 A.2d 129. Although the opinion sketched the State-aid formula, it dwelt in considerable detail on the new approach to a thorough and efficient education: its definition, its involvement of both the State and district in fleshing out the details, standards, and elements against which thorough and efficient was to be measured, its requirements of reporting and monitoring,

the whole range of remedies available to the Commissioner and the Board for corrective action to force districts to upgrade their educational offerings when monitoring revealed deficiencies, and the non-delegable duty of the State to do so. We described the process of district-by-district evaluation, monitoring, and corrective action intended to lead to thorough and efficient education everywhere in the state, not by a financial measuring rod but by an actual direct measurement of numerous factors that reflect the level of substantive education. The only question about financing was not whether it provided equal dollars per pupil -- indeed, we noted that "there may be and probably are legitimate differences between and among districts and students", id. at 464, 355 A.2d 129, but whether it was sufficient to support the entire system and its goal of achieving a thorough and efficient education throughout the state.

The fiscal provisions of the Act are to be judged as adequate or inadequate depending upon whether they do or do not afford sufficient financial support for the system of public education that will emerge from the implementation of the plan set forth in the statute. We are no longer considering the needs of the public system as it existed before the 1975 Act. We assume the Legislature had this in mind when preparing the state aid clauses of this statute. [ Ibid. ]

We "acknowledg[ed] the diversity that will inevitably exist among these separate [districts]," id. at 459, 355 A.2d 129, and in referring to equal opportunity, we noted the Commissioner's and the Board's responsibility to assure that "throughout the State each pupil shall be offered an equal opportunity to receive an education of such excellence as will meet the constitutional standard." Id. at 459-60, 355 A.2d 129. In other words, it was not an equal opportunity, without qualification, but an equal opportunity only up to a point: to receive a thorough and efficient education.

The clear thrust of our decision was to render equal dollars per pupil relevant only if it impacts on the substantive education offered in a given district. Compliance with the constitutional mandate was to be determined on a district-by-district measurement, and if money was a factor in the district's

failure, the remedy was not to change the statute but to implement it by forcing the district to spend more or by supplying further state funds. Indeed, the only explicit suggestion for statutory change was our observation that the Legislature should consider addressing the question of "what kind of showing must be made by a school district asking for state assistance due to local inability to recruit needed funds." Id. at 466, 355 A.2d 129.

Most telling of our view of the constitutional mandate was that, while noting that the funding mechanism would equalize only about 64% of the districts if fully funded (368 out of 578, leaving 210 districts with ratable resources superior to the rest, id. at 465 n. 4, 355 A.2d 129), we nevertheless observed that the Act eliminated " gross disparities in per pupil expenditures and tax resources." Id. at 467, 355 A.2d 129 (emphasis supplied). Our description of the implementation of the Act, whereby the process of monitoring and evaluation results in a review "treating the school districts as separate entities," id. at 463, 355 A.2d 129, was consistent with our statement at the outset that whether the Act would be found to be constitutional after its funding and implementation would depend on a test of it "as applied in the future to any individual school district at any particular time . . . ." Id. at 455, 355 A.2d 129. While not purporting to definitively describe the potential thrust of any future attack on the legislation as applied, we deemed the Act's structure and financing mechanism as effectively limiting that claim to its operation in a particular district.

The strength of our holding of facial systemic validity despite the certainty of continued substantial expenditure disparity from one district to the next is highlighted by the opposing strength of the two dissenting opinions. Both forcefully pointed out, as the centerpiece of their disagreement, the significant variations in financial resources and the almost certain consequent variations in educational expenditures and educational quality that are a fundamental ingredient in the guaranteed tax base formula of the Act. Our opinion, therefore, cannot be

viewed as momentarily putting aside the expenditure-disparity issue: it was at the heart of our decision. On the record then before us it was rejected.

Chief Justice Hughes' concurring opinion reflects the competing considerations that faced the Court. While concurring in result, the Chief Justice disagreed with our implied conclusion that the inequality of resources allowed under the Act did not threaten its constitutionality. His concurrence in the finding of constitutionality was clearly based on his evaluation of the importance of allowing the Legislature to devise a constitutional remedy. It was explicitly based on his hope that in the future the funding formula would be changed to assure substantially more equality. He expressed serious reservations about the ability of the Commissioner to achieve a thorough and efficient education by monitoring "one by one" 578 school districts, Robinson V, supra, 69 N.J. at 470, 355 A.2d 129 (Hughes, C.J., concurring); the preferred route to thoroughness and efficiency was through equality of funding and equality of expenditures per pupil. Id. at 471-75, 355 A.2d 129. Nevertheless, in deference to the Legislature's clear responsibility, the newness of the statutory response, and the lack of experience under it, he joined the majority, trusting this Court's continuing power, explicitly reserving the right to declare the Act unconstitutional if experience showed that in practice it did not afford a thorough and efficient education.

With that as background, Abbott v. Burke, testing the Act as applied, came before us first in a procedural controversy and now in full substance. As often occurs, constitutional questions shift and sometimes sharpen as relatively abstract issues take on factual substance. When we first viewed the apparent scope of the factual controversy in Abbott I, supra, 100 N.J. 269, 495 A.2d 376, as it bore on the issue of appropriate forum, we found it necessary to underline the basic holdings of the Robinson v. Cahill cases, including explicitly the power of local districts to spend beyond what was required for a thorough and efficient education, subject to the limitation that "such authorization

does not become a device for diluting the State's mandated responsibility," Abbott I, supra, 100 N.J. at 291, 495 A.2d 376 (quoting Robinson I, supra, 62 N.J. at 520, 303 A.2d 273). We also recognized the revision of Robinson I effected in Robinson V that the Court has "been constantly mindful that money is only one of a number of elements that must be studied in giving definition and content to the constitutional promise of a thorough and efficient education." Abbott I, supra, 100 N.J. at 292, 495 A.2d 376 (quoting Robinson V, supra, 69 N.J. at 455, 355 A.2d 129). But we gave, in view of the issues about to be projected, a new potential gloss to the constitutional obligation. For instance, in the context of plaintiffs' claim that the disparities in dollar expenditure disproportionately affected disadvantaged students, we recognized that the State not only had the power to spend in excess of the norm in view of the presumed greater needs of such students, but that it might be required to do so. Id. at 291-93, 495 A.2d 376. Our application of the constitutional standard first presented in Robinson I -- an "educational opportunity . . . needed in the contemporary setting to equip a child for his role as a citizen and as a competitor in the labor market," Robinson I, supra, 62 N.J. at 515, 303 A.2d 273 -- reflects the context of the present case.

[T]he thorough and efficient education issues call for proofs that, after comparing the education received by children in property-poor districts to that offered in property-rich districts, it appears that the disadvantaged children will not be able to compete in, and contribute to, the society entered by the relatively advantaged children. [ Abbott I, supra, 100 N.J. at 296, 495 A.2d 376.]

Finally, after noting plaintiffs' contention that "educational deficiencies could substantially be ameliorated only by increasing [local districts'] entitlement to state aid", id. at 285, 495 A.2d 376, we observed that the continuation of the local fiscal burden was "based in part on the Legislature's finding that local funding is important to encourage local involvement in public education, N.J.S.A. 18A:7A-2a(7). . . ." Ibid. We described a wide array of potentially relevant issues allowing the broadest presentation on remand of the parties' contentions and

evidence, and gave point to that intention by couching our remand with a condition that made it clear the case would first be heard by an ALJ.

The OAL's [Office of Administrative Law] obligation and capacity to designate specially qualified judges cannot be overemphasized in the present context. This litigation exemplifies the type of complex, sensitive, important, multi-issue, and cross-disciplinary matter that the Legislature contemplated in authorizing the selection of persons to serve as administrative law judges both from within and without state government. See N.J.S.A. 52:14F-6 b.

Thus, remand to the administrative agency is particularly appropriate in this case. We anticipate that the OAL will conduct a thorough hearing, where the parties shall present all their evidence relevant to the constitutional claims and defenses. This will serve to consolidate all fact-findings in a single proceeding. We intend that the proceedings will promote development of a complete and informed record, which will reflect determinations of appropriate administrative issues as well as the resolution of factual matters material to the ultimate constitutional issues. [ Id. at 302-03, 495 A.2d 376.]

Thus, while leaving the door open to the numerous factual and legal contentions of the parties, we reiterated the constitutional mandate as it had developed through Robinson V. But we added a new element of considerable relevance to this case. We said, in effect, that the requirement of a thorough and efficient education to provide "that educational opportunity which is needed in the contemporary setting to equip a child for his role as a citizen and as a competitor in the labor market," Robinson I, supra, 62 N.J. at 515, 303 A.2d 273, meant that poorer disadvantaged students must be given a chance to be able to compete with relatively advantaged students. The Act and its system of education have failed in that respect, and it is that failure that we address in this case.

Issues similar to that before us today have been litigated in various state courts. Shofstall v. Hollins, 110 Ariz. 88, 515 P. 2d 590 (1973); Dupree v. Alma School Dist. No. 30, 279 Ark. 340, 651 S.W. 2d 90 (1983); Serrano v. Priest, 5 Cal. 3d 584, 96 Cal.Rptr. 601, 487 P. 2d 1241 (1971) (later history omitted); Lujan v. Colorado State Bd. of Educ., 649 P. 2d 1005 (Colo. 1982); Horton v. Meskill, 172 Conn. 615, 376 A.2d 359 (1977) (later history omitted); McDaniel v. Thomas, 248 Ga. 632, 285 S.E. 2d 156 (1981); Thompson v. Engelking, 96 Idaho 793, 537 P. 2d 635 (1975); People of Illinois ex rel. Jones v. Adams, 40 Ill.App. 3d 189, [119 NJ Page 314] 350 N.E. 2d 767 (App.Ct.1976); Rose v. The Council for Better Educ., Inc., 790 S.W. 2d 186 (Ky.1989); Hornbeck v. Somerset County Bd. of Educ., 295 Md. 597, 458 A.2d 758 (1983); Milliken v. Green, 390 Mich. 389, 212 N.W. 2d 711 (1973); Helena Elementary School Dist. 1 v. State, 784 P. 2d 412 (Mont.1990) modifying 769 P. 2d 684 (Mont.1989); Board of Educ., Levittown, etc. v. Nyquist, 57 N.Y. 2d 27, 453 N.Y.S. 2d 643, 439 N.E. 2d 359 (1982), appeal dismissed, 459 U.S. 1139, 103 S. Ct. 775, 74 L. Ed. 2d 986 (1983); Board of Educ. of City School Dist. v. Walter, 58 Ohio St. 2d 368, 390 N.E. 2d 813 (1979); Fair School Fin. Council of Oklahoma, Inc. v. State, 746 P. 2d 1135 (Okla.1987); Olsen v. State, 276 Or. 9, 554 P. 2d 139 (1976); Danson v. Casey, 484 Pa. 415, 399 A.2d 360 (1979); Richland County v. Campbell, 294 S.C. 346, 364 S.E. 2d 470 (1988); Edgewood Indep. School Dist. v. Kirby, 777 S.W. 2d 391 (Tex.1989); Seattle School Dist. No. 1 of King Cty. v. State, 90 Wash. 2d 476, 585 P. 2d 71 (1978); Pauley v. Kelly, 162 W.Va. 672, 255 S.E. 2d 859 (1979); Kukor v. Grover, 148 Wis. 2d 469, 436 N.W. 2d 568 (1989), reh'g denied, 443 N.W. 2d 314 (1989); Washakie Co. School Dist. No. One v. Herschler, 606 P. 2d 310 (Wyo.1980), cert. denied sub nom. Hot Springs Co. School Dist. No. 1 v. Washakie Co. School Dist. No. 1, 449 U.S. 824, 101 S. Ct. 86, 66 L. Ed. 2d 28 (1980). Their resolution has depended on the court's interpretation of the state's constitutional education provision and/or the state's equal protection doctrine. These state constitutional claims, the underlying contentions and facts, although presenting great variety of detail, are remarkably similar to those facing us: an educational funding system that depends on a combination of state and local taxes producing disparity of expenditures in the face of inverse disparity of need. Fourteen of the states have rejected both constitutional claims;*fn5 six, including New Jersey, have held the state system of financing education invalid under the state education article, while rejecting or declining to reach

equal protection claims*fn6; three determined that the existing system violated both claims, and one that the system violated only equal protection.*fn7

Almost invariably the remedy extended no farther than the observation that the Legislature will presumably revise the system to conform with the Court's decision, the Court frequently reserving jurisdiction in order to impose a judicial remedy if the Legislature failed to act.

Very few of the cases have a factual record that even begins to approach that before us. None has the unique attribute of this case: an educational funding system specifically designed to conform to a prior court decision, having been declared constitutional by the Court but now attacked as having failed to achieve the constitutional goal. In short, we are the only state involved in a second round on this issue. The command of our thorough and efficient clause is strong and clear, but to the extent that further interpretation is required, to the extent that questions of conformance to the constitutional command exist, and difficult questions remain open, we cannot look out of state for an answer -- it must be found through the interpretation of our own Constitution, with the aid of the parties and the numerous amici who have participated in this case.*fn8


Summary of the Issues

The numerous factual and legal contentions in this case and their interrelationships have led to a record of enormous length and complexity. Even our significant compression of them may be difficult to follow. We offer the following overview of the main issues, and our resolution of them, to explain the significance of the evidence.

1. The initial issue is whether, and to what extent, our State's educational system can be judged in terms of disparate dollar input in the face of proof of the actual education being delivered. The substantive content of thorough and efficient has been legislatively defined and sustained by this Court. The State claims it is being delivered. Local district goals and standards have been established, reports of the status of education and its improvement are filed, the Commissioner's agents are examining them to determine their adequacy, corrective measures are taken, education is evaluated, and, finally, the Commissioner, based on all of this, determines its sufficiency, determines whether it is thorough and efficient. In view of that kind of evidence, what is the relevance of the fact of disparity of expenditures between two districts if the Commissioner decides that both are delivering a thorough and efficient education? Is disparity still an issue when proof of an adequate substantive education is offered? Does the issue become one of determining whether the substantive education is in fact thorough and efficient regardless of the difference in the dollar input per pupil?

We find the largely circumstantial evidence of substantive education, while important and relevant, insufficient to exclude consideration of dollar input and expenditure disparity. We are not satisfied that a thorough and efficient education is being provided in certain districts; therefore we cannot disregard expenditure disparity as irrelevant to whether such an education is being delivered.

2. The Commissioner and the Board claim that the legislative and administrative scheme provides a thorough and efficient education to practically every district with but few exceptions. The State's proof consists of the Act, the rules and regulations, and their implementation by the Commissioner. The system consists largely of definitions of required minimum content and administrative oversight to assure conformance with certain criteria. They include plans, goals, and standards that represent a combination of State and local definitions of educational objectives. All of this is monitored by the Commissioner's agents, who review budgets and other reports of the districts to assess compliance with the districts' goals and minimum statutory criteria. While the procedure suggests a certain educational content, there is no standard of the breadth of curriculum that must be offered, no standard of other commonly accepted educational criteria (staffing ratios, faculty experience and training, staffing of special positions and their number), and no broad-gauged standard of performance of any district, school, or pupil apart from the statewide tests mentioned later. We find that despite great effort, the procedure ultimately fails to measure the district's system against the accepted definition of a thorough and efficient education -- one that equips its students to fulfill their roles as citizens and competitors in the market.

Although the record contains proof of substantive education, we cannot determine whether that education equates with thorough and efficient. The record is inadequate, in absolute terms, to demonstrate thoroughness and efficiency. While the Commissioner asserts that his certification pursuant to the statute is presumptive proof of a thorough and efficient educational system, we find the record devoid of persuasive factual evidence -- as distinguished from a presumption -- that certification in practice means that students are equipped for their roles as citizens and workers. We do not mean to deprecate at all the process mandated by the statute and implemented by the Commissioner and the Board -- quite the contrary, it may very

well be effective. We mean only that on this record it has not been shown to lead to a thorough and efficient education. There is no evidence that certification, the process, or the educational content now present affords New Jersey's students the opportunities that will equip them in their roles as citizens and competitors in the labor market. We recognize, of course, that the burden of proof on this issue is plaintiffs', not the Commissioner's.

3. The companion issue to whether the State has proved that a thorough and efficient education exists is whether plaintiffs have met their burden of proof that it does not. Here the issue is the significance of plaintiffs' proofs on two levels: their proof of the failure of education in poorer urban districts, and the comparison between this education and that of the richer suburban districts. As we have noted about the Commissioner's evidence, so we affirm as to plaintiffs': they have not proved what is necessary for a thorough and efficient education. Neither their statistical nor other comparisons informs us of what a district needs in order to have thorough and efficient education; we are left without a standard against which to measure a given district's efforts. When arrayed against this absence of proof, the Commissioner's proof of the process of the DOE in implementing acceptable standards of education becomes more persuasive. Despite this lack of affirmative proof, have plaintiffs nevertheless proven that whatever that standard may be, their districts clearly fall below it? Does the combination of student need, disproportionately present in poorer urban districts, inferior course offerings, dilapidated facilities, testing failures, and dropout rates leave the issue in doubt? And what does the comparison with affluent suburban districts mean if the Constitution indeed requires that poor children be able to compete with the rich? On this issue we confront questions of substantive education: what is the importance of disparity in expenditures per pupil, course breadth, and staffing; are these indicators related to the quality of education that defines the opportunity? The Commissioner

contends that neither money nor those other indicators is proof of educational quality, that the "determinants" of the quality of education are found elsewhere, in management, in community relations, in parental interest, in staff attention, and in numerous other characteristics not clearly related to funding -- characteristics that transcend the relationship between the money spent and the education obtained. The "effective schools" concept and studies testing it are asserted as proving the validity of this view of the educational process -- a radical view in that it explicitly denies the conventional wisdom that the more spent the better the education; the more teachers the better the education; the more experienced the teachers the better the education. On this view of the educational process, expenditure disparity becomes 1 irrelevant. The central issue is here joined, including whether a thorough and efficient education requires that children with greater needs are entitled to greater resources. Whatever else the evidence shows, it is clear that the reverse is the fact: in New Jersey today, as we assume in the United States, the greater the students' needs, the less their education. And this raises yet another issue: to what extent does the requirement of thorough and efficient education impose on the schools the responsibility to account for and attempt to remedy the problems students bring with them to the schools, intractable problems, problems never dreamed of in the past as being within the schools' responsibility, problems created not by the schools but by society?

On this issue we conclude that a significant number of poorer urban districts do not provide a thorough and efficient education for their students; that the measurement of the constitutional requirement must account for the needs of the students; that in most poorer urban districts, the education needed to equip the students for their roles as citizens and workers exceeds that needed by students in more affluent districts; that the 2 education provided depends to a significant extent on the money spent for it, and on what that money can buy -- in quality and quantity -- and the ability to innovate. We do not dispute

the Commissioner's proof about "effective schools" or "determinants" except to the extent they are used to prove that disparity of expenditures does not count, and that the conventional indicators do not count.

4. Although plaintiffs claim that the Act and the entire system of education is unconstitutional based on their proof of disparity between poorer and richer districts, a vast gulf exists between the richer and the poorer districts, a gulf that includes all of the districts in the middle concerning which the proofs are limited. We know little about the quality of the education they offer, other than their expenditures per pupil and their certification. Neither the State nor the plaintiffs has attempted to prove that their education is or is not thorough and efficient.

As a matter of law, in the absence of further evidence, we cannot conclude that the education in such districts is not thorough and efficient; furthermore, on this record and given the litigated context -- plaintiffs 3 attacking the entire system and the sufficiency of education in specific districts, the State defending by proof of its process -- we must accord deference to the administrative scheme and the actions of the Board and the Commissioner to the extent of ruling that plaintiffs have failed to prove that a thorough and efficient education does not exist in those districts between the richer and poorer ones. We do not foreclose the possibility that at some other time a different record might lead to the conclusion of total systemic failure that sweeps in even such districts, but not on this record. In the absence of proof, we believe the separation of powers requires us to defer to the Board's, the Commissioner's, and the legislative judgment concerning such districts. Given the consequences, a conclusion of constitutional deficiency cannot hang by a thread, it must rest on granite. The result is that we conclude, for the overwhelming number of districts in this State, that there has been no showing that the constitutional mandate has not been satisfied.

5. Has the State proven that given more time, it will be able to achieve a thorough and efficient education in all districts 4 under the present system? The Board and the Commissioner claim that thorough and efficient exists now, but that in any event the Act and procedures assure its arrival in the near future. Assuming one agreed, it would be hard for this Court to justify the radical interference with the legislative power that is involved in the constitutional determination of insufficiency. The constitutional command does not require relief every time the slightest deviation from a thorough and efficient education is found, or any time that deviation, though proven, is likely to be corrected soon. Were we confident that a thorough and efficient education were likely to be achieved in the near future under the present system, we would not dream of intervening. We do believe the Commissioner is making progress; we do believe that the Board is making progress; we do believe that the Legislature would, if necessary, change the Act to provide for further progress.

Nevertheless, we reject the State's claim that in these poorer urban districts a thorough and efficient education has been or will be achieved. The extent of failure is so deep, its causes so embedded in the present system, as to persuade 5 us that there is no likelihood of achieving a decent education tomorrow, in the reasonable future, or ever. The State's argument is strong on paper: districts can raise all the money they want, districts must raise all the money they need to provide a thorough and efficient education, and if that fails, the State must pay the way, and the Commissioner must monitor all of this and correct any deficiencies. But for ten years and more there has been no thorough and efficient education in these districts. The factors that lead to this failure are described later, but the simplest is that these districts are just too poor to raise the money they theoretically are empowered to. We can keep the present system and its promise for the future for other districts without sacrificing these poorer urban districts to perpetual failure.

They can, and as we view it, constitutionally they must, be treated differently. Judicial deference can go just so far.

6. Can the Act and its system of education be declared unconstitutional in its entirety -- as plaintiffs demand -- even though the failure of a thorough and efficient education has been proven only for a relatively small number of 6 districts? Certainly, if the failure is not remedied in accordance with the decree issued by this Court, such a declaration may be the Court's only recourse. In Robinson I there was no showing that any district failed to achieve a thorough and efficient education. Rather, it was the absence of substantive educational proofs -- a measure to assess whether the constitutional command was being met -- that led the Court to declare the statute unconstitutional in its entirety. While we have the trappings of the substantive education being provided, the words of the statute, rules and regulations defining the content of a thorough and efficient education, do we have any evidence that tells us that the students of this state are being equipped for their roles as citizens and workers? There is a limit to this Court's powers in this area: educational sufficiency ultimately must be a responsibility of the Legislature; we do not sit as the Commissioner's superior in these matters, as the Board's overseer in its efforts. All we are entitled to ask for under the Constitution is proof of an effort to achieve the goal and a reasonable success, and when the State has established a structure 7 of the kind that we have seen in the record before us, when it has spent more than most any other state in the nation on education, we cannot say that it has failed to satisfy its own Constitution. Not on this record on a statewide basis. We can say only that as to certain students, it has failed, as they have failed, and that this failure must be remedied.


Facts and Conclusions

We note in this section of the opinion some of our factual and legal conclusions. We describe at the outset (Section A) the [119 NJ Page 323] Act's funding scheme indicating the extent to which it theoretically equalizes districts' ability to raise money for education, and the extent to which it relies on the local tax base. In Section B we note the evidence of the vast disparity in educational funding that continues to exist, corresponding to the districts' property wealth, despite the Act's equalizing provisions. The basic position of the State is then analyzed (Section C), namely, that despite these funding disparities the Act assures and has achieved a constitutionally adequate education in all districts through the operation of its provisions defining a thorough and efficient education and granting 8 the Commissioner the power to monitor and correct districts' performance, including the power to require a district to increase taxes if its educational budget is insufficient. In that section the evidence concerning the impact of "municipal overburden" on that power of the Commissioner to force districts to increase taxes is noted, and the conclusion reached that it renders that power impotent. We also deal in that section with the Commissioner's power to certify districts as providing a thorough and efficient education, and with the significance of such certification. In response to the Commissioner's claim that a constitutionally adequate education is being delivered, we then describe (Section D) the record evidence of the quality of education actually provided in poorer urban districts and contrast it with that in richer suburban districts. The critical educational needs of the students of these poorer urban districts are then set forth (Section E), including the evidence of their performance on State-mandated tests, along with a description of the special innovative approaches to education thought to be required to meet these needs. Having described the evidence of a failing 9 education in poorer urban districts, the contrast with that afforded in affluent districts, and the disparity in funding between the two, we deal next with the Commissioner's contention that the difference in education between the two is not caused by the amount of expenditures per pupil, but by mismanagement in some of the poorer districts (Section F). Our

conclusion that money does make a difference leads to a determination of the invalidity of the minimum aid portions of the Act.

A. The Funding Scheme

The Act's funding scheme is described in considerable detail in Robinson V, supra, 69 N.J. at 478-90, 355 A.2d 129. It is based on a limited equalizing of the taxing power of school districts. It enables all school districts to raise funds as if their tax base were at least 134% of the average school district tax base ("tax base" meaning in this connection the district's equalized property valuation per pupil). N.J.S.A. 18A:7A-3, -18a. The school district sets the tax rate as if the real property of the district equaled this guaranteed tax base (GTB). The local revenues generated by the tax from the district's actual 0 tax base are then supplemented by state aid, called "equalization aid," in an amount that, when added to these local revenues, equals what that tax rate would have produced if applied to the GTB.

In the school budget year 1985-86, the GTB was $250,927, with equalization aid totaling $1.34 billion. During that year it had the effect of equalizing the taxing power of 371 districts out of a state total of 578 districts, roughly two-thirds of the state's school districts. The equalization aid for the prior budget year (1984-85) aimed at giving effect to the GTB ($223,100) was $1.24 billion. Had the Act been fully funded, it would have been considerably more.*fn9 Districts whose school tax base in fact exceeds the GTB do not receive any equalization aid at all.


In its funding aspect, the Act does not require or assure any particular level of educational expenditure in any school district. It is indifferent to whether the district spends $1,500 per pupil or $15,000. As far as equalization aid is concerned, its only effect is to pay a portion of the school budget determined by the district. A district can decide to raise $5 million or $2 million; under the Act that is a matter solely for the district to decide. Both state equalization aid and the local tax rate would be affected by that decision. The potential legislative appropriation for equalization aid, therefore, is dependent not only on the level of the GTB but on local budget decisions. There is no limit -- theoretically -- on the district's ability to tax and spend.*fn10


The Act gives poorer districts -- poor in terms of property valuation per pupil -- taxing power to raise more money for school purposes than what a school district with the average property valuation and no equalization aid could raise. Putting aside for the moment the impact of "municipal overburden" (a condition in many poorer districts where the cost of local government -- police, firefighters, other municipal employees, road maintenance, garbage collection, etc. -- is so high that the municipality and the school district are reluctant to increase taxes for any purpose, including education), equalization aid attempts to obliterate the enormous disparity between rich and poor for school tax purposes; it creates, instead of rich and poor districts, two different classes: those districts with a guaranteed tax base -- almost two-thirds of the districts in the state -- and those with a tax base in excess of the guaranteed tax base of $223,100, running from $223,667 to $7.8 million and clustering at $300,000 (1984-85 figures). To understand better its equalizing impact, the GTB and equalization program should be compared with the situation that would exist if there were no 3 equalization aid whatsoever (the districts' real property

taxing power ranging from $22,322 per pupil to $7.8 million per pupil, with 58% of the districts below average, 42% above -- many enormously poor and a fair number very rich); and with the situation that existed prior to the Act when equalization aid leveled only 157 districts as compared with the 368 not equalized. Robinson V, supra, 69 N.J. at 465 n. 4, 355 A.2d 129.

Three limitations on equalization aid should be noted. Most important of the three, the amount of equalization aid a district receives in a budget year is based not on its budget for that year, the current year, but on the budget of the prior year.

Just how severe the impact of that limit can be is realized when a district with equalization aid at a level, for instance, of 80% of the district's budget is analyzed.*fn11 Assume that district has a $4.2 million budget for this year, representing a spending increase of $200,000 (last year's budget was $4 million). For $4 million of that $4.2 million budget, 80% aid will be forthcoming -- the district will have to raise only $800,000 locally to have a total 4 of $4 million. But to get the extra $200,000, the school district will have to raise that entire amount on its own tax base, and the impact on its tax rate will be five times as much as it would have been (because, on the assumption given, the State would have paid 80% of that $200,000 but for this "prior year" equalization aid rule). This failure to provide current year funding affects districts' willingness to add to or enrich their programs in view of what could be a substantial tax impact. Both the Commissioner and the Board, in their decisions in this case, support legislative change to a current year funding system.

The second limitation is the budget cap law, applicable to all districts, restricting 5 annual increases in school district budgets to a certain percentage over the prior year, but allowing low

spending districts to increase their budgets more rapidly than higher spending districts. N.J.S.A. 18A:7A-25. This restriction affects equalization aid by limiting the total budget on which such aid is based. The budget cap law is not as important to poorer districts, who do not ordinarily budget to cap. However, the statute allows the Commissioner to waive the cap limitation.

The third limitation cuts off equalization aid to the extent that the district's budget, in terms of expenditures per pupil, exceeds that dollar per pupil amount that is the sixty-fifth percentile of all school districts' budgets. In other words, if the district with a lower tax base per pupil than the guaranteed tax base nevertheless spends more than the statewide average expenditure per pupil, it will receive equalization aid even for the excess expenditure up to the point where the district's per pupil expenditure equals the sixty-fifth percentile of all districts, i.e., equalization aid will stop as the school district's budget per pupil approaches that of the highest-spending 6 districts of the State. Again, this restriction is of little importance to the poorer districts.

For those districts with property valuation above the guaranteed tax base, the Act provides "minimum aid." Keyed to property wealth and the size of the district's budget,*fn12 this

element of the funding scheme, while not as substantial as in the past, remains an expenditure that is counter to equalization (aiding the richer districts instead of the poorer districts). In 1984-85, for instance, minimum aid totaled $93 million (as compared to $1.2 billion of equalization aid in that same year); immediately prior to the Act, however, minimum aid equaled $290 million as compared to equalization aid of $431 million for the same year. In 1989-90, $163 million in minimum aid was distributed; equalization aid totaled $1.9 billion.


The Act also provides for "categorical aid," amounts given by the State to districts regardless of their wealth or the total size of their budget, based on the recognition that certain essential programs cost more than others. Categorical aid supports special education for students with particular handicaps, compensatory or remedial education, and bilingual education. The aid formula consists of calculating the statewide average expenditure per pupil (measured by the district Net Current Expense Budget (NCEB)) and multiplying it by a statutory fraction assigned to the category, N.J.S.A. 18A:7A-20, the product being the amount a district will get in additional aid for each pupil in that category. For instance, in 1984-85 the additional cost factor for compensatory education was .18, and bilingual education .23 (the additional cost factors can be changed each year by the Governor unless the Legislature objects, N.J.S.A. 18A:7A-21). In 1984-85 the statewide average expenditure per pupil measured by NCEB was $3,329, and therefore a district with 100 students taking compensatory education courses would have received $59,922 in compensatory education categorical aid.

8 In 1984-1985, total categorical aid was $315.4 million ($206.1 million for special education; $88.1 million for compensatory education; $21.2 million for bilingual education). Categorical aid is distributed as a flat grant per pupil rather than in accordance with the GTB equalization aid formula.

Finally, there is transportation aid and pension aid, the latter consisting of the State's contribution to the Teachers' Pension and Annuity Fund (TPAF), both of which are non-equalizing. The transportation aid is a percentage of the total transportation costs of a district and is distributed in a way that bears no relationship to the wealth of the district. Payments by the State to the TPAF, however, are affected by the districts' wealth, since the richer districts tend to have more and better paid teachers per pupil than the poorer districts. The contribution to the TPAF is a substantial amount ($535.8 million in 1984-85) and is counter-equalizing. There are, however, as was noted in Robinson IV, supra, 69 N.J. at 149-50, 351 A.2d 713, administrative and other problems that would arise were this aid terminated on its present basis and 9 instead distributed pursuant to the equalization aid formula.*fn13

Of considerable importance, in the State's view of this case, is federal aid. For many years, since 1965, the Elementary and Secondary Schools Act (now titled the Strengthening and Improvement of Elementary and Secondary Schools Act), 20 U.S.C.A. § 2701 et seq. (Supp.1989), has provided needed extra

funding for programs for disadvantaged students. Federal aid is fairly narrowly targeted not only as to district but as to use. Its impact on poorer districts is indicated by the numbers: in 1984-85 Camden received $394 per pupil; East Orange, $166 per pupil; Jersey City, $471 per pupil; Irvington, $320 per pupil; Newark, $808 per pupil; Trenton, $480 per pupil; and Paterson, $244 per pupil. Although substantial, federal aid amounts only to approximately 5% of the total of all districts' current expense budgets (nationwide, federal aid is about 8% of districts' budgets). The State, in its arguments concerning both the adequacy of school budgets in poorer districts and the asserted disparity in expenditures per pupil between such districts and richer districts, often uses expenditure figures that include federal aid. When federal aid is included, the level 1 of funding per pupil in poorer districts is increased and the disparity of such funding compared to richer districts decreased, sometimes dramatically.

The question of the significance of this aid and its appropriate function in school finance analysis was very much at issue in this case. While obviously such aid must be acknowledged, we have determined it should not affect our conclusions concerning either constitutionality or remedy, both as a matter of constitutional interpretation and federal law. Briefly, we view the State's constitutional obligation to provide a thorough and efficient education as not adequately satisfied if dependent on federal aid, which today is subject to substantial fluctuation. Plaintiffs' witness called it a "roller coaster."*fn14

Furthermore, as we read the federal law, even the mere consideration of federal aid in determining the need for or amount of state aid would violate the federal aid statute. 20 U.S.C.A. § 2854 ("No State shall take into consideration payments under [20 U.S.C.A. §§ 2701 et seq. ] in determining the eligibility of any local educational agency in that State for State aid, or the amount of State aid, 2 with respect to free public education of children."). We deem it inevitable that a constitutional determination and remedy based on the assumption that federal aid will continue would have such an effect. See also 20 U.S.C.A. § 2728 (conditioning receipt of federal funds on maintenance of funding effort by the local district and the State and further providing that federal funds shall be used to supplement rather than supplant funds from State and local sources).


Put differently, federal aid, targeted solely at helping poor children, is not intended to enable a state to keep in place a funding scheme that disproportionately penalizes them. If New Jersey's funding scheme were equal and fair, which it is not, federal aid would continue, and together with state and local expenditures it would provide an even greater opportunity to educate disadvantaged children. The State's position in advancing such an argument in order to save this failed system gives us concern. If New Jersey's educational funding system is not thorough and efficient on its own, we question whether the State should want to preserve it by relying on federal aid, at the inevitable cost of depriving poorer children of their full measure of help.

Finally, to the extent that the constitutional obligation is measured by the regular education provided by the district (the NCEB), federal aid is irrelevant. Federal aid is targeted for specific uses, e.g., compensatory education, special education, and bilingual education. Like state categorical aid, it is not

intended to diminish disparities in educational ...

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