On certification to the Superior Court, Chancery Division, Mercer County.
Wilentz, Clifford, Handler, Pollock, O'hern, Garibaldi, Stein
We affirm the judgment of the Chancery Division declaring unconstitutional the Quality Education Act (the Act or QEA),
N.J.S.A. 18A:7D-1 to -37. Our decision is based on the Act's failure to assure parity of regular education expenditures between the special needs districts and the more affluent districts. The State informs us that it does not anticipate that the Act in its present form will continue to control financing of public education.
We retain jurisdiction. We decline to enter any orders now. The substantial increase in State aid to the thirty special needs districts (approximately $700 million) since our opinion, Abbott v. Burke, 119 N.J. 287, 575 A.2d 359 (1990), compared to the wealthier districts (no increase), and the consequent change in the relative disparity of expenditures for regular education between the two (average per-pupil expenditures in the special needs districts before QEA were either approximately 70% or 75% of that in the richer districts, and are now approximately 84%) constitute, within a framework of commitment to parity, a constitutionally legitimate response of the other branches of government to our ruling in that case, given all the circumstances.
We will not intervene, except as noted below, if substantial equivalence of the special needs districts and the wealthier districts in expenditures per pupil for regular education is achieved for school year 1997-1998 along with provision for the special educational needs of students in those special needs districts. That school year is selected in view of the current statute requiring compliance by an even earlier school year, 1995-1996, and in conformance with plaintiffs' suggested timetable calling for compliance by 1997-1998.
If movement towards that end at any time suggests less than a reasonable likelihood of achieving compliance by 1997-1998, we will entertain applications for relief from any party to this action. More specifically, if the relative disparity, now at 16%, is not further addressed in both school years 1995-1996 and 1996-1997, we will hear such applications. Furthermore, if a law assuring such substantial equivalence, approximating 100%, for school year 1997-1998 and providing as well for special educational needs is
not adopted by September 1996, we will consider applications for relief.
By "regular education" we mean what was known as the Net Current Expense Budget, now called under QEA the Local Levy Budget. By "provision for special educational needs" we mean sums in addition to those for regular education. By a "law assuring substantial equivalence," we mean a law that will by its own terms automatically achieve substantial equivalence in per pupil regular education expenditures without depending on the discretionary actions of officials and, to the extent local fair shares or their equivalent are required, will automatically, and without procedural delay, result in the raising of funds for such shares.
We explain briefly why the QEA fails to assure substantial equivalence between the special needs districts and the richer districts in expenditures per pupil for regular education. Although the specific mathematical formulas involved in calculating the spending and funding provisions of the QEA are extraordinarily complex, the basic legislative design is simple and straightforward, as are the reasons why QEA failed to assure and achieve parity. The Legislature declared as its objective that the QEA formula would "provide that by the 1995-1996 school year, the per pupil expenditures in the poorer urban districts will be substantially equal to those in the wealthy suburban districts." N.J.S.A. 18A:7D-2b(5). To achieve that goal, the Legislature addressed both spending and funding for special needs districts. Although the QEA authorized, but did not compel, the special needs districts to spend enough each year to achieve parity by the 1995-1996 school year, the Act did not guarantee funding sufficient to pay for the authorized level of spending.
The QEA directs the Commissioner of Education (Commissioner) to calculate annually an equity spending cap permitting an increase in the budgets of each special needs district that, if sustained through the 1995-1996 school year, would result in the
per pupil special needs districts' budgets equalling the average per pupil budgets of the so-called I and J districts, the richer districts. N.J.S.A. 18A:7D-28c. Because the equity spending cap is permissive, not mandatory, N.J.S.A. 8A:7D-28d, the funding provisions of the QEA dictate whether the special needs districts can afford the spending levels permitted by the equity spending cap.
The QEA's funding provisions contemplate the payment of foundation aid for current expense and capital outlay to special needs districts in an amount essentially equal to the difference between each district's "maximum foundation budget" and its "local fair share," N.J.S.A. 18A:7D-4. The QEA calculates local fair share in a manner designed to reflect a school district's fiscal capacity, determined by a formula based primarily on the district's equalized property value and the aggregate income of the district's residents. N.J.S.A. 18A:7D-7. That calculation of local fair share was intended to address our holding in Abbott authorizing the Legislature to determine the division between state aid and local funding "consistent with the constitutional obligation," provided that funding in special needs districts cannot "depend on the budgeting and taxing decisions of local school boards." 119 N.J. at 388. Because local fair share is ...