Alternative Source for Tax Dollars

Alternative Source for Tax Dollars

Over the last several years, the New Jersey school system has been facing tremendous challenges associated with shortfalls in funding. At the heart of these issues, is the fact that many districts do not receive the resources they need from decreases in property taxes. This is hurting the ability of schools to address a host of critical challenges in the process. To fully understand what is taking place requires examining the need for equalization in funding programs, the impact of district power equalization and the characteristics of a fair / equitable school system. Together, these different elements will highlight the overall scope of the problems and how they can be addressed over the long-term. (Goodspeed, n.d.)

The need for equalization of local, county, and state funding systems.

The current state of the New Jersey school system is that wealthier districts will receive greater amounts of funding in contrast with other areas. This is because the wealthier communities will have higher levels of assessed property values. When the mill levy is determined, this will lead directly to greater amounts of revenues collected by government officials. This money is sent to these schools, in order to provide students with better quality of education in comparison with other areas. (Goodspeed, n.d.)

At the same time, Governor Christie has imposed strict budgetary cuts at the state level to all school districts. This means that many areas which are in poorer neighborhoods will not receive the kind of support they need. In 2011, this resulted directly in decreases in to these areas of up to 100%. To make matters worse, the state has imposed a cap on property taxes of 2.5%. This is leading to a loss in tax revenues for these school districts. For the poor and inner city institutions, this can have a devastating effect on their ability to raise money for some of the most essential programs. This is because there are fewer property owners in these areas. (Crawford, 2010) (Goodspeed, n.d.)

Moreover, they have lower values assessed on what they owe to government officials. These factors can lead directly to decreasing levels of funding for schools inside these communities. The problem is becoming worse from the dramatic cut backs in state funding and the cap on raising the mill levy beyond 2.5% a year. This is creating a situation, where these districts do not have the funding they need to provide students with a quality education. (Crawford, 2010)

As a result, there needs to be an equal contribution of support from all levels of government. This will ensure that every school receives the resources it needs to deal with critical challenges. When this happens, many inner city and poorer school districts can maintain high levels of quality without having to make drastic cuts to a host of programs. This is the key for ensuring that everyone can deal with the current financial challenges by responsibly dividing areas of support among different segments.

The impact of district power equalization.

The long-term effects of district power equalization are that students and school districts will have greater access to the resources they need. This means that there must be a change in the formula that is utilized to determine what amount each entity should contribute to public education. Moreover, many of the wealthier school districts must share some of the money they receive from the mill levy with the poorer school districts in the form of a pool. This will ensure that everyone has the equal access to the resources they need in order to achieve critical objectives in the process. When this happens, there will be more stability in the funding resources that are provided. This allows the poorer schools to avoid facing 100% decreases in these areas from select sources. (Toutkoushian, 2008)

At the same time, the state needs to come up with more creative ways to fund education. This means that they should have alternative sales taxes imposed. These small increases will result in school districts receiving more income. As the legislature can avoid making dramatic cuts backs from the general fund and will have another source of revenues. This will improve their ability to provide educators with the resources they need. (Balu, 2011)

A good example of this can be seen with a study that was conducted by Balu (2011). She found that this formula has been successful in helping to ensure that school districts are receiving additional financing. Commenting about these shifts, she concluded that this will prevent sudden decreases by introducing another form of revenues for education with her saying, "Districts in states that shifted their tax base for education toward sales and income taxes, received more than 60% of their revenues from the state. They experienced an increase in revenue stability after finance equalization reform was adopted." (Balu, 2011) This is showing how changes in the way revenues are collected can improve the kinds of equality in the funding school districts are receiving.

As a result, a change must occur in the formula that utilized to determine how revenues and other sources of income are distributed among educational institutions. This means that there must be shifts in the way they are collected and distributed. In many situations, this will require having wealthier districts contributing more of their income from the mill levy to a general fund. These amounts will be distributed equally among the various schools. (Toutkoushian, 2008) (Balu, 2011)

At the same time, the state must have a shift in the sources of revenues. This means passing on any kind of increases to other areas such as sales taxes. These transformations will allow the state of New Jersey to keep the mill levy rate of 2.5%. While at the same time, any kind of short falls can be split among small increases in sales taxes. If this can occur, the schools will receive their funding from specific areas other than the general fund (which is earmarked for them). These elements will prevent any kind of sudden decreases in spending over the long-term and ensure that all districts receive the resources they require. (Balu, 2011)