New Jersey school districts experiencing enrollment growth will face fiscal pressure from Gov. Chris Christie’s proposed $35.5 billion budget that keeps state aid for localities relatively flat, according to S&P Global Ratings.

S&P analyst Tiffany Tribbitt noted in a report Monday that Christie’s budget proposal for the 2018 fiscal year holds aid to K-12 schools steady from 2017 for most items except funding for charter schools, host district support and school choice. New Jersey school districts' two main funding sources are property taxes and state aid. Tribbitt wrote that more than 82% of increases from Christie’s proposed budget are geared toward mandatory spending increases for debt service, health benefits and pension costs, which limits the state’s ability to increase funding for other school aid.

“Districts experiencing enrollment increases could face budgetary pressure as state aid effectively declines on a per pupil basis," says S&P credit analyst Tiffany Tribbitt.
“Districts experiencing enrollment increases could face budgetary pressure as state aid effectively declines on a per pupil basis," says S&P credit analyst Tiffany Tribbitt. S&P Global Ratings

“Districts experiencing enrollment increases could face budgetary pressure as state aid effectively declines on a per pupil basis,” she wrote. “Furthermore, the governor's call for changes to the school funding formula could create uncertainty and budgetary pressure.”

Christie has pressed for changes to the state’s School Funding Reform Act of 2008, which was designed to allocate more funds to districts based on their number of high-need students. Tribbitt noted that the state has not funded the legislation according to statute for the past nine fiscal years causing disconnect with district enrollment and aid levels.

“This might benefit districts with declining enrollments, but those with increasing enrollment are effectively seeing lower per-pupil aid,” said Tribbitt. “S&P Global Ratings will determine how any changes to the state's school funding formula could affect rated districts if and when legislation moves forward.”

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