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Wednesday, May 10, 2006 • BY ROBERT SCHWANEBERG AND DUNSTAN McNICHOL • Star-Ledger Staff

The New Jersey Supreme Court yesterday allowed the state to freeze aid to its 31 poorest school districts in order to balance the budget, but also gave the districts a right to appeal for more funding.

The unanimous ruling came on the same day acting Education Commissioner Lucille Davy told lawmakers the Corzine administration is working on plans to overhaul the state's school funding for mula completely by July 2007.

"You really want one funding formula that funds kids based on what they need rather than where they live," Davy said.

The high court issued its decision one week after it heard lawyers for the "special needs" school districts argue that with costs rising, flat state aid would translate into cuts in educational services. Attorney General Zulima Farber countered that given the state's "dire" budgetary circumstances, "we simply don't have the money" to increase education funding.

The justices gave the special needs districts until May 31 to reduce their budget requests and re submit them, as Davy had ordered in March. The 31 districts originally requested about $500 million more than the $4.25 billion that Gov. Jon Corzine provided in his proposed budget, which is being reviewed by state lawmakers.

The justices also ordered the Department of Education to go ahead with planned audits of four special needs districts: Newark, Jersey City, Paterson and Camden. Farber candidly told the justices that the state has "neglected its responsibility to provide sufficient fis cal oversight" and said the audits are needed to ensure that poor districts are properly spending billions of dollars in aid.

The justices agreed and set a November deadline for completing the audits.

While that much of the ruling backed Corzine, he declined to call it a "victory," saying that would be achieved only when all students are prepared to meet the challenges they will face upon graduation, "and not a moment sooner."

"We have a great deal of work ahead of us to ensure that all children across New Jersey receive a thorough and efficient education, and that public, local and school officials are accountable for the public funds they receive," Corzine said. "Our focus will be to get resources to children."

The justices also handed a par tial victory to the poorest districts by granting them a broad right to appeal "inadequate funding" for "demonstrably needed" school programs. Corzine had proposed a strict budget cap that did not allow poor school districts to appeal the state's funding decisions.

"We're pleased that the court has taken that step," said David Sciarra, director of the Education Law Center, who argued the case on behalf of schoolchildren in the needy districts. He said the ruling was "very similar" to what the court did during former Gov. James E. McGreevey's first year in office in 2002, when it allowed him to impose a spending cap on the poorest districts while giving them a "safety valve" through the right to appeal.

Richard Shapiro, a lawyer for 16 of the districts, said, "In structure, it's no different from what has oc curred in the past. The baseline is different but the appeals process is preserved."

The ruling was the latest in a 25-year-old lawsuit, Abbott vs. Burke, in which the justices have repeatedly ordered state officials to increase aid to the poorest schools, which have come to be known as the "Abbott districts."

Sciarra said, "What's important now is that the (education) department work cooperatively with the districts to finalize school budgets and meet the children's needs, even if more funds are needed."

But Davy told lawmakers she is confident that the poorest districts can provide a quality education without additional state aid.

"I firmly believe there are places in all these budgets where people can tighten their belts, just as we have done, and find ways to save money," Davy told the Assembly Budget Committee.

Davy said her department is working on a new funding formula that would set a base cost of providing the "thorough and efficient" public education the state constitution requires, then apportion state aid to every community based on how much help it needs to provide that level of education.

Democratic and Republican lawmakers alike pressed for such an approach, saying growing state payments to the Abbott districts were sparking resentment in hundreds of other communities where state school aid has been flat for years.

"It's time to start talking about New Jersey -- not Abbott and non- Abbott," said Assemblyman Jo seph Cryan (D-Middlesex), vice chairman of the committee. The chairman, Assemblyman Louis Greenwald (D-Camden), agreed.

"It's divisive within communities and it's divisive within neighborhoods," Greenwald said.

Assemblyman Kevin O'Toole (R-Essex) said hearing Republicans and Democrats "speaking with one voice" means the school funding formula is likely to be changed.

"It's the biggest social experiment ever conducted in this coun try, and it has been a failure," O'Toole said. "We have to come to the conclusion the Abbott funding experiment has failed; it has failed the children and it has failed the taxpayers."

Top court orders 'Abbott freeze' but lets schools appeal

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