Budget Types in Education in New Jersey

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Table of Contents

Introduction
Common Budget Types
Common Revenue Sources
Hammonton Town Budget Analysis
Budget Development Evidence
Conclusion
References

Introduction

Budget management is one of the most significant and challenging tasks for school districts since it is crucial to balance the needs of the students and competitive salaries for teachers. Hence, education institutions must develop comprehensive budget programs to identify emerging issues and receive financial aid from local and state sources. The current paper examines the most common types of budgets in education in New Jersey, USA, and thoroughly analyzes the financial planning model of NJ, Atlantic, Hammonton Town.

Common Budget Types

The most common budget types in education, in general, include student-based and site-based designs. In New Jersey, the primary method is a student-based strategy, and every school district needs to provide information about its student body to receive financial support (Adely, 2019; “School finance 101,” n.d.). This metric is called the Adequacy Budget, and it is calculated based on the number of students and their associated characteristics (Adely, 2019). Namely, it consists of the Base Per Pupil Amount (BPA) and additional factors, such as education grade, disabilities, need for food/support services, and student performance, that multiply BPA (“School finance 101,” n.d.). It is an accepted formula in New Jersey as per the 2008 School Funding Reform Act that ensures that all school districts receive enough money to provide equal services to all students (Baker & Weber, 2022). There are differences between counties and districts; however, they generally follow the same pattern.

Common Revenue Sources

Consequently, it is crucial to examine the revenue sources to understand the differences in budget types. In general, all school districts receive money from local and state sources based on the student body. The former includes local taxes, tuition, and unrestricted miscellaneous revenues (“User friendly budgets 2022-23,” 2022). Income from state sources is a more complicated metric that comprises various types of state aid. For instance, equalization aid is the difference between the proposed adequacy budget and how much of it local sources can cover (“School finance 101,” n.d.). Hence, if a school district receives sufficient money from local taxes, the state does not cover additional expenses. At the same time, if local revenue is not sufficient, New Jersey will provide additional finances to the district. These differences in revenue sources are crucial to understanding how budget types work and how much money schools can allocate to their needs.

Hammonton Town Budget Analysis

All school districts in New Jersey follow the student-based budget type; however, the differences in revenue sources, operating costs, and other expenses are still present. For instance, the proposed revenue for Hammonton Town in Atlantic County is $27,403,483 from local taxes and $28,818,255 from state aid in 2022-23 (“Hammonton Town,” 2022). The suggested spending per student is $15,599, which is slightly below average (“Hammonton Town,” 2022; Farrie, 2021). However, as pointed out by Farrie (2021), the average spending per pupil is not a comparable metric between the districts because each area has a unique distribution of low/high-income families. Other measurements, such as total extracurricular and equipment costs, are more illustrative to showcase the quality of the provided services. Ultimately, a thorough analysis is necessary to understand how well a particular school district utilizes the student-based budget.

Budget Development Evidence

Lastly, it is crucial to examine the effectiveness of the student-based budget type and the evidence that Hammonton Town utilizes this strategy. The most credible proof is that all school districts in New Jersey propose their adequacy budget based on the BPA metric, which is generally equivalent to the student-based budget (“School finance 101,” n.d.). Hence, “advertised per pupil cost calculations” is a crucial metric that differentiates the amount of money that school districts allocate to their operating services (“Hammonton Town,” 2022). Moreover, the analysis of supporting costs, such as school security, food, and special education, should be carefully considered to implement an effective budget plan. There is ongoing criticism that this budget strategy, which emerged from SFRA 2008, has become less effective in recent years due to the increased standards in education (Baker & Weber, 2022). However, there is no direct solution to the problem, and more research is required. Ultimately, the correlation between the BPA metric and the adequacy budget proves that school districts in New Jersey utilize the student-based strategy.

Conclusion

Financial management of school districts in New Jersey centers on the concepts of the student-based budget and student necessities. The baseline of the BPA metric is complemented with student performance, grade level, demographic characteristics, and other factors to calculate the necessary amount of money per student. If the local revenue sources cannot cover the proposed budget, the state supports school districts with equalization, school choice, transportation, and other types of aid. Hammonton Town – the examined district – will proposedly receive nearly $23,000,000 in equalization aid to minimize the gap between the revenue from local sources and the estimated adequacy budget. It is the largest contribution from state sources that ensures that all students receive the highest quality of education. Ultimately, Hammonton Town in Atlantic County has the student-based budget type as per the state reform of 2008 SFRA, which relies on the concepts of the BPA metric and the adequacy budget.

References

Adely, H. (2019). Here’s how New Jersey decides how much each school district will get in aid. North Jersey. Web.

Baker, B., & Weber, M. (2022). New Jersey school funding: The higher the goals, the higher the costs. New Jersey Policy Perspective. Web.

Farrie, D. (2021). Comparing New Jersey school spending the right way: A new ELC research report. Education Law Center. Web.

Hammonton Town. (2022). State of New Jersey: Department of Education. Web.

School finance 101. (n.d.). New Jersey School Boards Association. Web.

User friendly budgets 2022-23. State of New Jersey: Department of Education. Web.

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