Thursday, August 25, 2016

The Abbotts Didn't and Don't Have NJ's Worst Municipal Overburden

One justification Robert Wilentz and the NJ Supreme Court gave for ordering massive state aid to the Abbott districts is that the Abbotts suffered from "municipal overburden" and thus were not in a position to increase their local taxes further.

As Wilentz wrote:

1. Municipal Overburden “Municipal overburden” is the excessive tax levy some municipalities must impose to meet governmental needs other than education. It is a common characteristic in poorer urban districts, a product of their relatively low property values against which the local tax is assessed and their high level of governmental need. The governmental need includes the entire range of goods and services made available to citizens: police and fire protection, road maintenance, social services, water, sewer, garbage disposal, and similar services. Although the condition is not precisely defined, it is usually thought of as a tax rate well above the average.

The underlying causes of municipal overburden are many and complex. Its consequences in this case, however, are clear and simple. The poorer urban school districts, sharing the same tax base with the municipality, suffer from severe municipal overburden; they are extremely reluctant to increase taxes for school purposes. Not only is their local tax levy well above average, so is their school tax rate. The oppressiveness of the tax burden on their citizens by itself would be sufficient to give them pause before raising taxes. Additionally, the rates in some cases are so high that further taxation may actually decrease tax revenues by diminishing total property values, either directly because of the tax-value relationship, or indirectly by causing business and industry to relocate to another municipality.

Indeed, there is much truth to what Wilentz said of the Abbotts and excessive taxes.

In FY1990, the average NJ property owner paid an all-in 2.041 tax rate, but the average Abbott property owner would have paid 2.918, a significantly higher figure.  A reasonable person could conclude that most (NOT ALL) of the Abbotts required significantly more state aid than they were then receiving.

Looking at the high (superficial) average, the high Abbott tax rate would seem to justify Wilentz' dictates, but the overall 2.918 Abbott average masks great diversity and completely omits any consideration of the many high-tax non-Abbotts who were left behind.

HOWEVER, the problem with the New Jersey Supreme Court's decision in Abbott is that it did not use a data-based method to determine what districts should be the ones to get that extra aid.  There was no attempt to actually classify what towns in New Jersey truly had the worst municipal overburden and unmet academic need and target aid to those districts.

Instead, the NJ Supreme Court used cockamamie criteria combined with out-of-date data to determine what "urban" and "poor" districts should be on the list of districts to get this money.  A number of the Abbott districts indeed suffered from municipal overburden, but not all of them did and there were a great many non-Abbotts that also had acute municipal overburden who were completely left out of the Abbott decision.





In terms of taxes, the creation of the Abbott list had more mistakes of exclusion than inclusion.

Most of the Abbotts did indeed have high taxes; but most of NJ's highest tax districts were not Abbotts.

Hence, if you actually look at the 50 towns in NJ with the highest tax rates, only 15 were Abbottized in 1990.  (Salem City was not Abbottized until 2004)

Click to Enlarge
If you look at the Abbotts themselves, their tax rates were much higher than average and were appalling high in Camden, East Orange, Orange, Bridgeton, and Asbury Park, but Abbott tax rates varied.  Asbury Park's high taxes translated into very high student spending (in excess of Millburn) even in 1989-90, so its high tax burden can be seen as partly voluntary.

However, punishing taxes also existed in other low-DFG districts.  20 of the non-Abbott districts who were also among the 50 highest taxed towns were in DFG A or B:  Salem City (then DFG A), Penn's Grove (DFG A), Pine Hill (DFG B), Woodlynne (DFG B), Commercial Township (DFG A), Lawnside (DFG B), Clemonton (DFG B), Lawrence Township (DFG A), Chesilhurst (DFG A), Egg Harbor City (DFG A), Clayton (DFG B), Bellmawr (DFG B), Brooklawn (DFG B), Maurice River (DFG A), Fairfield Township (DFG A), Paulsboro (DFG A), Lakehurst (DFG A) Elk (DFG B), National Park (DFG A), and Greenwich (DFG B).  (these are 1980s DFG classifications)

Of the future Abbotts, you would not be able to say that Garfield, Burlington, Harrison, Perth Amboy, Neptune Township, Phillipsburg, and Hoboken had any kind of real municipal overburden.  (And Hoboken also already outspent Millburn in 1989-90.)

Click to Enlarge
The Supreme Court gave the legislature some discretion over the final composition of the Abbott list, but since the NJ Supreme Court came out with the Abbott II decision in early June and the budget had to finalized by the end of June, the legislature did not have the time to thoughtfully and thoroughly evaluate what districts most merited this mountain of state aid.  The only changes the legislature made were it added Neptune Township and Plainfield to the list of Abbott districts.

Today the immensity of state aid for the Abbotts has reduced their school taxes significantly and taken many Abbotts out of the realm of acute municipal overburden.

In 1990, fifteen of the 50 worst-taxed towns in NJ were Abbotts.  In 2016 only eight are.

Click to Enlarge:
Source: http://www.state.nj.us/dca/divisions/dlgs/resources/property_tax.html#1


The Abbott decision was wrongheaded for multiple conceptual reasons. Abbott was wrongheaded for its insistence that money was the dominant factor in academic success, for its belief that the state could rigidly demarcate "urban poor" from all other districts, from its blindness towards the many struggling non-Abbotts who would be left behind.   Lastly, Abbott was wrongheaded because of the Supreme Court's repeated contempt for democracy and the elected branches.

However, the more I did into Abbott history the more I realize it was wrong even on factual reasons. The Abbotts weren't New Jersey's lowest spending, Pemberton was no instance of "society is failing," and the Abbotts, as a class, didn't have New Jersey's worst municipal overburden.

Finally, the relevance of the Abbotts not having NJ's worst municipal overburden cannot be emphasized enough in response to the Education Law Center's threats to launch another Abbott case.

The relevance of the Abbotts cannot be emphasized enough in condemning Chris Christie's failure to update the Abbott list.

I've said this before and said it again, but Abbott is judicial activism at its worst.

Saturday, August 13, 2016

The Great Abbott Tax Freeze

This post is about how the Abbott decisions of the 1990s and the ensuing flood of state money into the Abbotts allowed the Abbotts to freeze their school taxes.  This post provides shades of history as to why the Abbott districts, unlike poor non-Abbotts, pay nowhere near their full Local Fair Shares.

This is a story about Abbott unfairness that isn't often told. Many people outside of the Abbott districts know that Abbott has caused their own taxes to soar, but few realize just what a huge break the Abbott districts themselves got.


As usual, I got this data from the Department of Education via an OPRA request. I've put it all online on the Historical State Aid, Tax Levy, Tax Rate, and Spending Spreadsheets.

Info on NJ's Tax Levy Surge

From 1989-90 to 2015-16, New Jersey's total school tax levy increased from $4,558,222,671 to $13,957,747,742, or a 206% increase.

The median district's tax increase has been 224%, with Swedesboro-Woolwich having the biggest, with 1685% increase (from $800,000 to $15 million). Swedesboro's Equalized Valuation increased only from $92 million to $758 million (a factor of 8), so its tax rate has literally doubled, from 0.91 to 1.98.
The biggest decrease has been Camden's, where school taxes have fallen by 62% (from $19.6 million to $7.5 million). Camden's Equalized Valuation has actually increased, from $898 to $1.7 billion, so Camden's school tax levy has fallen from 2.19 to 0.47.

During these 26 years, inflation has been only 84% and the student population has increased by only a third. New Jersey's total Equalized Valuation (using adjustments for non-K-12 districts), increased from $509 billion to $1,165 billion, or a 128% increase.


What is shocking is that how exempt the Abbotts have been from increasing their taxes.

When the Abbott II decision came out most of the Abbott districts had substantially higher tax levies than they have now (adjusted for inflation).

District 1989-90 Tax Levy 2015-16 Tax Levy Percentage Increase
BURLINGTON CITY $3,937,817 $10,899,878 176.80%
PEMBERTON $5,321,419 $12,942,946 143.22%
NEPTUNE $15,477,594 $36,035,649 132.82%
HOBOKEN $17,878,915 $41,004,666 129.35%
LONG BRANCH $17,428,181 $37,901,052 117.47%
PHILLIPSBURG $5,295,655 $10,728,711 102.59%
GARFIELD $13,227,178 $25,989,445 96.49%
HARRISON $4,712,377 $9,229,913 95.87%
INFLATION 84%
ORANGE $6,862,215 $11,692,295 70.39%
MILLVILLE $6,655,325 $11,319,609 70.08%
ELIZABETH $36,849,087 $59,813,124 62.32%
NEW BRUNSWICK $17,604,644 $27,862,800 58.27%
GLOUCESTER CITY $2,690,467 $4,210,000 56.48%
NEWARK $74,008,652 $115,650,165 56.27%
VINELAND $14,282,074 $22,166,068 55.20%
PLEASANTVILLE $5,500,615 $8,311,512 51.10%
PLAINFIELD $15,914,470 $23,143,293 45.42%
TOTAL ABBOTT $536,608,170 $768,994,010 43.31%
PERTH AMBOY $15,701,730 $21,762,553 38.60%
KEANSBURG $3,617,566 $4,868,294 34.57%
WEST NEW YORK $11,247,010 $14,860,598 32.13%
EAST ORANGE $14,543,536 $18,950,050 30.30%
JERSEY CITY $90,913,927 $112,161,139 23.37%
PATERSON $32,932,844 $38,955,956 18.29%
PASSAIC $14,544,224 $16,818,577 15.64%
SALEM CITY $2,070,000 $2,392,321 15.57%
UNION CITY $14,119,701 $15,418,637 9.20%
BRIDGETON $3,491,084 $3,637,144 4.18%
TRENTON $21,410,019 $21,115,662 -1.37%
ASBURY PARK $6,870,119 $6,635,736 -3.41%
IRVINGTON $23,934,989 $17,459,529 -27.05%
CAMDEN $19,634,736 $7,449,009 -62.06%


In 1989-90, the total Abbott tax levy was 9.4% of NJ's total.  In 2015-16 it was only 5.6%.

Contrary to what has been implied by the Education Law Center and NJ Supreme Court, the Abbotts did not have NJ's highest Equalized school tax rates.  Of the districts with NJ's 50 highest Equalized Tax Rates in 1989-90, only three of them were Abbotts.  (Salem City had very high taxes, but it was Abbottized much later)

Winfield is obviously an outlier here.  I am skeptical that Winfield's tax rate really could be 6%, but Winfield's all-in taxes are the highest in NJ today, so the 6% tax rate may be a real number. Indeed, there are a few districts in NJ whose
taxes are that high now.
Since 1989-90, the median Abbott has only increased taxes by 53%.  The Abbotts' Equalized Tax Rate has fallen from 1.11 to only 0.69, whereas the state's (weighted) Equalized Tax Rate has risen from 0.86 to 1.25.



Most of the Abbotts have not done well in the last few decades, so it could be expected that their tax levy will lag the growth of the statewide tax levy, but poor non-Abbotts, by contrast, have been forced to accept significantly higher tax increases.

The 12 DFG A non-Abbotts (Atlantic City, Buena Regional, Seaside Heights, Woodbine, Paulsboro, Wildwood City, Lawrence Township, Downe, North Wildwood, East Newark, Commercial Township, and Fairfield Township) have increased their taxes by a median of 134%.

The 66 DFG B non-Abbotts have increased their taxes by a median of 204%

Not a single DFG A or B non-Abbott has been able to cut taxes in nominal dollars, although there are a few where the tax increases have lagged inflation.

Abbott Tax History

Immediately after the Abbott II decision most of the Abbotts actually had to increase their taxes.  For instance, Newark increased school taxes from $74 million to $82.7 million; Paterson increased school taxes from $33 million to $38 million; Trenton increased school taxes from $21 million to $25 million.

On the other hand, over two years Jersey City slashed its school taxes from $90 million to $68 million.

By 1993, however, Abbott tax increases were gone and the Abbotts were being flooded with more state aid than they knew what to do with.  After this point, the Abbotts were allowed to keep their tax levies constant while the rest of the state - included the poorest non-Abbotts - had no choice but to increase taxes.

In 1993-1994, the Abbotts (not counting Salem City), had a tax levy of $550,030,670. Five years later, in 1998-99, their total tax levy would only be $551,208,043. Over the next five years NJ had a serious budget crunch, but the Abbotts still received a deluge of money and only had a tax levy of $570,705,470 by 2003-04.  

Even the best-off Abbotts, Jersey City and Hoboken, did not have to raise their taxes. From 1994-95 to 2000-01, Hoboken's tax levy stayed in a very narrow band in the low $22 million range. Jersey City's tax levy stayed at exactly $72,094,096 for nine years. Jersey City's tax levy would not exceed the $90 million tax levy it had in 1989-90 until 2009-10.



While school districts in NJ have accepted a massive increase in their tax levies that surges well beyond inflation and student population growth, of the 31 Abbott districts, only eight have increased taxes faster than inflation.  The other Abbott districts have had effective tax decreases over the last 26 years.

The increase in the total tax levy is only exceeded by the increase in K-12 state aid, which increased from $2,491,585,444 to $8,020,259,660, or 246% during this period (63% of the surge in state aid went to the Abbotts; most NJ districts actually get less aid per student now than they did in 1989-90 adjusted for inflation)



As a consequence of the megamoney that the Abbott districts got in the 1990s and 2000s they fell significantly behind their Local Fair Shares and became accustomed to paying very little for their schools.

Even today, eight years after SFRA passed, only half of the Abbotts even pay 50% of their Local Fair Shares.

This gives taxes as a percentage of Local Fair Share.

In conclusion, in discussing the history of Abbott funding, it's critical to remember that not all of that money made it into Abbott classrooms or even Abbott bloat.  A lot of that money just offset taxes in Abbott districts or even just enabled Abbott districts to jack up their municipal taxes.

The history of Abbott districts going years, even decades, without increasing taxes indicates that the Abbott districts themselves don't believe Abbott Theory.







Monday, August 8, 2016

Phil Murphy Doesn't Understand State Aid

Phil Murphy just did an interview with Larry Mendte of "Jersey Matters" on several issues facing the state, including school aid.

The interviewer asked Murphy some pointed questions. In the first part, he asked Murphy would get
the money from for some of his promises and why Phil Murphy never mentions that he worked for Goldman Sachs.  Murphy refused to directly answer to the first question about how he would pay for things, and instead said that a budget is a statement of a society's values, so the dollars and sense of costs can be figured out later.

Murphy said he didn't talk about being from Goldman Sachs because it "cuts both ways" and would turn off some voters.  He claims that being from Goldman Sachs gives him a great deal of insight into what facilitates economic growth, which is an unconvincing argument, because it's hard to see how Jon Corzine's being from Goldman helped NJ in any way.

Anyway, the section which most interests me occurs in the second part and is where Larry Mendte asks Phil Murphy what his plan on state aid is. If you're pressed for time, check out the 3:30 minute.

Larry Mendte frames the question of school aid with a short preamble about disproportionalities in funding, with some districts being overfunded and some districts being underfunded "for no rhyme or reason."

Rather than answer the question about redistributing money, Murphy vowed to "implement the formula" without any discussion of how and then gave a semi-inaccurate explanation of SFRA.

Murphy repeats the line that under under the new formula "money follows the child," but claims that SFRA funds kids more who are from single-parent homes and who have learning disabilities, when this isn't true. SFRA have no references at all to giving more money to districts kids who have more kids from single-parent homes and intentionally assumes that every district in NJ has the same percentage of kids who have learning disabilities.  All else being equal, under SFRA, a district with a 25% classification rate would get the same amount of special education funding as a district with a 10% classification rate.

The major omission of Phil Murphy's answer is that he doesn't acknowledge that fully funding the K-12 component of SFRA would cost $2 billion (without redistribution), or give any pathway at all to where he is going to get that money.

Larry Mendte then asked Murphy, point blank, if he would move money from overfunded districts to underfunded districts. Murphy then repeats,  "I'd like to follow the formula."

Murphy never uses the word "SFRA," nor does he mention Abbott, which was what SFRA was a reform of. Murphy talks about his involvement with the NAACP, without mentioning that the NAACP supported the Abbott status quo and OPPOSED SFRA back in 2007-2008, when it was being passed.

Murphy then criticizes Christie's "Fairness Formula" proposal (like all Democrats have) and claims that the "big urban centers" are making progress, which is only semi-true too.

What Murphy doesn't acknowledge is that poor non-Abbotts have made equal progress and the Abbotts continue to increase their graduation rates despite decreasing and sub-Adequacy budgets over the last few years, which is contrary to what Abbott Theory says should happen.

Murphy says that Christie's proposal is divisive and "us versus them," but how is the Abbott Regime not "us versus them", but with a different "us" and "them"?  The money to pay for Abbott didn't came out of thin air; it was taken from aid that would have gone to other districts and the pension funds.  

The interview is Classic Phil Murphy:
  1. All problems in New Jersey are Chris Christie's fault.
  2. Phil Murphy will spend more money on whatever the problem is.
  3. Phil Murphy will figure out where the money comes from after he's governor.
Clearly, Murphy has the most expensive gubernatorial agenda of anyone running this year.  Murphy's endorsement of providing "free" Pre-K to another 45,000 children would cost $607.5 million.  (45k x $13,500).



Murphy has aid in the past that NJ can solve its budget crisis by reining in tax incentives, but he confuses tax incentives approved with money actually given out and ignores that tax incentives provide some positive externalities.  He has proposed his own slew of tax incentives too.

Murphy comes off as ignorant (again) in this interview of how SFRA's formulas work or what the rationale for SFRA was, Murphy has been asked about state aid before and he must know about Steve Sweeney's state aid reform proposal, so this is an example of Murphy not doing his homework rather than being a victim of gotcha journalism.

In opposing redistribution, Murphy is actually being politically calculating, since he must know what what overaiding and redistribution are.  He does not want to take aid away from any district because it would (the horror!) alienate some voters and Murphy wants to pander his way into the governorship.

Murphy knows that the NJEA is not on board for redistribution and NJEA support is essential for him to win the Democratic primary. 

Phil Murphy knows that Steve Fulop and the Hudson County machine don't like Steve Sweeney. Murphy knows that he is the second choice of the Hudson County machine, after Steve Fulop himself.  Murphy calculates that if Fulop drops out, he can get that support and defeat Sweeney.

Phil Murphy claims to be the "governor who has your back," but in opposing redistribution, Murphy is taking the side of Hoboken, Jersey City, Asbury Park, Pemberton et al against the rest of New Jersey.  The status quo aid distribution is already an "us versus them" scenario where districts who are richer or smaller now than in the past continue to receive state aid at a level that is unjustified in light of their current resources and needs.

Districts who have gone the opposite way, and gotten poorer and/or larger, are screwed.  These are the districts who need a "governor who has their back."

From the looks of things, that governor isn't Phil Murphy.






Wednesday, August 3, 2016

The Savage Inequalities Abbott Ignored

One myth about the Abbott cases in New Jersey is that prior to the NJ Supreme Court's heroic takeover of school finance in 1990, the state singularly failed to live up to its constitutional obligation to provide a "thorough and efficient education" to children in poor urban districts.  According to David Sciarra of the Education Law Center, NJ had "two separate school systems, one for poor, one for rich."

Like most myths there's some truth to the notion of pre-Abbott II urban deprivation.  New Jersey's urban poor districts (later known as theAbbotts) did indeed spend less than the rich suburban districts.  Yes, the spending disparities translated into stark programmatic disparities between the rich and poor.  Due to the "nested inequalities" where urban kids were "doubly disadvantaged" in being poorer than kids in rich suburbs, the urban schools couldn't give urban kids what they needed.

But what's never, ever discussed in the history of Abbott New Jersey school finance is that NJ had a smooth spectrum of spending, not "two separate school systems," and the Abbott districts in 1989-90 weren't New Jersey's budgetarily poorest. Not even close.  Prior to the Abbott II decision New Jersey's most underbudgeted districts were, with very few exceptions, rural districts, mostly in South Jersey, not urban districts at all.

The fact that New Jersey had a progressive aid distribution even in the 1980s has been forgotten.  The fact that Gov. Kean already had a special urban aid program in place that gave more money to urban poor districts than non-urban poor districts has been forgotten.  The fact that Newark alone got more state aid than Bergen County and the rest of Essex County combined hasn't been forgotten per se because it has never publicized at all.

What people do not know anymore about the Abbott cases is that prior to the Abbott II decision of 1990, the future Abbott were disparate, but, as a class, only spent about 5% less than the state median.  

What I have never seen in journalism since the 1980s is that in 1989-90, eight of the Abbotts actually exceeded the state's average spending and three Abbotts - Hoboken, Asbury Park, and New Brunswick - actually outspent Millburn.

Of New Jersey's fifty lowest spending districts, only four (4) were Abbotts.  

(I got the data from the DOE via an OPRA request.  This Historical Budget Data spreadsheet contains the spending data, plus historical state aid and tax levy data.)

What I'm trying to do here is bust the Abbottist myth that New Jersey's governors and legislature singularly failed urban poor districts. If you reason that "average spending for demographically poor districts" = "constitutional violation," then the constitutional violation in New Jersey wasn't at its most severe in the Abbotts, since they were nearly average spending and had many districts below them.  If low spending alone creates a constitutional violation, then the biggest violation was for rural, South Jersey districts.

The only way the state failed the urban districts would be if you compared them to the richest suburban districts in New Jersey, which is precisely what the Education Law Center did in order to make the Abbott districts appear to be more deprived than they were.  




Abbott II was Based on Extremes in Spending 

What must be made clear about the Education Law Center's argument Abbott II case is that it focused on comparisons of seven of the poorest Abbotts - Camden, East Orange, Jersey City and Irvington, Newark, Paterson, and Trenton -  against ten of the most affluent and tax-supportive suburbs in New Jersey - Paramus, Princeton, Millburn, Scotch Plains-Fanwood, Livingston, South Brunswick, Cherry Hill, Moorestown, Montclair, and South Orange-Maplewood.

Kean's Justice and Education departments objected to the validity of this comparison, saying there was a continuum of financial resources, but Chief Justice Robert Wilentz rejected this counterargument:

The State further claims that the most intensive study conducted by plaintiffs, including the study of funding disparities, is limited to comparisons between plaintiffs' districts (Camden, East Orange, Jersey City and Irvington) and three others-Newark, Paterson, and Trenton, all contrasted with certain richer suburban districts (Paramus, Princeton, Millburn, Scotch Plains-Fanwood, Livingston, South Brunswick, Cherry Hill, Moorestown, Montclair, and South Orange-Maplewood). We agree that plaintiffs' most complete study of the characteristics of districts, including substantive education, was made in the form just mentioned. But when it came to funding disparities and their relationships, plaintiffs' comparisons were across the board.

Obviously, when comparison is between affluent and high-tax suburbs to the poorest cities there are going to be spending disparities and these disparities would be exacerbated for the urban students on account of their having greater needs.



Indeed, what you have heard about unacceptable spending disparities between wealthy suburbs and the Abbotts is correct.  Wilentz documented many of the disparities in his Abbott II decision. That Raymond Abbott himself had a learning disability and received no services for his disability is heartbreaking.




But what is missing from the suburban-Abbott comparison is sensitivity to the rest of the state and an analysis of where the Abbotts were to the rest of the state.

In 1989-90, the median district in NJ spent $7,094 per student, with the weighted mean being somewhat higher, at $7,267 per student.  (vo-techs and some districts for which I did not have complete data are excluded.)

As you can see, the majority of the future Abbott districts were close to the median or exceeded it!  

Since the Abbott districts had more disadvantaged students than New Jersey's average district, one could still argue that the urban poor districts needed more than the average amount of money, but what this ignores is that the Abbotts weren't synonymous with New Jersey's lowest-budgeted districts.

Click to Enlarge
As you can see, this list is dominated by South Jersey rural districts.

There are only four "urban districts" among NJ's fifty lowest-spending districts and three of them (Bridgeton, Pemberton, and Millville) are rural anyway.  

Most of these lowest-spending districts include districts who are demographically poor too. Using the 1990 DFG classification (since it would be more contemporaneous than the 1980 classification). Fourteen districts in the bottom 50, Chesilhurst, Clementon, Fairfield, Elk, Westfield, Haledon, Prospect Park, Deerfield, Ocean Gate, North Bergen, Clayton, National Park, Lower Township, and Mullica were in DFG A or B. Another seven, New Hanover, Franklin, Winslow, Monroe, Freehold Boro, Pittsgrove, and Florence were in DFG CD.

*When I ran these calculations I could not believe that New Hanover and Chesilhurst only spent $1,000 per student, but I have double-checked the numbers I got from the Department of Education and cross-checked school spending with each district's local tax levy and state aid, and the $1,000 per student figures seem to be accurate.  Even if it turns out that there is some mistake and New Hanover and Chesilhurst spent more than $1000 per student, the basic point that the most underbudgeted districts in New Jersey were mostly non-urban still holds.

Abbott: Judicial Activism at its Worst

A reasonable person could believe that urban social problems were deeper than rural social problems and that therefore extra state aid for urban districts was justified.  A reasonable person could believe that Abbott districts suffered from "municipal overburden" and therefore more state aid was justified.  Clearly the cost of living is higher in North Jersey than South Jersey, so some spending disparities are justified. Furthermore, some of the poorest non-Abbotts are not K-12 districts, so their spending also should logically be lower.

A reasonable person can say that urban problems were "more pressing," but the second part of Tractenberg's assertion, that the urban districts "had less resources to deal with them" is untrue of the Abbotts as a class.  A handful of Abbott districts were indeed badly underresourced and those were the districts the Education Law Center used to argue its case, but the deep problems of Camden, East Orange, Jersey City and Irvington, Newark, Paterson, and Trenton did not exist to the same degree in all of the Abbott districts and the problems that existed in the poorest Abbotts existed in greater or equal depth in districts that were not legally considered "urban."

Chief Justice Robert Wilentz said that "society was failing" in the Abbott districts, hence the massive aid he ordered, but other poor districts still needed to keep their buildings warm in winter, still needed to bus kids, still needed to pay teachers, still needed to insure themselves, and still needed to buy equipment.  Why should heating oil cost more in Newark than in East Newark?  Why should a basketball court more for Bridgeton than for Fairfield Township?  Why should health insurance for a teacher cost more for Pemberton than for Eastampton?  Why need teacher salaries be higher for Harrison than North Bergen?  Why should a computer cost more for New Brunswick than Sayreville?

These are the Savage Inequalities that Abbott forgot.

Against the State's argument that New Jersey had a continuum of need and that the Millburn/Newark comparison was unrepresentative of the state, Robert Wilentz and the Supreme Court stood athwart justice and said that only the problems of urban districts, even if they were not the most severe, mattered.  And against common sense, the Supreme Court asserted that you could draw rigid demarcation between "urban" and "suburban."

Jim Florio had originally only wanted to bring the urban districts up to the 60th percentile, but he and Christie Whitman complied with the NJ Supreme Court "Parity Spending" and later "Parity Plus" orders anyway.

Over the next several years Abbott state aid would double, from $1,024,840,106 in 1989-90 to $2,291,696,951 in 1997-1998, when the Abbotts reached parity with DFG I and J districts.  From 1997-1998 to today, Abbott aid would double again, to $5.1 billion.  

Even the Abbotts who were already the best aided saw large gains:
  • Hoboken's state aid rose from $6.9 million to $10.2 million from 1989-90 to 1993-94.
  • Asbury Park's state aid rose from $12.3 million to $21.6 million. 
  • New Brunswick's state aid rose from $12.2 million to $21.2 million.
DFG A and B districts, from 1989-90 to today, only had their aid double over this twenty-six year timeframe.

For anyone seeking an example of the dangers of judicial activism, look at Abbott.


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See Also: 


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Note on the data:  I got the data from the Department of Education via an OPRA request.  I got the enrollment data via scans of original 1990 documents.  I had to enter the enrollment data into an Excel spreadsheet by hand.  If there was a typo in the documents I saw or I created a typo, please excuse me.

I can forward to anyone the enrollment data sheets.  Email me at stateaidguy@gmail.com if you want them.

I did not have enrollment data for every district I had budgetary data for.   I have omitted those districts from my calculations.

I did not factor in vo-techs into my state spending averages and median calculations.  

Thursday, July 28, 2016

Steve Fulop: Flippant and Thankless Again

What is it about Steve Fulop that prevents him from treating state aid as a serious issue?

I don't like running negative posts about Steve Fulop, but time and time again, whenever Fulop has been questioned about the fairness of Jersey City's state aid he has either ignored the question or insulted the person asking the question.

Ciattarelli Asks, Fulop Insults (Again)

Lately, Steve Fulop has been bragging about how Jersey City has been able to go three years without increasing taxes while still dramatically increasing spending.  Since this is the exact opposite of what happens in most other New Jersey towns, Fulop's been boasting about it and implying that he could perform the same increase spending/cut taxes magic for the rest of New Jersey.

‘Without increasing taxes, we have been able to hire 150 additional police officers, increase the city’s open space by 10%, implement the state’s first paid sick leave policy, increase minimum wage for all city employees, and construct housing for homeless veterans. We have also been able to lead the state in the number of construction starts, and have created more jobs than any other large city in New Jersey.’

Steve Fulop Refuses to
Treat State Aid with Any
Respect
This isn't Fulop's only recent in-your-face bragging about Jersey City becoming an "economic powerhouse."

After S&P increased Jersey City's credit rating Fulop sent out a similar press release where he boasted of Jersey City's economy and took all the credit for it:

Driven by strong local leadership, Jersey City has become an economic powerhouse. S&P’s report notes per-capita effective buying power of more than 120% of the national level and a total property value for the city that’s risen nearly 10% over the past year alone. With 450 new small businesses opening, more than 6,000 jobs created, and median household income and property values on the rise, Jersey City’s middle class is stronger than ever – and growing....

This boasting was too much for Assemblyman Jack Ciattarelli, who used Fulop's boasting about Jersey City's economic strength as an opportunity to question the fairness of Jersey City's state education aid and say, yet again, that Jersey City epitomized the need to redistribute state aid.

“What the mayor never boasts, despite Jersey City’s economic fortunes, is weaning his school district off a state subsidy paid for by the taxpayers of New Jersey. 
“Of Jersey City’s annual $665 million school budget, $420 $490 million million or 63 74 percent is paid for by citizens around the state – citizens who pay exorbitantly high property taxes because they’re subsidizing Jersey City’s school system. After all subsidies, Jersey City pays less than 20 cents on the dollar for its schools. 
“The mayor’s boasts, which only add insult to injury to taxpayers across the state, call attention to just how terribly flawed and blatantly unfair the current distribution of state school aid is. And it is exactly the reason we desperately need school funding reforms that are fair to taxpayers across the state.” [edits are mine]
This is part of a long-running line of criticism against Fulop from Ciattarelli:

“It’s easy for local policy makers to achieve tax reductions when the state subsidizes their services,” said the Assemblyman. “The fact is, fiscally speaking, we’re experiencing a very painful squeeze or crowding out effect with our state budget. Overly generous property tax abatements are one of the reasons why. These abatement are not only an exploitation of our state school funding formula, they are an injustice to property owners in places like Jersey City. In trying to solve the state’s problems, we need policy makers at all levels of government to take these issues seriously. In that respect, the statement issued by the Fulop camp is an embarrassment and a disservice – a disservice to the taxpayers of this state who fund Fulop’s school system.”

Indeed.

While the median district in New Jersey gets $550 less per student than SFRA says it needs, Jersey City gets $4,272 per student more per student from the state than SFRA says it needs.  Because of massive state aid, Jersey City only pays for 19% of the cost of its K-12 public schools.

That $4,272 per student is $130 million total in excess money that allows Jersey City to have a minimal school tax rate of 0.5, meaning someone with a $1 million property (if the assessment were accurate) would only pay $5,000 a year in school taxes.  The low school taxes enable Jersey Cityans to have spending power than people in most of the rest of the state don't have.

And because Jersey City's school taxes are so low, the municipal government can cannibalize its school system's tax base through PILOTing since property in Jersey City pays so little in school taxes anyway.  

And because Jersey City is an Abbott district, all parents there, no matter how high their income is, get two-years of state-funded Pre-K for their children.  This $70 million a year subsidy injects spending power into Jersey City's economy that most other NJ towns don't get.


Ciattarelli has also criticized Fulop and Jersey City for granting tax abatements profusely. The granting of PILOTs also makes Jersey City's tax base appear smaller than it actually is and thereby sustains the elevated school aid level:

“This [Jersey City municipal report] reveals the tip of an iceberg that is vast and mostly underwater.  Short-term property tax abatements, under very special circumstances, may have their place. What’s happening in Jersey City and elsewhere is crony capitalism at its worst and an injustice to all New Jersey taxpayers. 
“Jersey City can afford to siphon property tax revenues from their schools because the state provides such large subsidies.  In Jersey City, the state contributes 60 74 percent of its [K-12] school funding. This subsidy is so overly generous that local taxpayers pay only 15 19 cents on the dollar for their [K-12] schools.”  [my edits]

It is new PILOTed buildings being built and putting more money into the municipal government that is the major reason Steve Fulop can increase spending and keep taxes flat.  Brigid D'Souza of Civic Parent has demonstrated this repeatedly.



After these latest criticisms of Jersey City's state aid Steve Fulop has been flippant and attacked Jack Ciattarelli.

First, Fulop rubbed Jersey City's flat taxes and economic growth in the rest of the state's face
“Jersey City had a tax reduction last year and just today we will adopt a budget without a tax increase.  Jersey City has led the state in job creation just as we had a credit upgrade last year.
Then Fulop insulted Jack Ciattarelli:
Nevertheless, we are excited that after 25 years in elected office, Ciattarelli finally decided to speak up on an issue. We look forward to hearing about his next policy stance in the year 2040 as directed by a new generation of Republican officials.

And after the latest criticism, City spokeswoman Jennifer Morrill said Ciattrelli should "do his homework and look in the mirror."

Fulop then blamed Jack Ciattarelli for something that happened decades before Ciattarelli entered the legislature and has nothing to do with state aid anyway.

"Jersey City schools have been under state control for the last 30 years of which he has been part of the Trenton establishment"

The Fulop counterattack is preposterous. It is Steve Fulop and Jersey City who "haven't done their homework."

First, Jack Ciattarelli has been in the Assembly since 2011, so that's 5.5 years, not 30.

Second, state aid and state control of the Jersey City Public Schools have zero to do with each other. Jersey City gets a lot of state aid because it was poor in the 1980s and the NJ Supreme Court forced the state to fund the Jersey City Public Schools ABOVE the level of DFG I and J districts and later pay for two years of Pre-K for every child in Jersey City. Jersey City was put under state control because of systematic corruption and patronage in the administration of the schools.

Bridgeton gets a huge amount of state aid, but Bridgeton isn't under state control because it hasn't had any scandals; Lakewood gets relatively little state aid, but it is under state monitoring because it has had scandals.

Get it?  And now that Jersey City is an "economic powerhouse," there is no justification for it to only carry 19% of its K-12 education system.  As Jersey City Councilman Michael Yun has admitted, Jersey City's state aid "doesn't make sense."  

Corporate Tax Subsidies: Jersey City's Other Megasubsidy

Yet Ciattarelli actually understates his case against Jersey City because he misses the other half of New Jersey's oversubsidization of Jersey City, which are tax subsidies for corporations who relocate to Jersey City or for real estate development there.

Although New Jersey has a large tax subsidy program, most towns in the state is not qualifying locations for (re)location subsidies because the towns are not considered "urban transit hubs," "distressed cities," or the handful of other qualifications for corporate subsidization.
You don't hear about it often, but
Chris Christie
has done a lot maybe too much for
Jersey City.

Under the Grow NJ and Economic Development & Growth tax-incentive programs, Jersey City is considered both a "Distressed City" and an "Urban Transit Hub."

Because Jersey City meets two of the major qualifications for subsidies,  businesses qualify for tax breaks there they couldn't get in the rest of New Jersey, and Jersey City can outcompete the rest of New Jersey because of state policy not because Jersey City has a fantastic mayor.  

The Goya relocation illustrates the unfairness of the tax subsidy situation to other towns in New Jersey.

Goya had been headquartered in Secaucus since 1974, but after it got an offer for tax subsidies from New York State, it used the threat of relocation to extract tax subsidies from New Jersey.

Goya's New HQ/warehouse in JC got an
$82 million "Urban Transit Hub"
Tax Credit Even Though it isn't realistically
transit-accessible.
To keep Goya in New Jersey, in 2012 the Economic Development Authority in 2012 approved $81.9 million in tax credits to stay in New Jersey and build a headquarters on the western edge of Jersey City.  The tax credits were through the "Urban Transit Hub" program, even though the Goya site is nowhere near viable public transit and contains at least 7 acres of parking.  (Jersey City also threw in a $8 million tax abatement.)

Although Goya's new headquarters was literally just one mile from its old headquarters, the Jersey City location counted as a transit-hub and the Secaucus location didn't.

I accept that the state has to give out corporate tax subsidies to be competitive, but Steve Fulop needs to give the rest of New Jersey credit for Jersey City's growth.

Here are all subsidy approvals worth over $5 million for corporations and law firms in Jersey City from 2014 and 2015.

Note: the subsidy awards are paid out over a number of years upon certain investment benchmarks being reached; there are often retained jobs to go along with new jobs. I have not listed retained jobs, nor construction jobs.

Why Can't Steve Fulop Admit State Aid is Unfair?

Steve Fulop likes to present Jersey City as an example of a city that is both very progressive and very high growth.  Fulop uses Jersey City as an argument that there is no tension between growth and progressivity.

Some people believe it:

“Time and again we’ve heard from New Jersey conservatives that government must take the low road of austerity, but Jersey City’s success shows that progressive policies and fiscal responsibility go hand in hand,” said Analilia Mejia, executive director of New Jersey Working Families.
But Jersey City isn't this proof because its progressivism and spending increases haven't required tax increases.  Fulop's been able to have progressivism without paying for it.

Through massive state subsidies, Jersey City can have progressivism without increasing its own taxes because other taxpayers already pay for so much its services.  Jersey City can attract businesses galore because a business in Jersey City would pay lower state taxes and lower property taxes than it would elsewhere in New Jersey.

Hey, Steve Fulop has been dealt a strong hand in Jersey City, but rhetorically, he can't have it both ways: he can't brag about Jersey City becoming an "economic powerhouse" and still support Jersey City's $420 million in K-12 aid.

I don't understand what Steve Fulop is thinking politically.  How fatal could it be for him as mayor of Jersey City to admit that Jersey City gets more state aid than it economically and morally is entitled to?  As gubernatorial candidate, how can Steve Fulop not admit that Jersey City gets more than its fair share?

Fulop owes it to New Jersey to treat the issue with respect.  He owes Jack Ciattarelli an apology too.

At a certain point, the mayors of other towns where development wouldn't be subsidized will feel insulted that Steve Fulop doesn't acknowledge that the design of NJ's corporate subsidy program is tilted in favor of Jersey City and that Jersey City's growth is not simply amazing municipal government.  In the meantime, can't Steve Fulop say "thanks"?

Between Fulop's opposition to a Jersey City reval and flippancy on state aid, I see him as politically tone-deaf.  He's young.  He has years of political viability ahead of him.  But I see him less and less as New Jersey's next governor.

---

See Also,
"The Phantom Budgetary Salvation: Cutting Tax Subsidies."  (about Phil Murphy)



Tuesday, July 26, 2016

Abbott Ineffectiveness, Elementary School Edition

A meme about Abbott academic performance I've occasionally seen concedes that by high school that all the effects of Abbott spending have faded out, but in elementary school the Abbotts do well.

An example of this occurs in Deborah Yaffe's 2007 history of the Abbott cases, Other People's Children, where she writes:

The picture is mixed. Look at elementary school scores, and it is difficult not to feel optimistic; look at middle and high school scores, and it is difficult not to feel discouraged.  (324)

I don't know if this statement correct in 2007 or what research it was based on, but the claim that the Abbotts do well on the elementary level isn't correct today.

If you compare the elementary school scores of the over-Adequacy and near-Adequacy Abbott districts with the most severely under-Adequacy non-Abbotts the non-Abbotts do slightly better.

Lest this post be construed as a "money doesn't matter," argument.  Again, let me clarify once again my premises on school spending and Abbott.


  1. Money matters in education.
  2. NJ's debt and economic stagnation are among the worst in the United States.
  3. State Aid is therefore zero-sum.
  4. Abbott "Parity Plus" spending and the superhigh Adequacy Budgets embedded in SFRA are beyond the point of Diminishing Returns
  5. Sustaining superhigh state aid for the Abbotts thereby deprives equally needy districts of the money they need.  

The point of this post and related posts I've written to demonstrate #4, which is Abbott spending is beyond the point of effectiveness.

According to the Education Law Center itself, the eight highest spending Abbott districts (relative to their Adequacy Budgets) are Asbury Park, Hoboken, Gloucester City, Pemberton, Keansburg, Phillipsburg, who are all above Adequacy, and Burlington City and Pleasantville, who spend over $17,000 per student, but are slightly below Adequacy.  Asbury Park is the most over Adequacy, exceeding its Adequacy Budget by $5,617 per student.

The 18 elementary schools of these Abbott districts have an average FRL-eligibility of 70%.

The eight lowest spending non-Abbott districts (relative to their Adequacy Budgets) are Bayonne, East Newark, Guttenberg, Fairview, Red Bank Boro, Freehold Boro, Bound Brook, and Prospect Park.  East Newark is the most under Adequacy, with a 2014-15 Adequacy Budget gap of -$10,097 per student.  Red Bank Boro has the smallest Adequacy gap in this cluster, but it is still -$6,759 per student.

The 19 elementary schools of these non-Abbott districts have an average FRL-eligibility of 71%.

ETA: I don't have data on school level Free-lunch eligibility, but if you go by district data, the non-Abbotts have much higher Free-lunch eligibility and significantly higher LEP-percentages.

ABBOTTS
DistrictTotalFLRLLEP
Asbury Park1,993.501,790.5069185
Keansburg1,543.00972160.536
Phillipsburg3,681.001,652.00299106
Burlington City1,735.0095211174
Pemberton5,035.001,791.0056256
Gloucester City2,055.001,168.0024047
Hoboken1,970.009026621
Pleasantville3,769.002,937.00279542
TOTAL21,781.5012,164.501786.51067
Weighted Percentages56%8%5%
NON-ABBOTTS
DistrictTotalFLRLLEP
East newark2541942946
Guttenberg1,022.007277256
Fairview1,269.0088593174
Prospect Park8786826120
Bayonne9,555.005,325.50870.5329
Freehold Boro1,563.001,101.0098222
Red Bank Boro1,159.0095380396
Bound Brook1,713.501,048.00210210
TOTAL17413.510915.51513.51453
Weighted Percentages63%9%8%

Although in terms of student economic disadvantage these districts are very similar, they are worlds apart budgetarily.

The eight Abbotts have an average Total Budgetary Cost Per Pupil of $19,843.

The eight non-Abbotts have an average Total Budgetary Cost Per Pupil of $11,356.

Not even counting Pre-K and construction money, the Abbotts spend $8,500 more per student.

So with clear-cut budgetary superiority there should be at least a palpable academic superiority, right?

NO.

The eighteen high-spending Abbott elementary schools with tested students on average are, at the 18th percentile in statewide performance.

The eighteen low-spending non-Abbott elementary schools with tested students are, on average, at the 35th percentile in statewide performance.   (all averages in this post are unweighted)


When you hone in on 4th grade scores on the old NJASK (which I consider the last valid year for scores due to PARCC-era opt-outs), the disadvantaged non-Abbotts do better.

On English Language Arts,  the 50th percentile for kids in the Abbott districts is 190 (the state average was 202.)  



For non-Abbotts the 50th percentile for kids in the non-Abbotts is 198.  

On math, the 50th percentile is for kids in the Abbott districts is 212.



Grade 4 Science scores are broken out by Advanced Proficient, Proficient, and Below Proficient status, not percentiles, but the result is the same: the severely underfunded non-Abbotts doing better, with 85% of the students in the severely under-budget non-Abbott schools getting Advanced Proficient or Proficient scores compared to only 81% of the students in the Abbotts.

At for Advanced Proficient scores the gap is even wider: the non-Abbott schools averaged 40% Advanced Proficient compared to 25% in the Abbotts.



Even if you look at absenteeism the non-Abbotts do better.   The Abbotts have chronic absenteeism at 14%.  The non-Abbotts have a chronic absenteeism rate of 8%.   

One of the justifications for Abbott superspending and superlative facilities was that you had to have schools so beautiful and light-filled that kids wouldn't want to be absent.  It seems to be yet another incorrect theory.




There are claims out there that Abbott spending is effective. The Education Law Center just came out with a press release, "THE GOVERNOR IS WRONG ON STUDENT ACHIEVEMENT," which
summarizes research that suggests that Abbott was working and cherry-picks Union City to argue that superspending is academically necessary and beneficial.

The ELC's press release begins:
Governor Chris Christie attempts to justify his proposal to take massive amounts of school aid away from NJ districts educating the most disadvantaged students by making claims about student achievement that simply aren’t true.

The Governor says districts with high student need “get a big check from the state every year, [but] they are not making any changes in the way they educate children and they are not showing any increase in success."

The Governor is just plain wrong. The facts show NJ's most disadvantaged students making substantial gains over the last 15 years, and studies have documented the positive connection between increased funding and improved student outcomes.
But the governor is not "just plain wrong" about Abbott ineffectiveness, but he makes a foolish mistake in comparing Abbotts to their charter schools and not poor non-Abbotts.

The Abbotts have a clear cut, immense budgetary advantage. For Abbott Theory to be correct, a clear-cut advantage in spending should drive clear-cut higher academic performance than in districts that don't have Abbott money, but not only is there no clear-cut superiority, there's not even ambiguous superiority. In fact, the Abbotts appear to be doing worse.

And what if my sample isn't statistically valid enough to prove to Abbottists that Abbott superspending isn't effective?  So what.  If the Abbotts have 5% academic superiority for 50% spending advantage, that isn't a strong argument to sustain Abbott.

And finally, what was affordable in the 1990s isn't affordable today.  New Jersey's economy has been stagnant for years and we are one of the country's most indebted states.  

State aid is zero-sum and more money for the Abbotts means less money for every other district including many districts who are just as poor as the Abbotts.

Abbott: Ineffective, Unaffordable, Unfair.