Saturday, September 16, 2017

Dream First, Figure Out the Costs Later: Paul Tractenberg's Idea for an Essex County Superdistrict

In my most recent post I looked at a proposal by Newton mayor Wayne Levante to create a single, countywide district for Sussex County.

Although such a consolidation would be politically difficult and perhaps only reduce Sussex County's taxes by 1%, I realized that consolidating Sussex was a sound idea, since Sussex County's taxes are extremely high, its school districts are very small, and several of Sussex's small districts will not be able to accommodate further enrollment loss and/or loss of Adjustment Aid as stand-alone entities.

Aside from a sentimental (but strong) attachment to home rule, the primary difficulty of consolidation would be evening out unequal school taxes and spending, but Sussex's tax and spending differences are narrower than in most other counties, so Mayor Levante's "uphill fight" for Sussex consolidation is less steep than it should be for other counties.

In this post I turn my attention to proposals by Paul Tractenberg to create a consolidated Essex County district and how such a design would be infinitely more difficult to implement and operate than a consolidated Sussex County district would.

Tractenberg has advocated for an Essex County consolidated district several times.  Here's an extended argument for an Essex superdistrict from 2013:
The use of Essex County as a pilot for the county school district model requires elaboration. By the usual New Jersey political calculus, it is a solution with no chance of being tried. It runs afoul of some formidable political bosses and some very wealthy and influential suburban residents. It runs head-on into the glib and dismissive badmouthing of cities like Newark, Irvington, East Orange, and Orange. If there was ever a quintessential political third rail, this seems like it. 
Yet Essex County, although it is quite populous, is one of New Jersey’s smallest and most compact counties. You can drive from one end of it to the other in not much more than 30 minutes. In other times, Verona actually implemented a voluntary program under which students came from Newark to attend the Verona schools and that was not seen as logistically or politically infeasible. 
NJ's Most Segregated County 
Essex County is also by far the state’s most segregated county. Its 21 school districts include four that are urban, desperately poor, and almost entirely populated by students of color; five that are relatively diverse, two (Montclair and South Orange-Maplewood) by conscious choice; and 12 that are overwhelmingly white and higher-income with virtually not a single low-income student. 
These extraordinary disparities, and frightening isolation and separation, literally exist side by side. If ever there seemed to be a situation that met the New Jersey Supreme Court’s constitutional standard -- that schools have to be racially balanced “wherever feasible” -- Essex County seems to be it. And if Brown v. Board of Education and its implementation in the South established anything, as a matter of law, it was that politically and racially inspired opposition to a constitutional command could not succeed. 
Now it’s time for us to decide. Do we stay with the status quo of two separate and unequal state systems of education, or, if we don’t, do we embrace a “radical” reform approach based on constitutional imperatives and the best available evidence or one that defies the constitution and the evidence?
Before I outline the huge difficulties of consolidation, I want to say that I live in an integrated suburb (South Orange) and agree that integration benefits poor, minority students academically.  The inequalities of taxation in Essex are also brutal and and do much to stifle revival in Newark, Orange, East Orange, and Irvington.  Because tax rates are so bad in urban Essex I've called for a countywide school tax to be distributed between independent districts.

I also think that larger district tend to provide school choice, with different curricular and pedagogical options for parents, as opposed to the one-size-fits-all nature of smaller districts.  Personally, I'd like to see districts allow both "koala dads" and "tiger moms" have the schools they want, instead of having them battle it out on Boards of Education. 



The bottom line of Essex consolidation is that the same inequality makes consolidation all the more educationally necessary makes consolidation all the more fiscally difficult.

Whereas in Sussex, consolidation is feasible within the existing money spent and might even save money, in Essex, consolidation would require massive infusions of municipal aid for the urban towns and probably quite a lot of additional money (from some source) for transportation.

Also, were the tax benefits of consolidation solely to the poor, and its tax costs were solely borne by the rich, at least it would be a unambiguous goal for progressives to fight for, but in actuality the costs of consolidation would primarily be born by the four Abbotts, not the rich suburbs.

Even the tax problem were solved and consolidation were implemented, the countywide district's schools would be segregated due to housing patterns.  It would be necessary to use bussing to solve school segregation, which is itself an expense greater than any savings through needing fewer administrators.  If the bussing were mandatory it would incense large segments of the population.

Even if the tax problems were solved and any bussing were voluntary, there is a lack of space in all the large suburban districts in Essex.  Unless residential students in suburban Essex were induced to attend school in urban Essex, there would not be enough space to accommodate more than a few children currently attending school in Orange, Irvington, East Orange, and Newark.

Tractenberg's Proposal Would Make the Poor Pay More

The first challenge in devising a countywide district is how taxes would be apportioned and on this issue consolidation slams into the rocks.

Let's assume that an Essex County superdistrict would apportion taxes based on Equalized Valuation, like county government already does.

Essex County's (weighted) average school tax rate is 1.3, based on $1.099 billion in total school taxes on $84.8 billion in Equalized Valuation, but that rate varies and the pattern of school taxation is ∩-shaped, where rich towns and the Abbotts tax the least and middle class towns tax the most

Thus, a move that would create a common, flat tax rate, like a consolidated district would require, would make the rich and the Abbotts to pay more.

Sourece:
http://www.state.nj.us/dca/divisions/dlgs/resources/property_tax.html#1




East Orange actually has the lowest school taxes in Essex, at a rate that is only 0.797.  The other Essex County Abbotts, Orange (0.818), Newark (0.9), Irvington (0.943), have low taxes as well.

A few of Essex County's rich towns, like Essex Fells (0.923), Roseland (0.963), and Millburn (0.853) also have low tax rates and so would pay more in taxes, but their combined increases are less than the increase for Newark alone.

How high would taxes go?

For instance, Newark now pays 12% of Essex County's school taxes ($130 million out of $1.099 billion), but Newark has 16.2% of Essex County's Equalized Valuation, so if an Essex County superdistrict were formed and the tax levy stayed the same and converged on that 1.3 average, Newark's 16.2% of school taxes would become $178 million.

Source, http://www.state.nj.us/dca/divisions/dlgs/resources/property_tax.html#1
Own calculation, based on a town's share of Essex County's total Equalized Valuation and $1.099 existing tax levy.

East Orange would also see a large increase.  East Orange has 3.2% of Essex County's total Equalized Valuation ($2.7 billion out of $84.9 billion).  If East Orange paid 3.2% of Essex County's school taxes its bill would be $35.1 million, a dramatically higher figure than the $21 million figure it pays now.

Orange would pay another $7 million, Irvington would pay another $7.2 million.

Millburn has 11.5% of Essex's total Equalized Valuation. In an Essex County superdistrict Millburn's taxes would have to be 11.5% of $1.099 billion, or $102.5, a $20 million increase on the $83 million Millburn pays now.  Roseland would pay another $6.1 million, North Caldwell would pay another $2 million.  Fairfield would pay another $10 million.

The biggest tax beneficiaries of Essex consolidation would be working class and middle-income non-Abbotts of Essex County who lack the tax bases to have low taxes, but receive so little state aid that they have no choice but to be high taxers.  South Orange-Maplewood, West Orange, Glen Ridge, Verona, Bloomfield, and Belleville could look forward to lower taxes.  Glen Ridge, Belleville, Bloomfield, and Verona would probably spend more too.  Verona might get the full-day kindergarten that it currently lacks.

Montclair's taxes would theoretically fall by $25 million.  Bloomfield's would fall by $16.9 million.  South Orange-Maplewood's would fall by $30.3 million.

West Orange's taxes would fall the most.  West Orange's taxes would fall from $132 million to only $62 million! 

West Orange, however, is a high spending district, with a Total Budgetary Cost Per Pupil of $18,277.  It's likely West Orange's schools would have to make cuts if a countywide district came into being, so not everyone in West Orange would be happy about the other implications of consolidation.

The need for certain districts to make cuts exacerbates the political impossibility of a countywide district.  Home rule has is benefits and one of them is that districts can decide for themselves how much to tax and spend.

Disparities in Municipal Taxation Exacerbate Challenges

What heightens the challenge of equalizing Essex County's school tax rate is that municipal taxes are extremely high in the Abbotts (due in part to decades of massive school aid offsetting their school taxes). Unless there were some tremendous infusion of municipal aid for the Abbotts and/or cost cutting there, the differences in municipal taxes also make consolidation deeply unpopular even in the urban districts that Tractenberg believes would benefit.

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


Cedar Grove, Essex Fells, Livingston, Millburn, and North Caldwell have muni tax rates below 0.5, with the other suburbs having gradually larger tax rates.

Newark's muni tax rate is 1.642, but Orange's tax rate is 2.872, East Orange's is 3.353, and Irvington's is the highest in New Jersey, at 3.475.  Belleville's municipal tax rate is very high too, at 1.836, although nothing compared to East Orange and Irvington.

Essex County's inequalities of municipal taxation are actually the worst in New Jersey, as measured by the standard deviation of the tax rates.


If Newark, had to pay a 1.3 school tax rate, on top of its 1.642 muni tax rate and the existing county government tax of 0.5, it would have a 3.3 tax rate.  Orange's tax rate would rise to 4.7, East Orange's would rise to 5.1, and Irvington's would rise to 5.2.

If school taxes are somehow conditioned on municipal taxes so that towns with higher muni taxes paid less, it would mean higher school taxes for Essex's wealthy towns and probably its middle class towns too.  Making school taxes conditioned on municipal taxes would also incentivize municipal bloat, since higher municipal taxes would mean lower school taxes.

Although the main reason the urban towns have high muni taxes is greater need, there is also waste. In urban New Jersey, municipal spending is a jobs program as much as public service.  (example 1, example 2)

Although I would expect Orange, Irvington, East Orange to have high muni taxes given their poverty and support robust municipal aid for them, there is little justification for their municipal tax rates to be double what Belleville's is.  When poor non-Abbotts like East Newark (1.4), Fairview (1.1), Dover (1.1), Prospect Park (1.5) have much, much lower municipal taxes, I suspect that the huge infusion of state aid allowed municipal taxes to spike sky-high since school taxes were frozen.

What About Abbott PreK and 100% Construction Funding?

A further inequality of Essex that doesn't exist in Sussex is that Essex County has its four Abbott districts and these districts thus get the state to pay for 100% of their construction costs and pay for universal PreK for 3s and 4s  (PreK in the four Abbotts costs NJ a combined total of $136 million)

If Essex County were consolidated into a single district, it's hard to imagine how these privileges would continue just for Newark, Orange, East Orange, and Irvington.  Kids who live in the same jurisdiction would have to be treated equally and the new district and the state and new superdistrict are unlikely to have the money to fund that.

I estimate that Belleville alone has 650 children who are three or four years old.  If all of those children were to get "free" PreK it would cost $8.1 million.  Even if PreK were restricted to Free & Reduced Lunch eligible children in the hitherto non-Abbotts it would cost tens of millions countywide.

Tractenberg's new Essex County superdistrict would also have a disparity to settle regarding construction funding, since right now the Abbotts don't pay for any of that.

So, a fix for construction funding would have to be yet another issue settled before an Essex superdistrict could be created.

What About Per Pupil Tax Apportionment?

A tax scenario that would be even more difficult for poor towns would be to apportion taxes based on how many students come from a town.

I don't think any objective observer would want taxes to be apportioned by student population, but as a political compromise it might be necessary to get affluent towns to go along with a consolidation proposal.

If, hypothetically, taxes were apportioned by student population, and Newark ended up paying 38% of taxes because it has 38% of the student population, Newark's taxes would be $338 million, an impossible amount for Newark that would require a 2.5% school tax rate.

(See note at bottom on apportioning taxes by Local Fair Share)

Suburban School Districts Don't Have Room 

Another practical problem with consolidation is if Tractenberg's goal is for urban students to be able to attend suburban schools, there is no room for them without new schools being built.

In the last ten years, almost all of suburban Essex districts have seen student population increases, topping out with 14% increases in South Orange-Maplewood and Bloomfield.

Although Montclair's increase has been modest since 2006-07, that 1% increase on top of existing crowding was enough to persuade Montclair's superintendent to not participate in Interdistrict Choice, despite the huge state money infusion it would have provided and despite the fact that Montclair had recently opened a new school.

'The issue for us is limited school space, even with the new Bullock School,' [Superintendent] Alvarez explained. 'We don't have excess capacity, and the capacity we do have can be utilized better by bringing our district's special needs students back to Montclair.'
Paul Tractenberg praises Verona for accepting a few dozen Newark students for one year a generation ago, but that was in 1969, a moment when Verona's student population had fallen significantly and classrooms had empty seats.

Essex County is the only county in New Jersey without an Interdistrict Choice participant, and that is due to the lack of capacity in suburban districts, not a lack of a desire to have the students and state money.

This excludes districts with populations under 1,000 because Essex Fells and Fairfield have had large percentage declines
but those declines are small in absolute size.
Source, NJ Enrollment Files
http://www.nj.gov/education/data/enr/

Would Consolidation Save Money?  


Tractenberg also endorses the "folk hypothesis" that governmental fragmentation is the cause of New Jersey's extreme property taxes.

Finally, we could once and for all confront New Jersey’s particularly virulent form of home rule. Consolidation of school districts and municipalities is routinely referred to as “a political third rail.” For three-quarters of a century this attitude has disabled us from addressing the gross inefficiencies -- fiscal, educational, social, and constitutional -- of our crazy quilt of undersized and colossally expensive municipalities and school districts. A former speaker of New Jersey’s Assembly, Alan Karcher, referred to it in a book title as Multiple Municipal Madness. As citizens and taxpayers, we excoriate politicians for our property taxes, by far the highest in the nation, but we cling with equal passion to our costly and dysfunctional governmental bodies.

It's a common belief that governmental fragmentation is the basic reason for New Jersey's high taxes, but it's based on a false premise that New Jersey has an inordinate number of localities.  It is true NJ has a lot of localities per land area, but in terms of localities per capita, New Jersey is average.

In small districts and municipalities administrators tend to have multiple roles, so the ratio of students:administrators is the same as in larger towns.

Yes, New Jersey does spend more on central office administration than other states, but we spend more on absolutely everything else too.  


Source, US Census,
http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html
On the municipal level at least, there is zero correlation between population size and government spending.

Where I do think consolidation could eventually save money is if it caused changes in voting behavior.

Right now, many residents tolerate high school taxes because they know the money benefits their own children and they believe that higher school spending increases their own property values.

However, in a consolidated superdistrict, people would know that the money raised isn't directly benefiting their own kids and it would be illogical to believe that money spent countywide would disproportionately benefit one's own town and real estate values.

So, if consolidation into a countywide district made voters a lot more conservative with school taxes, then that would save money, but this isn't what Paul Tractenberg is thinking.

Practical Problems Drive Political Opposition

Tractenberg chalks up opposition to consolidation to nameless "political bosses" and "wealthy suburbanites" who are motivated by racism, but opposition to municipal and school consolidations in New Jersey is more often motivated by pure sentimentalism.

Think of all the examples of demographically similar and adjacent towns refusing to consolidate municipal government.
  • Scotch Plains and Fanwood already share a school district but have not even gotten to the referendum stage on effecting a municipal merger.
  • Roxbury and Mount Arlington have not gotten to the referendum stage either, after seven years of study and advocacy.
  • Sussex Boro and Wantage Township already share a school district and several other services, but have rejected a merger.
  • South Orange and Maplewood already share a school district but have not been able to arrange a municipal merger. It is actually Maplewood, the slightly poorer town, that has spurned attempts at merging.  When Maplewood had a vote on a merger commission the anti-merger slogan was "Keep Maplewood Maplewood."
Princeton is the exception that proves the rule, because voters there rejected consolidation three times (1953, 1979 and 1996) before narrowly approving it at the bottom of the Recession in 2011.

Where school district consolidations have occurred, like South Hunterdon, tax apportionment has been on a per student basis, a completely impractical idea for socioeconomically dissimilar towns in Essex like we are discussing here.



New Jersey's landscape of wealth and opportunity is very unequal and I wish that countywide districts had been created a century ago, but 100+ years of independent development of towns and school districts have created stark differences in taxation and school spending between towns and districts that would be very difficult to undo.

The Abbott decisions have, ironically, made consolidation even more complex since the Abbott decisions allowed distortions to occur in school and municipal spending.  At this point, school tax rates have risen so much in non-Abbotts that if an Abbott and non-Abbott merged, the Abbott districts would end up paying higher taxes, meaning there would be strong opposition to consolidation even amongst the groups Tractenberg thinks would benefit the most.

Even if the tax problems, space problems, and transportation problems could be solved, I doubt any districts would want this because it is a loss of power over their own schools.  Newark, which just got back local control over its schools, may be reluctant to give up that power again to a county it only has partial influence over?

Paul Tractenberg is right logically that consolidation follows from our noblest impulses and is suggested by Brown v Board of Education, but the practical challenges of consolidation are too large to overcome.  Even aside from political acquiescence (or judicial diktat), it would require some massive infusion of state municipal aid and transportation aid to be workable at all.

The elected officials (or "bosses," if they disagree with Tractenberg) who would oppose consolidation have some legitimate reasons for doing so.


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See Also:




What About Apportioning Taxes By Local Fair Share?

In theory, we could use an apportionment based on Local Fair Share in order to mitigate low income:property ratios in poorer towns, although this would actually not make much difference for most towns.

Newark has only 13.3% of Essex County's Local Fair Share, whereas it has 16.2% of Equalized Valuation, so Newark's tax increase would be smaller than under a pure Equalized Valuation apportionment, but the other Abbotts would pay basically the same amount.

Millburn's tax share would go from 11.47% of Equalized Valuation to 12.36% of Local Fair Share.  Again, not a big difference.

Monday, September 11, 2017

Sussex County Consolidation?


A recurring proposal to mitigate New Jersey's crushing property taxes is school district (and municipal) consolidation.

The argument seemingly has some merit.  Starting from the fact that New Jersey has 590 school districts, proponents say that if New Jersey had fewer school districts we would need fewer superintendents, fewer assistant superintendents, fewer business administrators, fewer assistant business administrators, etc and then save money.  The most informed advocates for consolidation might use Maryland as an example, which has only 24 county-size districts and much lower spending than New Jersey, with a 1.1 average property tax rate versus New Jersey's 2.4 average tax rate), while seemingly getting equivalent results.

The latest advocate for consolidation is Mayor Wayne Levante of Newton. Levante, a former teacher in Paterson, says that if all 25 of Sussex County's districts consolidated into a single countywide district it would save $6-$9 million.


Why even consider such a thing?
The major reason for consolidation: To save money. 
Per-pupil costs are rising in the county despite decreasingly enrollment, resulting in higher property taxes, according to the Newton resolution. 
Levante said a consolidated district would reduce school administrative costs in Sussex County by anywhere from $6 million to $9 million annually. 
Some school buildings might close as a result, Levante said.
He added that local school boards could still exist, with board presidents perhaps serving on an advisory committee for the county superintendent.

How it would work
The Newton resolution calls for having one county superintendent, one county business office, and all schools within the county overseen by the county office.

Levante, a former teacher in Paterson, drew a parallel to the set-up in New Jersey's third-largest city.

"I worked in Paterson ... It's like 50-something schools. You have one superintendent," Levante said.

Although I'm going to throw cold water on Mayor Levante's proposal, if any county in New Jersey merged into a countywide district, Sussex would be a good candidate.

  • Sussex County has a 2.94 all-in tax rate (with a 1.75 for the schools alone), compared to New Jersey's 2.4 all-in average.  Since Sussex County's taxes are so high, the need to do anything to save money is more acute.
  • Sussex County's districts are very small, with an average size of 805 students, compared to a statewide average of 2250.
  • Existing tax rates do vary, but not by as much as in other counties.
  • Sussex County towns are less unequal than towns in other counties. Sussex County has no districts in DFGs A or B or in DFG J. 
  • Sussex County's school taxes actually have the lowest Standard Deviation of any NJ county and the municipal taxes are the sixth lowest, meaning there would be less difficulty in equalizing school taxes and then municipal tax encumbrance.  
  • Sussex County is losing student population and its 21 overaided districts are overaided by $41 million.  If Adjustment Aid is cut, Sussex County districts will face budget cuts that could more easily be managed by a larger district.

Despite the relative practicality and need of consolidating Sussex, large, probably insurmountable, political difficulties would remain.

Saving $6-9 million is better than nothing, but it would be wrong to assume that every Sussex County taxpayer would benefit, since right now Sussex County contains 25 school districts with 25 tax rates, ranging from 2.365 in Hampton Boro to 1.435 in Branchville.  Consolidation would also require shifts in taxation, depending on how school taxes in a Sussex County superdistrict were apportioned.

If a town does not have a K-12 district, school tax rates reflect combined districts.
Source:
http://www.state.nj.us/dca/divisions/dlgs/resources/property_tax.html#1


One way taxes could be apportioned is the way county taxes already are, where the percentage of school taxes paid equals a town's percentage of the county's total Equalized Valuation.   Under this setup, if a district has 10% of the county's total Equalized Valuation, it would pay 10% of the school taxes.

Under apportionment by Equalized Valuation, Sussex County's swings in taxation wouldn't be as large as the swings in more diverse counties', but there would still be complaints.  If Equalized Valuation were used, Vernon's tax increase would be the largest.  Vernon right now taxes at 12% of Sussex County's total school tax levy ($37.9 million out of $295.5 million for 2016-17), but Vernon has 14% of Sussex County's total Equalized Valuation ($2.35 billion out of $16.85 billion).  So, if the total school tax bill stayed at $295.5 million, Vernon's taxes would rise to 14% of that, or $41.4 million.

Apportioning by Equalized Valuation isn't the only model.  A Sussex superdistrict could also apportion taxes based on what percentage of the total student body comes from the town, so if a town contributes 10% of the students, it pays 10% of the taxes, regardless of what its tax base is.

If tax apportionment is based on student body, tax rates would vary between towns.

Since tax rates would vary by town, the consolidated Sussex BOE's tax increases would hit some towns much harder than they would others.

Newton's taxpayers might pay the highest tax rate in Sussex County under a per student apportionment, since Newton has 5.2% of Sussex County's student population, but only 3.7% of the tax base.  If Newton had to pay 5.2% of Sussex County's school taxes, I estimate the school rate would become 2.5 alone.  (on top of municipal and county taxes)

(Math for calculation.  5.2% of $296 million = $15.4 million; $15.4 mil divided by Newton EV of $621 mil = 2.5%.  I cannot estimate whose tax rate would become the lowest, since not all Sussex districts are K12s.)

New regional districts in New Jersey, like Pittsgrove-Elmer and South-Hunterdon, use per pupil apportionment, but these new regional districts are created between towns that have similar tax bases and similar student populations.  The towns "look before they leap" and learn what their new tax rates will be. For South Hunterdon the variation is small, going from 1.2269 for Lambertville to 1.5710 West Amwell.

A hybrid tax apportionment, between Equalized Valuation and a per student apportionment, is also possible.

Manchester Regional in Passaic County has a hybrid system, where apportionment is based 50% on Equalized Valuation and 50% on pupil contribution.  This exists because North Haledon wants to exit the regional district entirely, but the NJ Supreme Court has not allowed it. The 50:50 apportionment deal is a compromise.

While the Manchester Regional model is defensible in the abstract, since Manchester Regional's component districts differ greatly in wealth, there are thus large differences in tax rate.

Thus, North Haledon has a tax rate of only 0.1866, but Prospect Park has a tax rate of 1.3346.

The problem is not Manchester Regional's tax apportionment formula itself; the problem is that Manchester Regional's component districts differ greatly in wealth.  If Manchester Regional's taxes were apportioned solely on pupil enrollment, like Pittsgrove-Elmer and South-Hunterdon, the differences in Manchester Regional's tax rates would be even greater.

In any case, if Sussex County used a per student tax apportionment plan, there would be large differences in tax rate.

See "Manchester Regional: NJ's Most Underaided and Most Divided District"))

Also problematic is that there would have to be a convergence of spending too. Right now Hamburg Boro is Sussex County's highest spender, with a Total Budgetary Cost Per Pupil of $25,092 per student. That high spending is mostly driven by over $2,027 per student in excess aid, but Hamburg also has extremely high school taxes, with a 2.132 tax rate.

Hardystown Township is Sussex County's lowest spender, at $13,873 per student. Hardystown is also overaided, but by only $1,353 per student, but it has chosen to be an undertaxer, with a 0.9 tax rate.

Source:
User Friendly Budgets,
http://www.nj.gov/education/finance/fp/ufb/2016/37.html

Unless higher spending is justified by more challenging demographics, what are now Sussex County's highest spending districts would have to make cuts after they become mere schools within the larger Sussex County superdistrict.

That Being Said, Sussex County Taxes are Less Unequal Than Most Other Counties

The Reference to Essex is because this graph is used in my Essex post as well.
Source, http://www.state.nj.us/dca/divisions/dlgs/resources/property_tax.html#1
Excel Calcuation of SD
The Reference to Essex is because this graph is used in my Essex post as well.


Sussex County's Taxes Would Still be Among the Nation's Worst

Assuming that the $6-$9 million in savings is correct, how much of a tax reduction is that for Sussex County really?

Sussex County's all-in tax levy was $490 million for 2016.  ($91,924,069 for county taxes, $295,631,557, for school district taxes, $103,186,926 for municipal taxes)  (see "Property Tax Information")

Sussex County's all-in tax rate is 2.9, which is much higher than the state average of 2.4 and 240% of the national average of 1.19.

So, even saving $9 million (the upper-bound estimate) would only equal 1.8% of the all-in tax burden, or 3% of the school tax burden.

The lower bound estimate, $6 million, would only be 1.2% of the all-in tax burden, or 2% of the school tax burden.

Even if there were complete municipal consolidation too and the savings were of the same order, Sussex County's taxes would still be at 2.8, which is still way about New Jersey's average, let alone the national average.

The truth is that governmental fragmentation doesn't lead to that much more administrative spending in New Jersey.

If school district consolidation allowed the closings of schools and a reduction of the teaching force, then yes, it would produce bigger savings.

If living in a big, countywide district led voters to be less tolerant of school tax increases than they are for increases for their own town, then that would produce large savings too.

Can Sussex County Afford Not to Consolidate?

Here is where state aid comes in.

21 of Sussex's districts are overaided with a total surplus of $42 million. (not counting Interdistrict Choice money. Three Sussex districts are underaided (Green, Lenape Valley Regional, and Newton), but with a deficit of only $5.8 million, most of which is Newton's.

Right now the distribution of state aid in Sussex County makes zero sense. Hopatcong is overaided by $9,126,016, or $5,888 per student, whereas Newton is underaided by -$4,205,916, or -$3,776 per student.




It's likely that Sussex County schools will lose state aid in the next few years, thereby creating budget stress. If a district only has a single school, managing those cuts is going to be very hard. if a district had multiple schools, managing the cuts is easier since an aging school could be closed.

Is this worth the fight?  

Although Sussex County could more easily consolidate than most other counties in New Jersey, the odds of consolidation happening are not high, with even Mayor Levante admitting "I know it's an uphill battle."

With that acknowledgement, I don't think a countywide consolidation is a fight worth fighting. Individual Sussex County districts could consolidate or create send-receive relationships, but creating a countywide district would be such a huge political lift that I think people who want lower taxes should fight on other fronts.

To be honest, district fragmentation and a proliferation of administrators isn't the real reason New Jersey has such high taxes.  The real reason is that New Jersey's teachers are the fifth best paid in the country and New Jersey has the third-lowest student:teacher ratio, and the same thing goes for other government employees.  The utopianism of Abbott, which diverts billions per year into Abbott districts in excess of what other states give their low-income districts, also forces extremely high taxes on non-Abbotts.  (See Education Spending and New Jersey Taxes)

Taken in a vacuum, county-wide districts have much to recommend them, but New Jersey has had home rule and governmental fragmentation for over a century.

As good looking in the abstract county districts are, and as functional as Maryland looks, when it comes to county-wide districts that ship sailed long ago.

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See Also:
"New Jersey Doesn't Actually Have That Many Districts"
"Dream First, Figure Out How to Pay for It Later: Essex County Consolidation"

Thursday, August 3, 2017

Updated State Aid Disparities for 2017-18


Through the effort of Steve Sweeney, Paul Sarlo, Louis Greenfield, and their allies, the legislature was able to amend Chris Christie's original flat-funding state aid proposal in order to add $100 million to overall K-12 spending and redistribute $31 million from overaided districts to underaided districts.

This is an updated look at 2017-18 state aid disparities.

Sweeney's success reduces the disparities that existed in Christie's original proposal, but compared to 2016-17, the disparities are as large as ever, since underaided districts are the ones that are gaining student enrollment and/or losing tax base and thus their Uncapped Aid increased more than Sweeney was able to increase their state aid.

As always, my original data is from the Department of Education.  They sent me information on enrollment, tax levy, Actual Aid, and Uncapped Aid.  I used those amounts to calculate total deficits or surpluses, deficits or surpluses per student, and aid as a percentage of Uncapped Aid.

As always, I've put updated 2017-18 state aid data online.

The analysis is basically the same as other analyses I've done, but I exclude Interdistrict Choice aid from a district's aid and aid surplus or deficit.  Interdistrict Choice has its own, independent aid formula that is outside of SFRA.  Interdistrict Choice Aid is not subject to redistribution under the present debate, so it is wisest to exclude it from the SFRA aid that districts receive.

Here is a summary:

  • The 377 underaided districts still have a deficit of -$1,965,333,325. This is almost exactly the same as the deficit for 2016-17, when our deficit was $1.93 billion.
  • The 200 overaided districts still have a surplus of $637,776,892. 
  • The net deficit for the state is thus $1.328 billion. 
  • There are 70 districts who are still overaided by more than $2,000 per student. Asbury Park has the largest surplus, at +$10,943. (A $24,348,602 surplus for 2225 students) 
  • There are 118 districts who are still underaided by more than $2,000 per student. Bound Brook's deficit remains the largest, at -$9,546 per student.(a -$17,153,743 deficit for 1796 students.)
  • Hopatcong receives 546% of its Uncapped Aid.  ($11,170,937 out of $2,044,921)
  • Chesterfield only receives 19% of its Uncapped Aid, the worst in New Jersey.  (Chesterfield only receives $821,188 out of $4,224,394 it should get.)
  • Jersey City's surplus is the largest in total terms, at $151,554,542 (Jersey City gets $410 million when it should only receive $258 million). This surplus enables Jersey City to tax at only $116 million on a Local Fair Share of $370 million.
So, as welcome as the late budget changes were, New Jersey still has a long way to go towards fairness.

The above figures include vo-techs, but exclude non-operating districts.

For 2016-17 data, please see Dr. Ken Greene's analysis.

---

See Also this Post on State Aid Disparities under the Governor's Original Proposal





Thursday, June 29, 2017

Falsehoods from Toms River


Since Steve Sweeney and Vincent Prieto agreed on a plan that would redistribute $31 million (originally $46 million) of the $670 million New Jersey has been giving out as "Hold Harmless Aid," the most vocal opposition has come from Toms River.

For background, Toms River receives $68.3 million in state aid, even though SFRA's core formulas say it only needs $47.2 million.  That $21.1 million excess is one of the ten largest in New Jersey in total dollars and works out to $1300 per student.

The $21 million in excess aid, plus Toms Rivers' own acceptance of very low student spending, allow Toms River to tax at only 75% of Local Fair Share, with a $151 million 2017-18 tax levy on a Local Fair Share of $197.6 million.

Despite having over $46 million in untapped Local Fair Share, and a knowledge that most New Jersey school districts tax above Local Fair Share, the Toms River Board of Education opposes any redistribution.

As part of their campaign in defense of their own aid hoarding, the Toms River Board of Education and its administrators have been writing op-eds arguing tha aid cuts are "unfair" for many reasons, the following of which are chief:
And how in good conscience can these legislators propose taking $3.3 million dollars from Toms River Regional when we are still reeling from the effects of Superstorm Sandy and have $600 million in ratables that have yet to be recovered? The topic of property tax assessments highlights another known critical flaw of the school aid formula- it allows for districts to have significantly understated property tax assessment totals in the aid calculation, which matters greatly because a district’s ‘wealth’ is the basis for a large portion of a district’s school aid. For example, the property wealth calculation does not include Payments in Lieu of Taxes (‘Pilots’) and tax abatement programs, which excludes millions of dollars in property ratables, which could be material to the calculation of a district’s school aid. The same legislators are also aware that large school aid increases, some in the millions, would be given to several districts whose towns have not had property assessment revaluations in over 25 years! Having an understated property ratable figure provides large aid dollars for several districts, and since the pot of school aid is limited, it takes away significant amounts of school aid that would be spread to the rest of the districts in the State.

Where to begin?
1.  A Lack of a Reval has No Effect on State Aid

It is true that there are towns in New Jersey (all in Hudson, Middlesex, and Union Counties) that have not done revals since the 1980s, but it is completely erroneous to say that a town's lack of a property reval in any way affects its state aid.

This is because state aid is based on Equalized Valuation, not the official assessment.

Equalized Valuation, which is also used to apportion county taxes, is calculated based on the ratio of sales prices to official valuation.

If, on average, sale prices are 115% of official assessment, then Equalized Valuation equals 115% of the town's total official assessment. If sale prices are, on average, 200% of official assessment, then Equalized Valuation equals 200% of the town's total official assessment.  Since Equalized Valuation is the product of official assessment times the sales ratio, a lack of a reval does not affect it.

Ironically, by insisting that the state maintain a frozen aid distribution, the Toms River BOE and administration are effectively say that the state not do a "state aid reval" of its own.

2.  Toms River was Overaided Before Sandy, Loss of Ratables is Factored into State Aid

Toms River (and Brick) have repeatedly said that it is unfair to take aid away from them because they have not recovered from Hurricane Sandy.

First of all, Toms River was overaided before Sandy occurred. In 2011-12 Toms River got $9.8 million in Adjustment Aid.  In SFRA's first year of 2008-09, Toms River got $18.5 million in Adjustment Aid.

Now, post-Sandy Toms River is more overaided than it was before Sandy, but the loss of tax base that Toms River brings up is already built-into the calculation of Toms Rivers' Local Fair Share state aid.

Since Toms Rivers now has an Equalized Valuation of $15,167,528,438 versus the $16,065,236,923 it had previous to Sandy, Toms Rivers' Local Fair Share is reduced by about $6 million, approximated based on
Equalized Valuation alone.  I do not have data on a loss of Aggregate Income, but if it is lower than it was pre-Sandy, that would reduce Toms Rivers' Local Fair Share as well.

What causes Toms River to lose state aid is that Toms Rivers' enrollment has also declined, partly due to Sandy and that enrollment decline causes Toms Rivers' Adequacy Budget to fall.  However, as enrollment declines, so does staffing needs, Out Of District tuition, and a few other budget items, so Toms Rivers' expenses are lower.

(See also:
"Jersey City's Property Reassessment Won't Change State Aid")

3.  PILOT Reform without Adjustment Aid Reform Does Nothing.

Toms River is correct that PILOTing is a distortion of state aid, since PILOTed property is "invisible" to the determination of Equalized Valuation and thereby Local Fair Share, but even if PILOTed property were included in the calculation of Local Fair Share, districts with a lot of PILOTed property (namely Jersey City) would not lose any state aid unless Adjustment Aid were also addressed.

If PILOTed property were included in the determination of Local Fair Share and no reform to Adjustment Aid were made, all that would happen is Jersey City's and Asbury Park would have some of their Equalization Aid converted into Adjustment Aid.

4.  Extra Aid for Low Spenders?

Toms River also makes an out-of-left field argument that it should be rewarded with extra state aid because it spends (and taxes) so little.

In terms of trying to justify their new aid proposal, can the same legislators explain how it is possible that aid increases would be given to districts who have total per pupil costs over $29,000 already (compared to $16,319 in Toms River Regional)? This highlights one of the critical flaws with the State Aid formula- it allows for unlimited per pupil costs, and gives no credit or consideration to districts with lower per pupil spending. The formula unjustly portrays lower-spending districts like Toms River Regional as not paying our ‘fair share’ in taxes when in fact we do pay our fair share. The reason we tax less is simple- we spend less! So before taking school aid from any district, per pupil costs should first be capped and no additional school aid should be given when that cap is exceeded.
What Toms River is doing here is attempting to redefine Local Fair Share to something other than the formula contained within SFRA.

Based on its Equalized Valuation and Aggregate Income, Toms Rivers's Local Fair Share at $197,593,919, compared to a 2017-18 tax levy of only $151,916,715.  This gives the Toms River schools an equalized school tax rate of only 0.9529 for 2017-18, which is significantly below New Jersey's 1.35 average.  

Given that Toms River has that $45.6 million in untapped Local Fair Share, it has the economic ability to compensate for the $21,140,413 in excess aid it might lose.  If Toms River made up for that lost $21 million in state aid its school tax rate would only become 1.08.

This is a twisted point to unpack:

So before taking school aid from any district, per pupil costs should first be capped and no additional school aid should be given when that cap is exceeded.

There are only a handful of districts spending $29,000 in New Jersey and all of them are losing state aid or seeing flat aid.  Lebanon Boro and New Hanover are high-spending districts that are gaining trivial amounts of aid ( $670 total and $3,598 total, respectively), so I can't figure out what Toms River is talking about here other than they want to distract from the issue of Adjustment Aid.

There are some very affluent districts who are gaining aid, such as Millburn, Princeton, Mountain Lakes, and Livingston, but these districts don't have spending that is anywhere near $29,000 per student.  If Toms River believes that affluent districts shouldn't get state aid, then that is a separate issue, but they are making an argument that is actually contrary to the principles that Toms Rivers' Republicanism usually stands for.

If Toms Rivers' implied demand that districts actually get extra state aid because they spend very little were implemented then it would have the perverse effect of equalizing spending between districts that make very different local tax efforts,  since the low tax/low spending districts would get extra state aid.  On what planet does cutting aid from districts that choose to tax themselves make sense?

If Toms Rivers' demand were granted, there would be a rush by Boards of Ed to slash their tax levies, slash their budgets, and receive extra state aid.

It makes no sense except in that it supports Toms Rivers' self-interest.

Finally, what is really missing from Toms Rivers' argument is any acknowledgement of how indebted and fiscally screwed New Jersey has become.

As I have posted many times on this blog, all of New Jersey's new
revenue is absorbed by the "PHD" expenses of Pensions, Healthcare, and Debt, even though New Jersey is still underfunding its pensions by $2.5 billion.

The amount of money New Jersey can plausibly gain by increasing taxes is $1-$1.5 billion and it would be irresponsible and imprudent to put all of that money into K-12 education.

Without redistribution there is no realistic budgetary pathway to fairness for underaided districts.

Sadly, even with complete redistribution of Adjustment Aid and the injection of another $500 million today's underaided districts will still not be brought to 100%.

Toms River is acting in its own self-interest nothing else.





Thursday, June 15, 2017

Kim Guadagno's Circuit Breaker: Positives and Negatives


Kim Guadagno is making a property tax relief proposal she calls a "circuit breaker" the centerpiece of her campaign for governor.

Guadagno's proposal is that all New Jersey residents have the school portion of their property taxes capped at 5% of income, with taxes due in
excess of that now assumed by the state.

As Guadagno's campaign explains it:

This innovative program would cap the school portion of a homeowner’s property tax bill to 5% of their household income, ensuring no New Jersey family would have to leave our state due to untenable property taxes. For instance, if a household makes $100,000 in income annually, they would not pay more than 5%, or $5,000, towards the school portion of their property tax. Any amount owed in excess of the 5% circuit breaker threshold will be applied directly to the homeowner’s property tax bill as a credit. So if the same family making $100,000 a year has a school property tax bill of $6,000 annually, they would receive a $1,000 credit. The school districts would then receive increased state aid to cover the cost of the credit so no school districts lose funding. 
Under this program, a family making New Jersey’s median household income of $72,000 will save an average of $895 on their property taxes annually. This proposal will apply to primary residences only and be capped at $3,000 annually. While the Homestead and Senior Freeze programs will remain in effect. homeowners will only be able to qualify for one program at a time and be able to choose the relief program that best meets their needs.
The state reimbursement would be capped at $3,000, so it is possible that certain households who have high property:income ratios would still pay over 5% of income in school taxes, but for most non-renters, taxes would be capped at 5%.

Overall, Guadagno's proposal would make NJ school funding more income-tax based than property-tax based, since the "Property Tax Relief Fund" comes from income taxes, and so make school taxation more progressive.

Guadagno's own staff estimates the cost at $1.5 billion, which Guadagno says could come from "auditing Trenton," eliminating existing property-tax rebates, and economic growth.

Since Guadagno came out with her circuit-breaker in April 2017 most of the criticism of it has been that Guadagno has underexplained where the state money would come from, since Guadagno rules out any tax increases (although that criticism applies to Phil Murphy and his agenda.)

Anyway, this is a look at some of the positives and negatives of Guadagno's proposal that I feel haven't gotten any attention.

The Good Things

It hasn't been independently verified that the circuit breaker would cost $1.5 billion per year, but assuming that amount is indeed the cost and assuming that Guadagno actually could find that $1.5 billion, this proposal would deliver real tax relief to the most overburdened taxpayers in New Jersey.

If a governor poured another $1.5 billion into SFRA the tax relief would probably be extremely limited, since Boards of Education would spend a large portion of their new money and/or teacher contracts would gradually consume whatever new revenue exists too.  If the money actually were directly given to households, people would end up with more money in their pockets.

The Bad Things

The Circuit Breaker's Not Looking Good,
Even if Guadagno Could Fund It
Since, under Guadagno's proposal, the state pays taxes in excess of 5% of income, Boards of Education would likely lose restraint in tax levy increases, since now their most overtaxed non-renters are protected by the state.

Very few Board of Education members are economically conservative, but they are aware that their communities have residents who can barely afford their homes and weigh that fact in determining what the tax levy increase should be.

Under a state-funded circuit breaker, Boards of Education now have a blank check to be cashed on the state's bank account and that restraint is gone.

Although NJ has a tax cap, tax increases are still not limited to 2% due to health care and enrollment adjustments and an electorate can vote to increase taxes to whatever amount it wants.

This means that the costs of the circuit breaker would increase fairly rapidly from the initial $1.5 billion.

What if there is a recession?

If the state started to put at least $1.5 billion into this tax rebate program it would have less money available to fund school districts, as well as other obligations.  Guadagno does support reducing Adjustment Aid and making cost-savings reforms to PreK and Abbott construction, but still, New Jersey's 369 underaided school districts have a deficit of $2.1 billion for 2017-18, so redistribution alone is not enough to create budgetary adequacy.

Moreover, New Jersey will eventually face another recession and have a revenue crash.

Every state loses revenue in a recession, but New Jersey's revenue fall is always more than the average state's since our income distribution is so unequal and our income tax structure is so progressive.  In the Great Recession NJ's revenue fell by 19%, whereas the average state's only fell by 12%.

The permanence of New Jersey's ongoing debt crisis plus the inevitability of another recession means that sustaining the "circuit breaker" is an iffy proposition for the bankrupt Garden State.


Kim Guadagno deserves credit for coming up with an idea that actually would lower property taxes for many people, but it may be the Right Plan for the Wrong State, since New Jersey is broke anyway and New Jersey's Boards of Ed are likely to lose what little fiscal restraint they possess.

Tuesday, June 13, 2017

Jennifer Beck: Take Politics Out of State Aid (Unless Monmouth County Benefits)

Senator Jennifer Beck has again released misleading statements on state aid in an incoherent,
analytically incomplete op-ed where she defends Adjustment Aid, criticizes attempts to redistribute it from most districts, and yet says that the state should help districts that have had surging enrollment.  

There aren’t a lot of details being provided on [Sweeney's] plan, but estimates suggest that it could end up costing Monmouth County schools over $100 million in state school aid. This plan, if estimates are true, isn’t a fair or equitable solution to our school funding crisis.\ 
In New Jersey, we are supposed to fund our schools in a way that gives all of our children an opportunity to succeed. We all know the problems that exist under the current school funding program: 
It’s led to municipalities like Jersey City, which has the tax base to support their local schools but underfunds them by $255 million — while pocketing more than $418 million a year in state aid. 
It’s led to New Jersey underfunding schools where student enrollment has exploded. In fact, state aid for our schools has remained essentially flat since the School Funding Reform Act (SFRA) was enacted in 2008, leaving property taxpayers on the hook to pay more. For example, Freehold Borough is 527 students over capacity and Red Bank’s enrollment has grown by 267 in the last five years. But the state has not pulled its weight.
It’s led to a system where 421 school districts throughout the state overpay in property taxes to fund their schools. Property taxpayers are paying more than they need to because the state has failed to live up to its end of the deal. In Ocean Township, local taxpayers are paying $8 million more in property taxes for their schools than they are required to by the state....
While I am grateful to see that some of our [meaning Monmouth County's] underfunded schools would be among those that get more funding (because they need it), I noted that his area seems to be getting quite a bit more than Monmouth County and other counties. Politics can’t play any part of such an important process that impacts both our property taxes and our children’s education.

What Beck is saying is that she doesn't want "politics" to impact property taxes and education unless Monmouth County benefits.

Admittedly, Beck is correct that Monmouth County would be a net loser in any likely aid redistribution.

FIRST, for 2017-18, Monmouth County has 26 districts with a grand total of $99.7 in excess aid, but Beck omits multiple key facts on that, Monmouth County also has 28 underaided districts with a total deficit of $51.9 million.  These underaided districts include poorer districts including Freehold Boro, Red Bank Boro, and Long Branch,  plus some middle-income and affluent districts including Rumson-Fair Haven, Holmdel, and Freehold Township.

SECOND, half of the $99.7 million in excess aid in Monmouth County only goes to two districts, Asbury Park and Freehold Regional, each of whom has $25 million in excess aid.

Asbury Park's state aid exceeds $24,000 per student, of which nearly $11,300 per student in excess of SFRA's target.  Asbury Park's grotesque state aid amount has led to to PILOT virtually all of its new development, for a grand total of perhaps $1 billion in hidden PILOTed wealth.

THIRD, many of the aid-losing districts in Monmouth County are resort towns on the Atlantic Ocean that have gigantic tax bases relative to their student populations.

Belmar has $29,571 in Local Fair Share per student. Lake Como has $23,424 per student. Deal has $98,708. Allenhurst has an astronomical $1,706,505 per student.

Several of the non-resort towns have large tax bases too.  Tinton Falls has $19,550 per student in Local Fair Share.  Henry Hudson Regional has $23,262 per student. Middletown has $16,405 per student.  

FOURTH, more than $2 million of that excess is in Interdistrict Choice money that is not subject to redistribution.  This Choice money mostly goes to Deal, which gets $1.8 million alone.  (Monmouth County's total Choice Aid is over $3 million, but some of that goes to districts who are still underaided despite that infusion).

FIFTH, New Jersey is the country's most indebted state.  Thus, the state cannot increase K-12 aid very much and so budgeting is zero-sum.  The more aid hoarding that Jennifer Beck can preserve, the less new aid there is available to NJ's underaided districts, including Red Bank and Freehold Boros.

Beck also says she favors some redistribution, but says we should start with the statutorily overaided districts for whom the existing statute of SFRA allows aid reductions.  These are 46 districts who, despite Adjustment Aid, get more money than the SFRA dictates they should due to post-2008 enrollment loss.

Let’s start the reform with the 46 school districts that are overfunded in state dollars.

Ok, that's a good idea and is better than nothing, but barely.  These 46 districts only get $11 million total in extra aid.  

And silliest of all, Beck says at her conclusion what she had already said a few paragraphs previously:


Any school funding reform plan should be one where decisions aren’t based on politics, but rather on what is best for our students, parents, taxpayers and teachers.
Decisions aren't based on politics?

What on earth is Beck herself doing but appealing to the naked self-interest of Monmouth County itself?  

Although SFRA is complex, Sweeney's plan is quite simple: to give each district in New Jersey 100% of its recommended funding, no more, no less.  

That's not politics, that's justice according the old definition of equal treatment under law.  




Wednesday, June 7, 2017

The 2017 Election: Optimism, Pessimism, and Hopelessness on State Aid


Well, the ballots have been counted and Phil Murphy and Kim Guadagno are the winners of their respective parties nominations.

Here are the reasons I'm optimistic about what the election means for state aid, the reasons why I'm pessimistic, and the reasons why I fundamentally have no long-term hope at all.

Phil Murphy:

The Good Stuff about Murphy:

He promises to "fully fund" SFRA and employs fully funding SFRA as a key means of restraining property tax increases.  Murphy said at a town hall event in Maplewood that he would "pull" $200-$300 million in Adjustment Aid and told the NJEA that SFRA need to be "tweaked and updated."

Although Murphy is strongly allied with the NJEA, with pressure from the legislative Democrats, Murphy could be induced to make a bigger redistributive move.


The Bad Stuff about Murphy:

Murphy repeatedly has given SFRA's deficit at only $1 billion a year, when the real deficit, against Uncapped Aid, is $2.1 billion for 2017-18 and that amount grows annually.  In 2008-09, the deficit was only $1 billion.

If Murphy feels the state can only put in an additional $1 billion into SFRA I accept it, but another $1 billion in isn't even close to enough to fully fund SFRA in real terms, so saying that another $1 billion = full funding is dishonest.

If Murphy keeps the State Aid Growth Limits intact, then the most severely underaided districts will gain very little.  (see "The Skews of Capped Aid")

Murphy also called himself a "barbell guy" at a town hall in Penn's Grove, meaning his priorities in education are PreK and higher ed.

Murphy's promise to eliminate tax incentives as a means to fully funding SFRA is a lie.  The amount NJ pays out in tax incentives is only $347 million (see A20), not the $1 or $2 billion it would take to fully fund SFRA.  Also, not every business is bluffing when it says it won't operate in NJ without tax incentives and many tax incentives go to renovation projects that have wide public support (eg, Bell Labs > Bell.Works, the Hahne's conversion in Newark).

Kim Guadagno:

The Good Stuff about Guadagno:

Kim Guadagno borrowed from Jack Ciattarelli's platform and thus actually has a comprehensive state aid reform package. Guadagno now realizes state aid is important and says "We need a new school funding formula and we need it now, too."

Guadagno supports redistributing Adjustment Aid, making the Abbotts pay for a percentage of their construction costs, and means-testing PreK.

If Guadagno had a means of paying for her "circuit breaker" (in which school taxes would be capped at 5% of income up to $3,000), it would mitigate taxes for lower income New Jerseyans.

The Bad Stuff about Guadagno:

Guadagno has ruled out any tax increases.  Assuming the Democrats control the legislature, no additional pension reforms will be allowed, so the state's fiscal crisis will worsen.

Guadagno has also been the lieutenant governor for eight years and she has done nothing to address school funding inequality.  Guadagno has even appeared at many ribbon cuttings for 100% state-funded Abbott construction projects, so I think Guadagno's conversion to state aid reform is unconvincing.

In a debate Guadagno cited kids in Phillipsburg learning algebra in trailers, when Phillipsburg is an Abbott and students there now have very luxurious facilities.

The Hopelessness:


New Jersey in 2027

No matter who wins, the structural budget forces that consume hundreds of millions more per year will still exist and still push out other spending.

This chart is based on the slower pathway to the full ARC that Chris Christie wanted. Presumably with
Phil Murphy the path to full funding will be more rapid.



So if Phil Murphy were to raise taxes by $1.5 billion (as he told the Star-Ledger), within a few years that additional money would be consumed by new, structural spending increases.

It's not a recipe for fiscal sustainability, let alone fair and sufficient state aid.

Phil Murphy, like every other governor, has talked about accelerating economic growth, but a governor's control over an economy is limited, particularly in the short term. Connecticut, under Dannel Malloy, has passed all of the policies that Phil Murphy wants in NJ other than marijuana legalization and a state bank, and Connecticut's economy is actually worse-off than New Jersey's.

Given the certain continuation of New Jersey's fiscal crisis, the redistribution of state aid is more necessary than ever.