Wednesday, July 29, 2015

Paterson's Budget Problems, a $20 Million Appropriation, and Some Context

Paterson is one of many New Jersey school districts suffering severe budget stress. Faced with a $20 million shortfall, Paterson is going to lay off over 360 staff members, including 197 teachers.

By a 5-4 vote, the Board of Education on Monday night approved a $565 million schools budget that district officials say will result in the elimination of 363 jobs.
Despite the large number of jobs at stake, less than 30 people attended the budget meeting and only five people spoke during the public hearing.
Among the jobs being cut are 197 instructional positions, which include teachers, officials said. The job reductions will generate about $21 million in savings, according to state-appointed schools superintendent Donnie Evans. 
Several people who spoke during the hearing predicted that the cuts will increase class sizes in a district that where student test scores are among the lowest in the state. 
“I’m struggling to understand how this reduction is going to have minimal effect on the children,” said Rosie Grant, head of the Paterson Education Fund, an advocacy group. “It has to be that class sizes are going to go up and supplies are less.” 
“This is going to lead to frustrated kids, it will lead to discipline problems, and it’s going to lead to increased dropouts,” Grant added. “We’re going to feed the school-to-prison pipeline unless we find the resources they need.”

School board president Jonathan Hodges cast the deciding vote in favor of the budget. Under the system of state control of city schools, Evans could have implemented the budget even if the board had voted it down.
Joining Hodges in voting for the budget were Christopher Irving, Manny Martinez, Flavio Rivera and Kenneth Simmons. Voting against it were Chrystal Cleaves, Errol Kerr, Lilisa Mimms and Corey Teague. 
Kerr called the district’s spending plan “the dumb the children down budget.” He asserted that the district does not have so much fat in its budget to withstand the $21 million in personnel cuts. Kerr also said the reductions would undermine the academic progress the district has made. “We are trying to destroy the entire thing,” Kerr said.
The budget stress is common across New Jersey, but what is unique about Paterson is that the New Jersey legislature tried to come to Paterson's aid with a $19.7 million appropriation for something the legislature called "Programmatic Stabilization Aid." Although many districts are also at risk of "destabilization" or were destabilized years ago, Paterson and Egg Harbor City (which was to get $300,000) were the only two districts that were going to get money from this off-formula aid stream.

Paterson, unlike Montclair (which almost got $1 million), is a truly needy district. 90% of Paterson students are FRL-eligible, the eighth highest percentage in New Jersey. Unlike many other Abbotts, Paterson does not receive Adjustment Aid and is thus not an aid hoarder. Paterson does receive $400 million in state operating aid for 28,139 students, or $14,200 a student, which is high, although not extraordinary considering what Paterson's needs are. Combined with its local and federal money, Paterson's school spending is $16,696, again, high, but not exorbitant compared to other Abbotts.

As Assemblyman Benjie Wimberly said of the money, “It saves a lot of jobs, it saves hundreds of jobs. We have to do what we have to do.”

As sympathetic as I am towards Paterson and any individual who might lose a job, the situation is complex.

The budgetary problem with Paterson (and many other Abbotts) is that it does not want to raise its own taxes. Since 2009 Paterson's Local Tax Levy has been the same $38,955,956. Its equalized tax rate is 0.5788, which is much lower than what a non-Abbott would pay and even lower than what many other Abbotts pay. Newark pays 0.8. Trenton pays 0.9175.

What makes Paterson's case more sympathetic is that it has had a loss of Equalized Valuation.   Indeed, the appropriation language cited this fact.

Programmatic Stabilization Aid shall be used by the Commissioner of Education to provde State aid to a school district, other than a school district that participates in Interdistrict public school choice program that 1)between October 2010 and October 2014, experienced an increase in its actual resident enrollment of at least 4.5% 2) between the 2013-2014 school year and the 2015-16 school year experienced a loss of Equalized Valuation of at least 21%.  

Giving the $19.7 million to Paterson is a very tough call, but people have to remember that as sad as it is for Paterson to have to lay people off that there are many similarly high-need districts that already receive much less than Paterson and have been hit similarly hard by the recession.

Paterson's spending, while not exceptional by Abbott standards, is higher than what other high-FRL districts spend. Woodlynne (93% FRL) spends only $12,241. Lakewood (86% FRL) spends $11,682. Red Bank Boro (89% FRL) spends $13,130. East Newark spends $9,980. Compared to its high-FRL peers Paterson is still doing ok.

Giving the $19.7 million to Paterson sounds nice, but is that a better use of money than expanding Pre-K in non-Abbotts? The $19.7 million for Paterson and $300,000 for Egg Harbor City could pay for Pre-K for 1,300 children.  Is it better than bringing desperately underaided and underfunded districts like the ones above closer to Adequacy?

If Paterson had gotten the $20 million it would have come out of NJ's pension contributions and cost the state more in the future or it would have come out of the budgets of other school districts and caused layoffs elsewhere. Raising state taxes by exactly $20 million just for Paterson and Egg Harbor City doesn't seem appropriate either. If the NJ legislature had proposed a tangible offset - reducing Adjustment Aid, Interdistrict Choice Aid, or categorical aid for ultra high-resource districts (eg, Hoboken, Ocean Twnship Cape May) - than I would be glad about the $20 million for Paterson and Egg Harbor City, but without an offset this wasn't a wise move.

$20 million in one year might not sound like a lot of money, but what about the year after and the year after that? The costs add up.

I also don't think that Paterson should be ahead of Woodlynne, Lakewood, Red Bank Boro, and East Newark for more aid. Even if the legislature took $20 million away from the Aid Hoarders I don't think that Paterson should be the first to get it. I wish Christie had proposed a spending offset somehow, but without the offset I think Christie made the right call with the line-item veto.

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