Thursday, September 24, 2015

Jersey City Should Not Be an Abbott

Jersey City should not be an Abbott.

In the early 1980s, when the never-ending Abbott lawsuit began, Jersey City was poor, decaying, and easily in the same economic class as Newark, Paterson, Elizabeth, Camden, and Trenton.  Well, times have changed and Jersey City, while still home to large sections of poverty, now has large sections of affluence which balance out that poverty in terms of tax paying ability.  Jersey City is not rich, but it is overall a middle-resource district that can pay for much more of its local education burden than it is required to.  Jersey City's Abbott status is now as out of date as disco.

This post is a response to a blog post by Civic Parent, a Jersey City blog on "government, education, and taxes" written by an MBA. In a 2013 post, Civic Parent looked forward to a time in the future when Jersey City could shed its Abbott status.
here is a goal we should all strive for: improving our city and schools to such an extent that we can finally be rid of Abbott....
Yes!!  Someone from Jersey City gets it.

Well, not completely.

Civic Parent is right that Jersey City should not be an Abbott, but Civic Parent is wrong on the timing.  The time for Jersey City to lose its Abbott status is now.

Civic Parent says that Jersey City should shed Abbott status for Jersey City's own sake:

Getting rid of Abbott should be our shared goal; if the city improves as the mayor-elect [Steve Fulop] has promised, then job opportunities will grow, families will be less financially stressed, our kids will have better after-school support through recreation programs and job training programs, and more of our young adults will be aiming for post-high school education. All of these improvements will attract more long-term family and commercial investment. Our tax base will naturally grow more robust and we will be able to fund our own school system. And that is something we should all be aiming for.
I believe that for the sake of justice for the entire state that Jersey City, especially the districts that are poorer and lower-resource than Jersey City, that Jersey City needs to lose its Abbott status.

First of all, I don't much care for New Jersey's virtually all-or-nothingAbbott funding system anyway. While New Jersey has a continuum of need and local resources, through the Abbott cases, the Education Law Center and New Jersey Supreme Court have contrived a system that gives 31 districts several privileges that numerous equally poor non-Abbotts do not have to the same degree or any degree.

However, that being said, if New Jersey is going to have a class of poor, low-resource districts given unique privileges, then those districts should be an up-to-date list of the poorest and lowest-resource districts in New Jersey, not an unchanging, rigid list of districts that participated in litigation over a generation ago.  

My point isn't that Jersey City is rich.  It's clearly not.  My point is that Jersey City is relatively middle resource and state resources are increasingly limited, Jersey City needs to lose much, although not most, of its $490 million in annual state aid so that poor districts can benefit.  Jersey City should also lose its Abbott privilege of having the state pay for 100% of capital projects and universal Pre-K.  When desperately poor children outside of the Abbott bubble get nothing for Pre-K, it is unfair to give "free" Pre-K to the children of professionals whose only instance of economic deprivation is that they were priced out of Manhattan.

The solution to the problem of Jersey City is to recognize the diversity of need across the state and to let the state have a measured response, not the Supreme Court's irresponsible all-or-nothing "Abbott remedy."

What is an Abbott District? 


As a preamble, technically, no district in New Jersey is an Abbott district anymore since SFRA ended the designation.  The Abbott districts are now "SDAs," "School Development Authority" districts. However, the name change is not very significant since the Abbott districts still get state-funded universal Pre-K, still get the state to pay for 100% of capital costs, still retain very high aid packages relative to their needs, and due to the Abbott XXI decision (2011) had smaller aid cuts than every other district had to cope with.

SFRA's ending of the Abbott designation is mostly meaningless.  It's like when British Petroleum changed its name to "BP."  It's still an oil company.  An Abbott district called an "SDA District" is still an Abbott.  

Jersey City is Diverse, but overall Middle Resource

Here are the financial and demographic facts about today's Jersey City:

Jersey City's Equalized Valuation for 2014-15 is $19,724,038,354 (that doesn't count PILOTed property). Its Total Income is $7,131,468,288. Both are the highest in New Jersey.

The state measures taxing ability by something called "Local Fair Share."

The formula for Local Fair Share takes in both property wealth (using Equalized Valuation) and income (using Total Income)

The formula is:

Equalized Valuation x 0.014909959 x 50% + District Income x 0.052921406 x 50%

Thus, Jersey City has a Local Fair Share of:

$335,745,966


This is the highest figure in New Jersey by far.  The second highest local Fair Share is Edison's, which is only $210 million.  Newark's Local Fair Share is only $183 million (fifth place) for a much larger student population than Jersey City.

Despite that $334.7 million taxing capacity, Jersey City's Local Tax Levy is only $110 million, an amount that is less than a much smaller suburb like West Orange pays.  In per pupil terms, $110 million for 34,000 students is only $3,300 in local tax dollars per student, an amount dramatically below the $5000+ per student that East Newark and North Bergen raise.

The $334.7 million in potential taxing ability works out to $10,000 per student.  This amount is not significantly below New Jersey's median for Local Fair Share per student, which is about $10,000 per student.



Thus, there are scores of New Jersey school districts that have weaker tax bases than Jersey City. Districts with weaker per student tax bases include places that are considered middle class and working class, like Howell, Clinton Township, Bayonne, and Belleville.

Some might object to delisting Jersey City as an Abbott because 71% of Jersey City students are FRL-eligible and they require higher school spending. That's true - Jersey City's FRL-eligible percentage is high - but it is only the 40th highest in New Jersey.  Since Jersey City has substantial local resources the FRL-eligibility figure by itself should not confer Abbott status.  After all, Atlantic City was never an Abbott even though its students were overwhelmingly poor.  Thus, the 71% FRL-eligible figure is not by itself relevant.

To explain in another way why Jersey City should lose aid despite having a high FRL-eligible percentile you have to realize that Jersey City actually has proportionally few students.

Out of a population of 260,000-270,000 (the population is growing so rapidly that an exact figure does not exist), Jersey City has fewer than 34,000 students, so only 12% of the population is in the public schools.  This is the second lowest proportion in the Abbott group after Hoboken. The average district in New Jersey, with which the Abbotts are consistent, has 17-18% of its population in the public schools.

So, while Jersey City has only a slightly smaller population than Newark, its student population is nowhere near as large and its student population is only 20% larger than Paterson's, even though Jersey City's overall population is much larger than Paterson's.  Since Jersey City's FRL-eligible percentage is lower than Paterson's (90% FRL), Jersey City actually has fewer FRL-eligible students.

Total PopulationStudent PopulationFRL-Eligible Population
NEWARK CITY278,42747,95440,281
JERSEY CITY260,000-270,00033,71723,939
PATERSON CITY145,94827,88925,100
ELIZABETH CITY127,55825,77921,912


There are Many Poorer and Lower-Resource Non-Abbotts than Jersey City

If New Jersey were less indebted and its aid distribution fairer, then Jersey City could retain its Abbott privileges and high state aid indefinitely. The problem is that New Jersey's debts are enormous and debt costs will consume virtually all new state revenue.  While Jersey City is overall middle-resource and its students are still poorer than average, Jersey City's tax base and student poverty must be seen in relation to other districts and there are many districts in New Jersey that have lower local resources and proportionally more poor students than Jersey City.

These are the fifty districts in NJ with the highest percentage of FRL-eligible students.

Bolded = Abbott.  (B) = Bacon.

District NamePercentage FRL-eligible
Camden City95%
Union City95%
Seaside Heights Boro94%
Woodlynne Boro93%
Asbury Park City93%
Bridgeton City93%
Passaic City91%
Paterson90%
Trenton89%
Atlantic City89%
Red Bank Boro89%
Salem City89%
Plainfield88%
East Newark88%
New Brunswick88%
Lakewood (B)86%
Orange*86%
Pleasantville85%
Perth Amboy85%
Elizabeth City85%
Wildwood City85%
Prospect Park85%
Fairfield Twnp (B)83%
Commercial Township (B)81%
Harrison81%
Egg Harbor City (B)79%
Long Branch79%
Guttenberg78%
Fairview77%
Freehold Boro77%
Lindenwold76%
East Orange76%
Paulsboro75%
Irvington74%
Lawnside74%
Keansburg73%
Bound Brook73%
Haledon 72%
Garfield 71%
Jersey City71%
Vineland70%
Millville70%
Woodbine (B)70%
Beverly City69%
Roselle Boro69%
Dover Town69%
Gloucester City69%
Somers Point City68%
Hillside Township68%
Ventnor City68%

As you can see, Jersey City is in 40th place.  Of the districts with higher FRL-eligible percentages, nineteen are non-Abbotts.

How do all the non-Abbotts on this list all compare to Jersey City in Local Fair Share per student?

DistrictPercentage FRL-eligibleLocal Fair Share Per Student
Seaside Heights Boro94%$15,598
Woodlynne Boro93%$3,289
Atlantic City89%$13,165
Red Bank Boro89%$13,230
East Newark88%$6,959
Lakewood (B)86%$15,887
Wildwood City85%$16,845
Prospect Park85%$3,747
Fairfield Twnp83%$5,006
Commercial Township81%$5,983
Egg Harbor City (B)79%$4,734
Guttenberg78%$13,676
Fairview77%$10,620
Freehold Boro77%$5,957
Lindenwold76%$4,908
Paulsboro75%$4,375
Lawnside74%$10,625
Bound Brook73%$6,890
Haledon 72%$5,846
Jersey City71%$9,958
Millville70%$4,361
Woodbine70%$8,555
Beverly City69%$7,161
Roselle Boro69%$8,095
Dover Town69%$5,671
Somers Point City68%$9,665
Hillside Township68%$8,453
Ventnor City68%$30,153
North Plainfield67%$7,364
Carteret Boro65%$7,693

So, of the fifty highest-FRL districts in New Jersey, twenty have weaker tax bases per student than Jersey City.   Of the districts with higher FRL-eligible rates than Jersey City, eleven have less in Local Fair Share per student.  

Haledon, Bound Brook, Paulsboro, Lindenwold, Freehold Boro, Egg Harbor City, Commercial Township, Fairfield Township, Prospect Park, East Newark, and Woodlynne all have higher FRL-eligible percentages than Jersey City AND lower tax bases and thus better claims to Abbott status than Jersey City.  

Of the eleven districts that have higher FRL-eligible rates and lower tax bases (plus Lakewood, an unusual district), all except Fairfield Township already tax themselves more heavily than Jersey City.  

DistrictPercentage FRL-eligibleLocal Fair Share Per StudentTaxes as a Percentage of Local Fair ShareEqualized School Tax Rate
Woodlynne Boro93%$3,289155%3.089
East Newark88%$6,95974%1.001
Lakewood (B)86%$15,88788%1.108
Prospect Park85%$3,74777%2.195
Fairfield Twnp83%$5,00624%1.2304
Commercial Township81%$5,98350%0.7073
Egg Harbor City (B)79%$4,734107%1.204
Freehold Boro77%$5,957101%1.3524
Lindenwold76%$4,90888%1.857
Paulsboro75%$4,375106%1.358
Bound Brook73%$6,890115%1.83
Haledon 72%$5,846100%1.89
Jersey City71%$9,95833%0.5878

(districts in regional districts have had that tax levy added in.)

As you can see, some of these districts, like Woodlynne, Egg Harbor City, Freehold Boro, Paulsboro, Bound Brook, and Haledon are poorer than Jersey City, much poorer in their tax bases, and much more overtaxed.

Finally, some of these very low-resource/high-need districts get substantial amounts of state aid for K-12 and that combined with substantial local taxes brings their school spending into a decent range, but none gets as much aid as Jersey City and Jersey City's schools spend the most, despite not being the most needy nor having the highest taxes.

DistrictPer Pupil Spending
Woodlynne Boro$12,241
East Newark$9,980
Lakewood (B)$11,682
Prospect Park$12,140
Fairfield Twnp$11,850
Commercial Township$12,714
Egg Harbor City$15,411
Freehold Boro$11,462
Lindenwold$13,292
Paulsboro$16,193
Bound Brook$12,388
Haledon $12,780
Jersey City$17,859

I realize that despite this evidence that Jersey City is no longer among New Jersey's poorest districts that many readers would wish that Jersey City remain an Abbott indefinitely.  Fine, but if Jersey City must remain an Abbott, then why can't districts like Prospect Park and Woodlynne become Abbotts?  And if Jersey City remains an Abbott and is joined by poorer districts, who do you take the money from?

It is a crime to let Jersey City hoard this money that other districts need so much more desperately.

Jersey City and other aid hoarders will have to unclench their hands on a huge portion of its state aid to help these poor, high tax districts.

Woodlynne, Egg Harbor City, Freehold Boro, Paulsboro, Bound Brook, and Haledon are small districts, so for them to be brought up to their full uncapped aid would only cost $28 million, not even 6% of Jersey City's aid!

If Chris Christie and legislature had guts - and the Jersey City political leadership had integrity or any concern for the rest of New Jersey - they would recognize that Jersey City is among the districts that need to lose state aid so that other districts can get what their children need.

Yes, Jersey City should still get an above average amount of state aid per student.  Yes, its poor 3- and 4- year olds need state-funded Pre-K, but Jersey City is past the point where it does not merit being an Abbott district.

Jersey City should be deprived of its Abbott status so that the state can craft a response to its Pre-K needs where only poor Jersey City children get it.  We have tens of thousands of poor children outside the Abbotts who are now getting nothing.

CivicParent is absolutely right that Jersey City should lose its Abbott status, but the time is now and the reason is for the welfare of poor children and poor districts in the rest of New Jersey.

The question is: Is there any elected official in Jersey City who cares about the rest of the state?








6 comments:

  1. TY for this post. Very important topic. I think Jersey City with its heavy use of abatements must get ahead of this fiscal issue. This puts a framework around how JC intersects with the wider state finances vis a vis school funding.

    One question - would a change in funding rest solely with a political decision? If there is a formula, what is the reason for not following it, i.e. is there no regulatory requirement, or is it just stuck in the courts? I'm honestly ignorant to some of the behind the scenes machinations around school aid hence these questions. Thank you

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    1. “This puts a framework around how JC intersects with the wider state finances vis a vis school funding. “

      Thank you for reading and commenting. I hope this post drives some conversations about the need to update the Abbott list and to amend the special privileges that Abbott districts have.

      It nees to be said again and again in Jersey City that Jersey City is already overaided. Even if someone is not concerned about the rest of the state, this is something that all concerned Jersey City parents should know because it means that Jersey City will not be getting any aid increases for the foreseeable future. If the JCPS do get any aid increases they will be very modest.

      Please review the spreadsheet here under “2015-2016 Additional School Funding Scenarios (Information Only)” The spreadsheet shows how much money districts would get (hypothetically) if NJ had another $1 billion to spend on K-12 education and SFRA were followed.

      http://www.nj.gov/education/stateaid/1516/

      Notice that Jersey City is slated to lose $612,141. Jersey City is, in fact, one of thirty districts that would lose aid even if the state increased aid spending by $1,000,000,000. (There are different ways to measure overaiding. According to uncapped aid Jersey City is overaided by $111 million.)

      Of course the state is not going to have another $1 billion to spend due to the pension crisis. That means that aid cuts are more likely than aid increases.

      Right now Jersey City only pays for 19% of its schools. In the future that percentage is going to have to increase. This means that non-PILOTed Jersey City property owners are going to have to pay for an increasing share of the JCPS. Since a third of Jersey City is PILOTed, this will eventually become a large disproportionate burden on non-PILOTed property owners.

      It would be nice if the JC City Council would consider what Jersey City’s aid future looks like.

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    2. "One question - would a change in funding rest solely with a political decision? If there is a formula, what is the reason for not following it, i.e. is there no regulatory requirement, or is it just stuck in the courts? I'm honestly ignorant to some of the behind the scenes machinations around school aid hence these questions. Thank you"


      This is a good question that I am not sure I can answer authoritatively.

      New Jersey has a formula for state aid called SFRA – the School Funding Reform Act of 2008. It’s an ok law in theory because it would give more money to poor districts and treat poor-non-Abbotts fairly, but it has not been followed since the Corzine administration.

      The decision to not follow SFRA is partly economic partly political.

      The economic part is that the recession, Atlantic City implosion, and loss of federal aid which have reduced the state’s revenue by many billions. Even now revenue hasn’t recovered very well and now we are drowning in the Pension Crisis.

      The political part is that Chris Christie doesn’t like SFRA in the first place because it would send so much money to poor districts (not all of whom would be Abbotts.). Christie, for blatantly political reasons, also does not want any district to lose aid, no matter how overaided it is.

      I think it is appalling how Christie treats Hoboken the same as he treats Prospect Park but the legislature ratifies Christie’s budgets and there is no one speaking up on behalf of poor, underaided districts and the need to make spending offsets so that these underaided districts can gain aid. What I am saying is that the whole Establishment is to blame, not just Christie.

      “is there no regulatory requirement, or is it just stuck in the courts?”

      Legally the state has to follow SFRA, but any budget that the legislature passes is automatically legal. The 2008 legislature that passed SFRA cannot bind the legislature of the future to any appropriations commitment. The only way the courts could/would intervene is if the residents of a district sued and said that they were not getting a “thorough and efficient” education. The claim about being denied a “thorough and efficient” education is what made the Abbott decisions possible.

      The NJ Supreme Court, in the Abbott XXI decision (2011) said that SFRA only had to apply to the Abbott districts. The state could, theoretically, cut aid to poor, underaided non-Abbotts like Prospect Park, Guttenberg, East Newark, Belleville, Woodlynne, etc all it wanted to.

      However, just because SFRA hasn’t been followed in the past doesn’t mean it won’t be followed again in the future.

      I think that the courts will intervene and affect school funding, but through pensions cases, not state aid cases. For instance, if the NJ Supreme Court decides that the suspension of COLA payments in the 2011 pension reform law was unconstitutional the state will have to pay up $1.2-$1.3 billion in missed COLA payments and then pay even more in pensions in the future.

      Having to pay up so much money to restore COLAs would force a cut in state aid and this *could* affect Jersey City.

      If state aid were cut again it is undeterminable how it would affect the Abbotts.

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  2. I think the author could access the Education Law Center link re Abbott districts as much of your information is erroneous. Once you have had a chance to review the information provided both historically and current I think you will have a better picture of the current situation and the future of these districts. FYI currently there are 32 formerly Abbott districts. Your bolded districts came to twenty-two. www.edlawcenter.org . This site is a wealth of information regarding the status of education in NJ both former Abbott and non-Abbott. They are the real experts on the subject. Also it would work to quote your sources of data i.e. free lunch information and other data used. It is impossible to verify without knowing the source.

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    1. Josephine,

      Thank you for commenting and reading.

      Yes, I am very familiar with the Education Law Center. I don't agree with the ELC on everything, but I certainly find their data to be useful.

      The numbers for FRL-eligible percentages came from the ELC itself.
      http://www.edlawcenter.org/research/data-research.html

      There are also 31 (former) Abbott districts. Where have you read that there are 32?

      True, there are only 22 bolded Abbott districts in this post's list of the fifty highest FRL-eligible districts. The other nine Abbott districts do not appear because they have lower FRL-eligible percentages and are not among New Jersey's fifty highest FRL-eligible districts.

      Also, if you do not believe me that Jersey City is overaided, please review this other document from the Education Law Center that shows how much money in per pupil terms above or below uncapped aid a district gets.

      http://www.edlawcenter.org/assets/files/pdfs/Newsblasts/FY16%20SFRA%20Funding%20Gaps.pdf

      You will clearly see that the Jersey City public schools get $3,551 more per pupil from the state per pupil than it is supposed to.

      The JCPS also get $6462 _less_ from Jersey City than they are supposed to. This is consistent with what I said about Jersey City taxing itself wayyyy below its Local Fair Share.

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