Tuesday, November 24, 2015

More on the Error in the Education Law Center's Report on Adjustment Aid

This is an expansion of a post I wrote a few weeks ago critiquing as misleading the Education Law Center's report "The Facts on Hold Harmless Aid in NJ's School Funding Formula," which is a defense of Adjustment Aid.

Adjustment Aid is legalized aid hoarding.  Adjustment Aid is aid that a district would get if SFRA's aid formulas indicate that it needs less money than it was getting before SFRA became law.  The way Adjustment Aid works is that if SFRA's formulas indicate that the district should get $30 million but it was getting $40 million pre-SFRA, it would still get $40 million total, with $30 million coming in regular formula aid and then $10 million in Adjustment Aid.

Adjustment Aid "hold harmless" aid that holds its recipients harmless, but certainly harms non-recipient districts that are more underaided than they would be otherwise if Adjustment Aid were fed into Equalization Aid.

There are several problems in the Education Law Center's, but one of the biggest is the conflation of low-DFG status with being "low wealth."

Table 4 presents the distribution of adjustment aid if the formula were fully funded and used a base year of 2014-15. [See Appendix A for district level data.] The total adjustment aid amount is $578 million. The aid is distributed across all types of districts: $216 million would be allocated to 14 former Abbott districts, and $362 million would be provided to 183 non-Abbotts; $237 million would be provided to 33 low wealth districts, $275 million to 120 middle wealth districts, and $45 million to 20 high wealth districts; $300 million would be allocated to 138 over adequacy districts, and $275 million to 50 below adequacy districts.

The huge mistake here is that a low-DFG district isn't necessarily low wealth.  The DFGs are badly out of date anyway, but they were socioeconomic classifications, not economic classifications.  Thus, a district can be in a low DFG but still have an average or high tax base and in fact, Adjustment Aid districts are more likely than not to be relatively wealthier in tax base than they are demographically.  
The Education Law Center considers any district in DFG A or B to be "low wealth," but of the 33 DFG A and B districts getting Adjustment Aid in the Education Law Center's report, only a handful actually have low tax bases.  

DFG A and B Districts Getting Adjustment Aid
DistrictCountyLocal Fair ShareTotal Number of StudentsLocal Fair Share per StudentAmount of Adjustment Aid in ELC's Alternative Calculations (assumes full SFRA funding, uses 2014-15 as base year)Actual Amount of Adjustment Aid in State Aid Summaries
SEA ISLE CITYCAPE MAY$34,151,45288$388,085$23,845$44,536
WILDWOOD CREST BOROCAPE MAY$18,478,211250$73,913$175,300$250,091
NORTH WILDWOOD CITYCAPE MAY$21,201,289328$64,638$285,751$396,411
WASHINGTON TWPBURLINGTON$1,856,01742$44,191$363,712$283,400
VENTNOR CITYATLANTIC$24,635,268817$30,153$629,687$700,622
LOWER CAPE MAY REGIONALCAPE MAY$25,743,1351,442$17,852$6,373,640$6,528,185
WILDWOOD CITYCAPE MAY$12,431,746738$16,845$1,977,300$3,567,304
MANCHESTER TWPOCEAN$48,500,9082,933$16,536$924,758$1,531,444
SEASIDE HEIGHTS BOROOCEAN$3,525,198226$15,598$188,824$410,159
MONTAGUE TWPSUSSEX$4,688,921301$15,578$480,230$26,780
WEYMOUTH TWPATLANTIC$2,633,754200$13,169$920,135$241,451
MIDDLE TWPCAPE MAY$30,809,2612,521$12,221$5,773,351$3,724,488
LOWER TWPCAPE MAY$21,889,7101,819$12,034$2,820,314$2,030,412
PINELANDS REGIONALOCEAN$18,417,7251,578$11,672$1,825,067$784,462
EAGLESWOOD TWPOCEAN$1,646,196145$11,353$410,558$58,181
JERSEY CITYHUDSON$335,745,96633,717$9,958$111,080,898$114,452,158
LITTLE EGG HARBOR TWPOCEAN$15,957,1451,777$8,980$2,909,076$1,427,520
WOODBINE BOROCAPE MAY$1,984,654232$8,555$968,892$761,240
ELK TWPGLOUCESTER$2,997,553351$8,540$438,143$38,757
ASBURY PARK CITYMONMOUTH$16,502,5492,337$7,061$23,420,836$24,422,872
VINELAND CITYCUMBERLAND$63,736,4309,885$6,448$10,817,844$34,392,237
LAKEHURST BOROOCEAN$2,434,311396$6,147$62,970$28,730
KEANSBURG BOROMONMOUTH$8,204,5271,547$5,304$9,303,939$8,642,285
PEMBERTON TWPBURLINGTON$23,198,5865,227$4,438$25,620,081$32,419,492
MILLVILLE CITYCUMBERLAND$26,258,7816,021$4,361$2,221,917$12,565,599
EAST ORANGEESSEX$44,660,84510,474$4,264$13,280,296$32,420,739
GLOUCESTER CITYCAMDEN$8,751,0002,074$4,219$3,745,077$9,360,582
BURLINGTON CITYBURLINGTON$9,741,8212,568$3,794$1,197,249$1,394,126
PLEASANTVILLE CITYATLANTIC$13,079,4113,978$3,288$4,607,944$14,090,235
PHILLIPSBURG TOWNWARREN$12,550,4173,911$3,209$2,542,230$9,997,105
SALEM CITYSALEM$2,904,2451,179$2,463$293,110$2,171,621

The statewide average for Local Fair Share per student is about $10,000 per student.

As you can see, most of the DFG A and B recipients of Adjustment Aid are thus not truly "low wealth" at all.

In terms of tax base, they are medium wealth, high-wealth, and even ultra-high wealth.  Salem City, Phillipsburg, Pleasantville, Burlington City, Gloucester City, East Orange, Millville, Pemberton, Keansburg, Lakehurst, and Vineland are unequivocally "low wealth" but the other districts are medium wealth, high wealth, and ultra-high wealth.

So, of the $237 million that the ELC asserts would be "provided to 33 low wealth districts," only $73 million-$100 million goes to genuinely low-resource districts.  The other DFG A and B getting Adjustment Aid are not low-wealth in an economic sense.

Taken as a whole, Adjustment Aid is one of the most regressive streams of aid in the NJ aid distribution.  It goes to truly low-wealth districts less often than the ELC admits.  

It's notable that  Washington Township, North Wildwood, Wildwood Crest, and Sea Isle City in fact have more Local Fair Share per student than Millburn and Princeton.  In light of NJ's terrible budget picture, for these districts the question should be "should they receive any aid at all?" not "should they get Adjustment Aid?"

The ultra high wealth districts getting Adjustment Aid should, arguably, not be independent districts at all and should be merged with their neighbors.

It is worth pointing out that half of NJ's ultra-high wealth districts would get Adjustment Aid (which exceeds the state average of one-third of districts receiving Adjustment Aid).  This means that the richest districts in New Jersey are more likely to get Adjustment Aid than the poorest ones.  

Ultra High Resource Districts and Adjustment Aid
District NameCountyDFGLocal Fair ShareStudent Pop.Local Fair Share Per StudentAmount of Adjustment Aid in ELC's Alternative Calculations (assumes full SFRA funding, uses 2014-15 as base year)Actual Amount of Adjustment Aid Given in the State Aid Summaries (Does not count "Additional Adjustment Aid")
CAPE MAY POINTCAPE MAY$3,831,2143$1,277,071$20,442$20,226
AVALON BOROCAPE MAYFG$59,473,86263$944,030$12,254$0
SEA ISLE CITYCAPE MAYB$34,151,45288$388,085$23,845$44,536
STONE HARBOR BOROCAPE MAYFG$30,768,64882$375,227$0$3,705
SADDLE RIVER BOROBERGENJ$48,204,780193$249,766$0$0
ALPINE BOROBERGENJ$33,818,844168$201,303$0$0
LONG BEACH ISLANDOCEANFG$44,619,512250$178,478$0$0
SEASIDE PARK BOROOCEANDE$5,951,88233$165,330$107,895$110,734
SPRING LAKE BOROMONMOUTHI$33,994,524271$125,441$0$0
SEA GIRT BOROMONMOUTHI$21,363,869178$120,022$0$0
LAVALLETTE BOROOCEANDE$16,792,324151$111,207$5,856$4,798
DEAL BOROMONMOUTH$17,212,918161$106,913$0$138,303
BEACH HAVEN BOROOCEANFG$8,104,90480$101,311$0$0
BAY HEAD BOROOCEANI$13,493,324135$99,951$0$0
CAPE MAY CITYCAPE MAYCD$15,801,869163$96,944$146,382$276,347
HARDING TOWNSHIPMORRISJ$31,097,756362$85,905$0$0
MARGATE CITYATLANTICDE$36,139,003459$78,734$0$45,463
WILDWOOD CREST BOROCAPE MAYB$18,478,211250$73,913$175,300$250,091
HOBOKEN CITYHUDSONFG$187,075,2362,639$70,889$3,808,8215,392,689
ENGLEWOOD CLIFFS BOROBERGENI$37,969,466553$68,661$0$0
NORTH WILDWOOD CITYCAPE MAYA$21,201,289328$64,638$285,751$396,411
BEDMINSTER TWPSOMERSETI$34,791,462546$63,721$0$0
AVON BOROMONMOUTHI$9,927,073159$62,434$0$0
OCEAN CITYCAPE MAYDE$96,496,9932,095$46,061$0$0
BRIGANTINE CITYATLANTICCD$32,792,678732$44,799$976,292$1,059,602
WASHINGTON TWPBURLINGTONA$1,856,01742$44,191$363,712283,400
MONMOUTH BEACH BOROMONMOUTHI$12,713,019295$43,095$0$1,986
EDGEWATER BOROBERGENGH$38,679,063938$41,236$0$0
FRANKLIN LAKES BOROBERGENI$51,923,7151,324$39,217$0$0
BOONTON TWPMORRISI$18,282,473477$38,328$0$0
BRADLEY BEACH BOROMONMOUTHCD$11,545,746306$37,731$550,106$674,206
RUMSON BOROMONMOUTHJ$36,852,943989$37,263$0$0
MILLBURN TWPESSEXJ$181,130,0964,881$37,109$0$0

The ELC intentionally omits this but, the majority of New Jersey's lowest-wealth districts would not get a cent of Adjustment Aid in the ELC's alternative calculations, including the very poorest districts of Bridgeton City, Camden City, North Hanover Township, Passaic, Trenton, Woodlynne, Paterson, Perth Amboy, Prospect Park, Elizabeth, and Newark.

Adjustment Aid is Privilege, Not Equity

Adjustment Aid is the biggest problem in the New Jersey education aid landscape.  It allows districts that have become wealthier and/or lost student population to cling to the aid they merited back when they were poor and/or larger.

Alas, the Education Law Center knows that hundreds of NJ districts are underaided and suffering, but its solution is hopelessly unrealistic. “It’s time to focus on the key task at hand – getting back on track to full funding of the SFRA to make sure all students receive the resources they need and a meaningful opportunity to succeed in school.”

I'm sorry, but full funding of SFRA ain't gonna happen. The only hope for NJ's most underaided and underfunded districts to free up money that is tied up in Adjustment Aid and going to districts that don't demographically or economically merit that money.

Again, contrary to the ELC's claims, very few truely low-wealth districts get Adjustment Aid. In the era of the Pension Crisis and stagnant state aid, Adjustment Aid cannot be justified.


See Also:

Adjustment Aid Has No Statutory Sunset

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