Wednesday, December 9, 2015

Education Law Center Newark Report: More State Aid, a Charter School Growth Moratorium, and Higher Taxes

The Education Law Center has just come out with a research brief on the budgetary stress/crisis in the Newark Public Schools.

The report is thorough and everyone interested in New Jersey school finance should read it.

However, what's missing from the Education Law Center report is any sense of context regarding the greater budgetary pain other districts are in.  Yes, Newark's schools have made cuts and will face more cuts in the future, but there are many districts in New Jersey who are even farther below Adequacy than Newark and who are making cuts that Newark is yet to contemplate.

While Newark should get some additional aid, the heroic $131 million state aid rescue that the Education law Center demands would be deeply unfair to the scores of New Jersey districts who are more underaided than Newark is.

While the Education Law Center's report provides important research and is a warning about Newark's budgetary future, it is a plea to let Newark cut in line and its research is incomplete in a number of ways.

Yes, Newark's Charters and Underaiding Force the NPS to Make Cuts

It is impossible to deny that the Newark Public Schools in significant budgetary problems and those problems are in part due to causes the Education Law Center criticizes, namely underaiding and charter school transfers.

Source: User Friendly Budgets

Newark's student population (charter + district) has grown by 10% in the last few years, diluting the state aid Newark gets.


Underaiding combined with charter school transfers has indeed caused Newark to make significant cuts.

Source: User Friendly Budgets

The ELC's Solutions Call for Special Treatment of Newark

However, while I see the same budgetary problem the Education Law Center sees, my conclusions are different from theirs, especially the demand that Newark become a state priority in receiving full SFRA funding.  Since Nj's terrible budget situation means that education aid has become zero-sum, more money for Newark would have to come at the expense of even needier districts.

My response will focus on the five recommendations the ELC makes to solve Newark's budget crisis.

It is clear Commissioner of Education David Hespe and State District Superintendent Christopher Cerf must take immediate action to prevent further staff, program and service cuts in 2016‐17 and beyond.
We recommend the following steps to stabilize the NPS budget over the next few years:
  •  Restore state formula aid to move NPS to full SFRA funding;
  •  Increase the City of Newark’s local contribution, utilizing  waivers of the 2% annual property tax cap;
  •  Temporarily halt the expansion of enrollment in existing Newark charter schools, pending a thorough analysis by the Commissioner and the DOE of the impact of further expansion on the funding and resources available in district schools, as mandated by law and court rulings;   
  •  Reduce district payments to charter schools in 2016‐17 by requiring Newark charter schools to apply any fund balance in excess of 2% to the charter’s per pupil payment amount under the charter law; and
  •  End the authorization in the State Budget of additional payments to charter schools from the NPS budget in excess of the per pupil amounts under the charter law.

1.  Full SFRA Funding
  •  Restore state formula aid to move NPS to full SFRA funding;
Indeed, Newark is underaided by $131 million for 2015-16.  In total dollars, that is the largest deficit in New Jersey.

However, according to the Education Law Center's own documentation, that is only $2,600 per student.

Newark is thus not even remotely among the most underaided districts in New Jersey. In fact, there are 85 districts who are more underaided than Newark.

SFRA is a weighted student formula, so if there is a district that has a lower-FRL percentage than Newark but has a $4,000 per student deficit, or a $6,000 per student deficit that district is indeed more needy than Newark.  Why should Newark be allowed to cut in line ahead of districts whose tax/school budget pain is so much worse?  

(I know the chart below is illegible.  Click on the chart to see full size)

I take seriously the cuts Newark has to make and worry about the future, but Newark's schools are cutting from a very high spending position.  The Newark Public Schools are unlike Prospect Park, Fairview, Wallington, or Dover and many other districts whose schools are also making cuts but who never high spending to begin with.  In other words, Newark is cutting spending that other low-income districts never had.


Although Newark is farther below Adequacy than it used to be, it is not remotely the farthest below Adequacy in NJ.

To make comparisons neater from here on out, I will only compare Newark to DFG A and B districts in Bergen, Essex, Hudson, and Morris counties.

Numerous DFG CD and DE districts, such as Belleville, Bloomfield, Woodland Park, and Elmwood Park, are also farther below Adequacy than Newark is.

It's also necessary to look at state aid in raw per pupil terms to see just how much better Newark's financial position is compared to demographic peer and near-peer non-Abbotts.

Source: State Aid is from the State Aid Summaries.  Enrollment is from the User Friendly Budgets

The most extreme underaiding of many other districts translates, unsurprisingly, into lower spending.

In comparison with its DFG A and DFG B districts in northeastern New Jersey, Newark's spending remains relatively high.

Newark has higher non-classroom expenditures than most other districts, although that it partly due to its own employee contracts and administrative structure.  However, if you compare spending by Total Classroom Expenditure, Newark's spending is lower than average, but there are still several districts who spend even less.

Source: User Friendly Budgets
Again, there are many DFG CD and DE districts who also spend less than Newark too.

All of the lower spending DFG A and B districts are more underaided than Newark.

  • East Newark has an $8,906 per student deficit.
  • Fairview has an $8,746 per student deficit.
  • Guttenberg has a $6,341 per student deficit.
  • Wallington has a $4,326 per student deficit.
  • Lodi has a $6,179 per student deficit.
  • Prospect Park has a $5,896 per student deficit.
  • Dover has a $5,484 per student deficit.
Belleville is in DFG CD, so it isn't a demographic peer of Newark's, but it is a poor town and there is no comparison between Belleville's budgetary problems and Newark's.

Belleville only spends $10,868 per student, of which $6841 makes it into the classroom.  This means that Belleville, unlike Newark, already has a bare-bones budget.

In the last year Belleville has had to borrow millions in the last year for basic items, like $3 million for technology and a $4.1 million advance on state aid.

On top of this, Belleville anticipates needing to carry out $65-$85 million in building repairs.

Manchester Regional (DFG B) spends more than Newark and is closer to Adequacy, but only because its residents accept an atlasian tax rate that is 177% of Local Fair Share.

Why does the ELC demand more money for Newark, which is underaided by $2,600 a student, but not Belleville, which is underaided by $5,162? or Dover? Or Prospect Park?

What rational basis is there for giving Newark priority over these even more underaided and underfunded or overtaxed districts?  

It makes no sense other than through the interpretation that the Education Law Center hates charter schools and wants to use Newark has a demonstration of charter doing fiscal damage to traditional public schools.   East Newark, Fairview, Guttenberg etc are intensely victimized by the state, but Newark is "victimized" by charters and the ELC hates that more than anything. 

Many other districts in New Jersey are already more underaided and underfunded (or overtaxed) than Newark, but there are no charter school villains for the the more savagely hurt districts, so the Education Law Center doesn't much care about them.

The more underaided disricts also aren't Abbotts and thus the ELC doesn't care much about them either.

2.  Have Newark Pay More in Taxes

  •  Increase the City of Newark’s local contribution, utilizing waivers of the 2% annual property tax cap;

Ok, I agree with this but I don't see why waivers should only be given to Newark.

There are many districts in New Jersey whose taxes are significantly below Local Fair Share and below Adequacy, shouldn't they get waivers too?

Source:, originally from the Department of Education

Every single one of the districts paying less in Local Fair Share than Newark is also below Adequacy.

Newark pays about 62% of its Local Fair Share, or $113 million out of $183.8 million.  Newark's tax deficit is thus about $70 million.

The Education Law Center should assess whether the economic damage of raising Newark's taxes would be greater than the educational benefit of taxing itself by another $70 million.

Newark's total tax levy (county, schools, municipality, libraries etc) was only $408 million for 2015.

To increase that by $70 million would be an 17% increase.

Newark's Equalized Valuation actually fell for 2016 by $246 million, indicating that it still may be economic decline.  If I were in Newark's leadership, I would not want my city to pay much more in taxes.  Yes, Newark should pay somewhat more than 62% of its Local Fair Share, but 100%?

If spending another $70 million guaranteed any educational progress maybe I'd support it, but the correlation between spending and education outcomes is so weak that I could not be persuaded to tax Newark much more than it is already being taxed.

3.  Freeze Charter Schools

  •  Temporarily halt the expansion of enrollment in existing Newark charter schools, pending a thorough analysis by the Commissioner and the DOE of the impact of further expansion on the funding and resources available in district schools, as mandated by law and court rulings;   

I don't think it's realistic to halt charter school expansion since the proportion of Newark kids in charters is higher on the elementary level.  To freeze the size of charters would mean either transferring these kids to district schools or shrinking the size of incoming classes at charter schools to allow the elementary-cohort to move through the charter system.

Ultimately, a moratorium on charters is a value decision and one that should be made through the democratic process.

Unfortunately it's not easy to say where in the democratic process this decision should be made.  A Board of Education is democratically elected, but it is also only responsible for its own schools and thus will usually oppose charters because of fiduciary responsibility.

A city council is not supposed to get involved in education, but it has a broader constituency than a Board of Education and is not in a fiduciary relationship with districts schools.  Here it is relevant that  the Newark City Council voted 7-2 against the Jasey/Diegnan charter school moratorium bill.

As Councilman Anibal Ramos said on the anti-moratorium vote:

"On behalf of the children of our city, I want to congratulate my council colleagues who voted in favor of this resolution," said Ramos, a former member of the Newark Public Schools Advisory Board and a strong supporter of quality public schools. "This is a vote that supports the children and families of our city. We have thousands of children in Newark alone who are on waiting lists to attend charter schools. The last thing the legislature should be doing is limiting their growth. What we need instead is legislation that would improve the monitoring of existing charter schools and allow quicker corrective action on those schools that are not performing well.”
On the other hand, Mayor Ras Baraka wants to slow or stop charter school expansion, but still, charters appear to be an issue on which Newark is closely divided.

The Education Law Center is free to demand anything it wishes, but I hope the Commissioner of
Education pays more attention to Newark's elected officials than to the ELC.

4.  Make Charters Give Up Their Reserves
  •  Reduce district payments to charter schools in 2016‐17 by requiring Newark charter schools to apply any fund balance in excess of 2% to the charter’s per pupil payment amount under the charter law; 

The ELC Report on charter school reserves was also erroneous because it looked at reserves in June, when charter school reserves are at their pre-summer peak.

5.  End Off-Formula Payments to Charters

  •  End the authorization in the State Budget of additional payments to charter schools from the NPS budget in excess of the per pupil amounts under the charter law.
Fair point about charters, but there are 36 regular districts in New Jersey that get more money than they are legally entitled to under SFRA and I don't see the ELC condemning them.

Is the Education Law Center  going to condemn the DOE for giving Hoboken an extra $1,256,889?  Will it condemn the DOE for giving Hamilton an extra $934,708?  Freehold Regional an extra $775,261?  Jersey City an extra $612,141?

Then there is Adjustment Aid, which is part of SFRA, but allows districts to get more aid than SFRA says they economically and demographically need.  If Is the Education Law Center going to condemn Jersey City for exceeding its uncapped aid by $111 million?  Or Pemberton, Toms River, Freehold Regional, Brick, and Asbury Park for hoarding more than $20 million each? 

If Adjustment Aid were to be gradually eliminated it would free up money for the Newark Public Schools, but for ill-founded reasons the Education Law Center LOVES Adjustment Aid and opposes redistribution. 

The Real Problem is the State Budget

The real problem with giving more state money to Newark is that New Jersey is going bankrupt.

We can take it as a given that Christie has no desire to fully fund SFRA, let alone give more money to Newark.  However, given the state's budget crisis, it is wrong to say that Christie "refuses" fund SFRA.  He could not fund SFRA even if he wanted to.

Also, even the Democrats have given up on SFRA.

The Democrats want to:
Within education, the Democrats' priority right now is Pre-K, although that's taking a backseat to helping retirees, the Transportation Trust Fund, and pensions.

If anyone can find a recent quote from a Democrat in the leadership about fully funding the K-12 portion of SFRA I'd be surprised. 

Will the Education Law Center ever exist in the real world and real economy? 

Can someone teleport them into the pension debt-ridden state New Jersey we all know and not the money-grows-on-trees forest they inhabit?

Update:  This ELC report by Mark Weber on underfunding in NJ gives the 32 districts that are farthest from Adequacy.

Newark isn't on the list.

No comments:

Post a Comment