Wednesday, March 30, 2016

Sweeney, Beck Propose Help for NJ's Neediest Districts

Senators Stephen Sweeney and Jennifer Beck continue to work on legislation that would redistribute state aid away from overaided districts to districts that are underaided and truly needy.

In an article by Adam Clark that appeared on the cover of the Sunday, March 27th Star-Ledger, Beck and Sweeney explained:

"The hold harmless provision [Adjustment Aid] was meant to make sure there was no losers," state Senate President Stephen Sweeney said. "It absolutely created losers." [my emphasis]
Sweeney (D-Gloucester) and Sen. Jenifer Beck (R-Monmouth) are finalizing a plan that they say would make school funding more equitable. Beginning in 2017-18, the proposal would gradually phase out hold harmless aid [ie, Adjustment Aid] for districts that don't need it and reallocate that money to growing districts that are underfunded, Beck said.

Political Courage

This is truly a brave move on both senators' parts. Both Sweeney and Beck have some overaided districts among their constituents who may oppose any redistribution and this bill faces an uphill struggle through ignorance, selfishness, and parochialism of the legislature.  Remember, SFRA barely passed in 2008 and it was an aid increase (even overaided districts were supposed to gain 2%), not an aid redistribution.

Not to overpraise Sweeney (who I criticized here for talking Pre-K expansion without having a way to pay for it), but I see him as a truly bold politician.  Between being the primary Democratic backer of pension reform, supporting the consolidation of K-8s with their regional high schools, and now state aid reform, Sweeney is someone who is willing to take stances that offend interest groups and some of his own constituents if he believes they are correct.  A sincere bravo to him on this.

Conditioning Aid Distribution on Adequacy = Inadequate Redistribution

Sweeney and Beck haven't released any details of their plan yet, but there are hints that they will consider where districts are relative to their Adequacy budgets.

According to the Adam Clark Star Ledger article:

The districts that would receive less hold harmless money are already "above adequacy," meaning they spend more money per student than the state's funding formula says is needed for a thorough and efficient education, Beck said. Those districts should be able to adjust their budgets, especially if their enrollment has dropped, she said.

Any redistribution of Adjustment Aid is a good thing, but if New Jersey only takes Adjustment Aid away from districts that are above Adequacy the amount of Adjustment Aid that could be redistributed is greatly reduced because 71 Adjustment Aid districts undertax so significantly that they actually below Adequacy.  Important examples of Adjustment Aid districts that are below Adequacy are Jersey City, Brick, and Toms River.

According to the Education Law Center Policy Brief on Adjustment Aid, for 2015-16:

  • The above Adequacy Adjustment Aid districts get $174,024,179 in Adjustment Aid.
  • The below Adequacy Adjustment Aid districts get $381,745,553 in Adjustment Aid.

So, if Adequacy is considered then the potential amount of Adjustment Aid that could be redistributed is only $174 million, not the full $550 million that the state labels as "Adjustment Aid."
(NJ hasn't run the SFRA formula in several years and the amount of money that districts get that is labeled "Adjustment Aid" is divorced from the amount of Adjustment Aid they should get.  For instance, Newark and Atlantic City both get something called "Adjustment Aid," but both are underaided and the Adjustment Aid should be converted into Equalization Aid.  Conversely, since Jersey City increasingly becomes richer and its student population grows slowly, more of its Equalization Aid should be converted to Adjustment Aid.)

Also, the Adjustment Aid districts that are above Adequacy are often only slightly above Adequacy, meaning that because they undertax, their aid excesses are greater than their surpluses above Adequacy.

For instance, even though Pemberton gets $32 million in Adjustment Aid, it is only above Adequacy by $14 million.

  • Asbury Park gets $24.2 million in Adjustment Aid, but is only $13.9 million above Adequacy.  
  • Keansburg gets $8.6 million in Adjustment Aid, but is only $5.9 million above Adequacy.  
  • Phillipsburg is gets $10 million in Adjustment Aid, but is only $125,000 above Adequacy.  

Adam Clark writes about this as a "bipartisan plan to change how that money — more than $500 million — is allocated" but if only Adjustment Aid districts that are above Adequacy lose aid, the amount that could be redistributed would be nowhere near $500 million.

Population Change isn't the Only Factor in Overaiding and Underaiding

Another concern I have is that redistribution will be overly conditioned on population changes.  Although Sweeney and Beck haven't released any details yet, Jennifer Beck has talked often about aid being taken from districts that have lost population and giving it to districts that have gained population.

"The bottom line is that we as a state have not allowed our methodology for funding to keep up with what's actually happening at a district," Beck said. "If you've lost 100 students and the state of New Jersey is giving you the same state aid as you had five years ago... there should be some cost savings along the way."
And, in a statement at a recent Senate budget hearing Beck said:

"According to Beck, school funding needs to be redistributed throughout the state so that districts that have lost enrollment are not getting funding above the adequacy standard at the expense of schools where enrollment has increased. She said that that issue is not only central to the discussion in Paterson, but in a number of schools statewide including those in Asbury Park and Freehold, both of which fall in her district."

I'm a fan of Jennifer Beck, but I do not think she has it totally right about the causation of overaiding and underaiding.

Some districts in New Jersey have always been overaided or always been underaided, even before any recent population shifts.  For many districts, it is difficult to say why they have always been privileged or always been victimized, but it's not like NJ ever was "on formula" for a lot of districts who are now underaided.  

What logic was there ever in giving Marlboro twice as much aid per student as Bloomfield? What on earth justified giving Hillsborough more money than Belleville? Why did Randolph get more money than Hackensack?

Freehold Boro (then DFG CD), whose population growth has been often cited in its underaiding, only got $3,153 per student in 1998-1999, which is not significantly more than what Hillsborough got.

The aid distribution has been unjust for a very long time.  

I am worried that Beck neglects causes of overaiding and underaiding other than population change. Although Asbury Park and Pemberton's extraordinary overaiding are partly due to population loss and the zombie power the Abbott "Parity Plus" Doctrine, there are other districts that are overaided because they have had increases in wealth.

Hoboken and Jersey City represent two districts that are overaided despite gaining population.

Increase in wealth is difficult to quantify because historic Local Fair Share data is not available and even if it were available I would have to adjust it for inflation, but I can use Equalized Valuation (as a percentage of statewide EV) to show that Hoboken (an extreme, but illustrative example) has become overaided because of an increase in wealth, not because it has lost student population (on the contrary, it's slightly growing.)

Were I to go back even farther the effect would be more dramatic.  In the late 1990s Hoboken had only 0.3% of the state's total Equalized Valuation.   (see Divergent Fates of NJ's Big Cities.)

Likewise, some underaided districts haven't had much population change either.  Perhaps they were always underaided, or their population has stayed constant but become poorer.  They could also have seen a decline in ratables.

Atlantic City would be a prime (if extreme) example of a district who was once overaided (hence the Adjustment Aid artifact) and whose population has actually fallen, but has become deeply underaided (-$6,770 per student) because it has had an enormous decrease in wealth.

Will Anything Change?

Sweeney and Beck themselves have said that their proposal will be controversial, but the moral arguments for redistribution are so strong that I have some hope that this legislation will at least pass the State Senate.

The big question marks are the Education Law Center, Vincent Prieto, and Chris Christie.

The Education Law Center, led by lawyer David Sciarra, has opposed redistribution in the past and I consider it to be reactionary and economically blind, but in the fall of 2015 it softened its opposition to cutting Adjustment Aid for districts that were above Adequacy.  The ELC is influential among Democratic legislators and NJ's education activist community, so its support would help tip the scales in favor of justice.

As recently as 2012, Christie, through Chris Cerf's Education Funding Report, supported cutting Adjustment Aid too for districts that are above Adequacy.  Christie actually followed through on this for two years before setting into a flat-aid policy.  Christie, obviously, has become erratic and no one knows what he would think of redistribution.  He even created "Additional Adjustment Aid" to protect Interdistrict Choice districts from ever losing aid.

Prieto is a big unknown. All of Prieto's constituents - East Newark, Edgewater, Fairview, Guttenberg, Harrison, Kearny, North Bergen, Secaucus, and West New York - are underaided, but Prieto is also a close ally of Jersey City and Hoboken politicians whose districts are overaided.  Prieto is known to be a backer of Steve Fulop too and may not want to do Steve Sweeney any favors.

Anyway, I appreciate what Sweeney and Back are trying to do and look forward to learning more about their proposal.

No comments:

Post a Comment