Tuesday, March 1, 2016

The Robbers and the Robbed: State Aid Disparities for 2016-17

When Chris Christie announced in February 2016 that he would again refuse to either put significant new money into SFRA or redistribute aid away from New Jersey's aid hoarding districts, I had a feeling that the inequalities of New Jersey's aid distribution would become even more savage.

Now, after I have been able to review uncapped aid figures, I see that my initial assumption was correct.  Even though Christie is allowing a $19 million increase in Equalization Aid, there is no substantial improvement in the fairness of New Jersey's aid distribution and hundreds of overtaxed, under-Adequacy New Jersey districts will have to make even deeper cuts or force their already overburdened residents to sacrifice even more through higher taxes.

Basic Facts on the 2016-17 Aid Proposal
  • The median NJ district gets $3,623 per student in K-12 state aid.
  • The median NJ district is underaided by $550 per student (compared to uncapped aid.)
  • The median NJ district gets 80% of its uncapped aid.  
  • There are 199 districts that get 100% or more of their uncapped aid.  There are 52 that get 200% or more of their uncapped aid.
  • Of the 199 overaided districts, 52 are overaided by $2,000 or more per student.
  • The total excess aid of the overaided districts is $563 million.
  • Of the 392 underaided districts, there are 141 districts that get 49.9% or less of their uncapped aid.
  • Of the 392 underaided districts, there are 130 that have aid deficits greater than $2,000 per student and 51 with deficits greater than $4,000 per student.
  • The total deficit for the underaided districts is $1.9 billion.

This post will include calculations and analysis of some factors around state aid itself, chiefly what districts are the most overaided (the robbers) and what districts are the most underaided (the robbed).

This post will be on the shape of the state aid distribution.  My next post will be about local taxation.

Background on Overaiding  
(Readers who know how SFRA works can skip this section.)

First, when I say a district is "overaided" I meant that it gets more aid than SFRA's core formulas indicate that it economically and demographically needs.  

To simplify, SFRA is a weighted aid formula that attempts bringing spending up to very high levels in any district that has many "at risk" students and concentrated poverty.

  • SFRA is sensitive to demographics through the calculation of the "Adequacy Budget."  The Adequacy Budget is a "weighted calculation" that depends on the overall size of the student population, with multipliers for older students and students who are FRL-eligible or ESL.  A district with a higher concentration of at-risk students receives an additional bonus.  
The Adequacy Budget for a district whose students are 80% FRL-eligible or higher will be above $20,000 per student, but this doesn't automatically mean that a district is supposed to get $20,000 per student in state aid since the district has to make a contribution through local taxes.  

The state's expectation the contribution from local taxes is done through calculating something called "Local Fair Share."

  • SFRA is sensitive to the district's economic position through the calculation of "Local Fair Share," ie, the district's tax base.   Local Fair Share is calculated with a formula that gives 50% weight to Aggregate Income and another 50% weight to Equalized Valuation. 
To simplify, if a district's Adequacy Budget is $20 million and it has a Local Fair Share of $5 million  it is supposed to get $20 mil - $5 mil = $15 million in Equalization Aid plus other streams of aid for Special Education, Transportation, and Security.  

Both Local Fair Share and Adequacy Budget are based on some arbitrary assumptions, but nevertheless, as long as the calculations are applied consistently, these measures provide a useful way of comparing district tax capacity and need.

SFRA was supposed to be phased in over several years, so a district's aid increase is supposed to be capped at 10% or 20% per year.  So if this district was only getting $10 million pre-SFRA, the biggest annual increase it could get would be $2 million per year.  That partial SFRA funding is "Capped Aid."  The full, full SFRA funding is "Uncapped Aid."  

However,  Local Fair Share and Adequacy Budget are only the rational components of SFRA.  SFRA also contains a demon known as "Adjustment Aid" that was only included in SFRA in order to make SFRA's passage through the legislature possible.

Adjustment Aid was included because SFRA's new calculations would have given many districts, including several politically powerful Abbotts, less money than they got under the status quo.

In order to facilitate the sausage making of passing SFRA, SFRA's authors thus had to include a provision for something called "Adjustment Aid" which guarantees that no district can get less than 102% of what it got in 2007-08, the year SFRA was passed.

Thus, SFRA is not a redistribution of the existing aid stream; it is only a method of distributing new aid and without new aid SFRA does not function.

To simplify, if a district was getting $15 million pre-SFRA and SFRA's core formulas showed that it only needed $10 million, that district would then get $10 million in regular formula aids plus $5.3 million in Adjustment Aid ($5.3 mil + $10 mil = $15.3 mil = 102% of the pre-SFRA aid.)

Adjustment Aid intentionally contradicted the intention of SFRA to "reform" aid, but it was supposed to become gradually less of a distortion as the state poured billions more into K-12 education and gave all of that new money to underaided districts and flat-funded overaided districts.  However, due to the stagnant economy, pension crisis, Atlantic City collapse, debt crisis, and Christie's refusal to raise taxes, there has been no aid for underaided districts and the old pre-SFRA inequities grow even worse as many districts gain population or lose wealth and get no new aid and other districts lose population or gain wealth and do not lose their aid.

Two additional pertinent facts about how SFRA was not designed to function in budgetary scarcity are:
  1. Every district, no matter how wealthy, is entitled to some aid under SFRA.  Thus ultra-high resource districts such as Hoboken, Alpine, and Jersey Shore microdistricts such as Avalon Boro, Stone Harbor, Allenhurst, Deal, are usually entitled to at least $1,000 per student through Transportation, Security, and Special Education Aid.  (See "Help for the Needless: NJ's Richest Districts and Their State Aid.")
  2. In order to satisfy the NJ Supreme Court's Abbott rulings requiring very high spending in poor districts, the aid targets for high-FRL districts are usually high enough that poor districts exceed the spending of traditionally affluent districts like Princeton and Millburn.  Some might consider $18,000 per student in state aid to be wasteful, but this posts defines a district to be overaided if it gets more money than the core formulas of  SFRA say it needs, not necessarily if it gets an amount of money that is extremely high.
SFRA passed in 2008 through the usual legislative necessities of avoiding difficult decisions and letting overaided districts keep their unneeded aid, but since 2008 other factors have made the aid distribution even more unfair.

In 2010 the legislature and Christie expanded Interdistrict Choice, which pays districts (almost always below capacity) to accept students who live elsewhere.  The state was supposed to get some aid offsets by cutting aid to districts losing students through Interdistrict Choice, but the Christie administration and legislature have not allowed these offsets to occur.  

To make things yet even more appalling, when Christie cut state aid in 2010, he cut state aid without considering if a district was overaided or underaided, in other words, Christie treated Hoboken and Freehold Boro identically, despite Hoboken being grotesquely overaided and Freehold Boro being savagely underaided and overcrowded. 

Then, the disparities created by the cuts weren't bad enough and NJ's pension situation not desperate enough, the NJ Supreme Court in the 2011 Abbott XXI decision declared that aid cuts to the Abbotts (and only the Abbotts) were unconstitutional and ordered their aid restored.  Hoboken thus got another $1.7 million, which it used for a technology shopping spree and for more administrative hires.  The other Abbotts aren't as rich as Hoboken, but they similarly were protected while every non-Abbott was sacrificed.

Details on the Most Overaided and Underaided Districts

The Districts Getting the most aid per student Aid are:

Click to Expand:

Most of the districts getting the most aid per student are in fact overaided.

However, a few of these districts, like Bridgeton, merit this aid.  Bridgeton is New Jersey's poorest town, and has only $1,486 in Local Fair Share per student.  For Bridgeton to get $14,082 per student is inadequately low.

On the other hand, there is some substantial aid hoarding going on.

The following districts have the greatest amount of excess aid in absolute terms.

These twenty districts alone get $363.8 million in excess aid.

Jersey City is easily the most overaided district in New Jersey, but it is also the second largest in student population.  In per pupil terms, the following are the most overaided.  Jersey City is also on this list, but it is not as high in per student terms.

Deal is a significant inclusion here because it exploits Interdistrict Choice more successfully than any other district.  Deal, one of NJ's richest districts, has become the Millionaire's Abbott.

In percentage terms (ie, actual aid over uncapped aid), Deal is NJ's most overaided district, getting over 1000% of its uncapped aid!

Their Victims
If the overaided districts lost every cent of their excess aid it would not be enough to fully fund SFRA, but if there were redistribution, districts like the following would be greatly helped.

The Most Ripped Off Districts In Absolute Terms:

Again, several of these are large districts, so their underaiding is not always severe in per pupil terms.

The Most Ripped Off Districts Per Pupil Are:

The Most Ripped Off Districts in Percentage Terms Are:

There are many reasons for this inequity.  Chris Christie doesn't give a sh*t about crushing tax burdens or overcrowded classrooms in poor and working class districts, but unfortunately, the legislature is almost as bad.  Although education aid is a major determinant of property taxes, very few legislators fight for aid fairness or even want it (Sens. Sweeney and Beck are exceptions).  There are a few Republicans like Senator Mike Doherty who condemn the overaiding of Hoboken, Jersey City, and Asbury Park, but these Republicans condemn it because of how that affects affluent suburban taxes, not how that overaiding screws poor and working class districts.

Unfortunately, even many underaided Boards of Education do not fight for fairness because they don't know how badly underaided they are, don't know how overaided other districts are, and they may have a mentality that the way to a fairer distribution of aid is the make the pie larger, not divide it more fairly.  Since few people in the education thoughtworld connect the Pension Crisis to state aid, the concept that the state might be out of dough to make that pie larger doesn't occur to most Boards of Education.

Many overaided districts do not realize how overaided they are either and those that do are completely selfish.

Hoboken as the epitome of "SCREW THE REST OF THE NEW JERSEY" since it is New Jersey's richest K-12 district in terms of tax base and yet gets $21 million a year for Pre-K and K-12 .  Hoboken's vampiric Board of Education and leadership may purport to be progressive, but they are too obsessed with their alleged victimization by their charter schools to see how they victimize the rest of New Jersey.

Anyway, Christie's proposed aid distribution for 2016-17 is unfair.  The legislature must not approve it as a blank check.  It must find more money for Equalization Aid and the logical place to find those offsets is in the aid packages of the overaided.


Helping the Needless: New Jersey's Richest Districts and Their State Aid

The Robbers and the Robbed: State Aid Disparities for 2016-17

Choice Districts, Charterized Districts Are Big Winners for 2016-17 State Aid

More on 2016-17 State Aid: Where the Money's Going

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