Tuesday, March 14, 2017

Estimating Local Fair Share for 2017-18


After the Department of Education came out with 2017-18 state aid proposals I made an OPRA request of the Department of Education for 2017-18 Uncapped Aid and Local Fair Share.

I wanted Uncapped Aid so I could see what the total deficit is for the underaided districts, see what districts are the most underaided, see the total surplus for the overaided districts, and see what districts are the most overaided.

I wanted Local Fair Share so I could see whose taxes are the heaviest, whose taxes are the lightest, and what the median district in New Jersey pays.

I did not request Adequacy Budgets because spending relative to Adequacy is also determined by local tax effort and a focus on whose spending is above and below Adequacy can distract from state aid fairness.  Also, Adequacy Budgets are embedded into the calculation of Uncapped Aid anyway.

To my disappointment, the Department of Education said it did not calculate Local Fair Share and Uncapped Aid for 2017-18.  They did not give a reason, but my conjecture is that it was Christie who made the final decision not to bother with even the hypothetical operation of SFRA.

Nevertheless, the Department of Education did send me the components of Local Fair Share, which are Equalized Valuation (from the previous fiscal year, so 2016) and Aggregate Income (from three  years previous, so 2014).

The formula for Local Fair Share changes year to year, but by plugging in Equalized Valuation and Aggregate Income figures into the 2016-17 formula, I can ESTIMATE 2017-18 Local Fair Share and compare district tax bases.

This is the (first) formula for Local Fair Share used in 2017-18:

(Equalized Valuation x 0.013156218 + Aggregate Income x 0.046185507)/2

To see more about changes in Equalized Valuation between FY2016 and FY2017, please see this post of mine.

As usual, I've put the data online here.  2016-17 data, to which I make comparisons, is available here.

Yet again, these amounts are ESTIMATES - especially the year to year comparisons - since I have no idea what the multipliers should be in the 2017-18.



On the other hand, the relational comparisons between different towns should be very solid, since I am applying the same multipliers to every district for 2017-18.  If these calculations show that Hoboken's Local Fair Share is New Jersey's third highest at $195 million, I'd be surprised if the DOE's calculations give any different ranking, even if the exact Local Fair Share turns out to be something other than $195 million.

Hopefully the legislature will pressure Department of Education to simply run the formula so that the public may have a more informed conversation about state aid.

Anyway here goes:

  • Jersey City's Local Fair Share would increase by another $20 million to $353 million.  This is powered by a $4 billion increase in the Equalized Valuation  (to $25.7 bil) and a $502 million increase in the Aggregate Income (to $8 bil).

    Jersey City's Local Fair Share appears to be now 76% larger than the next largest district's, which is Edison at $200 million.  For 2016-17 Jersey City's Local Fair Share was "only" 60% larger than Edison's.
  • Hoboken's gained $1.8 billion in Equalized Valuation and $357 million in Aggregate Income.  Whatever the exact  Local Fair Share formula ends up being, Hoboken's Local Fair Share would likely be around  $195 million and be the third largest in New Jersey, after Jersey City and slightly behind Edison.  This year Hoboken's Local Fair Share surpasses Toms River's.

    Hoboken's 2016-17 tax levy was only $42 million, so for 2017-18 Hoboken's taxes will be barely a fifth of Local Fair Share

    For the last year pro-reformers in the legislature have pushed to eliminate Adjustment Aid, but there are certain low-student population districts such as Hoboken, some wealthy enclaves like Alpine and Harding, and many Jersey Shore resort towns who have no need for any state aid whatsoever.  
  • There is also increases in other Hudson County towns, powered by non-Hoboken/non-Jersey City Hudson County's $5 billion increase in Equalized Valuation.  West New York's would be $4 million larger, driven by 10% increases in Equalized Valuation and Aggregate Income.

    Union City, Bayonne, North Bergen, Harrison, Kearny, and others would have small increases (the small increases might be smoothed away if the DOE actually ran the formula)
  • Asbury Park's Local Fair Share would actually shrank (by a tiny amount). That's outrageous, since Asbury Park is undergoing a building boom. Asbury Park is just as much an example of the exploitation of the PILOT law as Jersey City is.  
  • Atlantic City's Local Fair Share fell by another $13 million, from $65 million to $52 million.  This is due to the loss of another $2 billion in Equalized Valuation and $8 million in Aggregate Income.

    Atlantic City's school tax levy for 2016-17 was $82 million, so Atlatic City's taxes may be 157% of Local Fair Share.

  • Manchester Regional's taxes are likely the state's highest again.  My estimate is that Manchester Regional's Local Fair Share is only $4.9 million, so the $10.9 million (which falls disproportionately on Prospect Park and Haledon due to Manchester Regional's unique tax-apportionment scheme) is absolutely brutal.
  •  
  • Newark's Local Fair Share may have grown slightly, by $6 million, from $161 million to $167 million. (Newark's actual tax levy is $123 million)
  • Paterson's Local Fair Share may have grown slightly too, by $3 million, from $85 million to $88 million (Paterson's actual tax levy is only $41.5 million)

Again, the above figures are only ESTIMATES, but I hope this post generates discussion, particularly regarding Hoboken and Jersey City's state aid and the acute tax crisis in Atlantic City.

Please ask your legislators to demand that the Department of Education do these calculations for real.

At the very least, we have to know  what the total deficit is for the underaided districts.  For 2016-17 it was $1.93 billion, which is far beyond any realistic tax increase.  This deficit number is a critical point in the argument for why redistribution is necessary.

----

See Also:

No comments:

Post a Comment