Friday, May 26, 2017

The Coughlin/Prieto Split

The good news of the week is that Assemblyman Craig Coughlin of Middlesex County has declared his candidacy to be the new Speaker and that he already has a majority of the Democratic caucus committed to him.

This is a critical development in the fight for fair aid because the Assembly Speaker, by virtue of controlling the legislative calendar, has a de facto veto over any bill, including one that a majority of the chamber and the majority of his caucus want.  Prieto, notoriously, has used his power to protect Jersey City from any cuts, even at the expense of the state as a whole and his own District 32.

Prieto has counterdeclared that he is "strongly confident that [he] will have the support of a majority of the Assembly Democratic caucus for another term as Speaker," he has released no list of commitments and thus he is likely bluffing.

So far, these are the Democrats who are committed to supporting Craig Coughlin for Assembly Speaker:

Bob Andrzejczak (D-1)
Arthur Barclay (D-5)
Daniel R. Benson (D- 14)
John J. Burzichelli (D-3)
Herb Conaway Jr. M.D. (D-7)
Craig J. Coughlin (D-19)
Joseph Danielsen (D-17)
Wayne P. DeAngelo (D-14)
Joann Downey (D-11)
Joseph V. Egan (D-17)
Jerry Green (D-22)
Louis D. Greenwald (D-6)
Eric Houghtaling (D-11)
Gordon M. Johnson (D-37)
Patricia Egan Jones (D-5)
Rob Karabinchak (D-18)
James Kennedy (D-22)
Pamela R. Lampitt (D-6)
R. Bruce Land (D-1)
Yvonne Lopez (D-19) (candidate)
Vincent Mazzeo (D-2)
Paul D. Moriarty (D-4)
Gabriela Mosquera (D-4)
Carol Murphy (D-7) (candidate)
Nancy Pinkin (D-18)
Annette Quijano (D-20)
Adam Taliaferro (D-3)
Andrew Zwicker (D-16)

Although all but one of the pro-Coughlin Assemblymembers are from South and Central Jersey and there are undeniable geographic factors at work here, some of the reporting on the leadership election indicates that Prieto's opposition to state aid reform is a factor in the movement against him.

A South Jersey Democrat who spoke on the condition of anonymity said it was illogical that Prieto was “holding up legislation on school funding reform that benefits 85 percent of the districts”

But it's fascinating to see who ISN'T on this list.

We can't be 100% sure that everyone who isn't on the list is for Prieto so much as neutral, undecided, or intimidated, but here are the Assembly Democrats who aren't already for Coughlin.

  • Sheila Oliver and Thomas Giblin, District 34, Clifton, Montclair, Orange, and East Orange.  Since East Orange is overaided by $25 million and has extreme municipal taxes, this is somewhat understandable, but it means that Oliver and Giblin aren't following through on their promises to do everything they can for Clifton.

    Both Oliver and Giblin voted against SFRA in 2008.
  • Shavonda Sumter, Benjie E. Wimberly, District 35, Elmwood Park, Garfield, Haledon, North Haledon,Paterson, Prospect Park.

    All school districts are underaided in District 35.  Manchester Regional, which consists of Haledon, North Haledon, and Prospect Park, is one of New Jersey's five most underaided districts in dollars-per-student.

    Sumter and Wimberly are obsessed with Paterson's aid deficit, even though the districts around Paterson are much more underaided.

    Sumter and Wimberly have repeatedly gotten the legislature to earmark additional money for Paterson.  When Prieto announced his vague $100 million appropriation for K-12 aid, Paterson was the only district Prieto mentioned specifically.
  • Mila Jasey & John McKeon, District 27, have ignored South Orange-Maplewood's BOE resolutions, phone calls, and emails, plus more sporadic activism from West Orange. All other districts in District 27 are underaided as well.

    Jasey and McKeon were both against SFRA in the first place in 2008, even though District 27 is suburban.

    District 27's State Senator is Dick Codey, who is still bitter at Steve Sweeney because Sweeney defeated him to become Senate President in 2010. 
  • Tim Eustace & Joseph Lagana, District 38 (Bergenfield, Fair Lawn, Glen Rock, Hasbrouck Heights, Hawthorne, Lodi, Maywood, New Milford, Oradell, Paramus, River Edge,Rochelle Park, Saddle Brook).
  • Valerie Vanieri Huttle, District 37 (Alpine, Bogota, Cresskill, Englewood, Englewood Cliffs, Fort Lee, Hackensack, Leonia, Northvale, Palisades Park, Rockleigh, Teaneck, Tenafly). Huttle is in the same legislative district as the pro-Sweeney Loretta Weinberg and the pro-Coughlin Gordon Johnson.

    Huttle said that “way too early,” to determine the next Speaker, and “I feel like this is a disruption and is taking our eye off the things that we need to do by the end of this session."

    This indicates open-mindedness, so perhaps Huttle will support Coughlin later in the year.
  • Marlene Caride, Gary Schaer, District 36 (Carlstadt, Cliffside Park, East Rutherford, Little Ferry, Lyndhurst, Moonachie, North Arlington, Passaic, Ridgefield, Ridgefield Park, Rutherford, South Hackensack, Teterboro, Wallington, Wood-Ridge. All districts are underaided, often severely so, but Caride and Schaer don't really care.

    Schaer voted against SFRA in the first place in 2008.  He has insisted Prieto has a "plan." Marlene Caride has joined in Prieto's dilatory committee tactics.  Schaer and Caride should be considered to be pro-Prieto.
  • Eliana Pintor Marin, Blonnie R. Watson District 29, Belleville & Newark. This is Teresa Ruiz' district and she is strongly pro-reform and pro-Sweeney.

    Eliana Pintor-Marin is the only northern cosponsor of Steve Sweeney's reform bill, so it's possible that Pintor-Marin may be keeping her head down rather than a die-hard supporter of Prieto.  The same could apply to Blonnie Watson.  
  • District 28, Neil Caputo, Cleopatra Tucker. Bloomfield, Glen Ridge, Irvington, Newark, Nutley.

    The Senator for District 28 is the strongly anti-Sweeney/Norcross Ronald Rice.  

Daniel Benson of District 14 and Jamal Holley of District 20 are the only South or Central Jersey Assemblymembers who did not sign up for Coughlin.

Unsurprisingly, the Hudson County districts are for Prieto, Districts 31-33.  (McKnight, Chiaravalloti, Mukherji, Chaparro, Jimenez, and Prieto himself.)

In the letter announcing his candidacy for Speaker Coughlin claimed twenty-nine supporters, but that twenty-nine should be seen as a floor, not a ceiling, since at least some of the uncommitted Assemblymembers may sign up for Coughlin in the near future.

Right now Gordon Johnson of District 37 in Bergen County is the only northern Democrat to publicly support Coughlin, but hopefully he won't be the only northerner for long.

It's also fascinating that even though South Jersey and Central Jersey Assembly Democrats are clearly trying to unseat Prieto as Assembly Speaker, North Jersey Senate Democrats are not trying to unseat Steve Sweeney as Senate President.

Steve Sweeney's solid block of support includes many northern Democrats.  Even Jersey City's own Senators, Brian Stack and Sandra Cunningham, are for Sweeney.  (it is also said Sweeney could get a Republican or two to support him.)

Update: Prieto retaliates against Johnson, removes from committee chair. Replaces Johnson with loyal Benjie Wimberly.


See Also:

Saturday, May 20, 2017

Prieto Fails Basic Math

Vincent Prieto has always stood firmly against any kind of fair, rational aid distribution that would hurt Steve Fulop and Jersey City, as well as annoy the New Jersey Education Association.

But now Prieto is exposing himself as more than just a tool of the Jersey City political machine, but exposing himself as an idiot at math.
Tugged into the GOP Gubernatorial Primary this evening, Speaker Vincent Prieto (D-32) slugged back at Assemblyman Jack Ciattarelli (R-16), who criticized Prieto’s school funding plan. 
“Jack Ciattarelli should worry about where he’s coming from instead of talking about something he doesn’t know anything about,” the speaker said. “There is a difference between ‘underfunded’ and ‘below adequacy’. The Jersey City School System is $80 million below adequacy, which is far more than Manville. 
“It appears he doesn’t quite get it,” Prieto added. “Adequacy should be the bar for everybody. Manville… is below adequacy.”

Never mind that Prieto is openly making the argument that Jersey City must not lose state aid because it is below Adequacy, even though that sub-Adequacy spending is entirely Jersey City's own fault due to undertaxing.

Far more than Manville?  Jersey City is far larger than Manville.

Manville is a district of 1481 students.  In 2016-17 it was $6,262,140 below Adequacy (due entirely to the state's underfunding by $8.5 million), or $4228 per student.

Jersey City is a district of 30,860 students.  In 2016-17 it was $96,080,360 per student below Adequacy (due entirely to itself undertaxing by $224 million), or $3113 per student.

In that same interview Prieto made an offer to debate Jack Ciattarelli on school funding, “I am willing to debate anyone on this subject, anywhere, anytime,”

I hope Ciattarelli takes Prieto up on that.

Thursday, May 18, 2017

New Jersey Underfunds Higher Education

This post is on a seldom-discussed paradox of in New Jersey's budget landscape:

New Jersey's PreK and K-12 spending are the country's highest, but our higher education spending is actually average or below average.

Although one sometimes sees discussion of how New Jersey underfunds higher education spending relative to itself in the recent past, eg, like this report from the New Jersey Policy Perspective, one less often sees state-by-state comparisons, nor the stark contrast between New Jersey's exceptionally high PreK-12 spending and its middling to below average higher education funding.

Not Only Does NJ Spend Less on Higher Ed
Per Student Than it Used to, It Spends Less
Than Most Other States

I'm not an expert on higher education finance, and even if I were, a single blog post couldn't be a comprehensive analysis of state-by-state higher education funding.  However, I'm an enthusiastic researcher and I hope this post sheds at least some light on the insufficiency of New Jersey's funding for its public colleges and universities.

I've already made the point many times on this blog that New Jersey cannot fully fund SFRA just through new money and that therefore redistribution is necessary.  The point of this post is that even if we could stretch ourselves and fully fund SFRA without redistribution, we should not fully fund SFRA without redistribution either, since to do so would deprive other essential state services like higher education of the resources they need.


There are several different valid methods to make state-to-state budget comparisons for higher ed:

  • Higher ed funding in per student terms.
  • State funding as a percentage of the public higher ed system's total budget.
  • Higher ed funding in per capita terms.
  • Higher ed funding as a percentage of total state budget.
The bottom line is that New Jersey does average-to-badly just on the raw numbers and does even worse when you consider our cost of living and unusually high taxes.

1.  Funding Per Student

Without local cost adjustments, New Jersey's spending basically equal to the unweighted national average ($6,982 versus $6,954) and is in 17th place, so slightly above the median.  We rank beyond much poorer states such as New Mexico and are just above Arkansas.

Source: "State By State Wave Charts"

However, if you use local costs adjustments, New Jersey's per student higher education funding is only in 30th place.

2.  State funding as a percentage of the public higher ed system's total budget.

New Jersey's higher education system is more reliant on tuition than most other systems, with 59.5% of resources coming from tuition, putting us at the 17th most tuition reliant, versus a national average of 49.9%.

Source: "State By State Wave Charts"

Like most other states, New Jersey has become more tuition-reliant over time, but we have lost ground relative to the rest of the country and our ranking has declined.

For example.

  • In 1991, only 26.6% of NJ higher education spending came from tuition, which put New Jersey 27th from the top, so slightly below average in tuition-reliance.
  • In 2000, 32.4% of NJ higher education spending came from tuition, which put New Jersey 23rd from the top and above average in tuition reliance.

Source: : "State By State Wave Charts"

3.  Spending Per Resident

Yeah, we're below average here too.

In the most recent data I could find, from 2011, New Jersey spent $232 per capita on higher education, which is close to the national average of $242 per student, but only enough to put New Jersey in 30th place again.

4.  As a Percentage of the State Budget

We're even more below average here.

According to the Center for Budget and Policy Priorities, the average state devotes 13% of its budget to higher education.

What does New Jersey devote?

6%.  ($2.2 billion out of $35.5 billion)

Source vary, but a picture still emerges that New Jersey is below average.  According to the Kaiser Foundation, the national average is 10% of a state's budget, with New Jersey at 7%, still putting us in 40th place.*

I don't consider spending as a percentage of state budget to be the most valid comparative measure of funding though, since budgets differ in proportion to dollars per capita, percentage of GDP etc.  Perhaps New Jersey's devoting 6%-7% of its budget to higher education shouldn't be seen as low funding for higher ed so much as high spending for other purposes.  After all, 6%-7% of a high-tax state's spending could equal the same amount of money as 12% of a low-tax state's spending.


Our PreK-12 Spending is at the Country's Peak

The Great Paradox of New Jersey is that while our higher education funding is average, our PreK-12 spending is incredibly high.

For FY2014, New Jersey's spending per K-12 student was the country's third highest, at $17,907 per student, behind New York at $20,610 per student and Alaska at $18,416 per student.

One might attribute that high spending solely to our superior wealth, but that would be significantly incomplete because New Jersey spends the second highest percentage of its GDP on education, 4.6%, in the country too. (after Vermont).

Source: Education Law Center/Rutgers Graduate School of Education

Yes, while the Education Law Center constantly denounces Chris Christie for underfunding SFRA, it also recognizes that, all-in, New Jersey's "Tax Effort" is almost the country's highest.

This K-12 Funding Effort comparison factors in local taxes too, so comparing K-12 school spending, which is  local+state, to higher ed funding, which is almost entirely state isn't a perfectly apples-to-apples comparison, but, according to Kaiser and other public data, the state government's own efforts for K-12 aid are above average in per student terms, high in per capita terms, and average as a percentage of our (high) state budget.

In the Era of the Pension Crisis and Slow Growth,
Budgeting is Zero-Sum

There are several reasons for New Jersey's higher education funding to be so low proportionally other than that our PreK-12 spending is the country's highest.  A major reason would be low federal assistance for Medicaid that the state must compensate for, but, despite the Medicaid factor and others, it would not be credible to deny that our extremely high PreK-12 spending (and the Abbott Regime is one reason for the neglect of our higher education system.

Since higher education is a middle-class service par excellence, our long-term abandonment of it is yet another instance of how New Jersey's middle class has been under siege since the early 1990s.

I take it to be self-evident that New Jersey's underfunded higher education harms the state. According to the SHEEO, tuition here $10,263 per student, the country's 7th highest for in-state students, compared to a national average of $6,305.  The sticker shock of our state universities is probably one reason New Jersey has the country's worst student outmigration.  It's undeniably a reason 60% of Rutgers grads have debt, with an average debtload of $25,000.  It's probably a reason that many students don't even attempt college and our public college enrollment peaked in 2011.  At some level, our starved higher education system hurts our economic competitiveness too, although New Jersey's educational attainment remains among the country's highest.

In any case, in the era of the Pension Crisis something has to change.  New Jersey has to increase K-12 education aid overall, but we must use our dollars the most efficiently and fairly as possible and that means eliminate Adjustment Aid, in order to free up money for our many other government obligations.

* Something I wasn't able to address in this blog post is that New Jersey's funding per student at different colleges and universities is totally irrational too.

** Kaiser's data has NJ spending $2.4 billion on higher ed, not the $2.2 billion that appears in NJ's budgets for the past few years.  I don't know where they get that extra $200 million, although I don't think it affects their finding.

Friday, May 12, 2017

Star-Ledger Editorial Praises Sweeney's Plan

The Star-Ledger's editorial board has written an editorial praising Steve Sweeney's plan for a fairer, most just state aid distribution.

The editorial gets a lot of things right about the problems of SFRA and our state aid distribution and is a sign of how far the state's media has come in understanding what our problems are:

The fundamental problem is this: We're still locked into an outdated school funding formula that awards districts state aid based on what they looked like years ago, before their real estate booms or big enrollment fluctuations.... 
Hudson County has been a big winner in that political brawl. The state basically awards aid to Jersey City and Hoboken as if they never experienced an economic boom. The idea was to protect these districts from cuts for a few years, to help them adjust. But the temporary fix has become permanent. So Jersey City is getting $114 million in extra aid [this is misleading], while other districts are shortchanged. 
The big losers are districts that have seen enrollment growth. That's because the Legislature fiddled with the formula again by imposing state-aid caps that ignore big changes in enrollment. Bayonne is now being shortchanged by $53 million, mostly because of its increased enrollment. 
In South Jersey, Kingsway has seen enrollment explode by 1200 students, while Washington Township has lost an equal number. Yet the state aid is allotted as if those changes didn't occur. What sense does that make? 
That's especially damaging in districts that have seen big influxes of Latino students who don't speak English, like Freehold and Dover. They are underfunded, and face the added cost of teaching these students English. 
Prieto's plan does nothing to address these hard inequities. Instead, he's taking the easy way out, to avoid rankling anyone: Arguing that we should distribute $125 million among all the underfunded districts [this is wrong], a one-year band aid that doesn't address the core unfairness of our system.

I'm very happy to see the Star-Ledger write this, but it gets several things wrong.  (I know that pointing this out doesn't win my any friends on the SL editorial board)

1. Adjustment Aid was always included in SFRA from the day it passed in January 2008, well before the Supreme Court conclusively reviewed the constitutionality of SFRA in 2009. In fact, in the Abbott XX decision the NJ Supreme Court (obliquely) praised Adjustment Aid.

This is a reference to Adjustment Aid written into the Abbott XX decision:

"we cannot ignore,as a practical matter, the substantial amount of additional funds that will be available from non-SFRA sources for pupils in Abbott districts. The availability of those funds further cushions the transition to SFRA’s funding scheme. In sum, although no prediction is without some uncertainty, the record 8 before us convincingly demonstrates that SFRA is designed to provide school districts in this state, including the Abbott school districts, with adequate resources to provide the necessary educational programs consistent with state standards."

2. Jersey City's nominal Adjustment Aid is only $114 million, but that is because the formula has been frozen since 2013.

If the formula were re-run, Jersey City's Adjustment Aid would actually be $159.9 million, due to the boom in its Local Fair Share.

Conversely, the Adjustment Aid that Newark and Atlantic City get is fictitious and would be converted to Equalization Aid if the SFRA formula were operating.

3. Prieto's "plan" is only for $100 million for K-12. The other $25 million is for PreK.

Wednesday, May 3, 2017

How Overaided Districts Would GAIN Money if SFRA is Not Changed

Recently Senator Jennifer Beck has been disseminating misleading, incomplete
Jennifer Beck is Confused About What
She Wants
information about state aid in order to slow the redistribution of Adjustment Aid.

Part of her campaign in defense of Adjustment Aid is pointing out that 157 districts that now get Adjustment Aid should not lose state aid because SFRA says they actually should get MORE state money than what they get now!

She has now twice said something to this effect.

Example 1:
It’s not clear, that redistributing Adjustment Aid is going to be as uncomplicated as some have suggested .... 157 of those districts are also underfunded relative to what SFRA says they should get in state aid,” the senator added.
Example 2:

Sen. Jennifer Beck, a Republican member of the committee, cautioned against unintended consequences with the removal of adjustment aid. She said 157 of 181 districts receiving the aid remain underfunded by the state, and abruptly taking away funding would hurt those communities. The place to start, she said, would be to redistribute the roughly $11 million from 46 districts that are overfunded by the state.

Yes, how can a district getting Adjustment Aid "remain underfunded"?

When Beck refers to Adjustment Aid districts getting _less_ than SFRA says they "should get," she is indeed statutorily correct, but she is conflating what Adjustment Aid says a district should get legally with what it actually needs.

Verification of Beck's legal claim be easily seen in the Alternative Aid Scenarios that the Department of Education produces to show how much aid districts would get if SFRA were followed, with Adjustment Aid and the State Aid Growth Limits preserved. A quick glance at even Asbury Park will reveal that is is getting $2,056175 less than SFRA says it should get (!!!!)

Giving Asbury Park more money? How can SFRA do this?

This is a consequence of the fact that SFRA does not let any district receive less than 102% of what it got in 2007-08 and the fact that in 2010 and 2013 Adjustment Aid was cut. SFRA is blind to what a district's contemporary economic needs are; unless it has a large post-2008 enrollment loss, it can never receive less than 102% of its 2007-08 funding.

The first violation of the 102% promise was in 2010, when Chris Christie cut every district's aid by an amount equivalent to 5% of its budget. These cuts affected underaided districts and overaided districts alike, but the overaided districts lost some of their Adjustment Aid while the underaided districts lost Equalization Aid, Special Education Aid etc. (Christie's cuts were later reversed for the Abbotts.)

The second violation of the 102% guarantee was in 2013 when Christie, as part of a now-obscure fair-minded phase, actually did cut $40 million in Adjustment Aid from Adjustment Aid districts who were over Adequacy.

The 2010 cuts:

The 2013 cuts were allowed to occur for all affected districts, including Abbotts.


Any budget that passes the legislature is automatically legal, but these cuts were contrary to SFRA's stipulation that no district receive less than 102% of what it got in 2007-08.

Even though these districts are all overaided according to what SFRA's core formulas say they should receive, SFRA still contains the 102% provision and thereby it has a zombie-like determination to reverse the cuts of 2010 and 2013.

For instance, Asbury Park's aid is $25 million higher than its SFRA target (ie, Uncapped Aid), but according to SFRA, Asbury Park is owed another $2 million.

  • This is because Asbury Park's peak aid was $57.7 million in 2008-09 and the Adjustment Aid mechanism of SFRA wants to bounce it back up to that amount.
  • Pemberton's aid is also $25 million higher than its SFRA target, but SFRA wants to give it another $1 million. 
  • Keansburg is overaided by $7 million against its real real need, but is underaided by $500,000 against Capped Aid. 
  • Brick is overaided by $23 million, but would get another $2.2 million under SFRA. 
  • Marlboro is overaided by $5.3 million, but would gain another $800,000. 
Most NJ districts are slightly underfunded against Capped Aid and significantly underfunded against Uncapped Aid, but for 157 Adjustment Aid districts, they are underfunded against Capped Aid, but overfunded against Uncapped Aid.

If SFRA were followed as it is currently written, 157 of New Jersey's overaided districts would actually gain a total of $84 million!! Asbury Park's gain would actually be larger than Red Bank Boro's in per student terms. Toms River would gain $3.4 million, even though it is already overaided by $21 million.

Particularly ridiculous is that Allenhurst, who has $5.1 million in Local Fair Share for only three students, gain another $10,612 in state aid.

There are another 46 districts who are now slightly underaided, but whose aid in 2008-09 was greater than what SFRA calculates they actually need.  Since the 102% promise in Adjustment Aid applies to these districts as well, their Capped Aid is higher than their Uncapped Aid.  For Passaic, Capped Aid is $20 million higher than Uncapped Aid; for Perth Amboy it's $11.6 million.  For Montclair, the Morris School District, and Princeton, Capped Aid is about $1 million each higher than Uncapped Aid.

If these 46 districts got their Capped Aid they would become overaided by $43 million.

Projected Gains Per StudentUnder the Adjustment Aid/State Aid Growth
Limit Status Quo of SFRA
See: and

If Asbury Park and Pemberton are brought back to their peak aid levels, as Adjustment Aid dictates, the amount of aid available for truly underaided districts, including Red Bank Boro and Freehold Boro in Jennifer Beck's own district, is reduced by $84 million.  If the 46 slightly underaided districts are brought back to their peak aid levels the amount of money to give to districts like Red Bank Boro and Freehold Boro is reduced by $43 million.

Jennifer Beck is UNDERMINING the cause of fairness by making any references to the 102% promise within SFRA.

We cannot cut Adjustment Aid and keep the 102% guarantee. Since Beck purports to be an ally of Freehold and Red Bank Boros, Beck's self-contradiction here is off-the-charts.

The solution to perverse consequences of SFRA that would pour more money into overaided districts is to eliminate Adjustment Aid.

Beck, who in the past I liked, doesn't know what she wants, other than that she likes to get photo opportunities with Freehold and Red Bank Boros.


See Also

Tuesday, May 2, 2017

Loss Of Adjustment Aid Only Rarely Would Be Damaging

One line of argument against redistributing Adjustment Aid is that the loss of Adjustment Aid would be very hurtful to aid-losing districts.

For Sen. Jennifer Beck of Monmouth, an off-and-on reformer, issued this cautionary note after the May 2017 Senate Budget hearing:

Sen. Jennifer Beck, a Republican member of the [Budget] committee, cautioned against unintended consequences with the removal of Adjustment Aid. She said 157 of 181 districts receiving the Aid remain underfunded by the state [sic, this is a profoundly wrong statement], and abruptly taking away funding would hurt those communities. ....
“The Legislature needs to address the school funding disparity in this budget cycle, but we also must be cautious when considering the complexities of redistributing Adjustment Aid,” Beck, who is in a tough re-election battle, said in a statement after the hearing. “One thing that is certain is that our most underfunded districts cannot wait any longer for relief.”

Although there are some districts for whom the loss of Adjustment Aid would be very painful, on the whole, most districts getting Adjustment Aid either

  1. have Adjustment Aid as a small percentage of their budget.
  2. have Adjustment Aid as a small percentage of their Local Fair Share.
  3. are very high-spending as it is.

As we will see in greater detail below, there are only a handful of districts for whom the loss of Adjustment Aid would result in large budgetary impact who would not make up the lost revenue with local taxes.

(For this study I have attempted to be as accurate as possible and therefore subtracted aid excess that is the result of Interdistrict Choice money.  While the total amount of excess aid distributed for 2017-18 will be $696 million, $27 million of that amount is actually from Interdistrict Choice and therefore not subject to redistribution based on any proposal currently under discussion.  The 2017-18 Uncapped Aid figures are here.)

For the median district that is overaided, Adjustment Aid represents 10.2% of Local Fair Share.

There are 61 districts Adjustment Aid is not even 5% of the Local Fair Share.  Since the Adjustment Aid would be eliminated over five years, it's difficult to imagine why the loss of it should be difficult.

For another 38 districts for whom Adjustment Aid equals 5-10% of Local Fair Share.  For these districts there could be some difficulty adapting to reduced aid, but not enormous difficulty.

Hoboken (5% of budget but 2.4% of LFS, ), Upper Freehold (7.7% of LFS), Middleton (14% of budget but 3.8% of LFS), Weehawken (5% of budget but 3.1% of LFS), Hillsborough (6% of budget, 7.7% of LFS), and the Jersey Shore overfunded districts are among the districts who should not have a major problem adapting.

Then, admittedly, there are 105 districts for whom Adjustment Aid exceeds 10% of Local Fair Share, including 52 for whom it exceeds 20%. Asbury Park's $25.3 million of Adjustment Aid equals 184% of its Local Fair Share (39% of the budget), although Asbury Park is the outlier here.

Some readers may consider tax increases, even over five years, equal to 20% of Local Fair Share to be too onerous for voters to accept and therefore oppose cuts in Adjustment Aid because the reductions would force programming cuts.

It's true, if a district gets a large amount of Adjustment Aid, then losing that money would force cuts, but the complicating fact here is that these districts tend to already be very high-spending.  For them to lose significant money in Adjustment Aid would require cuts, but the cuts would be coming off of a level of spending that average and severely underfunded districts in New Jersey are nowhere near.

Let's look closely at the Budgetary Cost Per Pupil for the 52 districts for whom Adjustment Aid exceeds 20% of Local Fair Share.  (excluding non-operating districts)

My mistake. Brooklawn should NOT be on the list because its excess aid comes from Interdistrict Choice.
This strengthens my case.

These spending figures are almost always substantially above New Jersey's average.  The districts whose spending is the lowest Ocean Township (Ocean County) are districts who voluntarily keep their taxes very low.  Ocean Township's taxes are 66% of Local Fair Share.

Let's look at a few large, overfunded districts up-close:

  • Pemberton, a rural Abbott in the heart of the Pinelands, is overfunded by $25 million, for just 4300 students.

    Because of that excess, Pemberton now spends $20,000 per pupil, even though it only taxes at 57% of its Local Fair Share ($12 million against $21.5 million).

    Pemberton's excess aid is $25.7 million, which is far greater an amount than it could possibly make up with its own taxes, but as Pemberton loses its Adjustment Aid, it would be simply falling to the state's average and still be vastly better off than the dozens of high-FRL NJ districts now who now spend as little as $10,000 per student.  As an Abbott, Pemberton would retain 100% state funding for construction projects and two years of "free" state-funded PreK.

  • Brick is overfunded by $23 million for 8750 students.  Brick taxes at 77% of Local Fair Share, or $101 million compared to $131 million.   If it got a waiver and decided to make up for 100% of the lost aid through local taxes, Brick would still be under its Local Fair Share by $7 million.  
Lest I be accused of not acknowledging the impact of budget cuts on aid-losing districts, what also has to be considered is that even if Steve Sweeney's plan to redistribute all of Adjustment Aid and add another $500 million in school spending is implemented, it is not enough to bring every all of today's underaided districts up to 100%, because that would require $2.1 billion, not the $1.1 billion Sweeney is talking about.  So, even after the process of eliminating Adjustment Aid is complete, these aid-losing districts will be at 100% funding while there are many others that remain at 70%, 80% etc.

(See, Is Steve Sweeney Overselling His State Aid Proposal?)

So even if Sweeney's plan is implemented faithfully, there will still be a distribution of haves and have-nots.  Pemberton, Brick, Asbury Park etc will be at 100% funding, while Delran, Clifton,Cherry Hill, Chesterfield, Freehold Boro etc are still below 100% funding.

And most of New Jersey's poorest districts get no Adjustment Aid at all:

2014-15 Data

2014-15 Data

Central Avenue, East Orange.
At the risk of weakening my own case for redistribution, THERE ARE some overfunded districts for whom losing Adjustment Aid would be very difficult.  The district I would be the most worried about is East Orange.

East Orange is overfunded by $25 million, which is equivalent to 12% of East Orange's Total Operating Budget.  East Orange's school taxes are $20.7 million below Local Fair Share, so even if East Orange wanted to tax at its full Local Fair Share, cuts would still occur.

However, there is no way that East Orange could pay its full Local Fair Share because East Orange's municipal taxes are off-the-charts, at 3.5%, as part of an all-in tax rate of 4.6%.  Most New Jersey towns have municipal taxes at about a quarter of all-in taxes, but in East Orange municipal taxes  make up 72% of East Orange's total taxes.

I assume there is bloat in East Orange's municipal government, but much of that extreme tax burden is likely due to unavoidable need.

However, East Orange is an exception, and any painful cuts that other overaided districts will have to make as they lose Adjustment Aid has to be counterassessed against the deep existing budgetary deprivation existing in hundreds of underaided districts and the fact that even if Sweeney's plan is implemented, today's underaided districts will still not be at 100% funding.

For most districts that face losses of Adjustment Aid, the losses are manageable as long as there is some fix to the tax cap passed.

And when New Jersey's fiscal future is so grim, the elimination of Adjustment Aid is necessary.


See Also