Few details about the plan have been released, but it is clear that the loss of adjustment aid – designed to prevent steep drops in local budgets as districts transitioned to a new funding formula – would trigger deep and recurring cuts in teachers, support staff and programs essential to provide students with a “thorough and efficient,” or “T&E,” education under the SFRA and state constitution.
To evaluate Senate President Sweeney’s plan, Education Law Center estimated the impact of a 20% loss of adjustment aid in year one of the proposed funding cut, and the full amount of the aid loss over the five-year period in which adjustment aid would be phased out entirely. ELC also analyzed the impact of the aid loss on a district’s adequacy budget under the SFRA, that is, the spending level required to provide a T&E education to the unique student population in each district.
The Education Law Center also includes a chart purporting to show how far below Adequacy districts will become as a result of losing their Adjustment Aid.
As usual, the Education Law Center completely ignores a district's responsibility and ability to pay for a share of its school system.
In the chart that shows estimates for how far below Adequacy district would become after losing Adjustment Aid, the Education Law Center assumes that the district will keep its tax levy constant despite the loss of aid.
Hence, the Education Law Center assumes a district will lose all of its Adjustment Aid and then not even attempt to make up for the lost money through local taxes, "Because we are unable to accurately project changes to districts' adequacy budgets and local levy, year 5 estimates also use the FY18 projected adequacy budget and calculate spending by subtracting all adjustment aid from the prebudget year spending."
This is ridiculous. At the very least, the Education Law Center should have projected Year 5 by assuming 2% annual increases.
The Education Law Center does acknowledge in the introduction that districts could increase taxes by 2%, but pooh-poohs it.
Jersey City students are the biggest losers, experiencing an aid cut of $31.8 million in year one, followed by four consecutive years of cuts for a total of $158.8 million over five years. The district is currently spending $94 million below its adequacy budget. With a state-imposed 2% property tax cap, it would take decades to replace the lost adjustment aid with local dollars.
Here the Education Law Center's mendacity goes deeper because it ignores that Steve Sweeney's proposal has always included a provision to change the tax cap. For instance, this is the langauge from an early version of Sweeney's bill:
[The Commission shall study] the tax levy growth limitation as established and calculated pursuant to section 3 of P.L.2007, c.62 (C.18A:7F-38) and its impact on the ability of school districts to adequately fund operating expenses;Furthermore, the Education Law Center fails to acknowledge how large the Local Fair Shares are of aid-losing districts in order to give readers a sense of economic proportion.
Jersey City's Local Fair Share is $370 million for 2017-18, and that amount is constantly increasing. So for Jersey City to make up even $31 million a year in lost aid is not an insurmountable financial hardship.
The Education Law Center's report ignores that all districts in NJ can already exceed the tax cap if they get affirmative votes from their electorates.
The report pretends that being above or below Adequacy is a binary categorization, so that all under Adequacy districts are alike. Hence, Adjustment Aid districts like Salem City that is only $25 per student below Adequacy and Haddon Heights that is $29 per student below Adequacy are the same as Freehold Boro and Bound Brook, which are $8243 and $9836 per student below Adequacy, respectively.
-$25 ≠ -$9836
And for Jersey City, there is the problem-within-a-problem of the fact that Jersey City has PILOTed a third of its tax base, an amount that is $11.6 billion.
What About the Fiscal Crisis?
I can't believe this isn't a self-evident reason to redistribute aid, but New Jersey has a fiscal crisis and there is no place for New Jersey to get the money to fully fund SFRA without redistributing Adjustment Aid.
The Education Law Center puts all of the blame on Christie, saying "It’s simply [sic] wrong to rely on Adjustment Aid to get New Jersey out of the school funding hole dug by Governor Christie."
Ok. I think the hole was dug by the New Jersey Supreme Court, Governors Whitman-Christie, and our post-2001 economic stagnation, but even so, the missing context is that Chris Christie actually is increasing "education spending," but all the new money is going into various forms of debt:
The Education Law Center would undoubtedly support raising taxes on the rich, but I have said repeatedly on this blog, the amount of money that the state would gain from a millionaire's tax is only $615 million.
And New Jersey is still significantly underfunding its pensions. For FY2018 despite a record payment, the underfunding will equal $2.5 billion, even though New Jersey uses a very optimistic 7.65% Discount Rate.
Although a Democratic governor would raise taxes and put some of that into K-12 education, how much more does the Education Law Center want from the state?
New Jersey already has one of the highest GDPs per person, but by the Education Law Center's own analysis, we already put the second highest percentage of our GDP into education. According to the National Education Association, we have the country's third lowest student:teacher ratio.
The Education Law Center does not acknowledge how bad New Jersey's budget forecast is, as New Jersey's pension payments and healthcare costs must increase by hundreds of millions per year too, so it's foolish to think that more than a small fraction of new revenue will go into K-12 operating aid.
So, given New Jersey's enormous debts, limited ability to increase revenue through higher taxes, there is no way for New Jersey to fairly fund its schools without redistributing Adjustment Aid.
The Education Law Center is the reactionary. Sweeney and his allies are the progressives.
- Education Law Center Report on Adjustment Aid Has Significant Errors, Shows Usual Education Law Center Blindspots
- More on the Error in the Education Law Center's Report on Adjustment Aid
- Education Law Center Demands More Money For Its Clients