More reporting on Sweeney's aid bill

"The school funding reform act never envisioned that New Jersey's school aid formula would be set in stone. We didn't anticipate that school aid would fail to grow sufficiently to meet future needs. But that's exactly what happened," he said during a Statehouse news conference. "As a result, New Jersey's school aid funding has grown less fair and less adequate year after year."

-Steve Sweeney, quoted in the  Burlington Times.

“This is not an urban-suburban issue. There are disparities all over the state, including within my own legislative district where some school districts are overfunded and some are underfunded.

“State aid was to be distributed fairly and equitably based on a formula that took into account each town’s property tax base, its ability to pay, increases and decreases in enrollment and the special needs of the children.”

-Steve Sweeney, quoted in PolitickerNJ

We have some school districts that are receiving three times the amount of aid than they should be and some towns receiving one-third of the aid that they should be. This means some towns are paying 50 percent more in property taxes than they should be and some are paying 50 percent less,” 

-Steve Sweeney, quoted in NJTV

“It has caused a massive disconnect in how schools are actually functioning and how they’re funded. The state continues to distribute more than half a billion dollars in hold harmless aid more than eight years after the School Reform Act from 2008"

- Assemblywoman Joann Downey, quoted in NJTV

Is the Education Law Center in support of Sweeney's plan or against it?  I can't tell based on the following from the Asbury Park Press:

...the Education Law Center said the state doesn’t need a new commission or another year to begin the process.

“We again call on legislators to start the phase-in to full funding without further delay by providing a significant down-payment towards that goal in the FY17 State Budget,” Law Center executive director David Sciarra said.

Reform superintendent Ken Greene praises the approach:

This is a big issue. We are receiving for next year 56 percent of the state aid that we’re due and yet our local tax effort is 44 percent above the local fair share. So our community has had to compensate where other communities are being overfunded. I think that’s the central issue, 

-Dr. Ken Greene, quoted on NJTV

At least a few Republicans are in support:

“The Legislature should decide rather than the courts. Instead of fully funding a broken formula, we should fix it by making it fair and more equal.”

-Assembly Minority Leader Jon Bramnick

Sweeney has never singled out a district as one that is overaided. The closest he has come is this where he anticipates an argument against redistribution from overaided districts:

“We need to commit roughly $100 million a year over the next five years so what happens is, you’re going to see — it’s like a scale some are going to come down some are going to come up but eventually you come to level. And the goal is to 100 percent funding formula. I don’t think any organization can make an argument that it’s unfair to be at 100 percent” (my emphasis)

Others (like me) aren't so circumspect by singling out aid hoarders:

"Tax dollars from hardworking families in Burlington County are going to subsidize school districts and property taxes of homeowners in Hoboken, Jersey City, Asbury Park and elsewhere, even as our kids sit in classrooms in underfunded schools. This defies logic and must stop."

Burlington County Freeholder Mary Ann O'Brien, quoted in the Burlington County Times

Sweeney Releases State Aid Reform Plan

Added: Now that I've seen the bill, I have an analysis here:



For months, Steve Sweeney has been working with Sen. Jennifer Beck on a state aid reform bill that would, presumably, reduce or eliminate Adjustment Aid and redistribute it to needy districts.

The bill was delayed and delayed and it became apparent that Sweeney and Beck were not on the same page.  Sweeney usually talked about eliminating all Adjustment Aid whereas Beck usually talked about just eliminating Adjustment Aid for districts who were above Adequacy (which would severely reduce the amount of aid that could be redistributed.).  Sweeney evidently wants an increase in aid as well as redistribution and we have no idea how Beck felt about that.

Finally, after months of waiting we have a proposal, but it isn't a bill per se and Sen. Jennifer Beck is absent, although the Democratic Assemblymembers from her district, Joann Downey and Assemblyman Eric Houghtaling, were present and on the record for reform.

Sweeney has proposed a bill to create a commission that would be empowered to write a proposal on state aid that the legislature could then vote up or down, with no possibility of amendment.  (like federal base closings bills).

More commentary below:

SWEENEY, RUIZ, DOWNEY & HOUGHTALING UNVEIL INITIATIVE TO FULLY FUND NJ SCHOOLS

Commission Will Develop Five-Year Reform Plan To Close

Gap That Now Leaves 80 Percent of Districts Underfunded
TRENTON – Citing the state's continued underfunding of 80 percent of New Jersey's school districts, Senate President Steve Sweeney, Assemblywoman Joann Downey and Assemblyman Eric Houghtaling today unveiled legislation to create a special commission to develop a school funding reform plan to bring all districts to full funding within five years. Senator M. Teresa Ruiz, chairwoman of the Senate Education Committee, is a cosponsor of the bill.

"The School Funding Reform Act was a major accomplishment that promised to provide full funding for all schoolchildren by ensuring that money would follow the child," said Senator Sweeney. "State aid was to be distributed fairly and equitably based on a formula that took into account each town's property tax base, its ability to pay, increases and decreases in enrollment and the special needs of the children. The goals and objectives of the formula are on target, but the promise has not been kept."

"The state has failed to fund the formula and keep up with the needs of the school districts," said Senator Sweeney. "As a result, the school funding formula has grown less fair and less adequate, with the fastest-growing districts being shortchanged, compromising the quality of education and putting upward pressure on property taxes. It is time to restore equity to the system and to fully fund our schools."

The commission will put the plan into legislation that will have to be approved or rejected in its existing form with up-or-down votes by the Legislature.

"We will closely examine the proposal to ensure it meets our goals to provide sufficient aid to districts that are underfunded but also to allow others the ability to adjust to the formula funding as it is intended under the law," said Senator Ruiz. "We know the transition must be done in a deliberative manner, but that by fully funding the formula we will ensure that the resources necessary for the education of each student are preserved. We believe this is the first responsible approach to meeting the mission of the school funding formula that aid follows the child, and to bringing districts to full funding in a fair and meaningful way."

Senator Sweeney said he expected the plan to include increased state funding over the five-year timeframe.

Under the proposed legislation, a four-member "State School Funding Fairness Commission" would be established and given one year to develop a plan that would bring every school district in the state to "adequacy funding" within five years. The Governor would appoint two commissioners and the Senate President and Assembly Speaker would choose one each, according to the bill.

Assemblywoman Downey and Assemblyman Houghtaling said the state needs to address the growing disparities in school funding throughout the state.

"Our school funding formula is nowhere near being fully-funded, nor has it been updated to keep up with the day-to-day realities our educators and administrators face," said Assemblywoman Downey. "It has caused a massive disconnect between how schools are functioning and how they are funded. "This is an issue that affects all children, and all taxpayers, throughout our state and something we need to take seriously. We can no longer cherry-pick solutions."

"School districts like Freehold Borough and Red Bank, with rapidly growing school populations, have essentially seen their aid frozen, putting students and taxpayers at a tremendous disadvantage," said Assemblyman Houghtaling. "Many more are being failed by a funding system that overlooks the day-to-day realities of their classrooms. Our communities and schools need to finally have the fairness and certainty that our school funding law promised them."

Senator Sweeney said meetings he and other legislators have had with city and school officials in different communities have underscored the problems with the school funding formula.

"This is not an urban-suburban issue," Senator Sweeney said. "There are disparities all over the state, including within my own legislative district where some school districts are overfunded and some are underfunded. We can no longer allow some districts to be subsidizing others under this formula. We need to be responsible in making the reforms to ensure that no students are negatively impacted. It is a matter of fairness for all students."

----

Usually a commission is a way of killing a reform idea, but if a commission is empowered to send legislation directly to the floor for a vote I think it's a sensible idea. I think what Sweeney is conceding by promoting a commission is that the legislative process would not work for redistributing state aid. 

I don't have any insight into what really happened here, but maybe Sweeney tested other Senators and found out that he didn't have 21 votes for the reform he was originally hoping to pass?

Rather than an attempt to bury reform, I think this is an attempt to get a very serious reform. Since the bill cannot be amended, it makes it slightly easier politically for legislators to vote for it.  Under normal legislative proceedings, legislators will work aggressively to protect their own constituents at the expense of the state as a whole.

This happened in 1990 when the Quality Education Act was pushed through the legislature.  The QEA which would have slashed aid for suburban districts to give more money to poor and middle-income ones, but Sen. Matthew Feldman of Bergen County got special transportation aid for his Bergen County constituents.  Montclair's legislators also pulled in some special privileges.

Unfortunately Sweeney's approach delays reform by at least another year.

It looks like Sen. Jennifer Beck dropped out of state aid reform. My guess is that she didn't want to redistribute as much aid as Sweeney did and she may have opposed increasing school aid by $500 million.

However, getting the commission's ideas into law is Step 2.  Step 1 is getting the bill creating the commission through the legislature.  

I've got to assume that Sweeney is confident about the Senate, but who knows about the Assembly.  Vincent Prieto is conspicuous by his absence and has made almost no comments on state aid in all his years in the Assembly.  

Prieto voted for SFRA back in 2008, but on state aid is an unknown.

Two Cheers For County Taxes!

No one loves their county government in New Jersey, but something that's almost never pointed out about county government is that county taxes are by far the fairest of the three major property taxes in New Jersey.

My point about county taxes being the fairest is intuitive, although seldom made and rarely quantified.  This post will hopefully demonstrate the superior fairness of county taxes and suggest that school taxes and aid can be made fairer by copying two features of county taxes, their broad base and the fact that they are reapportioned annually.

Yes, I know some readers are incredulous about any defense of county government in New Jersey.  I agree that county government has a lot of corruption, bossism, and nepotism.  County government is more distant from constituents than school boards and municipalities and few of us feel we get much direct benefit from it.  And yet, the concept of countywide services and countywide tax base has many attractive features.  This post will demonstrate two of those features, with a focus on the benefits of annual reapportionment.

The greater fairness of county taxes come from two factors:

1.  Counties vary in wealth, but since counties are larger and more diverse than municipalities, the variation between county wealth is much narrower than the variation between towns and school districts and therefore tax rates are more similar.

2.  County taxes are reapportioned every year based on changes in Equalized Valuation and therefore are by far the most flexible of the three property tax types.

The apportionment method for county taxes is equivalent to a town doing a reval annually, but for towns themselves instead of individual property holdings.

County tax apportionment is determined by the percentage of a county's total Equalized Valuation that a town has.  So, if a town has 16% of a county's total Equalized Valuation one year, it pays 16% of the taxes and if the next year its percentage falls to 15%, it then pays 15% of that year's county taxes.

Equalized Valuation is computed by the ratio of sale prices in the previous year to the official assessments on those properties.  If average sale prices are 120% of official assessment, then the town's Equalized Valuation equals 120% of its official aggregate assessment.  If sales are on average for 95% of official assessment, then Equalized Valuation equals 95% of official aggregate assessment.

Equalized Valuation cannot be distorted by a lack of a reval, although it can be distorted by PILOTing.

The reduction in county taxes means that a town that is in economic decline gets some fiscal breathing room from the county that it would not in practice get on its school and municipal taxes, since the school district and municipality are stand-alone entities and state education aid and municipal aid are frozen.

(The source of this data is the "Abstract of Ratables" contained in the Department of Community Affairs' Property Tax Information Tables.)

Context Facts:



FYI: Counties and their Equalized County Tax Rates.

Note, this is not an apples to apples comparison since some counties provide more services than others, however, even comparing school taxes and municipal taxes isn't apples to apples either since taxpayers get different spending levels for their money.

Cumberland County	1.06	Union County	0.528	Burlington County	0.398
Salem County	1.042	Sussex County	0.515	Middlesex County	0.38
Camden County	0.845	Essex County	0.512	Somerset County	0.37
Warren County	0.75	Hudson County	0.511	Hunterdon County	0.364
Passaic County	0.735	Atlantic County	0.456	Monmouth County	0.296
Gloucester County	0.67	STATE AVG	0.604	Morris County	0.249
Mercer County	0.632	Ocean County	0.405	Cape May County	0.241
				Bergen County	0.234

Theoretically school aid and municipal aid should increase for a declining town and offset tax increases, but our school and municipal aid formulas have never or rarely been fully funded, rationally distributed, and for the past few years they have been stuck at 2013 levels.  For many school districts, aid has effectively been frozen since 2002.

The Effects of Annual Reapportionment

There are several different ways to demonstrate changes in tax apportionment over time.

1.  A chronological comparison of a town's school district, municipal, and county taxes.
2.  A chronological comparison of the amount of money the towns of a county pay in county taxes.
3.  A chronological comparison of the percentage of county taxes coming from different towns.

The biggest swing in county taxation in NJ over the last few years has been in Atlantic County, where Atlantic City's county tax levy has fallen from $45 million to $28 million, or, from 32% of the total county tax levy down to 16%.   Yet, because Atlantic City is a special example where its major industry is collapsing, I will focus on more typical jurisdictions.

We'll use Newark as an example of a town with a declining tax base whose county taxes are stable as we compare the trajectories of Newark's school, municipal, and county taxes over the past seven years:

As you can see, Newark has almost doubled its municipal tax levy and increased its school levy by 25%, but its county tax levy has increased by only 13%, a figure that barely exceeds inflation.

Newark and its nearly satellite cities, Belleville, East Orange, Orange, Irvington, and even Bloomfield and Nutley continue to erode in tax base. Nutley, in fact, has done worse than Newark in the past few years, presumably because the closing of the Hoffman-LaRoche megaplant.

 The rest of Essex County holds its own, and then mostly Millburn assuming a higher share of the burden. Millburn's county tax levy has increased by 52% since 2007, from $31.8 million to $48.5 million.

Newark was called "America's Renaissance City" during the 1990s, but that's only true in relation to how awful Newark had it in the 1970s and 1980s. In tax base at least, Newark is still in relative and even absolute decline. Since 2013, Newark has lost over $2 billion in Equalized Valuation (from $15.5 billion to $13.3 billion in 2016).

The new townhouses that have popped up in Newark presumably add little to the tax base and Newark's new downtown buildings are almost all PILOTed.

Although there is nothing voluntary about Millburn assuming this burden, it is impressive.  In ten years, Millburn may actually surpass Newark to become Essex County's biggest taxpayer in absolute terms.

Trenton has had a similar phenomenon as Newark, but Trenton's tax base is even weaker than Newark's and it has not increased its municipal levy by as much and its school levy at all.

I hesitate to speculate on why Trenton's tax increase lags Newark's, but Trenton's all-in tax rate is 5.733, the fifth highest in New Jersey.  Newark's all-in tax rate is 3.308 and is nowhere near the worst in New Jersey.

Were I to graph all of Mercer County Trenton's portion of county taxes would shrink while towns growing in tax base or real estate prices would grow.   For Mercer County, Princeton and West Windsor have both assumed another $12 million each.

Paterson appears to be even weaker still than Newark and Trenton, as its county levy has actually FALLEN in the last six years from $45 million to $41.8 million.

Although I'm using NJ's largest cities like Trenton, Newark, and Paterson to illustrate changes in county taxes, there are many small towns who are declining even more.  Prospect Park for instance has struggled more than Newark has, so have Belleville and Nutley in Essex and presumably many satellite urban-suburbs.

Jersey City Mischief (As Usual)

The simple method of apportioning county taxes can be distorted by a town giving tax abatements.

 

The state's PILOT law is terribly designed and gives towns incentives to take advantage of their neighbors in regional school districts, counties, and the state as a whole.

The abuse is enabled by the fact that taxes in regional school districts, counties, and state aid are apportioned by Equalized Valuation, but a property with a tax abatement does not appear as part of a city's official assessment and is therefore "invisible" to the calculation of Equalized Valuation.  Since PILOTed properties aren't part of Equalized Valuation, they are "invisible" to the apportionment of taxes for regional school districts, counties, and state aid.

What makes the incentives even stronger is that PILOT payments can be structured so that the municipality gets more money from a property with a PILOT than it would from one under normal taxation.  This is because PILOT fees are paid 95% to the municipality and only 5% to the county, with the school system totally cut off.

Montclair has been completely open about how it uses PILOTs as a way of shielding its wealth from Essex County (ie, Newark).

As Montclair's Mayor Robert Jackson explained in 2013, "In a PILOT agreement, 95 percent of the tax revenue comes to the town, not 83 percent. We get more money from that PILOT than we would if they paid taxes." 

Montclair's deputy mayor, Robert Russo, chimed in, "That's what I really like about the [PILOT] program. I am not a fan of the county taking money from us. What we're doing is enhancing the township's revenue. No one [in Montclair] is getting hurt."

PILOTing directly benefits a municipality by diverting additional revenue to it (coming at the expense of the county and schools), but it also indirectly benefits a municipality by hiding the ratables from the county. This allows a municipality to hoard its tax base without sharing with the rest of the county.

As annoying as Montclair's PILOTing is and the mayoral bragging about it, Montclair doesn't allow very much new development period, so the overall percentage of Montclair's tax base that is hidden behind PILOTs is small. Even if most of Montclair weren't off-limits to new development, Montclair pays for its school school system with local taxes and if it PILOTed excessively it would be cannibalizing its own school tax base and have a voter rebellion.

Not so for Jersey City. Jersey City should be commended for how accepting it is of new housing, but its schools are paid for by the state and there is no incentive for it not to PILOT virtually everything.  Jersey City has thus exploited the PILOT law like no other town in New Jersey to the point where 30% of its valuation is PILOTed.   Jersey City's abuse of the PILOT law is so substantial that it was in fact sued by Secaucus, North Bergen, and Bayonne in the late 1990s/early 2000s over not paying for its fair share of county taxes.

Calculating backwards from some data the Jersey City municipality released in 2015, the valuation of Jersey City's PILOTed properties is about $8.6 billion.   Were those properties taxable and paying taxes at the .511 Hudson County tax rate, they would be paying about $43 million in county taxes.  

Jersey City's leadership is aware of how PILOTs distort county taxes (and state aid).  As former Jersey City Mayor (and convicted felon) Jerry McCann explained in April 2016 in a letter about Jersey City's tax history:

All tax abatement revenues are used to offset the amount needed to be raised through taxation. Tax abatements do reduce our share of the county taxes since [abated properties] are not part of that ratio [used to calculate Equalized Valuation]. If the abatements are removed, we will have to pay more in county taxes as well as [get] less in state aid for our schools.

(McCann's actual text is in the photo caption, I've interpolated some clarifying clauses)

Jersey City is New Jersey's economic boomtown, but if you look at just the last nine years, the percentage of Hudson County taxes paid by Jersey City has actually decreased.



Since Jersey City, by its own boasting, has been a boomtown, its portion of county taxes should have increased; it's possible that the decline is partly due to declining real estate values in outlying parts of the city, but it must also be partly attributable to the fact that a large portion of new development has been PILOTed.

The story of Hudson County for the last nine years as been Hoboken's explosive growth and assumption of county tax burden (with a slight assist from Weehawken).  Since 2005, Hoboken's county taxes have MORE THAN DOUBLED, from $32 million to $67 million, and Hoboken's county taxes exceed its municipal and school taxes.

It should be noted unlike for Newark, Trenton, and Paterson, Jersey City's county tax levy has increased substantially, from $75 million to $105 million, but has been proportional to the overall increase of Hudson County.

Also, if I were to begin this chart a few years earlier around the year 2000, Jersey City's portion of the Hudson County tax levy would increase, although suspiciously not in proportion to the perceived increase in Jersey City's wealth.

Finally, it should be noted that for FY2017, Jersey City is taking up another $10 million in county taxes and relieving almost every other town's burden, although Jersey City will still pay only 32.2% of Hudson County taxes, a percentage that is below where it was in just 2008.

Since Jersey City hides so much of its wealth from Equalized Valuation, Jersey City's freeholder Bill O'Dea should get a chutzpah award for voting against the last Hudson County budget because he thought the computation of Equalized Valuation was unfair to Jersey City.

“Our votes against it were more about some of the problems with the first Equalized Evaluations that’s required by state law, which shifts the burden of increases and spending to those cities, based on how much their property values go up year-to-year and we find that to be unfair,”

I can't get into the unfairness of Jersey City's own tax apportionment here, but Jersey City's surge in Equalized Valuation is due to gentrification along the waterfront while other neighborhoods see much less growth. Since Jersey City is a single-entity in the eyes of the formula for Equalized Valuation, and not a collection of distinct neighborhoods on their own trajectories, the increase in Equalized Valuation catches Greenville and other poorer areas up in it and Greenville residents have to pay for an increase in county taxes that isn't justified for them based on where their market values are.

Normally a town would reval and treat its own taxpayers fairly, but Jersey City hasn't done a reval since 1988.

Conclusion

There are many in New Jersey who have "Maryland Envy" and wish we had county school districts.

In terms of integration and tax fairness, the idea county school districts is impossible to argue with, but I think the ship of county school districts sailed 200 years ago.

However, I do think that NJ could still have some kind of county tax for school systems.

Failing that, we need to have an annual repportionment of state aid.  We would have to get to the point of consistent funding first, where every district has the same per student aid deficit relative to its SFRA target, but once we are at fairness, we could theoretically redistribute aid every year and give aid-losing districts a tax cap amendment to make up for the aid they would lose.

The annual reapportionment of county taxes shows that a town with a rising tax base can increase its taxes without an adverse effect.  Should an adverse real estate market effect develop because of high county taxes, the system is self-correcting and that town's Equalized Valuation will fall relative to its county neighbors and later county taxes will fall or be flat.

New Jersey is light-years from aid fairness, but if we ever arrive at a rational, fair distribution, we need not fear taking away aid from a thriving town so that it increases its tax levy.  What we should fear more is forcing a declining town to increase its taxes against the headwind of tax base decline.

Although making a town with a growing Equalized Valuation raise its school taxes would be bad for long-time residents whose incomes lag the growth of their property values, I think this is less bad than making property taxpayers pay more in taxes on properties whose values are eroding.  Forcing taxpayers with declining assets to pay more in taxes ultimately accelerates a spiral of decline which is in no one's interest.

So Two Cheers for County Taxes: one, because the capture taxes from all kinds of towns and two because they are flexible in a way other property taxes aren't.

May the functions of county governments grow!

---

See Also:

The Loss of Property Wealth in NJ's Most Underaided Districts

The Divergent Fates of NJ's Big Cities

Title I Money is Inequitably Distributed Too

Anyone who knows how unfairly distributed NJ education aid is won't be surprised to learn that federal education aid is just as unfairly distributed as US News & World Report reports.

The distribution of federal aid is unfair both between states and between districts within states.

One reason for interstate disparities is that the federal government decided it was a good idea to use federal aid as an incentive to get states and localities to increase their own education spending, so laws on federal aid present "carrots" where the more districts and states spend, the more federal money they get.

The problem with this incentives approach is that it rewards the haves and ignores the have-nots.

Another oft-cited critique of the formula is that it rewards states and districts for investing more of their own dollars in education. While the goal is to incentivize states to spend more themselves, it tends to compound existing inequalities since wealthier states and districts tend to invest more heavily in education anyway.
Mississippi best illustrates this dilemma.

Especially in the state's Delta region, where poverty rates soar up to 60 percent, local revenue rarely breaks $1 million, and in some cases schools use their Title I money for bare necessities, like paying the electric and water bills.

"We don't want to allow states to roll back their spending," says Gordon. "But the reason why Mississippi is getting so little money per poor pupil is because they are spending very little money."

Also, there is a bias in favor of low-population states.

In addition, the formula directs extra funding to states with small populations – an attempt to channel more money to rural states, like New Mexico, that often depend on federal support for things like attracting and retaining teachers to remote schools. But wealthy states like Delaware and Connecticut have small populations because they are geographically small, and therefore qualify for the additional funds despite not needing them.

The US News article says that this bias is to help rural states, but it's really a consequence of the Senate's apportionment scheme and small state power.   Many block-grant formulas give a set percentage of aid to every state, usually 0.5%, regardless of its population, with the remainder, usually 75%, thereby distributed based on population and need.

Since several states have below than 0.5% of the US population, they disproportionately benefit.

There are also disparities between districts in states.  These are too to attempts to incentivize spending and also (you guessed it!) Hold Harmless provisions in the law.

The US News article has a table giving the amount of Title I money going to every district in the US.  The table is extremely useful because it gives Title I funding in per student terms.

As you can see, the distribution does not align with what anyone would consider need.  If money were to be distributed based on the percentage of students who are FRL-eligible, Camden, Bridgeton, and Woodlynne would get the most money, but only Camden is even in the top twenty.  Woodlynne only gets $1,644 per student.  Bridgeton gets $1804 per student.    

Having New Providence as NJ's fourth biggest recipient based on actual poverty figures is ridiculous.  

District	Enrollment	Percentage of Kids in Poverty	Title I Money	Title I Money Per Student	State Aid	Local Tax Levy
Greenwich Township (Cumberland)	86	18.60%	$48,980	$3,061	$527,000	$837,000
Alloway Township	664	7.08%	$143,790	$3,059	$4,365,000	$3,846,000
Mannington Township	225	17.33%	$117,581	$3,015	$902,000	$2,634,000
New Providence	2,462	2.44%	$173,691	$2,895	$4,960,000	$33,487,000
Robbinsville Township	2,945	2.44%	$198,816	$2,761	$5,027,000	$39,856,000
Frelinghuysen Township	183	2.73%	$13,109	$2,622	$848,000	$2,060,000
Salem City	928	44.07%	$1,001,579	$2,449	$20,987,000	$4,735,000
Estell Manor City	317	8.20%	$61,560	$2,368	$2,268,000	$2,448,000
Camden City	15,975	40.66%	$15,149,070	$2,332	$334,324,000	$11,917,000
Saddle Brook	2,031	7.48%	$353,529	$2,326	$3,150,000	$38,150,000
Paulsboro	1,184	41.13%	$1,102,473	$2,264	$13,686,000	$7,822,000
Union Township (Hunterdon)	520	3.27%	$38,234	$2,249	$1,137,000	$9,297,000
Shore Regional	975	6.77%	$143,104	$2,168	$1,630,000	$16,389,000
Avalon Borough	78	12.82%	$21,363	$2,136	$270,000	$4,270,000
Stone Harbor	66	13.64%	$19,150	$2,128	$273,000	$3,261,000
Lavallette Borough	177	9.60%	$35,978	$2,116	$533,000	$3,928,000
Downe Township	227	17.18%	$82,195	$2,108	$2,254,000	$1,416,000
North Wildwood City	337	27.30%	$189,965	$2,065	$1,607,000	$7,039,000
Atlantic City	6,187	45.98%	$5,862,086	$2,060	$32,270,000	$149,518,000

What's also problematic is that there is no attempt to adjust for tax base, so some, some ultra-high tax base districts like Avalon and Stone Harbor, are big recipients of Title I money.

Anyway, this blog focuses on state aid, but as you can see, the situation with federal aid isn't a lot better.  

Why the 2010 Aid Cuts were Unavoidable

Economic Stagnation is the
Root Cause of NJ's Fiscal
and State Aid Crises

Phil Murphy is the first of the Democrats officially out of the starting gate for the 2017 gubernatorial campaign.  He's hosting town halls, making appearances at public events, and has an active and open internet campaign.

A few weeks ago Phil Murphy did a Facebook town hall in which he took questions from the public.  The questions were submitted ahead of time and were read (and condensed) by Phil Murphy's campaign manager.

There were a number of questions about state aid and Phil Murphy did try to answer a question about what he wanted to do with K-12 state aid.

See Minute 42:50 of Video



Murphy didn't directly say what he would do about education aid so much as condemn what Chris Christie did do, specifically, "gutting" education aid. While Murphy's statement is technically factual, it is so devoid of context as to be misleading.

Murphy blamed Chris Christie for underfunding the formula by (a cumulative) $7 billion and said Christie had "gutted education."  He did not discuss the unevenness of NJ's aid distribution nor use terms like "SFRA" or "Abbott."

Murphy juxtaposed NJ's cumulative underaiding with the amount of corporate subsidies and incentives given out under Christie.  These tax incentives coincidentally have a cumulative value of about $7 billion and Murphy said said money ought to be used to fully fund education aid.

In case Phil Murphy himself reads this or his campaign does, here's some context on NJ's recent state aid history.

1.  Christie Inherited an Unsustainable School Spending Level That Had Been Paid for with $1 Billion in Federal Money

This is the defense of himself that Chris Christie gave in his confrontation with teacher-blogger Marie Corfield and he's factually right.

This is how the Corzine Administration itself described its plans for ARRA money:

Approximately $1.057 billion will be used to implement the new school funding formula enacted by the School Funding Reform Act of 2008 (SFRA). About $70.8 million is allocated to higher education. These funds will be used to restore cuts for higher education that were included in the proposed budget for FY 2010. These cuts will be restored if certain conditions, including limits on tuition increase, are met. Furthermore, the increase in funding for Tuition Aid Grants (TAG) proposed in the Governor’s FY 2010 budget will be supported with SFSF dollars.

If you look at the pension chart below, Jon Corzine also slashed contributions and part of the "savings" went into education aid.  Corzine had hit $1 billion two years in a row, but in 2009 he let contributions fall precipitously in order to sustain school aid.

I Love The 90s!
It's Easy to Fund Education When You're
Abandoning Pension Payments!

So Chris Christie didn't so much as "gut state aid," he "lost federal aid" and couldn't lower pension contributions below $0.

Christie vetoed a renewal the Corzine-era "millionaire's tax" and that certainly deprived the state of much money, but there were multiple versions of "millionaires' taxes" passed for various purposes (like seniors and tax rebates) and I don't believe anyone can claim that all of that money would have gone to schools.

Moreover, virtually every state cut education spending in 2009-2011 as the economy nosedived.

What is awful about Christie's cuts is that he made the same cut equal to 5% of budget for every district, from the most overaided to the most underaided.  This means that Hoboken was treated the same as Clifton until in gross legal amorality and irresponsibility, Justice Jaynee LaVecchia ordered the state to increase Abbott spending by $500 million which "gave back" $1.7 million to Hoboken.  

2.  New Jersey has been underfunding its aid formula since Forever, not since Chris Christie became governor.  
Ok, not forever, but ever since the Public School Education Act passed in 1975.

As New Jersey School Boards Association spokesman Frank Belluscio said in 1989  "The formula has been fully funded maybe three times since the law was enacted in 1975."

3.  New Jersey is Increasing "Education Spending" but the New Money is Mostly Going to Pensions & Debt

I think this is self-explanatory.

NJ only increased total state spending by $1 billion for FY2017.   $544 million of that went to education-related spending, but of that $544 million, only $94 million (17%) went to K-12 education aid.

To paraphrase James Carville, "It's the Pension Crisis Stupid!"

4.  New Jersey's aid for non-Abbotts has been stagnant since 2002.

The forerunner to SFRA was CEIFA,, the "Comprehensive Education Improvement and Financing Act" of 1996

CEIFA didnt' have a long run either.  Aid increased dramatically in the late 1990s, but because the economy was doing well then and NJ was in the process of zero'ing its pension payments.

Yet, starting in 2002 aid was basically frozen for all non-Abbotts.

The Department of Education admitted this very frankly in 2007 when SFRA was unveiled.

5.  New Jersey's Economy is Stagnant and Thus So Is Our Revenue

NJ's economic growth has lagged the nation's since 1990 and been particularly bad since around 2001.  Since 2004, NJ's average compound growth in GDP has only been 0.4% versus a national average of 1.3%.  NJ has only recovered 90% of the jobs it lost during the Great Recession, again, lagging the nation.

So the people who say that Christie gutted education aid are factually right, but not contextually, since any governor would have had to do the same thing.  Maybe if Jon Corzine had won reelection the cuts wouldn't have been as deep, maybe they would have been made more fairly and spared underaided districts, but Christie, along with Democratic counterparts in many other states, had to cut education funding.

By condemning Chris Christie for what he had to do back in 2010, Phil Murphy tells us nothing about what he would do.

See Also: 

The Phantom Budgetary Salvation: Cutting Tax Incentives
Dear Phil Murphy, Massachusetts Doesn't Have High Taxes

Only a Single Black Student in Hoboken's District Run Pre-K

Back in September 2015, Senators Mike Doherty (R) and Teresa Ruiz (D) argued over the merits of continuing Hoboken's Abbott status and its "free" Pre-K.

Doherty demanded an explanation for how the state could allow this injustice to persist:

Doherty made the point that the individuals in Hoboken have a median income of $69,000, compared to $29,000 in Hackettstown. And yet Hoboken, not Hackettstown, has a state paid-for pre-K program based on its designation as an Abbott School District.
“You could be a Wall Street executive and before you hop in your limo you could drop your child off at pre-school paid for by the taxpayers of Hackettstown”

In response, Teresa Ruiz said that Hoboken's Abbott status was justified because it had so many black and Latino students:

“How do we bridge our achievement gap?  How do we expand high optimal programs? Hoboken [when designated an Abbott District] was a different community than it is today. It’s nothing we’re going to figure out toda. Many Latino and African-American families needed to utilize those programs.”

Well, times have changed and there are few Hispanics anymore in Hoboken's Pre-K and almost no black students.

Out of 173 kids getting "free" Pre-K in Hoboken through the BOE, 139 are white.  I don't know if that counts as "lily white," but it's pretty damn close.  There are five kids who are biracial, nine who are Asian, and 17 who are Hispanic (who of course may be white and in Hoboken are rarely Spanish speaking.).

The original source of this is the DOE's Enrollment Files.

As part of the Abbott program there are also private Pre-K providers in Hoboken who operate with state money (ie, your money).  This option is more popular among Hoboken parents, with 596 students enrolled versus the only 173 enrolled in the school district's own Pre-K.  Presumably there are more black kids enrolled in the private Pre-K, but since that data isn't available publicly online, I can't say what its demographics are.

Click to Enlarge

This underscors the ridiculousness of David Sciarra's full-throated defense of Hoboken's Pre-K privileges in 2013, although then there were 10 black students and 42 Hispanic students out of 221.

NJ Legislature!  Update the Abbott list now!

HT: Dr. Anthony Petrosino for pointing this out to me.