Tuesday, March 22, 2022

A Politically Realistic Proposal to Fix Local Fair Share

 

Now that Adjustment Aid is being phased out, the biggest problem in the School Funding Reform Act is its use of Aggregate Income to calculate Local Fair Share.  To see how bad Local Fair Share disparities can get, check these out:

If you are unfamiliar with the problems of Local Fair Share, New Jersey's formula for local share is nearly unique in the United States in that it is a 50:50 hybrid of a district's Equalized Valuation and its Aggregate Income.  

The use of Aggregate Income means Local Fair Share is unequal and the following categories of districts have high Local Fair Shares:

  • Where residents live in houses that are inexpensive relative to income.
  • Districts that lack non-residential property and/or vacation homes because non-residential + vacation property has no income "attached" to it.
  • Districts where many residents live in tax-exempt housing.
  • Districts with high-income outliers.
The districts who are the most hurt by the use of Aggregate Income tend to be Philadelphia suburbs, then rural districts, and then some random ones in Northeastern New Jersey.  Woodlynne's Local Fair Share is the highest and fluctuates around 2%.  The state's median Local Fair Share fluctuates at 1.4%.  In 2021-22 the median was 1.46% and in 2022-23 the median will be 1.38%.




Due to the penalty against districts that have high percentages of residential property and those towns are already disadvantaged, having a high Local Fair Share correlates with having high municipal taxes.



Ideally what New Jersey would do to fix Local Fair Share is base it solely on taxable property (ie, Equalized Valuation, which would make the tax rate the same for all Equalization Aid-eligible districts, but I realize that equalizing Local Fair Share would require some districts to pay higher taxes and that is politically difficult.

What I propose instead of an equal Local Fair Share that there be a cap on how high a Local Fair Share would be.  It would not require low LFS districts to pay more, but at least lessen the extremes of high Local Fair Shares that afflict some districts.

The costs are not high.

For instance, capping Local Fair Share at 1.7% would only affect eight districts (Woodlynne, Lindenwold, Laurel Springs, Highland Park, Harrison (Gloucester), Pitman, Linwood City, and Merchantville) and cost $2,063,729 in additional Equalization Aid.

DistrictLocal Fair ShareEqualized ValuationLocal Fair Share as a Tax RateAmount of Equalization Aid at Real LFS if SFRA were 100% FundedEqualization Aid if LFS were Capped at at 1.7%Additional Equalization Aid at 1.7%
Woodlynne$1,391,251$72,802,5271.91%$10,880,769$11,034,377$153,608
Lindenwold$11,303,200$631,255,8421.79%$51,900,777$52,472,628$571,851
Laurel Springs$2,287,277$130,051,2421.76%$2,719,218$2,795,624$76,406
Highland Park$24,379,427$1,399,324,1531.74%$2,795,761$3,386,677$590,916
Harrison (Gloucester)$15,252,825$878,645,6981.74%$3,353,627$3,669,475$315,848
Pitman$11,665,247$674,646,5641.73%$4,817,288$5,013,543$196,255
Linwood City$10,856,880$629,986,8221.72%$71,230$218,334$147,104
Merchantville$4,641,379$272,331,6691.70%$4,746,854$4,758,595$11,741
TOTAL$2,063,729

The costs aren't even that high if LFS were capped at 1.6% or 1.5%.  

If Local Fair Share is Capped at ...Additional Equalization Aid
....1.7%$2,063,729
....1.6%$14,152,048
....1.5%$69,092,717


Several more districts who are not ineligible for Equalization Aid would become eligible if Local Fair Share were capped.  Haddon Heights and Wenonah become eligible for Equalization Aid at a 1.6% cap.  Medford, Washington Twp (Morris), and Haddonfield become eligible at a 1.5% cap.  (their totals are included in the table above)

There is a lot of inertia behind keeping Aggregate Income in the Local Fair Share formula, but at least capping the contribution at a certain point above the state median would eliminate the worst victimization by the formula.




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See Also









Friday, March 18, 2022

New Jersey's 2022-23 State Aid

New Jersey's 2022-23 state aid distribution is another big step towards state aid fairness.

Thanks to the addition of $650 million of new K-12 opex aid plus $186 million in redistributed Adjustment Aid,  underaided districts will gain $836 million.  Their deficit will shrink from $1.2 billion in 2021-22 to only $618 million for 2022-23.  

The net deficit, ie deficit minus surplus, is only $386 million.

Below is an analysis of 2022-23 state aid and education spending, organized in the following way:

  • Details About the Underaided.
    • The Education Adequacy Report Misses the late 2021-22 Inflationary Spike.
  • Details About the Overaided.
  • Other Education Spending.
  • Local Fair Share Disparities.


As usual, I've put all the data available on a spreadsheet: 2022-23 NJ State Aid.


Likewise, the surplus for the overaided districts will shrink from $362 million in 2021-22 to $232 million in 2022-23.  Since 2017-18, New Jersey has redistributed $687 million.

Amount Redistributed
2022-23$186 million
2021-22$193 million
2020-21$155 million
2019-20$90 million
2018-19$32 million
2017-18$31 million

Without state aid redistribution, the deficit would be $1.3 billion.  

Because S2 calls for a 76% reduction of Adjustment Aid in 2023-24, this means that at least $176 million in Adjustment Aid will be redistributed in 2023-24, which, combined with the state aid increases we've seen in the last few years, brings 100% state aid for all districts within reach.

Details About the Underaided

Counting vo-techs and non-operating districts, there are 391 underaided districts with a total enrollment of 961,649, or 74% of the total.

In total dollars, the district with the largest deficit is Newark, at -$98,901,597, or -$1,799 pp.  Newark's state aid has risen from $742 million in 2017-18 to $1 billion in 2022-23, but its deficit was originally so large ($146 million) and its Adequacy Budget has grown so much, that the deficit has not yet been eliminated despite getting $258 million in additional state aid.

The districts with the largest deficits per pupil are Cumberland County Vo-Tech at -$3,109 pp and Atlantic City at -$3,057 pp. Cumberland County Vo-Tech and Atlantic City are the only two districts with per pupil deficits over $3,000 per pupil. Their deficits are large, but in 2017-18 Atlantic City and Bound Brook had deficits of over $8000 per student.

In percentage terms, Loch Arbour is the most underaided, but it 69%, $23,359 out of $33,685.  No other district is below 70%.  Only five other districts are even below 80%.  




This is a huge contrast to 2017-18, when 96 districts got less than 50% of their recommended state aid.  It's a huge contrast to when Chesterfield got only 10% of its state aid target.


The Education Adequacy Report Misses Inflation

Second reason this year's deficit decreased so much is that the triannual Education

Adequacy Report's inflationary adjustment stopped in June 2021.
  Hence, SFRA's Base Payment per pupil barely budged, from only $12,177 per student to $12,451 per student.   (see at right)

From June 2021 to February 2022 inflation has been 4.4% and is running even faster now.

This is an important fact because it means aid increases to the underaided are smaller than they initially appeared and aid cuts are larger to the overaided.

Since New Jersey's projected enrollment fell from 1,316,864 in 2021-22 to 1,304,773, the statewide Adequacy Budget did not increase very much despite the inflationary adjustment.

Details About The Overaided

The 201 overaided districts have 343,124 students, or 26% of the total.  Their $232 million surplus is the smallest it has ever been.

Asbury Park's state aid loss merits attention: In 2019-20 Asbury Park's surplus was $22.9 million, or $11,026 per student.  Now it is only $7 million, or $3,653 per student.  Asbury Park's K-12 state aid per student has fallen from $25,000 per student (it was the highest spending K-12 district in the US), to only $15,176 per student.  

Jersey City's aid loss merits attention too.  In 2018-19 its surplus peaked at $171 million, or $5542 per student.  Now it is only $56 million, or $1903 per student.  In total K-12 opex aid, Jersey CIty's aid has gone from $419 million to $185 million, a loss of $234 million.  

Jersey City has actually lost more than $115 million, but it has a constant growth in tax base which converts its Equalization Aid to Adjustment Aid, which is then phased-out per the process laid out in S2.  In 2022-23 Jersey City will still be eligible for $82 million in Adjustment Aid.

The redistribution of state aid for 2022-23 was not something I was sure would happen after the Biden administration, acting on a vicious Education Law Center complaint, interpreted a provision in the ARP to prohibit state aid cuts to high-poverty districts (which Hoboken and Jersey City technically are), but apparently the Murphy administration has found a way to continue aid redistribution.  

Other Education Spending

New Jersey's budget for FY2023 is going to be $49 billion, of which $19.16 billion, or 39%, is considered school aid (see page 58).  That ~40% percentage has been constant for the last decade, although it's worth noting that in 2001 education spending was only 31% of the budget.

On the other hand, education spending actually exceeds the income tax's $18.15 haul due to education getting money from the lottery and a half cent of the sales tax.  Education spending has come to be nearly synonymous with the Property Tax Relief Fund, although the new ANCHOR credit will represent a long-overdue increase for direct tax rebates.




K-12 opex aid is just $9.9 billion, so 52% of the total education spending.  Here are some looks at the other major education spending categories.

Amounts in millions.

Extraordinary Aid will be $400 million.

Below are the net changes year over year for the above categories.  As you can see, the major debt categories of Teacher Pension And Annuity Fund, post-retirement healthcare, construction debt, and Pension Obligation Bonds did not require substantial increases and TPAF and Construction Debt service actually fell.  This is a tremendous contrast to the past, when TPAF payments increased by over $400 million in some years.



Disparities in Local Fair Share

Readers of this blog know that New Jersey's Local Fair Share is NOT a constant tax rate due to it being based 50% on Equalized Valuation and 50% on Aggregate Income.  Thus, towns where residents live within their means in properties that are inexpensive relative to income must pay higher school taxes, as well as property owners in towns without non-residential property and vacation homes.  

New Jersey's Local Fair Share grew from SFRA's inception in 2008-09 when it was a 1.15% median and peaked in 2019-20 at 1.53%.  The cause of the growth was that Adequacy Budgets grew faster than Equalization Aid, so the SFRA formula automatically adjusted to increase Local Fair Share.  (Brick and Toms River repeatedly complained that their Local Fair Shares have increased despite loss of Equalized Valuation, but that has happened statewide).

Phil Murphy's increase to Equalization Aid exceeds the growth of the statewide Adequacy Budget, hence Local Fair Share actually will fall 1.38%, with a low of 0.79% for Wildwood City and a high of 1.91% for Woodlynne (which peaked at 2.1% in 2019-20).

The decrease in Local Fair Share also decreased the number of districts who are ineligible for Equalization Aid from 272 in 2020-21 to 260 in 2022-23. (Note, in SFRA's first year only 180 districts were ineligible for Equalization Aid).

The extremes of LFS are here:



The 2022-23 Local Fair Share formula is:

(0.013089410 x Equalized Valuation + 0.045610629 x Aggregate Income)/2

Conclusion

FY2022-23 was another good year for K-12 opex aid equity.  We have come a long way from the time when New Jersey's state aid formula was inoperative in the early 2010s (which was Christie's fault) and when huge education-debt increases crowded out K-12 opex aid increases (which was not Christie's fault).  If the state's revenues continue to grow, in 2023-24 it's possible that every district will reach 100% funding.  

SFRA is always a work in progress and the legislature is moving to revamp the state aid law.  If it does
so, I hope it includes the following.
  • The tax cap must be loosened for under-Adequacy non-Abbotts who are losing state aid.  
  • The state must move up the timetable on its inflationary adjustment due to the 2022 Education Adequacy Report stopping its inflationary measurement in June 2021
  • New Jersey should base its Local Fair Share solely on taxable property.

Overall, Phil Murphy has been a positive surprise on state aid.  Although I knew that he would increase K-12 opex spending, I did not expect him to prioritize fairness of the distribution as much as he has.

Monday, November 15, 2021

New Jersey and the Quasimander: Why We Need Proportional Representation

In the last twenty years the United States has seen its constitutional democratic deficits go from being latent problems that most Americans disregarded to being glaring crises that call into question America’s status as a democracy.

The electoral college, Senate malapportionment, judicial supremacy, gerrymandering, the Senate's monopoly on confirming judges, the routinization of the filibuster, and the extreme difficulty of amendment have all become more conspicuous, more consequential, and hence the subject of more criticism.  More thinkers about American politics see our structure of government as something that could only possibly work with heterogenous parties, not the polarized parties of today.

But What About the States?

I agree with criticisms of the national government and I am glad they are beginning to go mainstream. However, I’ve noticed that state governments are rarely criticized for their democratic deficits. I've also noticed that it’s far more common to give examples of how our democratic deficits hurt Democrats than it is to give examples of how they hurt Republicans.

This piece is an exposure of how New Jersey has a huge democratic deficit in its voting system, which consistently awards legislative Democrats a higher share of seats than they receive in the legislative popular vote. Also, in common with all other states and the federal government, New Jersey uses a voting system which makes it impossible for a non-Democrat or non-Republican to be elected.

This blog post is an argument that New Jersey’s voting system is guilty of creating unequal voting power and artificially limiting ideological, racial, age, gender, and professional diversity in the legislature.

New Jersey’s Quasimander

New Jersey’s legislative districts are drawn by a bipartisan commission, so technically we do not have a


gerrymander, but we have a disproportionate outcome that is tantamount to a gerrymander, a phenomenon I name a “Quasimander.”

The legislative popular vote for New Jersey is rarely reported, which is unfortunate because there is a repeated pattern of the Democrats gaining a seatcount in the legislature that is higher than their share of the legislative popular vote.

After the 2021 election, the Democrats will have 60% of the State Senate and 57.5% of the Assembly, but the popular vote for both chambers was 51.5% - 48.2%, Democrat to Republican, which approximately matches Phil Murphy’s 51% of the gubernatorial vote. The Republicans’ 48.2% comes despite not running candidates against Senators Joe Cryan and Teresa Ruiz, in Districts 20 and 29, respectively.  

The root cause of New Jersey’s power disparity is New Jersey’s use of single-winner districting.  Single-winner districting creates voting power disparities because a district's turnout or winning margin are irrelevant in who is elected, so that winning by a huge margin in a high-turnout district is electorally equal to winning by by a tiny margin in a low-turnout district.

To explain this more clearly, I’ll focus on the New Jersey Senate, but the same conclusions would apply to the Assembly as well.



* Update, Cryan got 26,603 votes. Ruiz got 20,706.  The claims I made remain correct.

Although the 2021 election saw a near parity of the two parties, the geographic distribution of voters was quite different. In contrast to most other states where Democrats are more tightly packed, in New Jersey, it is the Republicans who are the party more packed together. In 2021 half of the Republican vote came from only 12 districts, whereas half the Democratic vote came from 17 districts.





The 16 Republican Senate winners averaged 46,222 votes, but the 24 Democratic Senate winners averaged 33,152 votes.

The top Democratic vote getter was Jim Beach, who got 48,486 votes and thus barely beat the Republican average.

Beach’s 48,486 is pretty good, but five Republican Senators got more: Steve Oroho, Bob Singer, Declan O'Scanlan, Jim Holzapfel, and Chris Connors. Chris Connors’s 61,297 votes is #1 in the Senate.

The Republican Senator who had the smallest vote total was Vince Polistina in District 2, with 30,776 votes, but nine Democratic Senators won with fewer votes than Polistina: Nellie Pou, Nick Sacco, Paul Sarlo, Sandra Cunningham, Joseph Vitale, Nilsa Cruz-Perez, Bob Smith, Teresa Ruiz, and Joe Cryan.





If we analyze by winning margins, the skew against Republicans still exists, although it is not quite as strong. Even including Joe Cryan and Teresa Ruiz’s victories against no opposition, the average Democratic Senator won by 14,606 votes, versus a 16,923 victory margin for the average Republican Senator, a difference of 16%.





Most analysis of election results focuses on what percentage a candidate won by. I think that is a valid, but sometimes misleading, metric in evaluating fairness because it doesn’t take into account that turnout varies and voters could have more power in a lopsided district if that district also has low turnout.

In any case, the dynamic is different when you look at percentages and you can see that Democrats dominate urban districts to a higher degree than Republicans do any of their districts.

(You may also notice that NJ has only eight districts that were decided by fewer than 10 points, underscoring that most districts are non-competitive.  (Which underscores the error in blaming gerrymandering for non-competitiveness.))





This disproportionate result of 2021 is roughly similar to what happened in 2017, 2015, and 2011, but in 2013 and 2009 the Republicans actually WON the legislative popular vote, but were trapped as the  minority due to so many Republicans living in “vote sinks” where their legislative votes are wasted on blowout victories. In 2013, the average Republican victor won 44% more votes than the average Democratic Senator, and all but two Republican victors got more votes than any Democratic victor.




Some Republicans have spun the 2021 result as a “victory” because they did better than expected and gained seats in the legislature. They have said that Phil Murphy lacks a mandate, but it’s constitutionally irrelevant.

The governorship is unipersonal and even having a minuscule victory would not reduce a governor’s powers. As Craig Coughlin said “We retained a solid and comfortable majority in the Assembly and the Senate.” Loretta Weinberg agreed, “the fact remains that Phil Murphy is still the governor and we still have the majority in both houses.”

Phil Murphy has said that he is not going to tack to the center, “We’re not going to change now.”

Disproportionate Power, Inversions and The Two Party System

New Jersey is not alone in having large disproportionalities.

New Jersey has a ten point disparity, but several others states are worse.  West Virginia Republicans and Hawaii Democrats' representation in their legislatures are 20 points higher than vote share. The most extreme recent outcome is Hawaii’s 2016 Senate election, where the seatcount became 20-0 Democratic.

New Jersey’s legislative inversions of 2009 and 2013 are uncommon, but not unheard of.

Pennsylvania’s legislature is currently inverted. In 2018 the Democrats won the legislative popular vote 55%-44%, but the Republicans retained the majority with 54% of the seats.  Nevada has a large inversion favoring the Democrats, where the Democrats translated 47% of the popular vote into 62% of the seats.  North Carolina and Michigan have or recently had Republican inversions as well.

The Two Party System




Even talking about a state being “49%” Republican or “60%” Democratic is misleading because a plurality of Americans are independents who only reluctantly vote for one of the two major parties.

Single-winner districts that allow plurality victories, a system known as “first-past-the-post,” are the real cause of the two-party system too.

When a candidate can win an election by a plurality, voters must vote strategically since if they vote for the candidate they actually like the best they are not maximizing their opportunity to defeat the candidate that they hate the most. The tendency of first-past-the-post voting to produce a two-party system is called Duverger’s Law.

The countries who have multi-party systems vote by a system called “proportional representation.”

There are several different kinds of proportional representation, but the simplest explanation is that proportional representation has multiple winners per district and the winners are determined by their party’s share of a district’s overall vote. 20% of the vote = 20% of the seats. 33% of the vote = 33% of the seats.

In addition to creating a legislature with more than two parties, proportional representation results in legislatures with more racial, professional, gender, and age diversity too. Using proportional representation would result in racial minorities gaining representation without intentionally drawing majority-minority districts.

A public policy benefit of proportional representation which I think is underappreciated is that it would encourage Republicans to contest urban areas more than they currently do, since they would now have a chance to win urban seats.

(see note at the conclusion of this on the NJ Assembly’s use of two-winner districts and why it is not proportional representation)

In proportional representation gerrymandering is impossible because moving a party’s voters out of one district would give that party more representation in another district. A quasimander like New Jersey has could not occur either.

In my opinion, a two-party system is inherently less democratic than a multi-party system because a two-party system provides voters with a choice between only two party platforms, and each platform will contain some planks that many voters oppose. The reason proportional representation countries have higher turnout is that there is no such concept as a “safe seat,” so all votes matter, and more choices allow voters to vote for what they really want.

Our two-party system is also undemocratic because it makes it very easy for minoritarian views to be enacted by coalitioning with popular views.  

Since the US two-party system is also tied to a partisan primary process where primaries tend to be dominated by party “Bases” who are far left and far right of the median voter, the two-party system is highly polarizing.

Even if the two-party system didn’t produce disproportionalities, even if it didn’t force people to vote for parties they don’t like, states have the problem of nationalized elections, and New Jersey’s recent election was another round of Biden versus Trump as much as it was Murphy versus Ciattarelli.

The Nationalization of State Politics



In New Jersey’s 2021 election the Murphy campaign did what Republicans do in Red States to Democrats and frequently reminded voters that Jack Ciattarelli was a member of an unpopular political party and had indirect ties to a disliked president.

I’m not saying that associating Ciattarelli with Donald Trump was completely far-fetched. Aside from praising Trump and attending a Stop the Steal rally, Ciattarelli took several stances like opposition to mask and vaccine mandates that seem calculated to satisfy the Republican Base (or perhaps were Ciattarelli’s sincere views). He use the term “sodomy” in the context of sex education is also not moderate.

Murphy also campaigned on his record, but the Murphy campaign leaned into Ciattarelli = Trump

hard.

So, what we had in New Jersey on November 2nd was a state election that was Biden versus Trump as much as it was Phil Murphy versus Jack Ciattarelli.

This nationalization effect hurt Steve Sweeney too.

Steve Sweeney explanation for his loss was "I'm in a conservative district. It's a tie. It's frustrating to watch what's happening in Washington. It has nothing to do with me."

Because of the nationalization of state politics, I believe many voters were not expressing themselves on state issues, so inferring a meaning from the 2021 result is impossible.

Proportional representation would reduce the nationalization of state politics because independent right-of-center and pure centrist parties would emerge that lack the Republican label. Although New Jersey would still have Trumpists, right-of-center parties would have an real independent character that the real-life NJ Republican Party lacks.

Two Little Reforms Aren’t Enough

The most common response to the existence of disproportionalities in representation is to stop partisan gerrymandering, but New Jersey already has a bipartisan commission to draw its district maps and 10 point disproportionalities still exist, ie, quasimanders. Again, 2009 and 2013 were inversions where the Republicans got more votes than the Democrats. Other states with bipartisan districting also have large disproportionalities, so do the United Kingdom and Canada. It is the nature of first-past-the-post to have disparities.

Maintaining single-winner districts and using plurality elections also makes it nearly impossible for anyone who is not a Republican or Democrat to be elected.

A more meaningful reform is Ranked Choice Voting, which would require a winner to actually have majority support. It would eliminate the “spoiler effect” and thereby make alternative parties more viable. Since a non-Republican or non-Democrat would have a chance in a general election, a candidate would no longer need to win a partisan primary to be a competitive general election candidate, although he or she would still have to have high name recognition to win.

Perhaps if New Jersey had used Ranked Choice Voting in 2009, Chris Dagget’s campaign would have gained traction, perhaps centrist independent campaigns would happen every cycle.

In my opinion, we should adopt Ranked Choice Voting for positions that are inherently single-winner, like governor and Senator, but use proportional representation for the NJ legislature to create a more robust multi-party system and ensure that all voters have equal power.

Two Cheers for Democracy!

My argument for proportional representation is way out of the mainstream. Nationally, even the left-wing of the Democratic Party is resistant to proportional representation. In New Jersey, no elected Republican supports proportional representation even though in this state Republicans would be the net beneficiary. In New Jersey, Phil Murphy does not even support Ranked Choice Voting.

Very few Americans, even among the educated, understand why the United States has a two-party system. Very few Americans think we have any electoral problem beyond gerrymandering or too much money in politics.

Yet, the desire for a multi-party democracy is strongly majoritarian and is overwhelmingly popular among young people.

Gallup has polled American support for a third party since 2003 and in 2021 support for a third party reached 62%.




Recent polling of young people shows that 71% want a third-party.

In international perspective, nearly all other democracies use some form of proportional representation, so in other countries people take multi-party politics for granted.

So my solution to our electoral problems is out of the Overton Window, the two-party and disproportionality problems I identify are problems which 60-70% of Americans recognize.

The United States isn’t authoritarian, but we aren’t at the same democratic level of Canada, Australia, New Zealand, and Europe either. New Jersey and other states aren’t as malapportioned, vetocratic, and judicially-dominated as the federal government, but we disproportionalities and huge democratic shortcomings of our own that we must fix.

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See Also:
(New Jersey Assembly elections have two winners per district, but it is only a system of simultaneous first-past-the-post elections. In a New Jersey Assembly district, if the vote outcome is 26% each for two candidates of the same party and 24% each for the two candidates of the other party, the party at 26% wins both seats.

This parity-of-outcome scenario happens every election.

In District 11, Marilyn Piperno (R) got 25.05% and her running mate Kimberly Eulner (R) got 24.94% versus Joann Downey (D) and Eric Houghtaling (D) getting 24.69% and 24.5%, respectively.

Despite how close the outcome was, the Republican Party is getting both seats.

I see this outcome as unfair, whichever party happens to win.


Proportional representation would have more than two representatives per district, but if the NJ Assembly used proportional representation, the two parties would each get one seat in a close where the winner has less than two-thirds support.

Some other states have more than one representative per district, but none use proportional representation.)

Saturday, October 23, 2021

2022 Equalized Valuations are Out


New Jersey's 2022-23 state aid numbers will not come out until the governor's FY2023 budget speech and state aid surpluses and deficits in 2022-23 will be strongly affected by the new Education Adequacy Report, but we can get a sneak peak at some changes in NJ State Aid by analyzing changes in Equalized Valuation.

Analyzing changes in Equalized Valuation also gives us a view into the state's ever swirling economic currents and what towns are thriving, holding their own, stagnating, and declining.  

Source for Data: NJ Table of Equalized Values.

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New Jersey's total Equalized Valuation increased from $1,353,490,784,661 to $1,430,600,617,782, a 5.7% increase.  5.7% is larger than most recent years, but it is not much larger than inflation, which was 5.4%.  (No, housing prices are NOT calculated as part of inflation.)

In contrast to previous years when Hudson County grew by more than 10% and had growth equal to 25% of the state's total, Hudson County was in last place for 2020-21.  In fact, South Jersey and the Jersey Shore led the state.


Ocean County had another good year at 9.3% growth (+$2.7 billion).  30% of that growth came from Lakewood, which grew from $12 billion to $12.8 billion.  (The Lakewood Public Schools continue to be ineligible for Equalization Aid, contrary to what some judges think.)


The trend could be a state manifestation of the nationwide boom in car-dependent places enabled by remote-working..




In NJ we hear constantly about an "urban renaissance," but NJ's big cities are wildly divergent in their
 economic fates and it's impossible to generalize about them.  Jersey City and Hoboken have boomed,  but the other cities have tended to lag state averages. Newark's renaissance is part reality, but also exaggeration.



Changes in Equalized Valuation also allow us to estimate changes to each district's Local Fair Share, although since Local Fair Share is based on Aggregate Income and depends on the statewide Adequacy Budget which will surely increase as a result of the Education Adequacy Report, I can only estimate what will happen.  

The 2021-22 Local Fair Share multipliers were:


Equalized Val.  x  0.013767998

District Income  x  0.051821204

Which is really 0.724% of Equalized Valuation plus 2.64% of Aggregate Income.

Hence, I get the following estimates for Local Fair Share changes for NJ's largest school districts.

FY2021 Equalized ValuationFY2022 Equalized ValuationGrowth or LossEstimate of LFS Change from 2021-22 LFS Real Estate Multiplier
NEWARK$14,982,559,801$14,465,468,748-$517,091,053-$3,559,654
JERSEY CITY$44,232,603,821$45,362,027,053$1,129,423,232$7,774,948
PATERSON$8,357,271,633$8,998,986,504$641,714,871$4,417,565
ELIZABETH$9,205,643,641$10,418,709,083$1,213,065,442$8,350,741
EDISON18,032,657,681$19,057,739,251$1,025,081,570$7,056,661
TRENTON$2,353,253,026$2,582,977,552$229,724,526$1,581,423
CAMDEN CITY$1,831,881,725$1,924,025,009$92,143,284$634,314
TOMS RIVER REGIONAL16,548,612,072$17,900,054,286$1,351,442,214$9,303,327
PASSAIC CITY4,112,963,610$4,293,101,153$180,137,543$1,240,067
WOODBRIDGE12,596,646,914$12,857,998,640$261,351,726$1,799,145
UNION CITY4,661,686,444$4,727,594,311$65,907,867$453,710
HAMILTON TWP9,262,658,564$9,530,775,475$268,116,911$1,845,717
CLIFTON CITY10,616,935,162$11,331,152,347$714,217,185$4,916,670
CHERRY HILL TWP9,092,288,643$9,553,839,001$461,550,358$3,177,312



Factoring in Jersey City's income growth and the increase in the LFS multipliers from the Education Adequacy Report, Jersey City's Local Fair Share will likely increase by a few tens of millions, but probably not enough to eliminate its Equalization Aid, which was $84 million in 2021-22.


(See Education Adequacy Report Drives Big Changes to State Aid)

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