Friday, July 31, 2015

The Problems of PILOTs

Note: This was one of the earliest posts I wrote for this blog and I now realize that this post contains an error of omission.

If Jersey City did not PILOT any new development its state aid would remain at $418 million forever due to the mechanism of Adjustment Aid, which disallows any district from getting less than 102% of what it got before SFRA became law.  However, since Jersey City's Equalization Valuation would be higher its "embarrassment or riches" would be greater and there would be more pressure to reduce its state aid.

Adjustment Aid will hopefully be eliminated one day and I was writing in reference to that future era.  

Let's say that you could enroll in a program where you would receive somewhat lower compensation at work, but get that compensation tax free or at a reduced rate and thus come out with higher net earnings.  Let's say this "PILOS" program - Payment In Lieu Of Salary - was originally intended to help less-employable people but there were no restrictions on who could enroll, including people who had no trouble getting a job.

Let's say that in addition to getting all of that money tax-free you could also benefit from food stamps, welfare, and Medicaid?

Sounds pretty good, right? Well a program like this for salaries is fiction, but New Jersey has a tax abatement program just like it that was originally intended to foster development where property owners pay a reduced fee called a PILOT (Payment In Lieu Of Taxes).

In a PILOT agreement, the owner pays a fee which is split 95%: 5% by the municipality and county, with 0% going to the school system.  In a hot real estate market, where the municipality has a lot of leverage, the  municipality can structure the agreement so that it gets more money from the PILOT payment than it would through regular taxation.

This post is going to focus on Jersey City and PILOTs. I'm "singling out" Jersey City for several good reasons.  One, Jersey City has PILOTed more property than any other town in New Jersey. Two, Jersey City's K-12 state aid is $418 million, making it New Jersey's second biggest recipient of state aid after Newark. Three, even without Jersey City's PILOTed property factoring into the calculation for Equalization Aid, Jersey City would still be very overaided.  Four, Steve Fulop is widely expected to run for governor.

Jersey City's Prolific PILOT Granting

According to a report NJ's Comptroller in 2010, Jersey City was one of, if not the, biggest PILOT granter in New Jersey.

In 2008, 303 [municipalities] had less than 1% of their total taxable value [abated]. Approximately one-third of municipalities, 188 overall, from 1-5% of their property value in [abatement]. A total of 75 municipalities had granted such exemptions exceeding 5% of total taxable value. ... 
Examination of the detailed property listings for the 75 municipalities showed that most of them engage in few to no redevelopment or rehabilitation abatements of significant value. Of the 75 municipalities, 40 had little to no such activity, with exemptions instead aimed at public properties, medical facilities, or nature preserves. An additional 12 of the municipalities had relatively few development abatements. The recoreds indicated that only 20 municipalities had granted many or high-value abatements for rehabilitation and redevelopment. .. 
Significant Use of Development Abatements: Asbury Park, Atlantic City, Bayonne, Bridgeton, Camden, Collingswood, Harrison, Hoboken, Gloucester Twp., Jersey City, Long Branch, Millville, Newark, New Brunswick, Paterson, Rahway, South Bound Brook, Vineland, Union City, Trenton.

It is not a coincidence that most of the largest granters of PILOTs in New Jersey are high-aid Abbott districts. Abbott aid allows school districts to have very low school tax rates and thereby sacrifice little by granting a PILOT and cutting the schools out of revenue.  In most non-Abbotts the school tax is much higher than the municipal tax, but in Jersey City the municipal tax is 50% of the tax bill, with the Board of Education getting 25%, Hudson County getting 22%, and small agencies getting the rest.

75% of Jersey City's K-12 school budget is paid for by state taxpayers, so if Jersey City PILOTs new development the state pays for the large majority of the costs to educate the children.  100% of Jersey City's Pre-K budget is paid for by state taxpayers, so Jersey City can PILOT property with impunity when it comes to Pre-K considerations.

In other words, since the state pays for Jersey City's schools anyway, cutting the schools out of money is relatively cost-free for Jersey City.

Jersey City Gains By Cutting the Schools and Hudson County Out

Indeed, cutting the schools and county out of taxes is more and more often revenue-positive for Jersey City since Jersey City can arrange for the developer to pay MORE in PILOT payments (which go to the municipality) than it would have paid to the municipality under regular taxation. Since these properties are office buildings and apartments for affluent people, the marginal cost of new services for new properties is very low and these PILOT agreements are extremely revenue-positive for Jersey City.

Jersey City started to grant PILOT agreements in the 1980s when Jersey City was "blighted" and continues to grant PILOTs even in thriving areas because PILOT agreements are so incredibly lucrative to the city.  In fact, PILOT payments in Jersey City are equal to more than half of Jersey City's regular municipal taxes. Jersey City's regular municipal tax levy is only $217.5 million but it gets $119.2 million from 146 PILOTed properties.

Jersey City is completely indifferent to PILOTs' impact on other Hudson County towns and state education aid, Jersey City openly boasts about how much more money it gets from a PILOTed building than a non-PILOTed.

Jersey City receives 100% of P.I.L.O.T. payments vs. 45% of conventional taxes
  • Most abated properties contribute more to city revenues than they would through conventional taxes
  • Under a P.I.L.O.T. agreement, The Sugar House in downtown Jersey City paid $652,216 to the city in 2007
  • Under conventional taxation, the Sugar House would have paid a total of $1,016,044 in taxes that year, of which Jersey City would have received $466,364 Jersey City received 40% more revenue through the P.I.L.O.T. than it would have through conventional taxation
The Real Problem with PILOTs (for the state)

The problem with Jersey City and PILOTs that should concern all state taxpayers is that PILOTed properties appear to the state as tax exempt properties just like churches, cemeteries, schools, and colleges would.

Recall, the state's formula for Equalization Aid (the biggest aid stream by far) is:

Adequacy Budget - Local Fair Share = Equalization Aid.

"Local Fair Share" is supposed to be based 50% on Total Income and 50% on Equalized Valuation.

This means that since PILOTed property is invisible to the formula for Equalization Aid, that the higher Equalization Aid is maintained despite the larger, real tax base.

As the Comptroller said:

"When new development occurs in connection with a long-term abatement, the PILOT revenue is not reflected in its ratable base, meaning formula state aid continues to provide enhanced funding based on artificially low community wealth. The school district still needs the state aid at the enhanced level since the district itself does not see the benefit of the PILOT amounts, and taxpayers throughout the state pay the resulting bill. The system allows the municipality, in essence, to hide its true wealth from the school district and the state, resulting in the school district's continued reliance on the state for funding."

Indeed, the value of PILOTed property in Jersey City is enormous and if it were taxable Jersey City would not need to be an Abbott district. Figures are very difficult to come by, but it was recently reported that if Jersey City's PILOTed properties paid regular taxes they would pay $198,589,915 total (to the schools, Hudson County, and municipality.)

Jersey City's (effective) tax rate is 2.291, (meaning 2.291%) so if the hypothetical taxes on Jersey City's PILOTs are $198.6 million, their (equalized) valuation has to be $198,589,915/.02291 =


The figure boggles the mind. It's like Jersey City has a hidden Millburn that the state's aid formulas do not see. Even at Jersey City's low 0.5878 tax rate, that $8.7 billion would produce $51 million for the school system.

If the state's aid formula could perceive that $8.6 billion in equalized valuation it could reduce Jersey City's aid and give that money to needier districts.

And what's also significant is that Jersey City is granting more and more PILOTs. Mayor Steven Fulop has reduced the value of PILOT agreements on the waterfront and downtown but is giving more PILOTs than ever to development in outer areas, including the transit-node of Journal Square. For example, the 1,840 apartment complex being built by KRE at Jersey Square (a $660 million construction job) will have a 30-year abatement and be invisible to the state's aid formulas through at least 2046.

Presumably these apartment projects will add only slightly to Jersey City's public school K-12 population, but they are expected to help increase Jersey City's state-funded Pre-K population by 25% in the next five years and cost the state (which pays nearly 100% of Pre-K costs) $20-30 million.

Jersey City: Aid Hoarder

Aside from the issue of PILOTs is that even Jersey City's official, equalized valuation has risen dramatically to $18-19 billion, the highest in New Jersey. Despite that increase in wealth, Jersey City's state aid has risen.  Without peer, Jersey City is he largest aid hoarder in New Jersey.

From 2000 to 2015, Jersey City's (non-PILOTed) Equalized Valuation more than tripled from $5.9 billion to $19.7 billion. (according to the Division of Taxation). By contrast Newark's Equalized Valuation only rose from $5.1 billion to $13.5 billion.

Yet yet despite that very high valuation Jersey City is not made to pay more for its schools. On the contrary, its aid has increased in absolute and proportional terms.

In 2000 Jersey City got $272.9 million in state aid out of a $5.1 billion (5.3%) total statewide distribution. Now Jersey City gets $488 million (counting Pre-K) out of an $8.6 billion statewide distribution. (5.7%).

Because of its gentrification and the existence of Adjustment Aid, the anatomy of state aid in Jersey City and Newark have diverged dramatically. Newark only gets $13 million in Adjustment Aid. Jersey City gets $114 million. Even though Jersey City's property wealth dwarfs Newark's, Jersey City's Local Tax Levy and Newark's are essentially the same.

Notice the difference in Adjustment Aid.

In the last few years Jersey City has thrived in a way that no other large city in New Jersey has.  This is good for New Jersey as a whole, but in the last few years New Jersey's state aid stream has been stagnant.  Hundreds of districts get less than 100% of what SFRA recommends and 117 districts get less than 50% of what SFRA recommends.  Many low-resource/high-need non-Abbotts never even got decent aid prior to the recession.

New Jersey has a daunting Pension Crisis combined with an intensifying education funding crisis.  This means that we cannot ignore the $8 billion in hidden ratables that Jersey City has.  New Jersey's PILOT law needs to be changed so that the municipality, school district, and county lose money in equal proportions and so that a fraction of the valuation of the PILOTed property counts for municipal and school aid.

Even aside from its PILOTed property, Jersey City is New Jersey's most overaided district in absolute terms.  Its $114 million in Adjustment Aid is a fifth of the total and would be even higher if Christie ran the SFRA formula again.  Jersey City has thousands of children receiving state-funded Pre-K whose parents are actually affluent and that number is expected to grow.

In the era of the Pension Crisis something has to change! 

April 8th, 2016 Update:

Former Jersey City mayor Gerald McCann wrote about the benefits of PILOTing to Jersey City itself in terms of Hudson County taxes:

Tax abatements do reduce our share of the county taxes since they are not part of that ratio. If the abatements are removed, we will have to pay more in county taxes as well as less in state aid for our schools.

January 18, 2017 Update:

If Jersey City's PILOTed property were an independent city, it would be in the top ten for New Jersey.

Here are the top EVs in NJ for tax year 2017.
1. Jersey City $26.6 bil
2. Edison $15.8 bil
3. Toms River $15.167 bil
4. Hoboken $15.128 bil
5. Newark $13.8 bil
6. Ocean City $12 bil
probably Jersey City's PILOTedMiddletown $10.6 bil

Woodbridge $10.5 bil


See Also:

"Extraordinary Aid Continues to Dwindle"

NJ Spotlight covers inadequate funding for "Extraordinary Aid."

Extraordinary Aid is the state's (partial) reimbursement program for extremely high Out of District tuition costs.  It's called "Extraordinary Aid" because the costs can be "extraordinarily high" (over $100,000 a student) and unpredictable.  Without Extraordinary Aid, a small district could be destabilized because of the random chance that a family moves in with several children with severe handicaps.

And now Extraordinary Aid payments are being cut relative to the costs of Out of District tuition.

Earlier this month, the state Department of Education alerted districts applying for the extra aid that it would pay 58 percent of the eligible costs. The funding level is a drop from 63 percent last year, and marks a significant drop from even the aftermath of the state’s fiscal crisis in 2012, when the state paid 77 percent.

Nonetheless, overall funding for extraordinary aid has remained steady. This year, the state has earmarked $165 million for such aid, the same as last year, and a slight increase over the $162.8 million budgeted in 2013.

And state officials point out that the aid has gone to offset the costs of educating more special-needs students, albeit at a smaller share per student. This year, the money is going to supplement funding for 13,200 students.

Still, as the cost of educating these students has increased, the shrinking share of extraordinary aid is emblematic of the fiscal constraints that schools are facing in addressing rising special-education costs.

The minute increase in Extraordinary Aid is the reason why I protest Adjustment Aid, Interdistrict Choice, Montclair's attempt to seize an extra $1 million, and Jersey City's growing Pre-K costs.

When the state is in a budget crisis, every dollar counts!  Jersey City alone is getting anotehr $2.7 million for Pre-K next year.  Hoboken is getting another $749,000 for Interdistrict Choice.  This gifts to high-resource districts and affluent parents on the Abbott Gold Coast hurt kids who live elsewhere!

Thursday, July 30, 2015

NJ Supreme Court to Hear COLA Case

The NJ Supreme Court has voted unanimously to hear the case on the constitutionality of suspending COLA increases for pensions.  (COLA=Cost of Living Allowances). 

COLA increases were suspended in 2011 in order to save the state $80 billion dollars.

Pension increases were expected to remain frozen for all retired public workers until the pension funds returned to sound fiscal footing, which was considered to be funded at a level of 80 percent and was at first expected to take two to three decades starting in 2011.

In recent years, however, New Jersey’s economic growth failed to match Christie’s rosy forecasts and the governor began to cut yearly budget contributions to the struggling pension system, undermining one of the central beams of his plan to replenish the pension system.

The state pension funds – which have 773,000 beneficiaries – are facing $40 billion in unfunded liabilities, according to state actuaries. The system is funded at a level of 51 percent and may run dry within a decade, financial analysts say.

If the Supreme Court rules in favor of COLA benefits the demise of state aid will come even sooner and more severely than I or anyone else anticipates.

We are doomed.

Jersey City's Development Boom, Pre-K, and the Aid Cuts Coming Your Way

It's a great time to be mayor of Jersey City. With new construction everywhere around him, Mayor Steve Fulop has predicted that Jersey City will overtake Newark to become the state's largest city by the end of 2016.
"I think that as New York City — Manhattan — has become less affordable, people look for alternatives. We’re situated in a sweet spot. We have 5,600 units under construction — more than any other city in the state — and another 7,000 on deck next year."

[Above: "Journal Squared"]

I'm not saying that this growth isn't good for New Jersey as a whole, but it comes with a downside for school finance for non-Abbott districts. The downside for school finance is that Jersey City's development boom is expected to increase the size of the Pre-K population by 25% by 2017 and keep growing thereafter. Since Jersey City is an Abbott and the NJ Supreme Court requires the state to pay 100% of Pre-K costs for all children in the Abbott districts, this means that New Jersey will have at least a 25% increase in Pre-K costs for Jersey City.  Although the residents of Jersey City's new construction will pay state taxes, reality is that all that new state revenue will go to the Pension Crisis. This means that that Jersey City's Pre-K growth will but even more pressure on education aid for other school districts.

Steve Fulop understands that the Pre-K population is going to increase. He is thus offering tax abatements to developers who provide space for Pre-K classrooms in new buildings.

Building more pre-K centers is a signature initiative of the Fulop administration, which is offering developers longer tax breaks if they commit to building them. The district doesn’t have enough public space for the 4,500 pre-K students enrolled now, and that number is expected to grow dramatically as development in Jersey City expands.
Just how much is Jersey City's Pre-K population boom going to cost New Jersey?

Jersey City now gets $67.5 million for Pre-K. With 2% inflation and 25% population growth, this means that in five years Jersey City's Pre-K will cost $93.5 million. Unless the New Jersey Supreme Court comes to its senses, that additional $26 million will be taken away from other New Jersey school districts.

The Pension Crisis is the predominant pressure on K-12 aid across the state, but increased expenditures for Pre-K funding in the Abbotts also hurt and Jersey City's increase is disproportionate to the other Abbotts. For 2015-16 Jersey City's increase for Pre-K was $2.7 million. That might not sound like a lot at first, but remember that the whole Pre-K and K-12 increase for New Jersey was only $8 million.

What's additionally ridiculous about this is that most of Jersey City's new residents are high-income. Over the next few years the absurdity of rich Abbott residents getting "free" Pre-K while poor non-Abbott residents go hang is going to become even more common.

Jersey City residents seem to be clueless about their exorbitant privilege. The Hudson Reporter ran this story about a creative director named Josh Bryant who waited in line for 48 hours for his son's "free" Pre-K education.

Josh Bryant, a 39-year-old tattooed creative director at a publishing company, used to wait in line to see bands like The Clash.
Now, he's waiting in line for something more important: his son's education.
Bryant and dozens of other parents are queued up – for up to nearly 48 hours – to secure one of 90 free (that is, state-paid) "first come, first served" preK spots for their 3-year-olds at Concordia Childhood Learning Center.
It's one of 38 preschool programs with Jersey City Board of Education contracts, Concordia's director Migdalia Viole said - but it's become so desirable that some professional parents worried about a segregative effect.
"I sort of regret the fact that I am able to take two days off work to sit here. Not everybody can do that," said Bryant, who started waiting at 11 a.m. Thursday.

Jersey City kids still get "free" Pre-K no matter what. Josh Bryant should "regret" the fact that poor kids outside the Abbott bubble GET NOTHING.

In conclusion, the rigid Abbott Pre-K mandate combined with the Pension Crisis means that Jersey City will enjoy funding increases while the rest of the state's districts see decreases.

Wednesday, July 29, 2015

Your number of the day: 4.58%.


It's a number everyone who cares about NJ school finance should know.


Because it's what the investment return was on NJ's pension funds was through May for FY 2014 (meaning ending this June). The final, exact figure won't be known until September, but it is expected to be lower since May 2015 was a bad month on the stock market.

From the Star-Ledger:

New Jersey's $80 billion pension fund likely won't hit its target investment return for the fiscal year that wrapped up in June after several years of double-digit gains that kept the giant pension system from falling into even deeper trouble.

Tom Byrne, chairman of the panel overseeing the pension fund investment portfolio, reported a gain of 4.58 percent through May, one month shy of the full fiscal year that ended June 30. Because of a weak June, final results, which won't be available until September, are expected to be even lower, he said at Wednesday's State Investment Council meeting.

New Jersey's assumed rate of return, the amount actuaries say it needs to avoid adding to its liabilities, is 7.9 percent. And while 4.58 percent is "decent" and outperformed its benchmark, Byrne said, it's a departure from the 16.9 percent the fund reaped the year before, the fourth consecutive year churning out double-digits.
Whatever the final amount is, the result for the state's school aid distribution is the same: without higher investment returns the state's pension liability is even higher and we cannot afford to fully SFRA.

What the lower return means is that the zero-out dates for New Jersey's pension funds move up. Instead of the Judges' fund zeroing-out in 2021, maybe it will zero-out in 2019 or 2020. Maybe instead of PERS zeroing-out in 2024 it will zero-out in 2022 or 2023. Maybe instead of zeroing-out in 2027 the Teachers' fund, TPAF, will zero-out in 2025 or 2026.  The pension funds' official value fell from $81 billion to $78 billion.

The scale of the Pension Crisis is so large that the exact time of the funds going broke is immaterial from the POV of state aid. The result is the same: New Jersey can never afford to fully fund SFRA and even the $8.6 billion Pre-K+K-12 aid stream is unsustainable.  Those of us from underaided, overtaxed districts cannot wait: we need redistribution now!

Update Sept 24th: 

The final number of FY 2014 has just come out and New Jersey's pension funds returned 4.16%.

Paterson's Budget Problems, a $20 Million Appropriation, and Some Context

Paterson is one of many New Jersey school districts suffering severe budget stress. Faced with a $20 million shortfall, Paterson is going to lay off over 360 staff members, including 197 teachers.

By a 5-4 vote, the Board of Education on Monday night approved a $565 million schools budget that district officials say will result in the elimination of 363 jobs.
Despite the large number of jobs at stake, less than 30 people attended the budget meeting and only five people spoke during the public hearing.
Among the jobs being cut are 197 instructional positions, which include teachers, officials said. The job reductions will generate about $21 million in savings, according to state-appointed schools superintendent Donnie Evans. 
Several people who spoke during the hearing predicted that the cuts will increase class sizes in a district that where student test scores are among the lowest in the state. 
“I’m struggling to understand how this reduction is going to have minimal effect on the children,” said Rosie Grant, head of the Paterson Education Fund, an advocacy group. “It has to be that class sizes are going to go up and supplies are less.” 
“This is going to lead to frustrated kids, it will lead to discipline problems, and it’s going to lead to increased dropouts,” Grant added. “We’re going to feed the school-to-prison pipeline unless we find the resources they need.”

School board president Jonathan Hodges cast the deciding vote in favor of the budget. Under the system of state control of city schools, Evans could have implemented the budget even if the board had voted it down.
Joining Hodges in voting for the budget were Christopher Irving, Manny Martinez, Flavio Rivera and Kenneth Simmons. Voting against it were Chrystal Cleaves, Errol Kerr, Lilisa Mimms and Corey Teague. 
Kerr called the district’s spending plan “the dumb the children down budget.” He asserted that the district does not have so much fat in its budget to withstand the $21 million in personnel cuts. Kerr also said the reductions would undermine the academic progress the district has made. “We are trying to destroy the entire thing,” Kerr said.
The budget stress is common across New Jersey, but what is unique about Paterson is that the New Jersey legislature tried to come to Paterson's aid with a $19.7 million appropriation for something the legislature called "Programmatic Stabilization Aid." Although many districts are also at risk of "destabilization" or were destabilized years ago, Paterson and Egg Harbor City (which was to get $300,000) were the only two districts that were going to get money from this off-formula aid stream.

Paterson, unlike Montclair (which almost got $1 million), is a truly needy district. 90% of Paterson students are FRL-eligible, the eighth highest percentage in New Jersey. Unlike many other Abbotts, Paterson does not receive Adjustment Aid and is thus not an aid hoarder. Paterson does receive $400 million in state operating aid for 28,139 students, or $14,200 a student, which is high, although not extraordinary considering what Paterson's needs are. Combined with its local and federal money, Paterson's school spending is $16,696, again, high, but not exorbitant compared to other Abbotts.

As Assemblyman Benjie Wimberly said of the money, “It saves a lot of jobs, it saves hundreds of jobs. We have to do what we have to do.”

As sympathetic as I am towards Paterson and any individual who might lose a job, the situation is complex.

The budgetary problem with Paterson (and many other Abbotts) is that it does not want to raise its own taxes. Since 2009 Paterson's Local Tax Levy has been the same $38,955,956. Its equalized tax rate is 0.5788, which is much lower than what a non-Abbott would pay and even lower than what many other Abbotts pay. Newark pays 0.8. Trenton pays 0.9175.

What makes Paterson's case more sympathetic is that it has had a loss of Equalized Valuation.   Indeed, the appropriation language cited this fact.

Programmatic Stabilization Aid shall be used by the Commissioner of Education to provde State aid to a school district, other than a school district that participates in Interdistrict public school choice program that 1)between October 2010 and October 2014, experienced an increase in its actual resident enrollment of at least 4.5% 2) between the 2013-2014 school year and the 2015-16 school year experienced a loss of Equalized Valuation of at least 21%.  

Giving the $19.7 million to Paterson is a very tough call, but people have to remember that as sad as it is for Paterson to have to lay people off that there are many similarly high-need districts that already receive much less than Paterson and have been hit similarly hard by the recession.

Paterson's spending, while not exceptional by Abbott standards, is higher than what other high-FRL districts spend. Woodlynne (93% FRL) spends only $12,241. Lakewood (86% FRL) spends $11,682. Red Bank Boro (89% FRL) spends $13,130. East Newark spends $9,980. Compared to its high-FRL peers Paterson is still doing ok.

Giving the $19.7 million to Paterson sounds nice, but is that a better use of money than expanding Pre-K in non-Abbotts? The $19.7 million for Paterson and $300,000 for Egg Harbor City could pay for Pre-K for 1,300 children.  Is it better than bringing desperately underaided and underfunded districts like the ones above closer to Adequacy?

If Paterson had gotten the $20 million it would have come out of NJ's pension contributions and cost the state more in the future or it would have come out of the budgets of other school districts and caused layoffs elsewhere. Raising state taxes by exactly $20 million just for Paterson and Egg Harbor City doesn't seem appropriate either. If the NJ legislature had proposed a tangible offset - reducing Adjustment Aid, Interdistrict Choice Aid, or categorical aid for ultra high-resource districts (eg, Hoboken, Ocean Twnship Cape May) - than I would be glad about the $20 million for Paterson and Egg Harbor City, but without an offset this wasn't a wise move.

$20 million in one year might not sound like a lot of money, but what about the year after and the year after that? The costs add up.

I also don't think that Paterson should be ahead of Woodlynne, Lakewood, Red Bank Boro, and East Newark for more aid. Even if the legislature took $20 million away from the Aid Hoarders I don't think that Paterson should be the first to get it. I wish Christie had proposed a spending offset somehow, but without the offset I think Christie made the right call with the line-item veto.

Tuesday, July 28, 2015

Adjustment Aid and DFG B: Who Gets It and Who Doesn't

I just wanted to make a quick follow up on my post yesterday about Adjustment Aid and who does and doesn't get it.

DFB B is the second poorest of the eight District Factor Groups.

Only 40% of DFG B districts get any Adjustment Aid.  This is lower than the 49% of DFG A districts that get it. Like with DFG A, the aid is usually a very small portion of district revenue with only a handful of exceptions

With DFG B you see how Adjustment Aid is really skewed towards the Jersey Shore (as well as rural areas).  Cape May, Ocean, and Atlantic counties have 11 of the 27 DFG B districts getting Adjustment Aid.

This is yet another reason why Adjustment Aid is so problematic.  Even if these Jersey Shore districts have higher-than-average FRL rates, that doesn't mean that they are low-resource.

Wildwood Crest has $2,147,644,070 in valuation for 250 students, or $8.6 million per student.  Even if you assign only two thirds of that to Wildwood Crest since it is only K-8, it still has $5.7 million per student, a figure even higher than Hoboken.

Lower Cape May Regional has $6,874,334,464 in equalized valuation for only 1,449 students, or $4.7 million a student.  Lower Cape May Regional is just a high school, but even if you assigned it only a third of that valuation per student, it would still have over $1.5 million a student, an extremely high figure.

Middle Township is a K-12 district with $2,720,079,400 in valuation for 2,588 students, or $1.05 million per student.  Also a high figure.

Upper Township has $1,924,606,756 for 1338 students, or $1.4 million per student.  It's another K-8 district, but even at two thirds valuation, it still has almost a million per student, an above-average figure.

What's more, the above districts are Interdistrict Choice districts, so they get additional money on top of their Adjustment Aid.  The NJ DOE originally wanted to make offsetting cuts to Adjustment Aid districts participating in Interdistrict Choice but never followed through on this due to opposition from several Cape May districts.

I need to emphasize that the real story here is Jersey City.  Jersey City gets $114.4 million in Adjustment Aid.  The other DFG B districts that get Adjustment Aid only combine for $73.4 million.

Jersey City only has about $550,000 in valuation per student (not counting its PILOTed property). That's a lower than average figure, but Jersey City's school tax rate is only 0.58, a an extremely low rate.  Jersey City's Local Tax Levy is $109 million on $18.3 billion in valuation.

When the state looks at sources for revenue for its many badly underfunded and underaided schools it needs to look at Adjustment Aid.  The districts that get Adjustment Aid are better positioned to absorb cuts than other districts are.

As for "Who doesn't get Adjustment Aid?"  It should be clear.  It's most districts period, but the program does nothing for most poor students.  In terms of geography suburban districts are the victims as usual.


Monday, July 27, 2015

Adjustment Aid: What it is, who gets it, and who doesn't

Adjustment Aid is a provision in the School Funding Reform Act of 2008 that guarantees that no district can lose state aid even if SFRA’s new aid calculations indicate that that district should now receive less aid than it did before SFRA became law.  

Adjustment Aid's supporters would call it a “hold harmless” provision and praise it for ensuring that no district can experience a destabilizing loss of aid. SFRA’s detractors would call it "aid hoarding" and denounce its creation as a political move that harms underaided districts at the expense of overaided ones.

The actual text in SFRA creating Adjustment Aid is the following:

For the 2008-2009 school year, each school district and county vocational school district shall receive Adjustment Aid in such amount as to ensure that the district receives the greater of the amount of State aid calculated for the district pursuant to the provisions of this act or the State aid received by the district for the 2007-2008 school year multiplied by 102%.

(The reference to “102%” requires the state to actually increase the aid of Adjustment Aid districts in 2008-09, although, according to SFRA, they are already overaided.)

Today, 176 districts -- less than a third of New Jersey’s total - get Adjustment Aid.  The total amount is $555 million, the third largest aid stream in NJ’s K-12 education budget.  (The 176 districts getting Adjustment Aid include nine non-operating districts and nine vo-techs.)

In 2012 then-commissioner of Education Chris Cerf characterized Adjustment Aid this way:

Adjustment Aid also crept in to SFRA, not because there was an educational need for it, but rather to ensure that no district lost State aid in the transition from old funding formula to new. …

Adjustment Aid was a political add-on to the [Professional Judgment Panel] process. It served no purpose other than to hold all districts harmless in the transition from the old funding formula to the SFRA. It is a symbol of the old Trenton; a paean to the longstanding tradition of refusing to make hard choices even when hard choices are in order and failing to make hard choices will cost taxpayers greatly

Cerf proposed to cut Adjustment Aid in half over five years for districts that were above-Adequacy. Unfortunately, his proposal was opposed by the Education Law Center and elected officials from areas that had Adjustment Aid districts. Urban Democrats and rural Republicans both opposed it. Sen. Steve Oroho (R-Sussex) denounced the proposed changes: "
This is exactly why we need a new funding formula that is balanced and accountable. Dozens of our local school districts are now among the 185 suburban and rural districts shortchanged from receiving basic aid, leaving them faced with potential increases in already too costly property taxes."

The Education Law Center and Sen. Oroho never agree, but the ELC also opposed cutting Adjustment Aid (assuming there would be no sensitivity to whether or not a district was Above Adequacy) and described Adjustment Aid's creation in a completely different way from how Chris Cerf did.

However, any proposal to cut adjustment aid in transition districts would run afoul of the State funding law -- the School Funding Reform Act of 2008 (SFRA). It would also create a scenario where a select group of districts would be forced to shoulder the burden of arbitrary school aid reductions.
Under the SFRA formula, numerous districts are currently receiving a form of state funding called "adjustment aid." This aid is designed to ease the transition as overall budgets in these districts are brought down to the "adequacy" cost levels established in the formula. "Adequacy" is what the NJ Department of Education has determined to be the level of spending necessary to provide NJ students with a "thorough and efficient" education. 
Adjustment aid is formula-driven. When the SFRA was first proposed, it was dubbed "hold harmless" aid, since it was designed to prevent a "cliff effect," or a sudden and sizable drop in state aid that would trigger significant cuts in educational programs and staff by districts as they transition to adequacy. With adjustment aid, these transition districts will be "flat funded" -- or receive no increase in state aid -- until their overall budget is lowered to the adequacy level. Most importantly, adjustment aid protects these districts from having their total state aid cut below the prior year's level.

Unfortunately Chris Christie lost his will to cut Adjustment Aid or even to run the aid formulas for the School Funding Reform Act after the 2013-14 aid distribution. For 2014-15 the state gave every non-Interdistrict Choice district another $20 per student, regardless of it being overaided or underaided. For 2015-16 the state froze every non-Interdistrict Choice district’s aid again, regardless of how severe its underaiding was.

This post will analyze who gets Adjustment Aid and why reducing Adjustment Aid is necessary in a budgetary era when the state cannot fully fund SFRA. Reducing Adjustment Aid was the Christie Administration’s one progressive move on aid, it should be revived and enthusiastically supported by people who purport to care about equity and justice. In a reactionary defense of the status quo, the Education Law Center betrayed hundreds of underaided, high-need districts in its opposition to reducing Adjustment Aid.

There are several different ways to look at where Adjustment Aid goes. Here are some snapshots to give you an accurate picture of who is getting the money and who isn't getting the money.

Most of the districts getting any Adjustment Aid are, in fact, middle-resource and not poor at all.

Though most districts getting Adjustment Aid are middle class, most of Adjustment Aid money does indeed go to districts with low-DFG rankings.

HOWEVER, just because a district has a low-DFG ranking doesn't mean it has a low tax base. Many low-DFG districts at the Jersey Shore actually have extremely strong tax bases. Jersey City is in DFG B, but has an average tax base per student.

ALSO, just because most Adjustment Aid goes to poor districts doesn’t mean that most poor districts get Adjustment Aid.  Most districts DFG A and DFG B get nothing in Adjustment Aid and those that do get Adjustment Aid usually get very little.

Let's do a close-up look at DFG A, the poorest of the eight DFGs. As you can see, most DFG A districts get absolutely nothing in Adjustment and and for those that do, it's usually a small percentage of their overall revenue.

Is any aid stream whose distribution looks so random appropriate for the state to use?

According to the chart Asbury Park gets over 30% of its revenue from Adjustment Aid. Since Asbury Park's students are over 90% FRL-eligible, you might think that Adjustment Aid serves from progressive purpose.

But Asbury Park spends $28,229 a year, of which $23,600 a year comes from state aid. Is it really fair to give Asbury Park so much money when so many other districts are severely underaided? Even if Asbury Park lost half of its $24.4 million Adjustment Aid its state aid alone would still be $18,400 per student and its overall spending about $25,000 a student. Some people say that Asbury Park is overaided because it is an Abbott but that is not quite accurate -- Asbury Park is overaided because of Adjustment Aid.

Other DFG A districts that get large amounts of Adjustment Aid also spend over $20,000 a pupil, including Atlantic City, Camden City, Keansburg, North Wildwood City, and Wildwood City. These districts can afford to lose aid.

Jersey City is in District Factor Group B, so it doesn't appear in the above chart, but Jersey City is especially relevant in discussions of Adjustment Aid because Jersey City gets $114 million in Adjustment Aid, one-fifth of the total. Because of Adjustment Aid Jersey City has a $109 million tax levy on $18.3 billion in valuation. Jersey City is the highest valuation city in New Jersey, but its local tax levy for schools is less than West Orange's.

$122 million of Adjustment Aid goes to districts that are DFG CD and higher. This includes some high-wealth districts Princeton, Montclair, Hoboken, West Morris, Clinton, and Marlboro. When so many districts like Belleville, East Newark, Guttenberg, Fairview, Dover etc are desperately underaided and underfunded, how can we side with the aid hoarders?

New Jersey is never going to be able to fully fund SFRA, but when 117 districts get less than 50% of their recommended SFRA (uncapped) aid, redistribution is necessary. Chris Cerf's idea to halve Adjustment Aid for districts above-adequacy was a sound one and should be supported.


See Also:

Friday, July 24, 2015

The Non-Results of Abbott Funding

When Marilyn Morheuser, executive director of the Education Law Center, was asked about what the results would be of massive increases in education funding for the Abbott districts she said the following:

"The state can't guarantee results. It can guarantee opportunity. However it's a little hard to tell what the results might be when opportunity is never made available."

Now, after 20 years of "Parity Plus" funding for the Abbott districts we know what those results are and they are not good. The Abbott districts, despite huge financial advantages over high-poverty non-Abbotts, perform no better and oftentimes worse than their underresourced demographic peers.

For instance, in Guttenberg 82% of students are FRL eligible. Guttenberg isn't an Abbott and its per student spending is $11,116. Jersey City (75% FRL)is an Abbott and spends is $17,859.

Guttenberg gets only $150,000 for Pre-K. Probably enough for five kids per grade. In the Abbotts Pre-K money is universal even for the kids of investment bankers.

Despite the underaiding and underfunding, Guttenberg’s students perform at the 29th percentile in statewide academic achievement. Jersey City’s students score at the 26th percentile.

Nor is that result a fluke. Guttenberg outperforms Hoboken and Harrison, which perform at the 19th and 25th percentiles, respectively. Guttenberg underperforms Union City and West New York, which are at the 28th and 30th percentiles, respectively, but not by a large amount,

Since all of the Abbotts have huge financial advantages over Guttenberg, advocates for the Abbott regime should explain how financial advantage does not translate into results. Hoboken is a relatively low 49% FRL-eligible and spends $22,199. Union City's (95% FRL) spends $17,400. Harrison's (81% FRL) spends $16,600. West New York (data incomplete, but prob 82% FRL) spends $14,800 per student.


Not every low-resource/high-need non-Abbott does as well as Guttenberg, but many others do.

Belleville is "only" 60% FRL-eligible, which is lower than most Abbotts, but it only spends $10,800 per student, one of the lowest figures in New Jersey. Despite that, its schools still perform at the 27th percentile, which is superior to most Abbotts.

Even one of New Jersey’s most underresourced districts, East Newark (88% FRL), does not lag that significantly behind the Hudson County Abbotts. East Newark only spends $9,980 per student and desperately needs more aid. However, even with that shameful underaiding, its students still scores at the 20th percentile. This is not satisfactory performance, but it is significantly ahead of the highest aided Abbott, Asbury Park, which spends $28,229 per student, and yet whose schools are at the 1st-3rd percentiles.

Prospect Park (85% FRL-eligible, $12,140 per student) is also low-resource/high-poverty and it is also at the 19th percentile. This is better than most of the Abbotts.

I want to pull out Hoboken's scores. Hoboken's 49% FRL rate is barely above the state average of 38%, but at $22,199 per pupil in spending, Hoboken has the second highest spending of K-12 district in NJ after Asbury Park.

Some people would say that Hoboken's low scores are due to higher-performing children enrolling in charter schools. Indeed, that could be a cause of the low scores on the elementary and middle school levels, but Hoboken has no charter high school Hoboken has only one charter high school (HCS), it only enrolls 20-25 children per grade, and Hoboken High School is still only at the 18th percentile. Only 11% of Hoboken High School students score above 1550 on the SAT, compared to a demographic peer average of 16%. 18% of North Bergen's students score above 1550. 24% of Belleville's do. 33% of Dover's do.

The high-poverty non-Abbotts tend to have more Latino students than their Abbott peers, but not always.

Let's do an a more detailed comparison of Dover and Phillipsburg (an Abbott).

Dover is 69% FRL eligible and 82% Latino and 7% black. It's a non-Abbott and only spends $11,362 per student. It gets $350,000 for Pre-K, probably enough for 11-12 kids per grade.

Phillipsburg is 53% FRL-eligible and only 17% Latino and 13% black. It's an Abbott and spends $15,998 per student. All the kids there get Pre-K.

Based on the FRL and spending numbers, you would think that Phillipsburg would outperform Dover, but the opposite is true. Phillipsburg's schools score at the 37th percentile. Dover's schools score at the 53rd percentile. Dover, in fact, outperforms all of the Abbotts. Union City, praised in the book Improbable Scholars, only scores at the 28th percentile.

Likewise, you would expect an Abbott like Pemberton with relatively lower-FRL rates to do much better than it does. Pemberton's FRL-eligibility rate is 44%, even lower than Hoboken's. Pemberton is also 58% white or Asian and only 42% black or Hispanic. Pemberton spends $18,931 per student, an extremely high figure.

And yet, Pemberton only scores at the 24th percentile. If you factor out the relatively-high performing Ft. Dix School, Pemberton only scores at the 21st percentile.

The Education Law Center and the NJ Supreme Court look like they were wrong about the importance of money to academic success. If you compare test scores in the Abbotts with the brutally underfunded and high-poverty districts that didn't participate in the Abbott lawsuit, such as Guttenberg, Prospect Park, East Newark, and Belleville, you will see that there are no wide differences or any differences.

My evidence here has been anecdotal, but the NJ DOE did a more comprehensive analysis in its 2012 Education Funding Report and likewise determined that Abbott money made no difference in score improvement.

Not all high-poverty/low-resource non-Abbotts do as decently as Guttenberg, Dover, and Belleville. I am NOT saying that money doesn't matter. I write this blog because I badly want the underaided non-Abbotts to get more money, but there is a point where more money produces diminishing returns and most of the Abbotts are beyond that point.

Thursday, July 23, 2015

The Poor Districts Abbott Left Behind

One issue with the Abbott funding regime that I am surprised doesn't arouse more anger among progressives is how there are still so many poor children left behind.  

The Abbott lawsuit was waged on behalf of public school children in the poor urban (ie, the Abbotts) districts and only those children. The Supreme Court of New Jersey, in its wisdom, has never decided that poor children in poor districts that were not urban have any of the rights that kids living in identical circumstances in Abbotts have.

Or, as Paul Tractenberg, the founder of the Education Law Center, bluntly said in 1997 

"We were focused on poor kids in urban districts. We didn't purport to represent poor kids wherever they happen to be."
Indeed.  The Abbott regime completely leaves behind poor children living outside the Abbott districts. School districts that are just as poor as the Abbotts but not part of the Abbott lawsuit usually get one-quarter or one-third as much state aid and spend drastically less per student.  

As the Abbott decision has aged and the Abbott list is essentially the same as it was in the early 1980s (no district has been subtracted from the list, although three districts have been added), it more and more diverges from a list of New Jersey's 31 lowest-resource and poorest districts.
Of the 31 districts in New Jersey with the highest percentage of FRL-eligible students, only sixteen are Abbott districts.  Of the 31 poorest districts, the fifteen non-Abbotts get on average $8,422 per student in state aid while the sixteen Abbotts get $15,038, a $6,600 per student difference.  Those fifteen poor non-Abbotts combined get $14 million in Pre-K money, less than just one Abbott, West New York, gets.  

If a district has considerable property wealth despite its student poverty than there can be rational reasons for the underaiding.  Indeed, Atlantic City still has about $1.5 million in property wealth per student and its school spending is $20,826 per student.  Seaside Heights likewise has a good tax base and can spend $15,999 per student.

Lawnside is not an Abbott, but its state aid is a healthy $12,611 per student, enough to bring up Lawnside's spending to $17,770.

However, Atlantic City, Seaside Heights, and Lawnside are the exceptions and the other highest-poverty non-Abbotts in NJ do not have strong tax bases or adequate aid streams and their school systems suffer.  East Newark's school spending is $9,980 per student despite an 88% FRL-eligibility rate.

The average Abbott in the top 31 highest poverty districts spends $17,457 per student whereas the average non-Abbott in the top 31 highest poverty districts only spends $13,794, a $3,600 per student difference.

If I factored in facilities money and Pre-K money the Abbott advantage would be even larger.

What this means is that NJ, with the Abbott decision, has created a new dimension of "Savage Inequalities."  Like other states NJ still has the savage inequalities between poor districts and wealthy districts, but unlike most other states we have savage inequalities between poor districts that were poor in 1986 and who won massive "legal relief" and districts that have become poorer since and get nothing.

Wednesday, July 22, 2015

The Grotesque Overaiding of Hoboken

The Poster Child for Everything That’s Wrong with New Jersey School Aid

There are numerous problems with New Jersey’s Abbott funding system, but there is no facet of Abbott more problematic - nay, morally obscene - than the fact that Hoboken, New Jersey’s richest K-12 district, remains an Abbott.

Although Hoboken is a uniquely high-resource, high-aid district, the continuing overaiding of Hoboken amidst the severe underaiding of the rest of the state exemplifies the rigidity of New Jersey distribution of education aid and its failure to adjust to changing economic realities.

Hoboken is Rich

If you thought that Princeton, Millburn, or Paramus had a lot of money for schools, Hoboken dwarfs them all.

Hoboken now has $13.26 billion in equalized valuation, the fourth highest in New Jeersey, but only 2,705 K-12 students, or $4.9 million a student. Hoboken has so much ratables, so few kids, and gets so much state aid that its tax rate is 0.3237. This means that someone with a condo with a $1,000,000 market value would pay $3,237 in school taxes a year. Even with that tiny tax rate, Hoboken spends $22,199 per student, the highest of any K-12 district in NJ other than Asbury Park.

If Hoboken had just a 1.0 school tax rate it would raise $130 million a year, enough to send every Hoboken child to a Swiss boarding school.

Just how high is $4.9 million a student? Paramus, an upper middle class town that is home to the biggest shopping mecca of New Jersey, “only” has $2.2 million per student. Princeton, with its mansions and corporate office parks, “only” has $1.9 million. Millburn, which also has mansions and a large mall, “only” has $1.7 million per student. (Yes, that 2,705 figure includes Hoboken’s charter school students).

In income Hoboken isn’t an outlier like it is in property wealth, but its median income is $108,000, which is similar to Princeton and Scotch Plains, two more towns not considered poor by anyone.

However, Hoboken's Total Income, which is used by the DOE to calculate Local Fair Share, is $3.6 billion for 2015-16, the fifth highest in New Jersey.

Since the formula for Local Fair Share is:

Equalized Valuation x 0.014909959 x 50% + District Income x 0.052921406 x 50%

$12,431,717,099 (the 2015-16 amount) x 0.014909959 x 50% + $3,567,442,637 x 0.052921406 x 50%

Hoboken's Local Fair Share works out to a staggering:


This is the fourth highest in New Jersey, after Jersey City, Edison, and Toms River and ahead of Newark, all of whom have much, much larger student populations.

Hoboken Pulls in Lots of Aid

Its unequaled wealth would allow Hoboken to have low taxes and high school spending no matter what, but on top of all that local wealth, Hoboken receives $20.8 million in state aid for its schools from taxpayers statewide; $10.6 million for K-12 and $10.2 million in Pre-K aid. Hoboken’s $20.8 million in aid is three times higher than West Orange’s $6.9 million, even though West Orange has almost three times as many children and an $850,000 per student property base.

Hoboken’s K-12 aid works out to $4,200 a student, dramatically more that what working class districts with average property valuations like Clifton and Red Bank Boro get. Even these disparities underestimate how privileged Hoboken is, since as an Abbott it gets its capital improvements paid for by state taxpayers.

To be fair, Hoboken doesn't receive more aid than every district that is lower-resource than it is, but it receives more aid than many.

Hoboken's aid aid combined with its immense property wealth puts it in a league of its own for student spending.

And if that wasn’t enough for Hoboken, Hoboken is getting more and more money per year! While 90% of New Jersey’s school districts saw not a dime in new aid for 2015-16 and the total K-12 increase was only $5.2 million (for 590 districts), Hoboken is getting another $749,133, or 14% of the total aid increase. The $749,133 comes via Interdistrict Choice, a program where the state pays tuition for students who live outside a district to attend school elsewhere. Hoboken receives $2,645,874 for only 160 students, or $16,000 a student, one of the highest costs per student in the whole Interdistrict Choice network.  (Hoboken tells the public that it is only getting $79,695)

The other $58,000 in new money is for Pre-K. Hoboken is an Abbott and therefore the New Jersey Supreme Court requires that state pay for “free” Pre-K for all three and four year old children living there, no matter how wealthy their parents are. This fact means that the children of investment bankers in Hoboken receive two years of “free” Pre-K. While the state has tens of thousands of children living in poverty outside of the Abbotts, they usually have no Pre-K access at all. Clifton, Belleville, and Bloomfield receive $0, but their low-income residents, as state taxpayers, pay for “free” Pre-K in Hoboken.

And if that isn't bad enough, $255,000 of Hoboken's aid is for students who aren't even there via Chris Christie's "Additional Adjustment Aid" program. Additional Adjustment Aid is given to Interdistrict Choice districts that once lost Choice students. Rather than let any district lose aid, Christie lets Choice districts keep their total aid amount by redirecting the lost Choice Aid via "Additional Adjustment Aid."

What’s more, Hoboken also has hundreds of millions of dollars of ratables hidden from the state’s aid formula behind PILOT agreements. When a town grants a development a PILOT town receives money from the building’s owner that are akin to taxes, but in the eyes of the state’s formulas for school aid, the PILOTed buildings are invisible and are equivalent to a tax-exempt church, hospital, or private school, ie, it doesn’t count as property wealth.

However, residents of PILOTed properties get all the same privileges of other Hoboken/Abbott residents, including two years of “free” Pre-K paid for by taxpayers statewide.

Comprehensive and up to date figures are difficult to come by, but the state comptroller in 2010 gave a “conservative” assessment for Hoboken’s PILOTed property at $298 million (which is the official valuation, not the Equalized valuation). Even at Hoboken’s extremely low school tax rate that property would produce over $1,000,000 for the schools a year.

Hoboken’s original status as an Abbott goes back to its poverty and low resources in the early 1980s, when the Abbott lawsuit emerged and when Hoboken was indeed one of NJ’s poorest districts.

Hoboken’s student population has not changed as dramatically as its ratable situation, but change has occurred and Hoboken’s students are now 49% FRL-eligible, which is not significantly above the state’s average of 36% FRL eligible. 95% of Hoboken students speak English at home.

Hoboken’s students still more disadvantaged than average , but this is financially irrelevant. The point is that at a 0.36 tax rate and $4.2 million in property valuation per student, Hoboken easily has the local resources to fund its schools, including Pre-K. When NJ is in a budget crisis and cannot increase aid, state aid is zero sum and that every dollar that Hoboken clings to is one dollar less that is available to children in the rest of New Jersey. If poor children in Hoboken deserve extra resources than poor children in other districts with even more economic disadvantage and barely a tenth of Hoboken’s property wealth deserve it either more.

Additionally, it needs to be underscored that Hoboken's public student population is proportionally miniscule.  Hoboken's total population is 52,000, but it only has 2,600 students (yes, that includes students in charters), or barely 6% of its total population.

This is a third of New Jersey's average.

Hoboken's tiny student population means that even though the student population may proportionally have a high FRL-eligible rate, there are few FRL-eligible students there period.

Many diverse suburbs in New Jersey actually have more or almost as many FRL-eligible students than Hoboken (plus many non-FRL eligible students.)  These districts are not remotely as rich as Hoboken and yet get far less aid.

Total Student Pop.% FRL EligibleNumber of FRL-eligible studentsAmount of K-12 State Aid
South Orange-Maplewood6,84620%1,369$4,216,218
West Orange7,02638%2,670$6,950,527

Hoboken's ELL percentage is only 1%, the lowest percentage in Hudson County.  The state average is 5%.


Since the recession hit in 2010 and state aid has be cut, numerous critics, especially Save Our Schools NJ and the Education Law Center, have slammed the state and Chris Christie for underfunding the state’s school aid law, the School Funding Reform Act of 2008 (SFRA).

Underaiding is a valid criticism (if one is oblivious to the pension crisis) but the problem with state aid in New Jersey isn’t only underfunding, it is the rigidity of the distribution. Powerful legislators and special interests prevent districts from losing aid, no matter how unjustified that aid is in light of more acute budget problems elsewhere.

Hoboken is not the only district in New Jersey that is overaided. There are over 200 districts that get more than 100% of what SFRA recommends and a few dozen that would lose aid even if SFRA were funded at capped aid levels. Hoboken only stands out because of its extraordinary wealth and the scale of its overaiding. The contrast between poverty stricken families in non-Abbotts getting nothing for Pre-K while affluent families in Hoboken with six-figure incomes getting “free” Pre-K is grotesque and just one of the most unfair results of the Abbott decision.

See: "Dear Hoboken, Your Charter Schools are Not Bankrupting You."

See: "Even Demographically, Hoboken has no right to be an Abbott."