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Wednesday, September 30, 2015

Dear Hoboken BOE, Your Charter Schools Are Not Bankrupting You

Hoboken has one of the highest percentage of students enrolled in charter schools in New Jersey.  It is also, by far, the richest K-12 district in New Jersey in terms of taxing ability per student.

Charter schools are controversial everywhere in New Jersey, but Hoboken's three charter schools - Elysian, the Hoboken Charter School, and HOLA Dual Language - are even more controversial than most because
1) there is such a large racial and socioeconomic divergence between Hoboken's charter schools and the district-run public schools
2) they enroll proportionally more students than in most other districts with charters and thus have a larger than average budget impact.

I am not going to wade into the fight about the socioeconomic disproportionalities between the charters and the district schools other than to say that I think this is a real problem.  NJ's charter school law needs to be changed so that Hoboken's charters can reserve spaces in their admission lotteries for FRL-eligible students to match the demographics of Hoboken's overall student population.

I am also not going to wade into whether or not it is fair that charter schools in Hoboken (and elsewhere) get significantly less in funding than traditional public schools.

This post is going to be about the budgetary impacts of Hoboken's charter schools and how the Hoboken Board of Education exaggerates what those impacts are and is New Jersey's whiniest, most delusional, school district.

This is important because the opposition from the Hoboken BOE to charters is the most intense opposition in New Jersey. The Hoboken BOE sued on a technicality to block a Spanish-immersion (HOLA) charter school's expansion, denied there was a "lawsuit" altogether, were disputed on that denial, budgeted $50,000 for a lawsuit that they had once denied existed, and, after they lost the appeal and agreed to stop using public funds for litigation, board members vowed to continue the appeal with their own personal money.

The basic fact about Hoboken's charter school expenses is that while they have a palpable impact on the district budget, Hoboken remains an exceptionally high spending district.  While the money going to Hoboken's charter schools is increasing, Hoboken's wealth has simultaneously increased even more rapidly and the impact on Hoboken's tax rate is imperceptible.

A Victimhood Complex

I think an attitude some individuals give off about charters in Hoboken is represented by former BOE president Leon Gold.

In an interview with titled "Hoboken's Charter School Nightmare," Gold, said this about charters:

We’re being hurt by increasing white flight from our school system [to charters], and we’re being strangled financially: Because of the [tax] cap that they put on in Jersey, we can’t even pay the amount of money that we will have to pay out from local tax levy, to support the charter school expansion. 
And they are actually starving us; we are going to have to engage in layoffs now because of this … Hoboken is this incredible nexus, where everything wrong about charter schools [and] about funding all comes together …
It’s stealing from our public school education. If Christie wanted to fund them completely through state aid, great … “School choice” … they’ve increased it for the charter schools, and reduced it for us …
Leon Gold must know nothing about public education in the rest of New Jersey if he thinks that Hoboken will be "bankrupted" by charters.

Hoboken cannot blame charters for all its budgetary "starvation." Hoboken is New Jersey's second highest spending K-12 district (after Asbury Park), so the notion that Hoboken is being "strangled" is insane unless you ignore conditions in the rest of Hudson County, New Jersey, and nation, which is precisely what Gold does.

Board president Leon Gold does not speak for the whole Hoboken Board of Education and school district, but his views are echoed elsewhere.

In December 2013 then-superintendent Mark Toback warned about the budgetary implications of HOLA's expansion.

a larger issue concerning the ability of the taxpayers of Hoboken to effectively sustain what is, in essence, four separate school systems under the current funding formula and the way by which funding is distributed.

This is totally misleading.  Yes, a demographically typical community cannot sustain "four separate school systems," but a demographically typical community would have far more children than Hoboken.  Also, an stand-alone charter school should not be considered a "school system."

The percentage of Hoboken residents enrolled in the traditional public and charter schools (combined) is 5% (about 2,600 out of 52,000).  The average New Jersey town has 17% of its population in the schools. A normal town could not sustain four school systems because half of its population would then be enrolled in the public schools.  Hoboken is not a "normal" town.

The Hoboken school district's total revenues are now $68 million.  However, its Local Fair Share is $187 million, the fourth highest in NJ, although Hoboken is relatively small in student population.  Its Local Tax Levy , $40 million, is barely above the state minimum (see Slide 41).    Hoboken tax base could sustain a 7,000-9,000 student school district before it would qualify for a dime of Equalization Aid.  Hoboken's equalized tax rate is now 0.35.  That could triple and Hoboken's tax rate would still just be average for NJ.  (NJ's average school tax rate is 1.3)

Hoboken Blames Charters for High Spending Too

Fortunately there are people know that Hoboken is actually an exceptionally high spending district. Laura Herzog of NJ Advance Media recently did an article about this "Why Hoboken has the highest per pupil spending in Hudson County."

The article begins with this list of district spending from the state's "Taxpayers' Guide to Education Spending 2015."  [These figures include pension and FICA expenses]

  1. Hoboken: $24,318 
  2. Jersey City: $23,435 
  3. Harrison: $22,854 
  4. Union City: $20,868 
  5. Weehawken: $18,998 
  6. Secaucus: $17,886 
  7. West New York: $17,558 
  8. East Newark: $15,893 
  9. Bayonne: $15,789 
  10. North Bergen: $15,425 
  11. Kearny: $15,184 
  12. Guttenberg: $13,611 

New Jersey districts' average per pupil spending is around $19,000, according to last year's NJDOE report.
Faced with the reality that Hoboken's spending is extremely high and yet warped by a party line that charters are to blame for everything, Hoboken's Business Administrator said precisely the opposite of Gold and Toback said and claimed that Hoboken's per pupil spending is so high (in part) because of charters!

According to Hoboken School Business Administrator William Moffitt, there are a few reasons Hoboken may have higher spending per pupil than other school districts:
  • It's a former Abbott district, so the state requires it to offer programs like full-day kindergarten and a preschool.
  • The cost of maintenance on its several over-100-year-old buildings: A district with newer schools, or a one-school school district like Guttenberg, is likely to have lower maintenance costs, he said.
  • There are three charter schools in Hoboken. "There's a redundancy there," he said, adding that it should be noted that $9 million in the district budget goes towards 750 charter school students.
What is going on?!?! Gold and Moffitt contradict each other and can't both be right, but both manage to be wrong anyway.

Gold is wrong that Hoboken's charters have "starved" Hoboken, but Moffitt is wrong too about what the reasons are for Hoboken's high spending.

Moffitt may have been referring to Hoboken's per pupil spending increasing because kids were enrolling in charters while the district cannot reduce expenses proportionally in their absence, but Superintendent Toback warned that charter school kids would have often just enrolled in private schools if they weren't in charters. (see page 4)

The claim about charters driving up Hoboken's per pupil spending is not the only bullshit given for Hoboken's high spending.

  • It's a former Abbott district, so the state requires it to offer programs like full-day kindergarten and a preschool. 
There are four other "former" Abbotts in Hudson County (West New York, Union City, Jersey City, and Harrison) and none of them spend as much as Hoboken.  No Abbott other than Asbury Park spends more.

  • The cost of maintenance on its several over-100-year-old buildings: A district with newer schools, or a one-school school district like Guttenberg, is likely to have lower maintenance costs, he said.

Yes, Hoboken spends the most on maintenance in Hudson County, but it spends the most or the second most on everything and is often an outlier. The only reason the Hoboken Administration singles out maintenance as a factor in high-spending is because having old buildings is beyond the Administration and BOE's control and thus not embarrassing to anyone.

East Newark's one school is also a "100 year old building" (actually a 125 year old building from 1896) and its maintenance spending is quite low.

Hey, it's great that Hoboken spends the most on Extracurriculars, Food, and Support Services, but it also spends the most on Legal Costs and Administration.

Total Operations and Maintenance of PlantTotal Support ServicesTotal Administrative CostsTotal Extracurricular CostsTotal Equipment CostsLegal CostsBoard Contribution to Food Services
East Newark$1,010$1,766$1,534$40$0$37$0
Jersey City$2,560$2,767$1,737$133$29$41$0
North Bergen$1,531$1,749$1,692$246$139$78$0
Union City$3,421$3,363$1,419$91$116$45$0
West New York$1,460$2,824$1,319$140$0$19$0

The other reasons given or implied are just as misleading or outright false.
  • School populations vary, so spending varies from student to student. More special education students may mean a higher overall "per pupil" cost.

False. Hoboken has fewer special ed students than most of the other Hudson County districts. (and a special ed classification is subjective anyway). According to the Education Law Center's school data sources, 10% of Hoboken students are in special education, compared to 15% are in sped in Harrison, 12% in East Newark, 13% in Kearny, 11% in Secaucus, 13% in Bayonne, 14% in North Bergen, and 13% in Jersey City.

It is also self-serving of Hoboken to cite special ed percentages because its other categories of at-risk students are even lower relative to the rest of Hudson County.  Only 1% of Hoboken students are ELLs, the lowest in Hudson County.  49% of Hoboken students are FRL-eligible, the second lowest in Hudson County (after Secaucus.)
  • Class size: A district with smaller class sizes may need more teachers. 

This is true, having small classes drives costs up.

Hoboken is saying "our per pupil spending is high because we spend a lot of money."

Hoboken's Awkward Truth is that It's Rich

What Hoboken won't admit is that Hoboken has over $12 billion in Equalized Valuation for only 2,600 students.  That's over $4 million in Equalized Valuation per student, an astronomically high figure.  

The exorbitant fact of Hoboken's extreme property wealth allows it to have the lowest school taxes in Hudson County (now 0.35) while producing the second most revenue per student.

DistrictEqualized ValuationEqualized Tax RateLocal Tax LevyTax Levy per Student
BAYONNE CITY$5,310,944,1001.16$59,392,474$6,909
EAST NEWARK BORO$125,724,4191.00$1,397,000$5,117
GUTTENBERG TOWN$904,717,6091.24$10,668,805$11,410
HARRISON TOWN$1,125,275,9180.87$9,229,913$5,232
JERSEY CITY$19,724,038,3540.59$109,961,901$3,677
KEARNY TOWN$3,391,591,3871.46$46,217,348$8,978
NORTH BERGEN TWP$4,666,622,1570.97$43,507,740$6,217
SECAUCUS TOWN$4,339,809,4490.71$32,748,152$16,794
UNION CITY$3,175,961,5440.52$15,418,637$1,451
WEEHAWKEN TWP$2,659,246,8910.72$17,904,821$14,210
WEST NEW YORK TOWN$2,434,363,2850.68$14,860,598$2,245

Thus, Hoboken's minute school tax levy (0.35) still bring in tens of millions of dollars for its schools.

The Hoboken administration does sorta cite state funding as a cause of high spending.

  • Funding: the Education Law Center tabulates district funding, keeping track of how "underfunded" districts are and "funding per weighted pupil," which the ELC calls "a fair funding comparison... accounting for the degree to which districts require extra resources to educate students with special needs." 
Hoboken gets less aid per K-12 student than most other districts in Hudson County, but it still gets 10x more than Secaucus, the other district to raise as much from its Local Tax Levy. This puts Hoboken in first place for Hudson County spending and second place in statewide spending (after Asbury Park)

DistrictAid Per StudentK-12 State Aid
East Newark$12,439$3,395,757
Jersey City$12,411$418,471,290
North Bergen$7,040$56,603,083
Union City$15,046$177,818,679
West New York$12,381$93,312,984

The Hoboken administration's statements about its high spending are politically motivated. The Hoboken administration refuses to concede that Hoboken is incredibly rich so that there is less pressure to ever cut Hoboken's $20.6 million in state K-12 and Pre-K aid. (the Hoboken BOE also gets hundreds of thousands in rent from state funded Pre-K schools that use BOE buildings)   The Hoboken district Administration wants to blame charter schools because it helps them politically to divert blame away from their own problems, like bloat and their decisions to simply spend a huge amount on education.

The word for what Hoboken is trying to do is "bullshit."

Do charter schools have a budgetary impact on Hoboken's public schools?  Yes they do, but since they educate 30% of the public school K-12 population and receive 13% ($9,019,617 of a total revenues of $67,991,728) in Hoboken's total spending, you've got to take that fact into consideration.

Hoboken's Voters & BOE Partly to "Blame"

From 2009-10 through 2012-13 Hoboken kept its Local Tax Levy constant, despite the fact that its tax levy was in the range of 0.35, one of the lowest in New Jersey.

If the Hoboken voters, and later the BOE itself, BOE had increased taxes by only 2% a year after 2009-2010 its Local Tax Levy would be $40.3 million in 2014-15 instead of $39.4 million.  If the Hoboken BOE used the health care adjustments that all New Jersey districts are allowed under the tax cap its Local Tax Levy would be significantly higher.

I'm waiting for anyone from Hoboken to attack the electorate and Board of Education for "strangling" and "starving" the district.

Gold blames the tax cap for Hoboken's budget "problems," but the 2% tax cap can be exceeded with a public vote. The only thing stopping the Hoboken BOE from doing this is that it doesn't want to.  Gold evidently wants to have a vote for the 2016-17 school year to allow a larger increase.  If the rest of the Board of Ed does not agree to a vote Gold needs to blame his BOE colleagues, not charter schools.

If Hoboken's has a budgetary problem with charters its bigger problem is that it doesn't want to tax itself

From 2008-2009 to 2014-15 Hoboken's equalized school tax rate has actually dropped from 0.3814 to 0.349, one of the only towns in New Jersey to see this happen. Next year's equalized tax rate will fall even farther, to 0.3237. All of the other Hudson County school districts, including Jersey City and the other Abbotts, saw their equalized tax rates increase from an average of 0.6633 to 0.9030.

Source: User Friendly Budgets.  Own calculation.  This has been updated in May 2016 for the 2016-17 tax rate. The rest of
this blog post has not been updated.

Hoboken Tries to Have It Both Ways with School Choice

The Hoboken Board of Education also has a hypocritical stance where it denounces school choice - i.e. charters - when it is financially hurt by school choice but embraces school choice - i.e. Interdistrict Choice - when it financially benefits.

Interdistrict Choice is a program where the state pays for students to attend a public school district outside of the district they live in.  Interdistrict Choice is not controversial like charter schools are, but it should be, since the money for Interdistrict Choice comes out of Equalization Aid, Special Ed Aid etc that could otherwise go to low-resource districts.

Financially, the only difference between charter costs and Interdistrict Choice costs are that charter costs are paid by sending districts and are thus concentrated whereas Interdistrict Choice costs are paid by state taxpayers and are thus diffuse.

Hoboken is an Interdistrict Choice district and gets nearly $16,000 per Choice student, one of the highest per pupil payments in New Jersey.  Hoboken actually gets more money per Choice student from the state than it spends per charter student (and part of that money originates with the state as well).  Hoboken is among the Choice districts getting Additional Adjustment Aid, essentially money for Choice students who have left the district.

Hoboken warns about charters taking kids out of the school district and producing inefficiency, but many of those charter school kids' spaces  are taken by other kids who are there via Interdistrict Choice.

Between 2009-2010 Hoboken's Choice Aid increased by $2.7 million. Although charter school transfers outpaced this increase, Hoboken has been compensated partly through this state-funded program.

Does Hoboken care about how it is "strangling" other districts who lose out on Equalization Aid, Special Education Aid because Hoboken is getting more Interdistrict Choice Aid?  Yeah right.

Delusions of Being Underaided

What is disturbing about Hoboken is that it may think that it deserves more state funding.

In a FAQ document that it produced in May 2015 Hoboken cited "relatively flat State Aid further underfunding education" for why it wasn't spending more money.

It said:
HPS received a small increase in state aid. The breakdown is as follows: $10,576,865 2014-2015 State Aid $10,656,560 2015-2016 State Aid $ 79,695 Increase in State Aid (0.75%)
Note: The school district experienced a significant decrease of $669,438 in School Choice Aid after the 2014-2015 district budget was finalized. The 2014-2015 loss in School Choice Aid was restored in 2015-2016.
Leon Gold also lamented in that Salon interview how Hoboken wasn't getting more state aid.:
I would have no qualms [about HOLA] at all if the state said, “We are going to fund these charter schools.” I would feel bad that they’re lacking diversity. I would feel bad that they’re not becoming part of the Hoboken culture. But if the state would fund [them], that’s great. But don’t take from poor students and give to the more affluent students …
Relatively flat?  A "small" increase?  "Don't take from poor students and give it to more affluent students?"

Hoboken is an ultra, ultra-high tax base district that is funded like a working class district for K-12 and like an inner city for Pre-K.

Hoboken's students are mostly not affluent, but again, there are proportionally very few of them and Hoboken thus has fewer poor children (in number) than some "affluent" suburbs like West Orange, Montclair, and South Orange-Maplewood, all of whom get less state aid, have about triple the total number of kids, and have half of Hoboken's Equalized Valuation.  Hoboken's ELL percentage is also among the lowest in New Jersey.

Hoboken is phenomenally high-resource and could sustain its school system easily without any state money.  Since so many working class districts get less state aid than Hoboken - and numerous poor districts get $0 for Pre-K - Hoboken itself "takes from poor students and gives it to more affluent ones."

Despite its grotesque overaiding, Hoboken is getting a  $749,133 increase in state aid for 2015-16, the largest increase in New Jersey and 13% of the total $5.2 million increase.  Hoboken, however, doesn't admit increase is taking place since they say they lost $669,438 in Choice Aid after 2014-15.  (the above chart reflects revised Choice Aid) Anyway, Hoboken thus only tells Hoboken parents that it gained $79,695.

Hoboken completely disregards its $57,906 increase in direct aid for Abbott Pre-K and the $219,137 increase it is getting from Abbott Pre-K providers to whom it leases space.  Since that money originates with the state, it is essentially additional state aid too.

In any case, the other 500 non-Interdistrict Choice districts in New Jersey got an aid increase of $0.  $79,695 (or $749,133) + $57,906 for Pre-K is not "relatively flat state aid" compared to what other districts are going through.

Even if the utopian fantasy of a fully-funded SFRA were realized Hoboken would still lose money since it is already so incredibly overaided due to post-2009 enrollment loss.  If SFRA were fully funded Hoboken would be among only 30 districts to lose aid.  (see Alternative Aid Scenarios)


In terms of the budget, Hoboken's charter schools are problem, but everything is relative and Hoboken's spending remains exceptionally high and will be for the foreseeable future.  Charter costs are increasing now more quickly than the overall budget, but once HOLA reaches capacity in 2018 the cost increases will level off. Hoboken's taxing capacity will be even more immense then than it is now and will probably overtake Toms River and Edison to have New Jersey's second largest Local Fair Share.

Leon Gold blames the cap for "strangling" Hoboken but it is the Hoboken BOE that does not ask the voters for more money and by locking up so much state aid Hoboken harms districts that are lower-resource than it is.

What is scary about Hoboken is that it is delusionally convinced that it is facing a "bare-bones" budget, that it is a victim and is underfunded and underaided.

It is one thing for a middle-resource to worry about charter costs, but the district is at the state's legal minimum for taxes and Hoboken has more than enough money for everyone.

There are many districts in New Jersey for whom charter schools are a real challenge.  Sometimes these are urban districts where charters have large (although possibly not majority) political and parental support.  Sometimes these are non-urban districts with high-performing traditional public schools where opposition to charters is nearly universal.

Hoboken is in a class of its own.  A large segment wants charters.  Whether this is a majority or not I do not know, but Hoboken has the resources to pay for a small traditional public school system and three charter schools.

It is one thing to criticize Hoboken's charters for their socioeconomic disproportionalities, but the budgetary impact has to be seen in perspective of Hoboken's peerless spending levels and unparalleled local tax resources.

The budgetary opponents of charters in Hoboken (some of whom would say they only oppose HOLA not charters in general), also need to recognize how wealthy Hoboken has become and how high its state aid still is.  Hoboken is an economically inexcusable aid hoarder and does real, although diffuse,  harm to poorer districts throughout New Jersey.  Through Interdistrict Choice it does to other districts what it attacks Hoboken charters for.

If you want to cite the budgetary impact of Hoboken's charters in dry budget presentations fine, but I beg you to read about Freehold Boro before you talk about being "bankrupted" or "strangled."

Have some perspective please.

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