Administrative Law Judge recommends that Freehold Boro's voters be Overruled on Bond Referendum

Administrative Law Judge Susan Scarola has recommended that Commissioner of Education David Hespe overrule the voters of Freehold Boro and authorize a $32.9 million bond in order to expand school capacity in what has become New Jersey's most overcrowded school district.

No one disputes that crowding is intense in Freehold Boro. The district's schools were built to educate 1,148 students but now educate 1,700 students. Freehold Boro's response to this has been to convert libraries into classrooms (with no walls separating the classes), bus about 200 students to Freehold Township, and "packing students on top of each other."


(Freehold Boro rents the six classrooms from Freehold Township at $120,000, or $20,000 per classroom, or $111 per classroom per day. Freehold Township is able to rent the space to Freehold Boro because Freehold Township's student population has fallen by over 500 students since 2010. (and yet it has not lost aid because of that))

In low turnout elections, Freehold Boro's voters have twice rejected bonding $32.9 million to build 23 new classrooms, a cafeteria and more gym space.

Although the rejection of the bonding is disappointing, it is entirely understandable since Freehold Boro's taxes are already 10% above Local Fair Share and its municipal taxes are fairly high as well. In 2015, Freehold Boro's Effective Tax Rate the fifth highest in Monmouth County. Also, Freehold Boro's voters are well aware that Freehold Boro's schools are ripped off in state aid and believe that they - the taxpayers of Freehold Boro - are being unfairly asked to carry the burden of a very poor, non-English speaking population.



The tax impact of the bonding would be $278 per year on an average tax bill which is now only $6,175.

State Senator Jennifer Beck (R) agrees with Freehold Boro's voters on state aid, clearly saying:

“It is unconscionable to me that the state would hinder the ability of Freehold Borough to educate its children adding it is the “responsibility of the state, not local taxpayers.”

Freehold Boro's Board of Education and Superintendent know Freehold Boro's taxes are already high. They also know that even if David Hespe approves their request that the money will do nothing to address Freehold Boro's inadequate operating aid and the town cannot pay higher taxes on top of the tax increase that may come from the bonding.  Thus Freehold Boro's school leadership has also asked Judge Scarola for more state aid:

Freehold Borough Superintendent of Schools Rocco Tomazic spoke with passion and conviction during a public hearing before Administrative Law Judge Susan Scarola and cited the reasons why the Freehold Borough K-8 School District needs help from the state to provide a thorough and efficient education to the town’s children as mandated by law.

However, based on what I have read about Judge Scalora's decision (see here and here), the Judge only recommended that David Hespe give permission to Freehold Boro to bond the $32.9 million. The reporting could be incomplete, but it seems like Judge Scalora was silent on state aid.

Nonetheless, Freehold Boro's Board of Education and Superintendent Rocco Tomazic say that they will continue to work to receive more state aid. "We are also continuing our work with legislators and the Department of Education to address our state aid underfunding." 

Freehold Boro's state aid/tax situation is all the more glaringly awful because it is in Monmouth County, home of some of New Jersey's most savage aid inequalities.

Monmouth County contains several of New Jersey's worst aid hoarders, including Asbury Park ($23.4 million in excess aid), Freehold Regional ($20.2 million in excess aid), Manalapan-Englishtown Regional ($12 million in excess aid), Keansburg ($9.3 million in excess aid.)  

The excess aid Asbury Park gets annually is two-thirds of the money that Freehold Boro needs to bond.  

The decision to overrule Freehold Boro's voters and authorize a large tax increase is a difficult one, but Freehold Boro's aid situation is appallingly unfair and is a shame of the state.  It is also an illustration of the deep unfairness of the Abbott Regime and the continuing all-or-nothing (or all or 38% to be literal) nature of NJ Supreme Court's mandate on construction aid.


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Please, if you want to help Freehold Boro and other underaided districts, please sign this state aid petition from Our Fair Share!

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See Also:

"Freehold Boro: Where Children Are Packed On Top of Each Other."

"Freehold Boro: Where Population Growth and Stagnant Aid Collide in the Worst Way"

How is the state going to pay for Sweeney's Pre-K expansion?

Senate President and gubernatorial candidate Steve Sweeney has proposed a large expansion of state-funded Pre-K.

“We need to expand early-childhood education throughout the state and implement creative ways of funding innovative programs. This is a major step forward in that process."

Under Sweeney's proposal, another 17 districts would get the same level of Pre-K services that the Abbotts currently have. This mens two full years of Pre-K for all 3 and 4 year olds residing there.

This is part of the Democrats' "New Jersey: Investing in You" campaign, a six-point campaign that excludes K-12 funding as one of its objectives.

Sweeney also proposes restoring "wraparound" services in the Abbotts, that is, before care and after care.

The wraparound services are not mandated by the NJ Supreme Court and the Christie Administration and legislature have cut them in order to balance the budget in the last few years and avoid deeper cuts to K-12 education and Pre-K in non-Abbotts. Sweeney evidently wants to spend even more money in the Abbotts, regardless of how badly aided other districts are.

The cuts to wraparound services usually preserve the services for "free" for the poorest children, but less-poor and middle-income children do not qualify for "free" services and many do not participate.  (even affluent children in the Abbotts are eligible for the academic component of Pre-K.)

The costs of Sweeney's proposal would be $62.7 million in 2016-2017 budget and $103 million for the next year, with the cost increasing thereafter.

Since the state spent $656 million on Pre-K in 2015-16, this represents a 15% increase.   However, this is less than a third of the (utopian) Pre-K expansion envisioned in SFRA in 2008, in which all districts with FRL-eligibility rates above 40% were supposed to get universal, state-funded Pre-K for all students and poor kids in any district were supposed to get state-funded Pre-K.  SFRA's much more ambitious expansion of Pre-K would pay for universal Pre-K to 100 districts and cost $360 million.  

No Source for Funds Identified by the Democrats

The huge problem is that there's no way to pay for the Pre-K expansion. New Jersey's economy is barely growing a fact that Sweeney recognizes "“Our growth has been anemic next to the nation’s." Any new revenues brought in by that economic growth are to be reserved for pensions, a policy that Sweeney supports and makes the central part of his pipe dream to fully fund NJ's pensions without raising taxes on the middle class or slashing services.

I have no clue where the state is going to get this money.  For 2015-16 the total increase in Pre-K and K-12 state aid was only $8 million.  For 2014-15 the increase was $35 million.  For 2013-14 the increase was a much more substantial $114 million, but that was part of the post-recession state aid rebound and the state was ignoring its pension obligations then too.

The increases of the last few years have been significantly below general inflation, let alone the health care and Out of District tuition inflation that constantly erode financial resources for school districts.

Source: State Aid Summaries

Sweeney's Pre-K plan is incompatible with his own plan to dramatically increase the state's pension contributions.

For FY2017, the state's pension payment is supposed to increase to $1.83 million from $1.3 billion in FY2016, meaning that even Chris Christie plans to have the state find another $500 million alone for next year.

Source, NJSpotlight, http://www.njspotlight.com/stories/15/12/17/senate-president-revamps-payment-plan-for-closing-deficit-in-state-s-pension-fund/

MOREOVER, Sweeney is forgetting the risk of the state losing the COLA payments case in Berg v. Christie, which will be decided in 2016.  If the NJ Supreme Court guts pension reform and orders the state to make back payments on COLAs and pay COLAs in the future the state's budgetary position will be ruined.

Even if the state prevails in Berg v. Christie, I don't see how anyone can fit in much larger pension payments AND much larger Pre-K expenses unless you slash aid somewhere else.

Hey, if Adjustment Aid were being cut I'd be all for Pre-K expansion, but without a funding source this is just irresponsibility from Sweeney or, more likely, a smart campaign tactic to build support among liberal true believers in the Democratic party.

Phil Murphy also talks about Pre-K, although his discussion is more cautious and acknowledges research shedding doubt on Pre-K's long-term effects.  Either way, it is possible that the Democratic primary could become a contest where the candidates try to "out Pre-K" each other.

Although Sweeney's proposal would cost $100 million a year in two years for the state and would be a headache for him as governor, it costs him nothing as a candidate just to make it.  As Senate president this proposal is cost-free to Sweeney too, since his autumn contemplation of redistributing state aid would divide the Democratic party.

Anyway, there are some forms of political advertising that money can't buy and a Pre-K proposal that gets good press is one of them.

Pemberton Township: The Unknown Aid Hoarder

When New Jerseyans criticize the problems of the Abbott system of school funding, the districts that are most often used as examples of the excesses and unfairness of Abbott are Hoboken, Jersey City, and Asbury Park. Hoboken is criticized for being an Abbott in the first place while it is (by far) New Jersey's wealthiest K-12 district. Jersey City is criticized for being aided like it is still as poor as Newark and PILOTing 30% of its property valuation, meaning that 30% of Jersey City's true property wealth is concealed from the formula for Equalization Aid. Asbury Park is criticized for the exceptionally high aid it receives - approximately $23,500 per student - and is used as an example of how futile that aid and high spending is, since Asbury Park's scores and graduation rate remain abyssmal.

This post is going to be about another district that is just as much an aid hoarder as Hoboken, Jersey City, and Asbury Park, although one more less often held up as a problem of Abbott spending and how divorced the Abbott list is from being a list of New Jersey's poorest districts: Pemberton Township.

Pemberton Township is located in eastern Burlington County, in the heart of the Pine Barrens. Its land area includes part of Fort Dix.

Pemberton receives the second largest amount of Adjustment Aid, after Jersey City.  While hundreds of districts across New Jersey are underaided by millions, even tens of millions of dollars, Pemberton gets $27.4 million more for its 5,227 students than SFRA says it demographically and economically needs.






In terms of excess dollars per student, Pemberton is New Jersey's seventh largest aid hoarder, with an excess of $6,188 per student. (source, Education Law Center.)

Why does this matter?

This excess aid figure is astoundingly high.  Pemberton's $6,188 in EXCESS aid per student alone is higher than what many demographically poorer non-Abbotts in New Jersey get TOTAL.  Belleville (DFG CD) gets about $5,400 per student.  Kearny (DFG B) gets about $5,200 per student.  Newton (DFG CD) gets about $3,800 per student.  Fairview (DFG A) gets $5,600 per student.  

Pemberton's $27.4 million in excess aid is greater than the total aid packages of larger and demographically poorer districts such as Clifton, Lakewood, Linden, Bloomfield, and Atlantic City.  (AC is getting some last-minute additional aid but that aid would just bring Atlantic City up to approximate parity with Pemberton's excess aid.)

Pemberton Should Not be an Abbott

The reason Pemberton is so overaided is that it is an Abbott district and therefore benefited from the New Jersey Supreme Court's "Parity Plus Doctrine," where the Abbotts had to receive funding to bring up their spending to above the level of the DFG J and DFG I districts. The Parity Plus doctrine thus brought Pemberton up to a mid-2000s aid level of about $16,000 per student.

While for some truly poor Abbotts an aid amount like $16,000 would be appropriate, $16,000 per student is enormous overaiding for Pemberton because Pemberton's students are not nearly as poor as students are in the other Abbott districts.

Whereas the average (unweighted) Abbott district is 78% FRL-eligible, Pemberton's students are only 44% FRL-eligible. Overall NJ students are 38% FRL-eligible, so Pemberton's students are poorer than average, but not by a huge amount.

Indeed, Pemberton has no demographic right to be an Abbott district. It is difficult to even see how it became an Abbott in the first place since in 1990 it was in DFG CD and Pemberton is not urban and the Abbott system was created for "urban" districts.

Overall Pemberton in 119th place in FRL-eligibility in New Jersey. 

(Click on the chart to see a legible resolution)

Pemberton's FRL-eligible percentage is equal to that of working class non-Abbotts like Bogota, Elmwood Park (East Paterson), Cumberland Regional, Egg Harbor Township, and Bloomfield.

Even if you break Pemberton's FRL-eligible students down into Free-lunch and Reduced-lunch categories, Pemberton should not be an Abbott district.

1,678 of Pemberton's 5,000 district students are Free-lunch eligible (33%). This is lower than the percentage Free lunch-eligible students in the FRL-peer districts mentioned above.  Bogota is 37% Free-lunch eligible.  Elmwood Park is 34%.  Egg Harbor Regional is 38%. Bloomfield, 35%.  Savagely underaided working class non-Abbotts like Belleville and Hackensack have much higher Free-lunch eligible percentages, 47% and 55%, respectively.

Even districts considered middle class, like West Orange (2,390 FL students out of 6,727, or 35%) have a higher percentage of Free-lunch eligible students than Pemberton.

For Limited English Proficiency Pemberton's students are in fact, significantly below the state's average, let along the Abbott average.  

Whereas the average (unweighted) Abbott is 10% ELLs and the average NJ district is 5% ELLs, Pemberton's students are only 1% English Language Learners.

Pemberton's Tax Base is Low

In terms of tax base Pemberton is indisputably low, possessing only $23.2 million for 5,227 students (not all of whom are in traditional public schools). This is about $4,500 per student and is one of the thirty lowest tax bases per student in New Jersey.  The only qualification of Pemberton's tax base it that it gets $1 million in federal "Impact Aid" due to the presence of Fort Dix.  However, factoring in that $1 million in Impact Aid would only increase Pemberton's tax base slightly.

So, while Pemberton has a low tax base per student and that entitles it to higher-than-average state aid, the amount of state aid that Pemberton gets is wholly unjustified when seen in comparison to districts whose tax bases are equal or lower than Pemberton's and who also have higher populations of FRL-eligible students.

Most of the non-Abbotts whose tax bases are peer or inferior to Pemberton's also have higher FRL-eligibility.

What Does Pemberton do with all that Extra $27.4 million?

Answer: Offset Taxes, Spend Significantly Above Adequacy

Pemberton is so overaided that it can afford to have a tax levy that is only 51% what SFRA indicates it is economically capable of paying.

Whereas Pemberton's Local Fair Share is $23.2 million, its actual tax levy for 2014-15 is only $11.8 million, an $11.4 million deficit.  In per pupil terms this is a $2,314 per student tax deficit.

But not to worry, Pemberton's state aid surplus is $6,188 per student, so Pemberton is over Adequacy by $2,866 per student!!!

Since Pemberton is Above Adequacy, Do Its Schools Outperform Their Peers?

Answer:  No.

Pemberton High School has few Abbott high schools in its peer group.  Its peer group consists mostly of high schools in working class districts like Bayonne, Greater Egg Harbor, Linden, Rahway, and Roselle.  There are a few charters in there too, plus a few high schools in Abbotts like Jersey City, Vineland, and Trenton.  (who are below Adequacy).  Hoboken is on the list as well but even Hoboken isn't as far above Adequacy as Pemberton.

Despite its financial advantage, Pemberton High School is only at the 31st percentile amongst its peer group.

The same lag compared to its peers exists for all of Pemberton's schools.

How did Pemberton Get So Overaided?

It's hard to say, but Pemberton's student population has fallen from 5,827 in 1998-1999 to 4,900 in 2008-09 and rebounded only somewhat - to 5,227 in 2014-15.

Despite that falling population, Pemberton received large increases in state aid until the Great Recession and the freezing of state aid, going from $54 million in 1998-99 to $83 million in 2008-2009 at its population nadir.

Pemberton's aid per student thus rose $9,300 per student in 1998-1999 to $16,000 per student in 2008-2009, around which it has fluctuated ever since.

Abbott Rules

SFRA was supposed to create a unitary funding formula for New Jersey's school districts and bring up underaided districts to Adequacy, but SFRA relied on new revenue in order to operate and except in SFRA's first two years, that new revenue has been absent.  Since SFRA is non-operating, the old, unfair Abbott aid distribute persists and New Jersey's aid distribution is really governed by Chief Justice Robert Wilentz, who died in 1996, and not any recently elected governor or member of the legislature.

Since Christie, and most Democrats for that matter, oppose redistribution of state aid, districts like Pemberton continue on in privilege while underaided and underfunded districts suffer through sub-Adequacy spending or very high tax burdens.

Although this blog post has been about Pemberton and the Abbott system, it shouldn't be taken that all overaided districts are Abbotts.  On the contrary, Toms River and Brick round out the top five of overaided districts and they are not Abbotts at all.

I don't know if anything will change in New Jersey in the foreseeable future.  The Democrats have abandoned SFRA in favor of prioritizing pensions, transportation, and retiree tax cuts.  Their education aid agenda focuses on Pre-K.

However, I know that nothing will ever change as long as people don't know the scale of overaiding and how there are other aid hoarders than Hoboken, Jersey City, and Asbury Park.

Education Law Center Newark Report: More State Aid, a Charter School Growth Moratorium, and Higher Taxes

The Education Law Center has just come out with a research brief on the budgetary stress/crisis in the Newark Public Schools.

The report is thorough and everyone interested in New Jersey school finance should read it.

However, what's missing from the Education Law Center report is any sense of context regarding the greater budgetary pain other districts are in.  Yes, Newark's schools have made cuts and will face more cuts in the future, but there are many districts in New Jersey who are even farther below Adequacy than Newark and who are making cuts that Newark is yet to contemplate.

While Newark should get some additional aid, the heroic $131 million state aid rescue that the Education law Center demands would be deeply unfair to the scores of New Jersey districts who are more underaided than Newark is.

While the Education Law Center's report provides important research and is a warning about Newark's budgetary future, it is a plea to let Newark cut in line and its research is incomplete in a number of ways.

Yes, Newark's Charters and Underaiding Force the NPS to Make Cuts

It is impossible to deny that the Newark Public Schools in significant budgetary problems and those problems are in part due to causes the Education Law Center criticizes, namely underaiding and charter school transfers.

Source: User Friendly Budgets

Newark's student population (charter + district) has grown by 10% in the last few years, diluting the state aid Newark gets.


Source: http://www.edlawcenter.org/news/archives/school-funding/state-underfunding-and-rapid-charter-growth-put-newark-budget-in-crisis.html

Underaiding combined with charter school transfers has indeed caused Newark to make significant cuts.

Source: User Friendly Budgets

The ELC's Solutions Call for Special Treatment of Newark

However, while I see the same budgetary problem the Education Law Center sees, my conclusions are different from theirs, especially the demand that Newark become a state priority in receiving full SFRA funding.  Since Nj's terrible budget situation means that education aid has become zero-sum, more money for Newark would have to come at the expense of even needier districts.

My response will focus on the five recommendations the ELC makes to solve Newark's budget crisis.

It is clear Commissioner of Education David Hespe and State District Superintendent Christopher Cerf must take immediate action to prevent further staff, program and service cuts in 2016‐17 and beyond.
We recommend the following steps to stabilize the NPS budget over the next few years:

•  Restore state formula aid to move NPS to full SFRA funding;

•  Increase the City of Newark’s local contribution, utilizing  waivers of the 2% annual property tax cap;

•  Temporarily halt the expansion of enrollment in existing Newark charter schools, pending a thorough analysis by the Commissioner and the DOE of the impact of further expansion on the funding and resources available in district schools, as mandated by law and court rulings;   

•  Reduce district payments to charter schools in 2016‐17 by requiring Newark charter schools to apply any fund balance in excess of 2% to the charter’s per pupil payment amount under the charter law; and

•  End the authorization in the State Budget of additional payments to charter schools from the NPS budget in excess of the per pupil amounts under the charter law.

1.  Full SFRA Funding

•  Restore state formula aid to move NPS to full SFRA funding;

Indeed, Newark is underaided by $131 million for 2015-16.  In total dollars, that is the largest deficit in New Jersey.

However, according to the Education Law Center's own documentation, that is only $2,600 per student.

Newark is thus not even remotely among the most underaided districts in New Jersey. In fact, there are 85 districts who are more underaided than Newark.

SFRA is a weighted student formula, so if there is a district that has a lower-FRL percentage than Newark but has a $4,000 per student deficit, or a $6,000 per student deficit that district is indeed more needy than Newark.  Why should Newark be allowed to cut in line ahead of districts whose tax/school budget pain is so much worse?  

(I know the chart below is illegible.  Click on the chart to see full size)

I take seriously the cuts Newark has to make and worry about the future, but Newark's schools are cutting from a very high spending position.  The Newark Public Schools are unlike Prospect Park, Fairview, Wallington, or Dover and many other districts whose schools are also making cuts but who never high spending to begin with.  In other words, Newark is cutting spending that other low-income districts never had.

Source: https://docs.google.com/spreadsheets/d/1o9XKu_H3zpChhp1X8lrc6BBMDyizEtwh_IwaiNifas4/edit#gid=0

Although Newark is farther below Adequacy than it used to be, it is not remotely the farthest below Adequacy in NJ.

To make comparisons neater from here on out, I will only compare Newark to DFG A and B districts in Bergen, Essex, Hudson, and Morris counties.

Source:
http://www.edlawcenter.org/assets/files/pdfs/Newsblasts/FY16%20SFRA%20Funding%20Gaps.pdf

Numerous DFG CD and DE districts, such as Belleville, Bloomfield, Woodland Park, and Elmwood Park, are also farther below Adequacy than Newark is.

It's also necessary to look at state aid in raw per pupil terms to see just how much better Newark's financial position is compared to demographic peer and near-peer non-Abbotts.

Source: State Aid is from the State Aid Summaries.  Enrollment is from the User Friendly Budgets

The most extreme underaiding of many other districts translates, unsurprisingly, into lower spending.

In comparison with its DFG A and DFG B districts in northeastern New Jersey, Newark's spending remains relatively high.

Newark has higher non-classroom expenditures than most other districts, although that it partly due to its own employee contracts and administrative structure.  However, if you compare spending by Total Classroom Expenditure, Newark's spending is lower than average, but there are still several districts who spend even less.

Source: User Friendly Budgets

Again, there are many DFG CD and DE districts who also spend less than Newark too.

All of the lower spending DFG A and B districts are more underaided than Newark.

• East Newark has an $8,906 per student deficit.
• Fairview has an $8,746 per student deficit.
• Guttenberg has a $6,341 per student deficit.
• Wallington has a $4,326 per student deficit.
• Lodi has a $6,179 per student deficit.
• Prospect Park has a $5,896 per student deficit.
• Dover has a $5,484 per student deficit.

Belleville is in DFG CD, so it isn't a demographic peer of Newark's, but it is a poor town and there is no comparison between Belleville's budgetary problems and Newark's.

Belleville only spends $10,868 per student, of which $6841 makes it into the classroom.  This means that Belleville, unlike Newark, already has a bare-bones budget.

In the last year Belleville has had to borrow millions in the last year for basic items, like $3 million for technology and a $4.1 million advance on state aid.

On top of this, Belleville anticipates needing to carry out $65-$85 million in building repairs.

Manchester Regional (DFG B) spends more than Newark and is closer to Adequacy, but only because its residents accept an atlasian tax rate that is 177% of Local Fair Share.

Why does the ELC demand more money for Newark, which is underaided by $2,600 a student, but not Belleville, which is underaided by $5,162? or Dover? Or Prospect Park?

What rational basis is there for giving Newark priority over these even more underaided and underfunded or overtaxed districts?  

It makes no sense other than through the interpretation that the Education Law Center hates charter schools and wants to use Newark has a demonstration of charter doing fiscal damage to traditional public schools.   East Newark, Fairview, Guttenberg etc are intensely victimized by the state, but Newark is "victimized" by charters and the ELC hates that more than anything. 

Many other districts in New Jersey are already more underaided and underfunded (or overtaxed) than Newark, but there are no charter school villains for the the more savagely hurt districts, so the Education Law Center doesn't much care about them.

The more underaided disricts also aren't Abbotts and thus the ELC doesn't care much about them either.

2.  Have Newark Pay More in Taxes

•  Increase the City of Newark’s local contribution, utilizing waivers of the 2% annual property tax cap;

Ok, I agree with this but I don't see why waivers should only be given to Newark.

There are many districts in New Jersey whose taxes are significantly below Local Fair Share and below Adequacy, shouldn't they get waivers too?

Source: https://docs.google.com/spreadsheets/d/1gxk-lF0GmDctr6Tswsfaz5OlbtWjc1GBqhMuPDKDMTk/edit#gid=0, originally from the Department of Education

Every single one of the districts paying less in Local Fair Share than Newark is also below Adequacy.

Newark pays about 62% of its Local Fair Share, or $113 million out of $183.8 million.  Newark's tax deficit is thus about $70 million.

The Education Law Center should assess whether the economic damage of raising Newark's taxes would be greater than the educational benefit of taxing itself by another $70 million.

Newark's total tax levy (county, schools, municipality, libraries etc) was only $408 million for 2015.

To increase that by $70 million would be an 17% increase.

Newark's Equalized Valuation actually fell for 2016 by $246 million, indicating that it still may be economic decline.  If I were in Newark's leadership, I would not want my city to pay much more in taxes.  Yes, Newark should pay somewhat more than 62% of its Local Fair Share, but 100%?

If spending another $70 million guaranteed any educational progress maybe I'd support it, but the correlation between spending and education outcomes is so weak that I could not be persuaded to tax Newark much more than it is already being taxed.

3.  Freeze Charter Schools

•  Temporarily halt the expansion of enrollment in existing Newark charter schools, pending a thorough analysis by the Commissioner and the DOE of the impact of further expansion on the funding and resources available in district schools, as mandated by law and court rulings;   

I don't think it's realistic to halt charter school expansion since the proportion of Newark kids in charters is higher on the elementary level.  To freeze the size of charters would mean either transferring these kids to district schools or shrinking the size of incoming classes at charter schools to allow the elementary-cohort to move through the charter system.

Ultimately, a moratorium on charters is a value decision and one that should be made through the democratic process.

Unfortunately it's not easy to say where in the democratic process this decision should be made.  A Board of Education is democratically elected, but it is also only responsible for its own schools and thus will usually oppose charters because of fiduciary responsibility.

A city council is not supposed to get involved in education, but it has a broader constituency than a Board of Education and is not in a fiduciary relationship with districts schools.  Here it is relevant that  the Newark City Council voted 7-2 against the Jasey/Diegnan charter school moratorium bill.

As Councilman Anibal Ramos said on the anti-moratorium vote:

"On behalf of the children of our city, I want to congratulate my council colleagues who voted in favor of this resolution," said Ramos, a former member of the Newark Public Schools Advisory Board and a strong supporter of quality public schools. "This is a vote that supports the children and families of our city. We have thousands of children in Newark alone who are on waiting lists to attend charter schools. The last thing the legislature should be doing is limiting their growth. What we need instead is legislation that would improve the monitoring of existing charter schools and allow quicker corrective action on those schools that are not performing well.”

On the other hand, Mayor Ras Baraka wants to slow or stop charter school expansion, but still, charters appear to be an issue on which Newark is closely divided.

The Education Law Center is free to demand anything it wishes, but I hope the Commissioner of
Education pays more attention to Newark's elected officials than to the ELC.

4.  Make Charters Give Up Their Reserves

•  Reduce district payments to charter schools in 2016‐17 by requiring Newark charter schools to apply any fund balance in excess of 2% to the charter’s per pupil payment amount under the charter law; 

We've been through this before, but charters have to build up reserves to pay for capital projects.  

The ELC Report on charter school reserves was also erroneous because it looked at reserves in June, when charter school reserves are at their pre-summer peak.

5.  End Off-Formula Payments to Charters

•  End the authorization in the State Budget of additional payments to charter schools from the NPS budget in excess of the per pupil amounts under the charter law.

Fair point about charters, but there are 36 regular districts in New Jersey that get more money than they are legally entitled to under SFRA and I don't see the ELC condemning them.

Is the Education Law Center  going to condemn the DOE for giving Hoboken an extra $1,256,889?  Will it condemn the DOE for giving Hamilton an extra $934,708?  Freehold Regional an extra $775,261?  Jersey City an extra $612,141?

Then there is Adjustment Aid, which is part of SFRA, but allows districts to get more aid than SFRA says they economically and demographically need.  If Is the Education Law Center going to condemn Jersey City for exceeding its uncapped aid by $111 million?  Or Pemberton, Toms River, Freehold Regional, Brick, and Asbury Park for hoarding more than $20 million each? 

If Adjustment Aid were to be gradually eliminated it would free up money for the Newark Public Schools, but for ill-founded reasons the Education Law Center LOVES Adjustment Aid and opposes redistribution. 

The Real Problem is the State Budget

The real problem with giving more state money to Newark is that New Jersey is going bankrupt.

We can take it as a given that Christie has no desire to fully fund SFRA, let alone give more money to Newark.  However, given the state's budget crisis, it is wrong to say that Christie "refuses" fund SFRA.  He could not fund SFRA even if he wanted to.

Also, even the Democrats have given up on SFRA.

The Democrats want to:

• put more money into pensions.  Even the NJEA is prioritizing this.
• make New Jersey less financially awful for retirees.
• replenish the Transportation Trust Fund.

Within education, the Democrats' priority right now is Pre-K, although that's taking a backseat to helping retirees, the Transportation Trust Fund, and pensions.

If anyone can find a recent quote from a Democrat in the leadership about fully funding the K-12 portion of SFRA I'd be surprised. 

Will the Education Law Center ever exist in the real world and real economy? 

Can someone teleport them into the pension debt-ridden state New Jersey we all know and not the money-grows-on-trees forest they inhabit?


Update:  This ELC report by Mark Weber on underfunding in NJ gives the 32 districts that are farthest from Adequacy.

http://www.edlawcenter.org/assets/files/pdfs/publications/Shortchanging%20New%20Jersey%20Students.pdf

Newark isn't on the list.

Manchester Regional: New Jersey's Most Underaided and Most Divided School District

One of the most contentious financial battles in New Jersey public education is between the three constituent towns of Manchester Regional High School - North Haledon, Haledon, and Prospect Park - over how to pay for Manchester Regional High School.

If you aren't familiar with this long-running case, the background is that Haledon and Prospect Park are relatively poor towns (DFG B) bordering Paterson's high-poverty North Side.  North Haledon (DFG FG) is better off.

 All three towns have their own K-8 districts with 700-1,000 students each, but share Manchester Regional High School.  For twenty years, North Haledon has wanted to leave the regional district or change the funding formula to a per pupil calculation, saying that it is being unfairly asked to subsidize children from the two other towns.

This case is in the news again because in 2013 the funding formula was changed from being a 67%/33% Equalized Valuation/per pupil split to a 50% Equalized Valuation/50% pupil enrollment split and Prospect Park and Haledon are saying (with much merit) that they are taxed beyond their limit.  Prospect Park and Haledon are now seeking to change the formula again to weigh  Equalized Valuation more heavily than enrollment so North Haledon pays a higher percentage of Manchester Regional's costs again.

As Prospect Park's mayor, Mohamed T. Khairullah, states:

"We are hoping that someone uses common sense and realizes you can’t squeeze water out of a rock. Our residents are not as financially able to fund the Manchester Regional High School as North Haledon residents are. The Commissioner of Education ignores that fact and continues to apply financial pressure on our community. We are at the point where we feel we should go back to the Supreme Court and ask them for better clarification that we think will benefit our community."

The fiscal background of this case that is never adequately reported is that Manchester Regional is New Jersey's MOST underaided district. According to SFRA, Manchester Regional should be getting $17,474 per student, but in actuality it only gets $6,770 per student.  Manchester Regional's aid per student deficit is $10,704, an amount greater than any other district's, including Freehold Boro's.

(Prospect Park and Haledon are also severely underaided for their K-8 systems)

The aid deficits are so enormous because Haledon, Prospect Park, and Manchester Regional are peers of the Abbotts, both economically and demographically, and therefore SFRA thus sets very high aid targets for them.   Prospect Park, in particular, is exceptionally poor and its lack of adequate aid should be statewide shame.

For its K-8 district, Prospct Park has only $3,747 in Local Fair Share per student, the 13th lowest tax base in New Jersey and actually inferior to what Newark, Elizabeth, New Brunswick, Millville and many other Abbotts possess.  Prospect Park is also 85% FRL-eligible, the 22nd highest percentage in New Jersey.  Prospect Park FRL-eligibility rate is equal to Elizabeth's, Perth Amboy's, Pleasantville's, and Orange's.  It is higher than Harrison's, Long Branch's, East Orange's, Keansburg's, Jersey City's, Vineland's, and Hoboken's.

Prospect Park also has very few homeowners.  Of 5,700 residents, only 1,200 are direct taxpayers.  In the 2010 census, 16% of Prospect Park residents were on food stamps.  A third of Prospect Park's land is actually a quarry.

For its K-8 district, Haledon only has $5,846 in Local Fair Share per student, the 43rd lowest in New Jersey.  Haledon's LFS per student is lower than several Abbotts, including Jersey City, Long Branch, Neptune Township, Vineland, and (of course), Hoboken.  Haledon is 72% FRL-eligible, again, a higher figure than several Abbotts, including Jersey City, Pemberton, Hoboken, Garfield, Vineland, Phillipsburg, and Hoboken.

Manchester Regional High School itself is 77% FRL-eligible, which is only one point below the Abbott average.  Manchester Regional has $6,091 in Local Fair Share per student, which is below the (unweighted) Abbott average of $6,955 per student.

North Haledon Fights to Change Apportionment or Leave the Regional District

When Manchester Regional was formed in 1957 the tax apportionment was on a strict per pupil basis, so that each town paid for Manchester Regional in proportion to how many students it sent there.

However, in 1975 the state legislature unilaterally changed the rules for tax apportionment in regional districts when it required that apportionment had to be solely by Equalized Valuation, regardless of what apportionment plans regional districts had already established.

The consequence of this is that as the wealthiest town, North Haledon eventually had to pay for a share of Manchester Regional's costs that was disproportionate to the percentage of North Haledon kids at Manchester Regional High School.  This disproportionality created mass resentment in North Haledon and North Haledon voters began to repeatedly reject budgets for Manchester Regional.

In 1993 the legislature reversed itself on tax apportionment in regional districts and said that regional districts could divide taxes by any basis they wished, but any change needed an affirmative vote from every member of a regional district to go into effect.

North Haledon organized a referendum on changing the cost apportionment in 1995, but, predictably, Haledon and Prospect Park rejected a change.  Thus, North Haledon began a campaign to leave Manchester Regional completely.  As its mayor said, "We should be paying to educate our children, no other town."

By the early 2000s North Haledon students were only 25% of the students at Manchester Regional HS, but North Haledon paid for 43.8% of the costs of the high school.  North Haledon's costs at the time were $18,400 per pupil, compared to per-pupil costs of $5,300 for Haledon and $3,400 for Prospect Park.

(43.8% is much lower than North Haledon's share of the total Equalized Valuation of the three towns. We will learn why there is a gap momentarily.)

In 2002, North Haledon voted to leave Manchester Regional, hoping to send its children to Midland Park.

Haledon, Prospect Park, and the Manchester Regional School Board opposed North Haledon's departure and the case went all the way to the NJ Supreme Court.  In 2004 Chief Justice Deborah Poritz of the NJ Supreme Court cited the "constitutional imperative to prevent segregation in our public schools" and declared that North Haledon could not leave Manchester Regional because doing so would have a "racially disparate impact."  However, Poritz said that the tax formula for Manchester Regional could be changed.

Poritz did not order any additional state aid to Manchester Regional, thus any reduction in tax money from North Haledon had to be made up for by Haledon and Prospect Park. 

North Haledon's High School Dropoff and its Financial Consequences


Something else that must be underscored is that North Haledon did not pay taxes to Manchester Regional purely on the basis of its Equalized Valuation even before the mid-2000s apportionment reform.

It is little known, but when there is a regional district that only educates kids in some grades (like MRHS only being a 9-12 district), that regional district must share its tax base with other school districts that educate kids from the same towns in proportion to the percentage of students from that town are in the regional district.

If 70% of a town's public school children attend the local K-8 district and 30% attend the regional 9-12 district, then the two districts split the tax base 70:30.

If 80% of a town's public school children attend the K-8 district and 20% attend the regional 9-12 district, then the tax base is split 80:20.

North Haledon only has 11% of its students at Manchester Regional High School.  (there are 87 North Haledon kids at MR, but 718 kids in the K-8 North Haledon Public Schools), so only 11% of North Haledon's tax base can be taxed by Manchester Regional whereas Prospect Park and Haledon have 28-29% of their students at Manchester Regional and therefore 28-29% of their tax bases can be taxed by Manchester Regional.  

This means that even though North Haledon has 61.9% of the valuation of the three towns, even before any per pupil adjustments are made, only 38.2% of Manchester Regional's tax base comes from North Haledon.

	Total Equalized Valuation (2014-15)	Public School Student Population 9-12	Public School Population 9-12 (at MRHS)	Percentage of Students in 9-12	Equalized Valuation Available to MRHS
Haledon	$538,293,732 (25.6%)	1,004	394	28.2%	$151,691,174 (42.2%)
North Haledon	$1,300,741,578 (61.9%)	718	87	10.8%	$140,610,165 (38.2%)
Prospect Park	$263,383,295 (12.5%)	832	339	28.9%	$76,249,464 (20.7%)

The root cause of this disparity in available Equalized Valuation is that there is a large dropoff in public school enrollment for high school-aged North Haledon students.  The average grade in K-8 in the North Haledon School District has 80 kids (718 / 9 ~ 80), but there are only 20 North Haledon kids per grade at Manchester Regional (87 / 4  20)  Meaning, the large majority of North Haledon students who attended North Haledon Public Schools K-8 go to private school or homeschool for 9-12.

Whereas in the early 2000s  25% of Manchester Regional's students were from North Haledon, now barely 9% come from North Haledon (87 out of 958).

In the early 2000s, 51% of Manchester Regional students were white. North Haledon was prevented from leaving because if it had left Manchester Regional would have become only 38% white.

Now only 21% of Manchester Regional students are white.

Chief Justice Deborah Poritz had said that North Haledon could not leave Manchester Regional because it would upset the demographic balance there, but the demographic balance has been upset anyway because a large majority of North Haledon students decide not to attend Manchester Regional, plus modest, population growth in Prospect Park and Haledon and the addition of over 100 students through Interdistrict Choice.

The New Per Pupil Adjustments: Who's Paying a Disproportionate Share?

While North Haledon could not withdraw from Manchester Regional, it did win a change in the tax apportionment formula.

The mid-2000s formula was a compromise where the tax apportionment would be based 67% on Equalized Valuation and 33% on student enrollment.  In 2013 the formula was again changed to one that was 50:50.

This means that half of Manchester Regional's tax levy would be divided based on available Equalized Valuation ("available" meaning, the Equalized Valuation left over after money is reserved for the town's elementary school population)  The other half of the tax levy is divided on a per pupil basis.

So in 2015-16 Manchester Regional had a $10.7 million tax levy.

• Half of the levy, $5.35 million, was divided by Equalized Valuation, so 41% from Haledon, 38% from North Haledon, and 21% from Prospect Park.
• The other half of the levy, $5.35 million, was divided on a per pupil basis, so 48% from Haledon, 11% from North Haledon, and 41% from Prospect Park.

The final apportionment is thus:

• $4,773,638 from Haledon.  (44%)
• $2,609,327 from North Haledon.  (24%)
• $3,319,347 from Prospect Park.  (31%)

The consequence of this arrangement is that North Haledon still pays much more per pupil than Prospect Park and Haledon.

But North Haledon's Equalized Tax rate for Manchester Regional is much lower than Prospect Park's and Haledon's.

Due to the 2013 apportionment change and North Haledon's shrinking contingent at Manchester Regional High School, the amount of taxes North Haledon pays for Manchester Regional is dropping and the costs are being made up by Prospect Park and Haledon.

The timing of the apportionment change is horrible for Haledon and Prospect Park because 2013 marked the year state aid froze and therefore they have gotten no new aid despite exceptional need.

New Jersey's Highest School Taxes

When the apportionment was further changed in North Haledon's favor in 2013 Manchester Regional's overall tax levy stayed the same, even though its wealthiest component town could now withdraw a large portion of its tax support.  

North Haledon withdrawl of taxes, combined with the worst underaiding in New Jersey, combined with an attempt by Manchester Regional to tax its citizens to prevent education being cut to the bone, means that Manchester Regional's school taxes are the highest in New Jersey in terms of Local Fair Share.  (in terms of all-in Equalized Tax rate Prospect Park and Haledon's taxes are among the worst, but not the absolute highest.)

	County	Previous Year Tax Levy	Local Fair Share	Tax Levy as percentage of Local Fair Share
MANCHESTER REGIONAL	PASSAIC	$10,345,405	5,835,285	177.29%
MILFORD BORO	HUNTERDON	$1,783,737	1,088,988	163.80%
WOODLYNNE BORO	CAMDEN	$2,116,037	1,365,093	155.01%
WINFIELD TWP	UNION	$1,526,912	1,002,427	152.32%
LINDEN CITY	UNION	$84,115,176	59,855,353	140.53%

What deepens the crisis for Prospect Park and Haledon is that they also have severely underaided K-8 systems to sustain.

Haledon is New Jersey's tenth most underaided district.  Haledon should be getting $12,514 per student, but in reality it only gets $6,660 per student, a $5,854 per student deficit.  Prospect Park is New Jersey's 13th most underaided district.  Prospect Park is NJ's 13th most underaided district.  It should be getting $14,587 per student, while in reality it gets $8,986 per student, a $5,601 per student deficit.

Prospect Park's K-8 system thus has a 1.1076 equalized tax rate, which combined with the 1.26 tax rate for Manchester Regional, municipal taxes, and county taxes, Prospect Park's tax rate is 4.412.

Haledon's K-8 system has a 1.1168 equalized school tax rate.  Combined with Manchester Regional, municipal, and county taxes, Haledon's tax rate is 3.959.

Prospect Park and Haledon, who are demographically and economically Abbotts, have no choice but to pay taxes 3-4 times higher what the Abbotts pay and much higher than what affluent districts pay.

(For 2015-16 Prospect Park and Haledon would have even higher taxes.)

For 2014-15 Prospect Park taxpayers alone got hit by a $414 tax increase for Manchester Regional and another $270 a year for 2015-16.

A District Divided and Alone

The mayors of Prospect Park, Haledon, and North Haledon are all well aware that their districts should receive additional aid.

In April, Mayor Mohamed Khairullah organized a bus trip from Prospect Park to Trenton to demand more money Manchester Regional's schools. 

Mayor Khairullah said "The community is hurting tremendously, and that's why people are willing to take the time off from work and away from their families to come down to Trenton." 

Mayor Randy George of North Haledon has said "It's the State of New Jersey who is supposed to subsidize [poor] schools, not the neighboring town. I believe we are sending less than 15 percent of the students and still paying 30-some-odd percent of the budget. That's double of what I believe we should pay."


Chris Christie has doesn't give a sh*t about Manchester Regional or anything other than himself, but what is shocking even to me is that Manchester Regional hasn't attracted any allies or media attention. 

If Manchester Regional were in fiscal crisis because of charter schools it would have legions of allies including the NJEA and Education Law Center, but since Manchester Regional is just New Jersey's most underaided district and there are no charter school villains, it has no one on its side.  The fact that Manchester Regional pays $844,022 to Passaic County Technical Institute for 305 students does not seem to raise anyone's ire.

Manchester Regional is so small that it lacks the political power of Paterson, which got the legislature to try to give it over $19 million, even though Paterson is not remotely as underaided as Manchester Regional.

Unfortunately again, Manchester Regional is divided against itself in its battle over its own tax apportionment and therefore it cannot effectively get out the message that it is unbelieveably underaided.

Also disappointing is the fact that Manchester Regional is New Jersey's MOST underaided district is not emphasized by the three towns' elected officials.  This fact may not even be known to the elected officials since uncapped SFRA aid figures are not widely disseminated by the Department of Education.  The fact that Manchester Regional is New Jersey's most overtaxed district is just as unknown, since Local Fair Share is also a virtual secret. 

The sum of this all is that Prospect Park and Haledon pay taxes that they cannot afford and their communities are suffering severely.  North Haledon cannot really be blamed for not wanting to pay taxes for Manchester Regional any more than any other well-off town can be blamed for not wanting to support poorer neighbors.  It's not like Bridgewater-Raritan has to send money to Bound Brook, Franklin Lakes has to send money to Fairview, or Millburn has to send money to Belleville, even though Bridgewater-Raritan, Franklin Lakes, and Millburn are all much wealthier than North Haledon and Bound Brook, Fairview, and Belleville are all very needy.

Amidst all of this it needs to be noted that despite being thousands of dollars per student below Adequacy, Manchester Regional exceeds its demographic peers, who are all higher-funded Abbotts or Jersey Shore districts.  Manchester Regional, despite its very low spending, is at the 87th percentile among its peers and is yet another example of the weakness of the Abbott premise of high spending having transformative powers in education.

Prospect Park and Haledon have valid grievances, but so does North Haledon.  I am neutral on the Manchester Regional tax apportionment battle, but I wish it would end so that these three communities would focus their anger at Trenton for abandoning them and criticize aid hoarding districts for lording it over them in Adjustment Aid privilege while they and other poor non-Abbotts are taxed into decline.

----

See the 2013 Commissioner of Education decision on Manchester Regional for more information.