Wednesday, March 30, 2016

Sweeney, Beck Propose Help for NJ's Neediest Districts

Senators Stephen Sweeney and Jennifer Beck continue to work on legislation that would redistribute state aid away from overaided districts to districts that are underaided and truly needy.

In an article by Adam Clark that appeared on the cover of the Sunday, March 27th Star-Ledger, Beck and Sweeney explained:

"The hold harmless provision [Adjustment Aid] was meant to make sure there was no losers," state Senate President Stephen Sweeney said. "It absolutely created losers." [my emphasis]
Sweeney (D-Gloucester) and Sen. Jenifer Beck (R-Monmouth) are finalizing a plan that they say would make school funding more equitable. Beginning in 2017-18, the proposal would gradually phase out hold harmless aid [ie, Adjustment Aid] for districts that don't need it and reallocate that money to growing districts that are underfunded, Beck said.

Political Courage

This is truly a brave move on both senators' parts. Both Sweeney and Beck have some overaided districts among their constituents who may oppose any redistribution and this bill faces an uphill struggle through ignorance, selfishness, and parochialism of the legislature.  Remember, SFRA barely passed in 2008 and it was an aid increase (even overaided districts were supposed to gain 2%), not an aid redistribution.

Not to overpraise Sweeney (who I criticized here for talking Pre-K expansion without having a way to pay for it), but I see him as a truly bold politician.  Between being the primary Democratic backer of pension reform, supporting the consolidation of K-8s with their regional high schools, and now state aid reform, Sweeney is someone who is willing to take stances that offend interest groups and some of his own constituents if he believes they are correct.  A sincere bravo to him on this.

Conditioning Aid Distribution on Adequacy = Inadequate Redistribution

Sweeney and Beck haven't released any details of their plan yet, but there are hints that they will consider where districts are relative to their Adequacy budgets.

According to the Adam Clark Star Ledger article:

The districts that would receive less hold harmless money are already "above adequacy," meaning they spend more money per student than the state's funding formula says is needed for a thorough and efficient education, Beck said. Those districts should be able to adjust their budgets, especially if their enrollment has dropped, she said.

Any redistribution of Adjustment Aid is a good thing, but if New Jersey only takes Adjustment Aid away from districts that are above Adequacy the amount of Adjustment Aid that could be redistributed is greatly reduced because 71 Adjustment Aid districts undertax so significantly that they actually below Adequacy.  Important examples of Adjustment Aid districts that are below Adequacy are Jersey City, Brick, and Toms River.

According to the Education Law Center Policy Brief on Adjustment Aid, for 2015-16:

  • The above Adequacy Adjustment Aid districts get $174,024,179 in Adjustment Aid.
  • The below Adequacy Adjustment Aid districts get $381,745,553 in Adjustment Aid.

So, if Adequacy is considered then the potential amount of Adjustment Aid that could be redistributed is only $174 million, not the full $550 million that the state labels as "Adjustment Aid."
(NJ hasn't run the SFRA formula in several years and the amount of money that districts get that is labeled "Adjustment Aid" is divorced from the amount of Adjustment Aid they should get.  For instance, Newark and Atlantic City both get something called "Adjustment Aid," but both are underaided and the Adjustment Aid should be converted into Equalization Aid.  Conversely, since Jersey City increasingly becomes richer and its student population grows slowly, more of its Equalization Aid should be converted to Adjustment Aid.)

Also, the Adjustment Aid districts that are above Adequacy are often only slightly above Adequacy, meaning that because they undertax, their aid excesses are greater than their surpluses above Adequacy.

For instance, even though Pemberton gets $32 million in Adjustment Aid, it is only above Adequacy by $14 million.

  • Asbury Park gets $24.2 million in Adjustment Aid, but is only $13.9 million above Adequacy.  
  • Keansburg gets $8.6 million in Adjustment Aid, but is only $5.9 million above Adequacy.  
  • Phillipsburg is gets $10 million in Adjustment Aid, but is only $125,000 above Adequacy.  

Adam Clark writes about this as a "bipartisan plan to change how that money — more than $500 million — is allocated" but if only Adjustment Aid districts that are above Adequacy lose aid, the amount that could be redistributed would be nowhere near $500 million.

Population Change isn't the Only Factor in Overaiding and Underaiding

Another concern I have is that redistribution will be overly conditioned on population changes.  Although Sweeney and Beck haven't released any details yet, Jennifer Beck has talked often about aid being taken from districts that have lost population and giving it to districts that have gained population.

"The bottom line is that we as a state have not allowed our methodology for funding to keep up with what's actually happening at a district," Beck said. "If you've lost 100 students and the state of New Jersey is giving you the same state aid as you had five years ago... there should be some cost savings along the way."
And, in a statement at a recent Senate budget hearing Beck said:

"According to Beck, school funding needs to be redistributed throughout the state so that districts that have lost enrollment are not getting funding above the adequacy standard at the expense of schools where enrollment has increased. She said that that issue is not only central to the discussion in Paterson, but in a number of schools statewide including those in Asbury Park and Freehold, both of which fall in her district."

I'm a fan of Jennifer Beck, but I do not think she has it totally right about the causation of overaiding and underaiding.

Some districts in New Jersey have always been overaided or always been underaided, even before any recent population shifts.  For many districts, it is difficult to say why they have always been privileged or always been victimized, but it's not like NJ ever was "on formula" for a lot of districts who are now underaided.  

What logic was there ever in giving Marlboro twice as much aid per student as Bloomfield? What on earth justified giving Hillsborough more money than Belleville? Why did Randolph get more money than Hackensack?

Freehold Boro (then DFG CD), whose population growth has been often cited in its underaiding, only got $3,153 per student in 1998-1999, which is not significantly more than what Hillsborough got.

The aid distribution has been unjust for a very long time.  

I am worried that Beck neglects causes of overaiding and underaiding other than population change. Although Asbury Park and Pemberton's extraordinary overaiding are partly due to population loss and the zombie power the Abbott "Parity Plus" Doctrine, there are other districts that are overaided because they have had increases in wealth.

Hoboken and Jersey City represent two districts that are overaided despite gaining population.

Increase in wealth is difficult to quantify because historic Local Fair Share data is not available and even if it were available I would have to adjust it for inflation, but I can use Equalized Valuation (as a percentage of statewide EV) to show that Hoboken (an extreme, but illustrative example) has become overaided because of an increase in wealth, not because it has lost student population (on the contrary, it's slightly growing.)

Were I to go back even farther the effect would be more dramatic.  In the late 1990s Hoboken had only 0.3% of the state's total Equalized Valuation.   (see Divergent Fates of NJ's Big Cities.)

Likewise, some underaided districts haven't had much population change either.  Perhaps they were always underaided, or their population has stayed constant but become poorer.  They could also have seen a decline in ratables.

Atlantic City would be a prime (if extreme) example of a district who was once overaided (hence the Adjustment Aid artifact) and whose population has actually fallen, but has become deeply underaided (-$6,770 per student) because it has had an enormous decrease in wealth.

Will Anything Change?

Sweeney and Beck themselves have said that their proposal will be controversial, but the moral arguments for redistribution are so strong that I have some hope that this legislation will at least pass the State Senate.

The big question marks are the Education Law Center, Vincent Prieto, and Chris Christie.

The Education Law Center, led by lawyer David Sciarra, has opposed redistribution in the past and I consider it to be reactionary and economically blind, but in the fall of 2015 it softened its opposition to cutting Adjustment Aid for districts that were above Adequacy.  The ELC is influential among Democratic legislators and NJ's education activist community, so its support would help tip the scales in favor of justice.

As recently as 2012, Christie, through Chris Cerf's Education Funding Report, supported cutting Adjustment Aid too for districts that are above Adequacy.  Christie actually followed through on this for two years before setting into a flat-aid policy.  Christie, obviously, has become erratic and no one knows what he would think of redistribution.  He even created "Additional Adjustment Aid" to protect Interdistrict Choice districts from ever losing aid.

Prieto is a big unknown. All of Prieto's constituents - East Newark, Edgewater, Fairview, Guttenberg, Harrison, Kearny, North Bergen, Secaucus, and West New York - are underaided, but Prieto is also a close ally of Jersey City and Hoboken politicians whose districts are overaided.  Prieto is known to be a backer of Steve Fulop too and may not want to do Steve Sweeney any favors.

Anyway, I appreciate what Sweeney and Back are trying to do and look forward to learning more about their proposal.

Thursday, March 24, 2016

The Education Law Center Loses Soul, Mind

The Education Law Center has issued a threat to the State of New Jersey that if the State doesn't completely change the FY2017 budget to fully fund the Abbotts, the ELC will sue the state yet again to force it to do so.

"ELC, on behalf of the Plaintiff school children in the landmark Abbott v. Burke case, notified Acting Attorney General Robert Lougy that the NJ Department of Education’s school aid notices for 2016-17 issued to districts on February 20 violate the SFRA and the 2010 and 2011 Abbott Supreme Court rulings by not utilizing the legally proper costs and weights in the formula.

ELC is demanding that the Acting Attorney General take immediate action to have the NJDOE reissue the aid notices using the proper at-risk and LEP weights and increasing preschool aid by the consumer price index, as mandated by the SFRA. ELC is also demanding that the urban districts covered by theAbbott rulings be provided with full state aid under the SFRA in the FY17 State Budget. The Governor has proposed a budget which is hundreds of millions of dollars in state aid below what the formula requires for these districts and their students.

If necessary, and as a last resort, ELC has placed the Acting Attorney General on notice that, if steps are not promptly taken to address Governor Christie’s unconstitutional aid notices and amounts, the Abbott Plaintiff school children will have no alternative but to bring the matter before the NJ Supreme Court."
The threat of another Abbott lawsuit when the state is broke and so many non-Abbotts are disgustingly underaided, is the most unfair and irresponsible thing I have ever seen from the Education Law Center.

Although the ELC didn't give a price tag for fully funding the Abbotts (it never does), John Mooney of NJSpotlight put the cost at $500 million.

lawyers representing children in the 31 Abbott school districts – all urban and low-income [sic], including Newark, Paterson and Jersey City – have pushing the administration to now not only adjust aid amounts statewide, but also fully fund the Abbott districts as required by the court’s ruling.
That would likely amount to close to $500 million more in the state budget, a hefty sum considering that the administration is increasing aid to districts statewide by only $94 million.
The major way that another Abbott lawsuit is unfair is that none of the Abbotts is even close to being among NJ's most underaided districts according to NJ's "landmark" weighted school aid law, SFRA (which the ELC originally opposed but now celebrates.)

The most underaided Abbott district is New Brunswick, whose aid deficit per student is $3,073, with Plainfield and Bridgeton right behind also with deficits greater than $3,000 per student.

New Brunswick has a substantial deficit, but there are 77 districts who are more underaided than New Brunswick, bottoming out with Bound Brook, who is underaided by $9,176 per student.

Click to Enlarge.
Half of the Abbotts are, in fact, overaided.  On one hand, this is a relief since the state would not have to give much in additional aid (if any) to seventeen of the Abbotts, but how can the Education Law Center not present this fact about the Abbotts in its public filings and press releases?

Aid Deficits/Surpluses Per Student

Given New Jersey's zero-sum budgetary reality, the aid of the non-Abbotts would be endangered by an Education Law Center/Abbott triumph since the state would have to get the money from somewhere and taking more money from pensions, like after the Abbott XXI decision in 2011, is impossible and Christie will not allow taxes to be increased. Even if Christie would allow taxes to increase, why should the Abbotts get that money instead of the pension system? whose investments have lost 6% of value through the 12 months preceding Feb 2016? Or the Transportation Trust Fund, which will be depleted in a few months?  And if NJ were to ignore the warnings of pension actuaries and infrastructure advocates and put that extra tax money into education, why give it to the Abbotts when other poor districts are so much more disadvantaged?

How much more disadvantaged?  There is not a single Abbott among NJ's lowest spending districts either (all of whom are underaided). Fairview, who is underaided by over $7,100 per student and only spends $10,143 per student, might lose some of the inadequate aid it does receive if the NJ Supreme Court issued another ukase for the state to find hundreds of millions more for the Abbotts.

The underaided non-Abbotts who are so budgetarily desperate, such as Freehold Boro, Manchester Regional, Woodlynne, Bound Brook, Belleville, and Guttenberg, would get nothing from another Abbott lawsuit since their students don't "have legal standing" in the morally and economically disinterested, legalistic reasoning of the NJ Supreme Court.

The lowest spending Abbott, Bridgeton (who I feel should get more money), still spends $15,961, an amount far, far above what nearly all working class and poor non-Abbotts are able to spend.

Do the Abbotts need more money?  Sometimes yes.  But the Abbotts can start by raising their own taxes.  Of the 31 Abbotts, only three tax at or above their Local Fair Share.

The increasing inequity of the Abbott lawsuit comes from the obsolescence of the Abbott list.

The 31 Abbott districts are not the 31 poorest districts in New Jersey.  Not by a long shot.
  1. Tax Base:

Although most of the Abbotts clearly have low tax bases, Harrison, Hoboken, Jersey City, Long Branch, and Neptune Township are not even close to being among the poorest tax-base districts in NJ.  Hoboken, in fact, is NJ's richest K-12 district by far.

2.  Demographics

Click to Enlarge
Demographically, there are other Abbotts who are not among NJ's poorest.  Pemberton's FRL-eligibility is 44%.  Hoboken's is 49%.  Neptune Township and Phillipsburg are 52% and 53% FRL-eligible, respectively.

The Education Law Center willfully blind when it comes to New Jersey's fiscal situation.  For all their knowledge of school finance, they are ignorant of trifling things like the collapse of Atlantic City's gambling industry, the Pension Crisis, the retiree exodus, continuing net job losses, the depletion of the Transportation Trust Fund, or the massive threat of an adverse verdict on COLAs in Berg v. Christie.

In short, the Education Law Center has become a reactionary law firm determined to protect the interests of its clients over the greater good and willing to mislead the public about the nature of NJ's finance problems and the facts of Abbott underaiding.


See Also:

If the Abbott List Were Updated, Who would be on it? off it?

The Non-Results of Abbott Funding

Your Number of the Day: -6.61%


It's the percentage of value the NJ pension funds lost through February 2016.

NJ's pension funds are actuarially assumed to return 7.9% annually.  This 7.9% is what Moody's used when it estimated that NJ's pension funds would start zeroing-out in 2021.  If NJ doesn't meet the 7.9% return then the funds start zeroing-out even sooner and state aid is gutted even sooner.

This comes a few days after Standard & Poor's lowered its outlook for NJ from stable to negative.

Tuesday, March 22, 2016

New Jersey's Poorest School Districts 2016-17

This post is about the school districts in New Jersey with the weakest local tax bases.

My basis for identifying a district as among NJ's lowest resource is simply its Local Fair Share per student.  Please see this Table of Local Fair Shares per student for the source of this information.

I do not mean to say that all of these districts are necessarily the lowest spending or the highest proportion of kids living in poverty; only that they have the least ability to pay taxes in NJ based on Local Fair Share.

Click to Enlarge

Bridgeton is again the poorest district in New Jersey.  It has only $8.5 million in Local Fair Share for 5,724 students, or $1,483 per student.

Twenty of these 37 districts are Abbotts and get significantly more state aid per student than the non-Abbotts. For instance, Woodlynne (a non-Abbott that is 93% FRL-eligible and borders Camden City) gets $12,382 per student, whereas Bridgeton gets $14,802 per student, Camden City gets $18,142, Salem City gets $17,176, and Trenton gets $16,176 per student. Woodlynne's Pre-K funding gap is even worse.  Woodlynne only gets $103,743 for Pre-K, probably enough for ten kids for one year.  The Abbotts, by contrast, get two years of state-funded Pre-K for all children.

In some cases this superior state aid for the Abbotts is justified by more challenging demographics, but not consistently.  Pemberton and Phillipsburg, for instance, have FRL-eligible rates of 44% and 53%, respectively.

The most property-poor Abbotts get $15,600 per student, on average.  The non-Abbotts only get $10,400.

Since the Abbotts are already so advanced in state aid over non-Abbotts,  another Abbott lawsuit, as the ELC is threatening, is completely unfair and wrongheaded.

Click to Enlarge.
The superior state aid, duh, lets the Abbotts have lower taxes.  Woodynne, on the other hand, has NJ's fourth heaviest school tax burden.

I don't have far to go in terms of analysis here, but because so many NJ districts have such inadequate tax bases, a proposal to require every district to pay for 25% of its school budget is not economically viable unless the plan is sensitive to Local Fair Share.

Again, the promise of SFRA to bring fairness in state aid to poor non-Abbotts remains unfulfilled.


See Also:
Help for the Needless: NJ's Richest Districts and their State Aid

Beyond the Point of Fairness: NJ's Most Overtaxed School Districts

The Poorest Districts in NJ (for 2015-16)

Monday, March 14, 2016

Millville's More for Me Plea OR How Even NJ Education Professionals Don't Understand SFRA

There are many reasons for the persistence of NJ's unfair and irrational distribution of school aid, but one factor preserving the unjust status quo is ignorance of just how unfair the existing distribution is and how SFRA is even supposed to work. This ignorance frustrates the formation of a reform movement and allows overaided districts to lack sympathy for underaided districts and for underaided districts to not comprehend the depth of their victimization.

This post is going to be on the demoralizing ignorance some education professionals and Boards of Education have of SFRA and the basic facts of how much money their own districts are supposed to get, let alone others.

Millville's SFRA Non-Comprehension

The most recent example I've seen of this ignorance comes from Millville.

Millville is a town of 28,000 located in Cumberland County.  It is an Abbott district.  Its 6,000 students are 70% FRL-eligible but only 1% English Language Learners.

Like most other school districts in New Jersey, Millville is facing cuts for next year.  The district estimates it has a $2 million shortfall and is preparing a 4% tax increase.

Like many other districts, Millville is attributing its budget problems to the "lack" of state aid.

The district lays the blame for its budget quandary on state aid, or rather not enough of it. 
Local officials say Millville, for the sixth year, is looking toward getting state aid for its new school year that is about what it got for the current year. Officials argue that, adjusted for cost increases, the amount of money actually in district hands is declining. 
Gentile said Millville would have to close an elementary school if it gets a seventh year of flat funding.  [my emphasis]
The reporting on the most recent Millville BOE meeting is sparse, so I cannot be 100% sure of everything that was said about state aid, but complaining about flat-funded state aid seems to be something Millville did last year too.

During the meeting, Board Member Bob Donato, of the Finance Committee, spoke about the $1.8 million shortfall and the flat funding from the state.
"It's always better than taking a cut but flat funding doesn't work in the world of rising costs," Donato said.
I'm sorry that Millville has to cut its budget, but it is deeply misleading of Millville to suggest that there is a possibility that Millville will gain state aid next year.

What Millville's BOE and Administration do not know or comprehend is that according to SFRA Millville is supposed to be flat-funded.

Millville is among almost 200 districts in New Jersey that already receives more money from the state than SFRA's core formulas says it needs. Specifically, Millville's K-12 state aid is $68 million, but SFRA's formulas show that it should only receive $63 million.

Since SFRA's formulas indicate that Millville should receive less than it was getting in 2008, Millville's state aid is sustained by Adjustment Aid. Although the amounts of Adjustment Aid that districts get are divorced from the formula, Millville's BOE and Administration should realize that its $12 million in Adjustment Aid means that it isn't due for an aid increase.

If New Jersey were on a path to fully fund SFRA, Millville would be flat-funded until underaided districts catch up with it. Only after all districts get their full uncapped state aid would districts like Millville begin to see their state aid increase.

There is no justification to say "if state aid is flat for a seventh year" since Millville's aid will be flat until doomsday as New Jersey falls farther and farther from fully funding its underaided districts.

Even another Abbott verdict in which the NJ Supreme Court orders that the Abbotts get their full SFRA funding would give Millville nothing since it already gets its full Abbott funding.

True, SFRA was supposed to be fully funded in four or five years, but back when SFRA was finalized in January 2008 Atlantic City wasn't suppose to collapse, the Great Recession wasn't supposed to happen, the Pension Crisis wasn't supposed to happen, and someone like Chris Christie was never supposed to get elected.

(Update:  Little Egg Harbor is another overaided district that does not comprehend why it is not getting an increase in aid.)

Underaided Districts Don't Get It Either

Alas, many underaided districts don't understand how SFRA works either and this causes them to miss just how victimized they are.

I've seen many examples of underaided districts say that the state is shortchanging them, but then use their deficit relative to capped aid and not the much larger and more meaningful deficit relative to uncapped aid.

Red Bank Boro, one of NJ's 30 most underaided districts, is one recent example of this. At a November 2015 BOE meeting where Red Bank Boro's lack of state aid and fiscal crisis was discussed, Red Bank Boro's administrator said "the district is due another $500,000 in state aid based on student population and demographics."

NO!  Red Bank Boro was owed $6.5 million in 2015-16!!!

Lakewood's BOE president made an identical mistake in January 2016 when he desperately (and justifiably) asked the state for more assistance for Lakewood.

"If the SFRA was fully funded the District would receive approximately $5 million more than it does."

NO!  Lakewood was owed $15.8 million in 2015-16!!!

The problem with this, is that capped aid is an arbitrary, out of date figure.  Capped aid depends on how much aid a district got back in 2008; uncapped aid is the actual, meaningful measure of what a district needs demographically and economically.

Referring to capped aid figures is also incomplete because very few districts are overaided relative to capped aid whereas about 200 are overaided relative to uncapped aid.  Using uncapped aid vs actual aid gaps thus exposes the inequity of overaiding existing alongside underaiding.

When even Board of Education members and administrators do not understand how SFRA is supposed to work, what aid increases their districts can hope for, or how much aid other districts are getting there is no fuel to fire a reform movement.  New Jerseyans everywhere think their taxes are too high and their schools are being "cut to the bone," and many New Jerseyans justly blame the state for these trends.

HOWEVER, the tax and budgetary pain isn't equal everywhere and one of the disequalizing forces is the unfair distribution of state aid.  Publicizing uncapped aid amounts is necessary because it will show districts where they stand relative to SFRA's recommendations and where they stand relative to other districts.  

In the meantime, if you want to help spread the word about how bad things are in New Jersey, refer lots of people to this blog or the table of uncapped aid and Local Fair Share figures I've created here.

Wednesday, March 9, 2016

Beyond the Point of Fairness: NJ's Most Overtaxed School Districts

Everyone in NJ thinks that their property taxes are brutal, but just because NJ's average property taxes are the country's highest doesn't mean that everyone's burden is equally excruciating.  This post is going to be about the school districts where taxpayers truly have the worst school taxes by the standards of New Jersey.

Although there are different ways to assess tax burdens, this will use the 2016-17 Local Fair Share.

Basic Facts on NJ School Tax Burdens:

  • The median district's 2015-16 tax levy was equal to 102% of its 2016-17 Local Fair Share. 
  • There are 306 districts that pay 100% or more of their Local Fair Share.
  • There are 17 districts that pay 150% or more of their Local Fair Share.
  • There are 284 districts that pay 99.9% or less of their Local Fair Share.
  • There are 55 districts that pay 49.9% or less of their Local Fair Share.

What is Local Fair Share?
(Readers who understand how SFRA is supposed to work can skip this section.)

Local Fair Share is a measurement of a district's ability to pay taxes.  It is a hybrid calculation that depends on Equalized Valuation (ie, market value of a town's taxable real estate) and on Aggregate Income.

The formula for Local Fair Share for 2016-17 is:

(Equalized Valuation x 0.013156218 + Aggregate Income x 0.046185507)/2

Where Equalized Valuation is from 2015 (for FY2016) and Aggregate Income is from 2013.

The formula for Local Fair Share might look wild, but all it says is that a district's fair share of taxes equals 0.65% of Equalized Valuation (1.3% / 2) plus 2.3% of income (4.6% /2 ).

So, to use South Orange-Maplewood as an example, its Equalized Valuation is $6,118,482,231 and its Aggregate Income for 2013 was $2,414,402,178.

Thus, when you plug those values into the formula you get South Orange-Maplewood's Local Fair Share of $96,003,237.

Local Fair Share is half of the calculation of Equalization Aid, the state's most important aid stream.

Equalization Aid is calculated by determining a district's Adequacy Budget (using population and various at-risk weights) and then subtracting Local Fair Share. So, South Orange-Maplewood's Adequacy Budget is $104,753,980 and its Local Fair Share is $96,003,237, therefore it would get $8,750,743 in Equalization Aid if SFRA were followed.

Of course, SFRA is NOT followed and South Orange-Maplewood gets $0 (ZERO) in Equalization Aid.

If a district's Local Fair Share is greater than its Adequacy Budget it does not get Equalization Aid. A third of NJ's districts do not qualify for Equalization Aid.

(It might seem inappropriate to some readers that I am using the 2015-16 tax levy and comparing it to the 2016-17 Local Fair Share, but Local Fair Share is (unavoidably) is calculated during the previous school year anyway and uses lagging data.  Thus, comparing the previous year's tax levy to the next year's Local Fair Share is a legitimate way to assess relative tax burdens.)

NJ's Most Overtaxed

Manchester Regional really stands out here for exceptionally bad taxes.  Manchester Regional's taxes are so incredible because of the new and unique tax apportionment arrangement Prospect Park, Haledon, and North Haledon have where North Haledon (a middle class district) pays taxes to Manchester Regional based 50% on Equalized Valuation and 50% on the percentage of students there who are from North Haledon. It must be known that most of Manchester Regional's taxes are paid by Prospect Park and Haledon.

Even though Manchester Regional is only a grades 9-12 district, even if you combined its taxes with the taxes of Haledon and Prospect Park, the resulting tax levies would still be exceptional for those two towns.  Prospect Park/Manchester Regional's combined tax levy would be 173% of Local Fair Share. (see graphic.)  Haledon/MR's combined tax levy would be 167% of Local Fair Share.  North Haledon, on the other hand, would have taxes that are slightly below LFS.

For some districts the high tax burden is something they found themselves in because their tax levies stayed constant (or increased) as their tax bases declined.  Atlantic City is the ideal example of a  district like this.  In 2008 when Atlantic City's Equalized Valuation was $22.2 billion, its $109 million school tax levy was easily affordable, now that Atlantic City's Equalized Valuation is about $8 billion, a $100+million tax levy is a huge challenge for a district whose income is as low as Atlantic City's is.

Linden, Lodi, and Newton have also had substantial losses to their Equalized Valuations.

Although Manchester Regional and a few other high-tax districts like Linden, Lodi, Woodlynne, West Orange, are severely underaided, the highest-taxed districts are overall a mix of districts that are overaided and underaided.  The underaided, high-tax districts can be seen as trying to make up for a lack of state aid; the overaided, high-tax districts can be seen as trying to spend more to improve educational quality.

Several of NJ's other severely underaided districts, such as Bound Brook, East Newark, and Freehold Boro, have tax burdens which are closer to their Local Fair Shares or even below their Local Fair Shares.

On the other hand, most of the districts whose districts whose taxes exceed Local Fair Share the most in absolute terms are indeed underaided.

Some of NJ's most overtaxed districts do well in state aid and should be considered voluntary overtaxers who; other overtaxers get a pittance for state aid and are essentially being forced to overtax themselves or else sacrifice their children.  If Manchester Regional taxed at its Local Fair Share ($4.7 million) instead of its actual $10.7 million levy, Manchester Regional would have $6 million less, or $6400 less per student.  Since Manchester Regional's total budget is about $18 million ($13300 per student), this would be a gigantic setback that would make Manchester Regional easily New Jersey's lowest spending school district.

All of the other overtaxed/underaided districts here tax themselves thousands of dollars in excess of their Local Fair Shares.

Some inequity in taxation is unavoidable because some districts (like Jersey Shore microdistricts) have more property wealth per student than others, but what is infuriating and unacceptable is how NJ's unfair distribution of state aid (where 199 districts get 100% or more of their uncapped aid) exacerbates these "natural" inequities.  Jersey City's school taxes are so low because it gets $130 million in K-12 aid in excess of what SFRA recommends.

What is also maddening is how little known all of these inequities are because the Department of Education does not publicize Local Fair Share data.

Both the Democrats and Republicans fail New Jersey's working class districts and poor non-Abbotts.  Republicans fail NJ's working class districts and poor non-Abbott districts through their opposition to any income tax increase whose proceeds could relieve property tax burdens; Democrats fail NJ's working class and poor non-Abbotts through their favoritism towards their urban (Abbott) base, lack of realism on pensions. and general non-prioritization of K-12 school funding.

Will help ever come for districts like Linden, Lodi, and Manchester Regional?  Not unless these districts can successfully make the case that they are truly victimized by the state and they can inform the public that not everyone's tax burden is equally heavy.


PS  The towns with the highest all-in (county, school, and municipal) Equalized tax rates are in this chart.

These data do not take income into account residential income.  I also excluded Winfield because its Equalized tax rate seems to be 18%, a figure I find unbelievable without further corroboration.



See Also:

Helping the Needless: New Jersey's Richest Districts and Their State Aid

The Robbers and the Robbed: State Aid Disparities for 2016-17

Choice Districts, Charterized Districts Are Big Winners for 2016-17 State Aid

More on 2016-17 State Aid: Where the Money's Going

Saturday, March 5, 2016

Paterson Supt Proposes a 27.2% Tax Increase, Opponents of Tax Increase Demand More State Aid

Paterson has been under increasing fiscal stress over the last few years, as the state has been unwilling and unable to give Paterson much in the way of additional state aid and Paterson has kept its own tax levy flat for seven years.

Last year, facing $497.8 million in expenses and just $472 million in revenue, Paterson considered raising taxes by 13% (or $5 million), but the Paterson BOE decided to make deeper budget cuts rather than increase taxes at all.

Now, despite making over 330 layoffs last year (including 170 teachers), the Paterson Public Schools are facing a $45 million deficit for next year and getting only a proportionally tiny increase in state aid.  At this point Paterson's superintendent is suggesting that Paterson raise taxes by 27.2%.

A 27.2% tax increase would be enormous for most other districts, but Paterson's school levy is only $39 million, so that 27.2% tax levy increase only translates into an additional $10.2 million.  Since Paterson's budget for 2016-17 is projected at $483 million, the additional $10 million is barely even a band-aid.

Paterson's BOE and municipal elected officials are aghast at the prospect of any tax increase. "We just can’t afford to increase taxes at this time,” said board member Nakima Redmon."

Paterson City Council president William McCoy called the increase "outrageous" and then added “This is a horrible idea. It’s not workable.”

This opposition to the tax increase is due to the fact that municipal taxes are also increasing by 6% ($9 million) and because Paterson continues to suffer significant economic weakness.  As a symbol of that weakness, Paterson is continuing to lose Equalized Valuation even as the rest of New Jersey slowly grows.

Patersonians are venting fury at the state for not giving them more state aid:

Assemblyman Benjie Wimberly, who works for the school district as recreation coordinator, urged the protesters to take their fight to Trenton. “There’s a man by the name of Chris Christie who needs to hear loud and clear that the city of Paterson cares about their children and cares about their schools,” Wimberly said. 
The Rev. Kenneth Clayton, president of the Paterson Chapter of the NAACP, called the state’s lack of funding of Paterson’s schools a “plot and plan” by officials in Trenton against the city.

“We can’t just sit back and accept this,” said Grant. “We have to push to get what we’re entitled to under the law.”
The people of Paterson have a valid argument about state aid, but only up to a point because two-thirds of NJ's districts do not get "what they're entitled to under the law." In fact, Paterson gets 91.8 % of its uncapped aid ($401 million of $437 million), compared to the state median of only 80%.

It would be nice to provide Paterson with more money, but Paterson's aid deficit is smaller than the aid deficits of some of its high-FRL neighbors no matter how you examine it.

Since it does so much better with state aid, Paterson's per pupil spending is higher despite having lower local taxes.

Although the people of Paterson are burdened, Paterson does not come close to paying its full Local Fair Share.

Paterson's taxes are especially low compared to its neighbors.

Paterson's schools also have some management and contractual problems.  For instance, prescription drug costs for Paterson employees increased at a 50% rate this year.

The budget situation in Paterson is serious and will surely become worse in the next few years, but the state and Paterson itself should keep a broader perspective and realize that they get substantially more aid than poor non-Abbotts AND state-funded Pre-K which relieves parents of a major personal expense.  A family in Prospect Park could be living three blocks from the Paterson border and have the same poverty, higher taxes, even less well-equipped and staffed schools, and have the large burden of paying for Pre-K itself (or doing without Pre-K at all).

Fairness in state aid should be for the most underaided, not districts who happen to be falling from what is comparatively a very high spending level.  As painful as it is, Paterson must be finally willing to accept some increase in its Local Tax Levy and that other districts are ahead of it in line for more state money.

UPDATE:  The tax increase proposal is now in the 12-15% range for Paterson.  

Thursday, March 3, 2016

Help for the Needless: New Jersey's Richest Districts and Their State Aid

This post is the first in a series where I examine tax and Local Fair Share data for 2016-17.  This post will identify New Jersey's richest school districts, based on total Local Fair Share and Local Fair Share per student and demonstrate that most of these districts receive considerable state aid that they have no economic need for.  The conclusion is that these ultra-high resource districts' aid should be redistributed to truly disadvantaged districts.

Local Fair Share is the state's way of evaluating what taxes a district should be capable of paying in order to support its schools.  Local Fair Share is half of the calculation of Equalization Aid, the state's major stream of aid.

The formula for Local Fair Share depends on Equalized Valuation and on Aggregate Income.

The exact formula for 2016-17 is:

(Equalized Valuation x 0.013156218 + Aggregate Income x 0.046185507)/2

Equalized Valuation is the market value of all the taxable real property in a town.  Aggregate Income is the total income of the residents, although there is a three year lag in what year aggregate income is from.  For FY2017 the state is using Aggregate Income from 2013.

Local Fair Share is not confidential, but it is not published either.  I got these data by making an OPRA request of the DOE.

The definition of "richest" I am using in this post is "tax base per student." These districts do not have New Jersey's highest average incomes, nor lowest FRL-eligible rates, nor highest school spending.  By using the word "richest," I'm intentionally being provocative, but it's high time that some high-FRL districts like Hoboken accept that they are in fact rich on a per student basis.

New Jersey's highest-resource districts tend to be demographically unusual places like Hoboken and Jersey Shore microdistricts that have very high property valuations and very few children.  The few conventionally affluent districts among the richest are Alpine, Harding, and Bedminster.

As usual, I will look at state aid for these districts and show that state aid for these districts is unneeded and must be redistributed in the era of the pension crisis.

Without further ado, here goes:

These 38 districts are all the districts with more than $35,000 in Local Fair Share per student.

The Red column is the actual Local Tax Levy.

Avalon Boro, with $1.3 million in Local Fair Share per student, is the highest resource in New Jersey.  It taxes itself at 6% of Local Fair Share, but still yields over $70,000 per student.

If you examine the chart, you'll see that these are mostly tiny districts.  Of these districts, only Franklin Lakes (1,083 students), Ocean City (1,447), and Hoboken (2,596) have more than 1,000 students.  According to the figures I got from the Department of Education for estimated 2016 population, these 38 districts in total only have 12,258 students.

Helping the Needless

Unevenness of economic resources is to be expected, but what is outrageous about the situation in New Jersey is that these ultra-high resource districts get considerable state aid. The 38 richest districts get $28,555,176 in K-12 state aid, plus another $11.3 million for Pre-K in Hoboken.

23 of NJ's 38 districts with more than $35,000 per student in Local Fair Share get over $1,000 per student.

Seven of NJ's districts with more than $35,000 in Local Fair Share per student get over $3,646 per student state aid median.

I've said numerous times on this blog that New Jersey must redistribute Adjustment Aid.  I believe that the fairest method to redistribute aid is to take Adjustment Aid from overaided districts, and I make no exceptions for overaided districts with high FRL-eligibility, such as Jersey City, Pemberton, and Asbury Park.

However, another source of aid to responsibly redistribute is to take all aid away from New Jersey's wealthiest districts.  The amount of aid NJ's highest-resource districts get is in the tens of millions of dollars.  When for 2016-17 the state can only find an additional $19 million for Equalization Aid we have to look at the money the least-needy districts are getting and put it where the need is the most acute and it will do the most good.


See Also:

Helping the Needless: New Jersey's Richest Districts and Their State Aid

The Robbers and the Robbed: State Aid Disparities for 2016-17

Choice Districts, Charterized Districts Are Big Winners for 2016-17 State Aid

More on 2016-17 State Aid: Where the Money's Going

Tuesday, March 1, 2016

The Robbers and the Robbed: State Aid Disparities for 2016-17

When Chris Christie announced in February 2016 that he would again refuse to either put significant new money into SFRA or redistribute aid away from New Jersey's aid hoarding districts, I had a feeling that the inequalities of New Jersey's aid distribution would become even more savage.

Now, after I have been able to review uncapped aid figures, I see that my initial assumption was correct.  Even though Christie is allowing a $19 million increase in Equalization Aid, there is no substantial improvement in the fairness of New Jersey's aid distribution and hundreds of overtaxed, under-Adequacy New Jersey districts will have to make even deeper cuts or force their already overburdened residents to sacrifice even more through higher taxes.

Basic Facts on the 2016-17 Aid Proposal
  • The median NJ district gets $3,623 per student in K-12 state aid.
  • The median NJ district is underaided by $550 per student (compared to uncapped aid.)
  • The median NJ district gets 80% of its uncapped aid.  
  • There are 199 districts that get 100% or more of their uncapped aid.  There are 52 that get 200% or more of their uncapped aid.
  • Of the 199 overaided districts, 52 are overaided by $2,000 or more per student.
  • The total excess aid of the overaided districts is $563 million.
  • Of the 392 underaided districts, there are 141 districts that get 49.9% or less of their uncapped aid.
  • Of the 392 underaided districts, there are 130 that have aid deficits greater than $2,000 per student and 51 with deficits greater than $4,000 per student.
  • The total deficit for the underaided districts is $1.9 billion.

This post will include calculations and analysis of some factors around state aid itself, chiefly what districts are the most overaided (the robbers) and what districts are the most underaided (the robbed).

This post will be on the shape of the state aid distribution.  My next post will be about local taxation.

Background on Overaiding  
(Readers who know how SFRA works can skip this section.)

First, when I say a district is "overaided" I meant that it gets more aid than SFRA's core formulas indicate that it economically and demographically needs.  

To simplify, SFRA is a weighted aid formula that attempts bringing spending up to very high levels in any district that has many "at risk" students and concentrated poverty.

  • SFRA is sensitive to demographics through the calculation of the "Adequacy Budget."  The Adequacy Budget is a "weighted calculation" that depends on the overall size of the student population, with multipliers for older students and students who are FRL-eligible or ESL.  A district with a higher concentration of at-risk students receives an additional bonus.  
The Adequacy Budget for a district whose students are 80% FRL-eligible or higher will be above $20,000 per student, but this doesn't automatically mean that a district is supposed to get $20,000 per student in state aid since the district has to make a contribution through local taxes.  

The state's expectation the contribution from local taxes is done through calculating something called "Local Fair Share."

  • SFRA is sensitive to the district's economic position through the calculation of "Local Fair Share," ie, the district's tax base.   Local Fair Share is calculated with a formula that gives 50% weight to Aggregate Income and another 50% weight to Equalized Valuation. 
To simplify, if a district's Adequacy Budget is $20 million and it has a Local Fair Share of $5 million  it is supposed to get $20 mil - $5 mil = $15 million in Equalization Aid plus other streams of aid for Special Education, Transportation, and Security.  

Both Local Fair Share and Adequacy Budget are based on some arbitrary assumptions, but nevertheless, as long as the calculations are applied consistently, these measures provide a useful way of comparing district tax capacity and need.

SFRA was supposed to be phased in over several years, so a district's aid increase is supposed to be capped at 10% or 20% per year.  So if this district was only getting $10 million pre-SFRA, the biggest annual increase it could get would be $2 million per year.  That partial SFRA funding is "Capped Aid."  The full, full SFRA funding is "Uncapped Aid."  

However,  Local Fair Share and Adequacy Budget are only the rational components of SFRA.  SFRA also contains a demon known as "Adjustment Aid" that was only included in SFRA in order to make SFRA's passage through the legislature possible.

Adjustment Aid was included because SFRA's new calculations would have given many districts, including several politically powerful Abbotts, less money than they got under the status quo.

In order to facilitate the sausage making of passing SFRA, SFRA's authors thus had to include a provision for something called "Adjustment Aid" which guarantees that no district can get less than 102% of what it got in 2007-08, the year SFRA was passed.

Thus, SFRA is not a redistribution of the existing aid stream; it is only a method of distributing new aid and without new aid SFRA does not function.

To simplify, if a district was getting $15 million pre-SFRA and SFRA's core formulas showed that it only needed $10 million, that district would then get $10 million in regular formula aids plus $5.3 million in Adjustment Aid ($5.3 mil + $10 mil = $15.3 mil = 102% of the pre-SFRA aid.)

Adjustment Aid intentionally contradicted the intention of SFRA to "reform" aid, but it was supposed to become gradually less of a distortion as the state poured billions more into K-12 education and gave all of that new money to underaided districts and flat-funded overaided districts.  However, due to the stagnant economy, pension crisis, Atlantic City collapse, debt crisis, and Christie's refusal to raise taxes, there has been no aid for underaided districts and the old pre-SFRA inequities grow even worse as many districts gain population or lose wealth and get no new aid and other districts lose population or gain wealth and do not lose their aid.

Two additional pertinent facts about how SFRA was not designed to function in budgetary scarcity are:
  1. Every district, no matter how wealthy, is entitled to some aid under SFRA.  Thus ultra-high resource districts such as Hoboken, Alpine, and Jersey Shore microdistricts such as Avalon Boro, Stone Harbor, Allenhurst, Deal, are usually entitled to at least $1,000 per student through Transportation, Security, and Special Education Aid.  (See "Help for the Needless: NJ's Richest Districts and Their State Aid.")
  2. In order to satisfy the NJ Supreme Court's Abbott rulings requiring very high spending in poor districts, the aid targets for high-FRL districts are usually high enough that poor districts exceed the spending of traditionally affluent districts like Princeton and Millburn.  Some might consider $18,000 per student in state aid to be wasteful, but this posts defines a district to be overaided if it gets more money than the core formulas of  SFRA say it needs, not necessarily if it gets an amount of money that is extremely high.
SFRA passed in 2008 through the usual legislative necessities of avoiding difficult decisions and letting overaided districts keep their unneeded aid, but since 2008 other factors have made the aid distribution even more unfair.

In 2010 the legislature and Christie expanded Interdistrict Choice, which pays districts (almost always below capacity) to accept students who live elsewhere.  The state was supposed to get some aid offsets by cutting aid to districts losing students through Interdistrict Choice, but the Christie administration and legislature have not allowed these offsets to occur.  

To make things yet even more appalling, when Christie cut state aid in 2010, he cut state aid without considering if a district was overaided or underaided, in other words, Christie treated Hoboken and Freehold Boro identically, despite Hoboken being grotesquely overaided and Freehold Boro being savagely underaided and overcrowded. 

Then, the disparities created by the cuts weren't bad enough and NJ's pension situation not desperate enough, the NJ Supreme Court in the 2011 Abbott XXI decision declared that aid cuts to the Abbotts (and only the Abbotts) were unconstitutional and ordered their aid restored.  Hoboken thus got another $1.7 million, which it used for a technology shopping spree and for more administrative hires.  The other Abbotts aren't as rich as Hoboken, but they similarly were protected while every non-Abbott was sacrificed.

Details on the Most Overaided and Underaided Districts

The Districts Getting the most aid per student Aid are:

Click to Expand:

Most of the districts getting the most aid per student are in fact overaided.

However, a few of these districts, like Bridgeton, merit this aid.  Bridgeton is New Jersey's poorest town, and has only $1,486 in Local Fair Share per student.  For Bridgeton to get $14,082 per student is inadequately low.

On the other hand, there is some substantial aid hoarding going on.

The following districts have the greatest amount of excess aid in absolute terms.

These twenty districts alone get $363.8 million in excess aid.

Jersey City is easily the most overaided district in New Jersey, but it is also the second largest in student population.  In per pupil terms, the following are the most overaided.  Jersey City is also on this list, but it is not as high in per student terms.

Deal is a significant inclusion here because it exploits Interdistrict Choice more successfully than any other district.  Deal, one of NJ's richest districts, has become the Millionaire's Abbott.

In percentage terms (ie, actual aid over uncapped aid), Deal is NJ's most overaided district, getting over 1000% of its uncapped aid!

Their Victims
If the overaided districts lost every cent of their excess aid it would not be enough to fully fund SFRA, but if there were redistribution, districts like the following would be greatly helped.

The Most Ripped Off Districts In Absolute Terms:

Again, several of these are large districts, so their underaiding is not always severe in per pupil terms.

The Most Ripped Off Districts Per Pupil Are:

The Most Ripped Off Districts in Percentage Terms Are:

There are many reasons for this inequity.  Chris Christie doesn't give a sh*t about crushing tax burdens or overcrowded classrooms in poor and working class districts, but unfortunately, the legislature is almost as bad.  Although education aid is a major determinant of property taxes, very few legislators fight for aid fairness or even want it (Sens. Sweeney and Beck are exceptions).  There are a few Republicans like Senator Mike Doherty who condemn the overaiding of Hoboken, Jersey City, and Asbury Park, but these Republicans condemn it because of how that affects affluent suburban taxes, not how that overaiding screws poor and working class districts.

Unfortunately, even many underaided Boards of Education do not fight for fairness because they don't know how badly underaided they are, don't know how overaided other districts are, and they may have a mentality that the way to a fairer distribution of aid is the make the pie larger, not divide it more fairly.  Since few people in the education thoughtworld connect the Pension Crisis to state aid, the concept that the state might be out of dough to make that pie larger doesn't occur to most Boards of Education.

Many overaided districts do not realize how overaided they are either and those that do are completely selfish.

Hoboken as the epitome of "SCREW THE REST OF THE NEW JERSEY" since it is New Jersey's richest K-12 district in terms of tax base and yet gets $21 million a year for Pre-K and K-12 .  Hoboken's vampiric Board of Education and leadership may purport to be progressive, but they are too obsessed with their alleged victimization by their charter schools to see how they victimize the rest of New Jersey.

Anyway, Christie's proposed aid distribution for 2016-17 is unfair.  The legislature must not approve it as a blank check.  It must find more money for Equalization Aid and the logical place to find those offsets is in the aid packages of the overaided.


Helping the Needless: New Jersey's Richest Districts and Their State Aid

The Robbers and the Robbed: State Aid Disparities for 2016-17

Choice Districts, Charterized Districts Are Big Winners for 2016-17 State Aid

More on 2016-17 State Aid: Where the Money's Going