New Jersey Education Aid: March 2018

Wednesday, March 21, 2018

Looking at the 2018-19 State Aid Disparities

UPDATED STATE AID ANALYSIS IS HERE.

http://njeducationaid.blogspot.com/2018/07/2018-19-state-aid-disparities-narrow.html

THE FOLLOWING POST REFERS TO MURPHY'S ORIGINAL PROPOSAL BEFORE LEGISLATIVE MODIFICATION.

This post compares the proposed state aid levels of all New Jersey districts for 2018-19 with their Uncapped Aid levels. By comparing actual Aid to Uncapped Aid we can see how stark New Jersey's state aid disparities are.

While I am very disappointed and angry at the proposed distribution for 2018-19, at least the Murphy administration is attempting to follow some rational distribution of aid. From 2013 to 2018 the Christie administration more or less flat-funded all districts, with the exception of those who participated in Interdistrict Choice. For 2017-18, the Christie administration did not even initially calculate Uncapped Aid .

Although the Murphy administration describes itself as a 180 turn from the Christie administration in education policy, and that's the reality in a lot of ways, one thing the Murphy administration and Christie administration have in common is that they have no choice but to prioritize the state's debt payments. As large as Murphy's $283 million increase in K-12 aid is, it is significantly smaller than the increase for teacher pensions, ie the Teachers Pension And Annuity Fund.

(Note, this does not include money from the lottery that is going to education)

See below for a definition of "Uncapped Aid."

The Scope of the Disparities:

The Big Picture:
There are 212 overaided districts with a total surplus of $708.7 million. This is almost $70 million more than 2017-18, when the surplus was $643 million. (I am excluding Interdistrict Choice aid)

The Murphy administration's proposed increase for the 171 of the 212 overaided districts is $28,604,340.

There are 380 underaided districts with a total deficit of $1.913 billion. This is $52 million less than 2017-18, when the deficit was $1.965 billion. (again, I am excluding Choice Aid, plus I am also excluding Atlantic City's Commercial Valuation Stabilization Aid, which is $32 million.)

If New Jersey could redistribute Adjustment Aid, the net deficit is only $1.205 billion.

Notes on New Jersey's State Aid Have-Nots

There are 75 districts getting 50% or less of their Uncapped Aid.

If the state wanted to prioritize this sub-50% districts, it would only cost $106 million to bring them all up to at least 50% funding, or less than one-seventh of the total excess aid that the overaided districts receive.

Chesterfield is, yet again, in in last place, getting only 21% of the state aid SFRA recommends for it. River Edge is the next lowest aided, getting 24%, then Hasbrouck Heights at 24.5%, Elmwood Park at 26%, and Robbinsville at 27%.

There are 43 districts whose deficit is larger than $4,000 per student. To bring all of these districts up to a deficit of $4000 per student (which is still terrible) would require $155.7 million, which is about one-fifth of the state's excess aid.
(The $155.7 million number does include Atlantic City's Commercial Valuation Stabilization Aid)

Atlantic City's Taxes are 287% of Local Fair Share.

(+$52 million over LFS)

Phil Murphy's proposed budget will give Atlantic City $1.2

million in tax relief.

Bound Brook is the worst-off in deficit in dollars per student, at -$8,999 per student. Then Atlantic City (even with the $32 million CVSA), Manchester Regional, Fairview, and Freehold Boro.

Several vo-techs, like Atlantic County Vo-Tech, Cumberland Vocational, and Passaic County Vocational are also extremely underaided.

Atlantic City, has, by far, the worst taxes, with a tax levy at 287% of Local Fair Share. ($81,888,890 out of $29,396,657)

Manchester Regional, up until his year, had the worst taxes, but its tax levy was in the low-200% rage of Local Fair Share. Manchester Regional's 2017-18 taxes are still at 219% of Local Fair Share, which is the second worst in New Jersey.

Newark's deficit is the largest in total dollars, $130,042,863.

Notes on New Jerseys' State Aid Haves

There are 68 districts getting 200% or more of what SFRA's real recommendation for them is is. 23 lucky districts get over 300%. Washington Township in Burlington County tops off the overaided districts, getting 563% of its aid target.

If the districts receiving 200% or more of their state aid got their aid reduced to "only" 200%, it would free up $76.8 million.

Tavistock is a non-operating district that claims three students living there. It is getting $2299 on an aid target of $299, so it technically gets 1003% of its recommended aid.

Jersey City's Taxes are only 29% of Local Fair Share.
Jersey City is Gaining $1.8 Million in State Aid.

Deal, whose tax base is astronomically large, is getting $2,039,184 in Interdistrict Choice money, plus $200,045 in formula aid, on an aid target of only $187,443. That works out to 1195% of Local Fair Share, but I have decided to exclude Interdistrict Choice money from this analysis.

In total dollars, the biggest excess is Jersey City's, at $175 million. Powered by surging real estate and a little additional state aid from Phil Murphy, Jersey City's excess aid is up $24 million from its $151 million excess in 2017-18. Jersey City's school taxes are now only 29% of Local Fair Share.

Jersey City's excess aid is the ninth highest in dollars per student too, $5,716 per student. That's more than the total aid of its impoverished neighbors Guttenberg and Fairview get total!

Jersey City's Local Fair Share is $398 million. This is growth of $30 million in Jersey City's Local Fair Share in one year. This means that if Jersey City lost $30 million in state aid per year and made up for that loss with local taxes that its tax rate would not increase.

Also, Jersey City's Local Fair Share is growing at a rate where it will no longer qualify for Equalization Aid in 6-7 years. Right now the Local Fair Share is $398 million, but once it reaches Jersey City's $590 million Adequacy Budget (for Equalization Aid) the only state aid Jersey City will qualify for will be the three categorical aids.

This means that even if Jersey City's Adjustment Aid is redistributed the state should still be able to use money currently going to Jersey City for needier school districts.

Hoboken's Local Fair Share is $217 million, which surpasses Edison to be the second largest in NJ after JC.

Hoboken's Local Fair Share is $217 million, the second largest
in NJ. Hoboken's LFS is $79,000
per student and yet it gets $10.5 million.
Hoboken's LFS per student is more than 2x Millburn's.

Pemberton's surplus state aid is $25,680,554, the second most in New Jersey.

Asbury Park is overaided by the most per student, with a surplus of $11,827 per student. That excess aid alone is more than what low-wealth non-Abbotts like Freehold Boro, Dover, Guttenberg etc get total for their students.

Loch Arbour is at 100%

Loch Arbor is the only district in New Jersey to get 100% of its Uncapped Aid: getting $3,944 for its 5 students, which is exactly SFRA's recommendation. (Since Loch Arbour's Local Fair Share is $1,301,988, it could give up all of its aid and not notice a thing.)

Abbott Specific Notes

The Abbotts are disparate. They range from Asbury Park and its mammoth $11,827 per student surplus to Plainfield, with its -$4,594 per student deficit (itself the 32nd largest in New Jersey).

For 2018-19 eleven Abbotts will be overaided, which is two fewer than the thirteen overaided Abbotts of 2017-18. The two Abbotts who slipped from overaided to underaided are Salem City and Burlington City. Their slippage, despite additional state aid, underscores how dynamic state aid is and that the deficit against Uncapped Aid constantly grows.

Only three of the Abbotts pay above their Local Fair Share (Burlington City, Salem City, and Phillipsburg)

The median Abbott only pays 56% of Local Fair Share. Hoboken's taxes are only 20% of Local Fair Share, despite having a levy that is extremely high in dollars-per-student.

Lakewood

Lakewood is now overaided!

Lakewood actually has a rapidly growing tax base and its Local Fair Share increased from $92,974,112 for 2016-17 to $102,034,106 for 2017-18 to to $111,534,172 for 2018-19. During that time there has also been a decrease in the student population.

Thus, Lakewood's state aid deficit, which was $19 million for 2016-17, has increased to a small surplus of $1,566,821.

Although SFRA does not work for Lakewood and the district does require additional state aid, the district also has the ability to increase the tax levy in excess of 2% (which it has been doing).

Debt Takes Most of the Money

In a continuation of what happened under Christie, the state is putting much more money into various debt categories than it is putting into

Friday, March 16, 2018

Despite Aid Increases, Inequalities Worsen: Phil Murphy's FY2019 Aid Proposal

UPDATED STATE AID ANALYSIS IS HERE

On Thursday, March 15th, the Murphy Department of Education, led by Asbury Park's former superintendent Lamont Repollet, released its proposed state aid figures for 2018-19.

Due to a combination of raising the income tax to 10.75% and a surge in state revenue, the Murphy administration is able to meet the next step of the Christie administration's ten-year rampup to full TPAF funding (+$392.5 million), as well as provide big increases for free community college (+$50 million), free PreK (+$57 million), and what I assume is another round of mostly Abbott construction (+$148 million in debt service)

The Murphy administration is proposing to increase K-12 operating aid by $283 million, which would be the biggest state aid increase since 2012-13. They are claiming this will bring New Jersey to full funding of SFRA, "The Governor is committed to putting New Jersey’s schools on the path to full funding within four years, and is proposing an additional $283 million in formula aid."

While that increase is worth lauding, the Murphy administration is following SFRA (almost) to the letter, including increasing Adjustment Aid for already overaided districts and utilizing SFRA's flawed design of how to distribute new aid.

Therefore, while the underfunding of state aid diminishes slightly, the inequalities of the distribution are exacerbated.

(I have calculated aid growth in dollars per student and put it online here.)
(I also have Actual Aid vs. Uncapped Aid here.)

1. Insufficient Help Goes to the Lowest Aided

The reason the distribution is unfair to the most underaided districts in NJ is that the Murphy

administration strictly followed the State Aid Growth Limits, which restrict a district's aid gain to 10% or 20% of what it got the year before, regardless of how underaided it is.

For the 2009-2010 school year and thereafter, total stabilized aid shall include Equalization aid, Special Education categorical aid, Security Aid, and Transportation aid.
d. For the purposes of this section, “State aid growth limit” means 10% in the case of a district spending above adequacy and 20% in the case of a district spending below adequacy.

Back in 2008 the authors of SFRA were being overly optimistic about NJ's revenue growth, but Capped Aid was supposed to be an incremental step towards the goal of real, full funding, not the goal itself.

The Murphy administration, however, is treating Capped Aid as the goal in itself, is making the achievement of Capped Aid by FY2023 the goal and calling that "full funding."

Hence, the districts that are supposed to get a 20% gain in one year are stretching that out into four 5% gains.

Phil Murphy to New Jersey
"Capped Aid = Full Funding"

Because the State Aid Growth Limits are calculated based on existing aid, the lower a district's state aid is, the less money it gains in real terms. (see "The Skews of Capped Aid")

For instance, Freehold Boro got 45% of its recommended, Uncapped Aid for 2017-18 and is underaided by over $7,675 per student.

Under the proposed State Aid distribution, Freehold Boro will gain 5% ($534,991), which equals $318 per student. Likewise, Red Bank Boro, which only gets 38% of its Uncapped Aid (-$4219 per student), will likewise only gain 5%, or $178,503, and yet that only equals $127 per student.

Bound Brook, NJ's most underaided district in dollars per student (-$9,546 per student for 2017-18)), is gaining 5%, but that is only $300 per student.

In 2017-18 Steve Sweeney and his state aid reform allies - Paul Sarlo, Louis Greenwald, Teresa Ruiz, Joann Downey, Eric Houghtaling - based new state aid on deficits and even though they had only $130 million to work with, they delivered larger aid boosts to the most underaided districts in New Jersey.

On the other hand, districts that are modestly underaided will gain far more.

Trenton was only underaided by $2856 per student, but for it to gain 5%, equals $793 per student.

Newark was underaided by $2852 per student for 2017-18 but its 5% gain equals $729 per student. Paterson was only underaided by $3,062 per student but its 5% gain equals $717 per student.

Half of all new aid will go to only thirteen districts, all Abbotts. As usual, the Abbotts get about 55% of all new aid.

Under the Murphy/Repollet plan, any district that already gets 83% or more of its Uncapped Aid will reach full funding in four years, but districts that receive 60% or less will have to wait years, even decades.

Since Freehold Boro receives 45% of its Uncapped Aid, At increases of 5% a year Freehold Boro will bring only be at 65% of what is its 2017-18 Uncapped Aid by FY2023. Under this pathway it would take Freehold Boro 16 years to reach what is just its 2017-18 Uncapped Aid (neglecting inflation and enrollment growth).

Some districts are even worse off. Chesterfield only got 19% of its Uncapped Aid in 2017-18. Under Murphy's planned 5% increases Chesterfield will take THIRTY SIX YEARS (2054!) to get what is only its 2017-18 Uncapped Aid. (Chesterfield's aid increase is a paltry $52 per student)

Some districts that are underaided but nonetheless above Adequacy are the most screwed. Cherry Hill was underaided by $1397 per student, but it is gaining only $44 per student. West Orange was underaided by $2459 per student, but is gaining a pathetic $36 per student.

Although it is a unique district, Lakewood is only gaining $239,242, or $39 per student.

2. Adjustment Aid is Sustained and Increased

Even worse than blindly obeying the flawed State Aid Growth Limits is the restoration of Adjustment Aid to about 172 already-overaided districts, for a grand total of an additional $28,604,340 increase in aid.

Marlboro was overaided by $5.3 million, it is gaining $270,369 (+$58 per student)
Pemberton was overaided by $25 million, it is gaining $658,924 (+$154 per student)
Brick was overaided by $23 million, it is gaining $750,798 (+$88 per student)
Asbury Park was overaided by $24 million, it is gaining $796,127 (+$360 per student)
Hopatcong was overaided by $9.2 million, it is gaining $169,007 ($109 per student)
East Orange was overaided by $22.5 million, it is gaining $1,114,526 (+$115 per student)
Jersey City was overaided by $151 million, it is gaining $1,863,714 (+$61 per student)
Manalapan was overaided by $13 million, it is gaining $498,300 (+$100 per student)
Ocean Township was overaided by $5.5 million, it is gaining $464,924 (+$175 per student)
Keansburg was overaided by $6.9 million, it is gaining $160,716 (+$114 per student)

Even Deal, whose Local Fair Share is $17 million for 178 students, is gaining $124,117 (+$697 per student) (this is mostly from Interdistrict Choice)

Asbury Park's state aid gain of $796,127 is actually greater than its severely underaided neighbors, Red Bank Boro (+$178,503) and Freehold Boro (+$534,991) will get COMBINED. No wonder Asbury Park's superinintendent is "delighted."

Since Murphy plans to "fully fund" (ie overfund) overaided districts for another three years, the total projected gain is $84 million.

The legal justification for increasing aid to the overaided is that Adjustment Aid technically does not allow a district to receive less than 102% of what it got in 2007-08, but Adjustment Aid was cut in 2010, 2013, and 2017.

What Phil Murphy and Lamont Repollet are trying to do is bring all these overaided districts back to their aid levels of 2008-09. Hence, since Jersey City's aid was then $417.9 million versus $410 million for 2017-18 , the Murphy administration has it on a four year path back to $417.9 million. Likewise, Asbury Park's peak aid was $57.6 million versus the $54.4 million it got in 2017-18, the Murphy adminstration has a four year path for Asbury Park back to that peak.

(See "How Overaided Districts Would GAIN Money if SFRA is Not Changed.")

If Adjustment Aid were reduced by a fifth, according to Steve Sweeney's state aid reform plan, NJ's underaided districts would be gaining an additional $128 million. ($128 million = a fifth of 2017-18's $640 million in excess aid)

3. Ignoring SFRA When It Benefits the Overaided

Lamont Repollet has already told people that he had "no choice" but to blindly obey Adjustment Aid and the State Aid Growth Limits, but he is ignoring SFRA when it benefits overaided districts.

SFRA has no statutory sunset for Adjustment Aid, but it does allow a minimal decrease in Adjustment Aid is allowed if a district's enrollment loss after 2008 exceeds 5%. (See "Adjustment Aid Has No Statutory Sunset")

There are actually 45 districts that SFRA calls for $9.8 million in cuts to, but Murphy/Repollet are ignoring this provision of SFRA.

District	SFRA Allowed Aid Loss (despite Adj. Aid)	Proposed Aid Change for FY2019
Beach Haven Boro	-$619	$0
West Cape May Boro	-$3,929	$0
Lawrence Twp	-$7,368	$0
Deal Boro	-$12,602	$0
South Amboy City	-$13,695	$0
Califon Boro	-$25,451	$0
Milford Boro	-$31,640	$0
Union Beach	-$37,569	$0
Hampton Boro	-$37,857	$0
Upper Freehold Reg.	-$47,019	$0
Cape May City	-$57,377	$0
Elk Twp	-$60,133	$0
Port Republic City	-$63,349	$0
Montague Twp	-$68,702	$0
Glassboro	-$71,938	$0
Commercial Twp	-$78,341	$0
Hillsborough Twp	-$81,254	$0
Washington Twp	-$86,701	$0
Delaware Twp	-$88,516	$0
Downe Twp	-$89,019	$0
Dennis Twp	-$92,124	$0
Neptune City	-$93,351	$0
Oaklyn Boro	-$98,879	$0
Brooklawn Boro	-$132,585	$0
Lafayette Twp	-$140,013	$0
Frenchtown Boro	-$154,323	$0
East Amwell Twp	-$157,165	$0
Waterford Twp	-$166,921	$0
Byram Twp	-$179,052	$0
Estell Manor City	-$202,559	$0
Harrison Twp	-$206,468	$0
Roosevelt Boro	-$213,779	$0
Upper Pittsgrove	-$252,837	$0
Ogdensburg Boro	-$259,688	$0
Bloomsbury Boro	-$286,288	$0
Clinton Twp	-$302,694	$0
Delsea Reg. H.S Dist.	-$381,559	$0
Plumsted Twp	-$421,093	$0
Greenwich Twp	-$455,185	$0
Buena Regional	-$546,074	$0
Tuckerton Boro	-$565,991	$0
Lower Cape May Reg.	-$761,881	$0
Clearview Regional	-$824,053	$0
Freehold Regional	-$885,391	$0
Hoboken City	-$1,069,199	$0
Total	-$9,812,231	$0

Conclusion

New Jersey is proposing to increase income taxes by $765 million and income taxes are actually surging, but only $283 million of that is going into K-12 state aid.

Increasing funding for NJ's many streams of indirect aid - TPAF, post-retirement medical, and construction debt service - is required, and Phil Murpy has a mandate by his electoral victory to increase PreK and community college aid as he wants.

However, Phil Murphy repeatedly promised to "fully fund that formula" and what he is doing will not bring New Jersey anywhere near to that point, and in fact, will preserve inequalities and in many cases, make them worse. By completely ignoring the legislature's work last year to expose and fix state aid inequalities, he is trying to govern without the input of Democtatic officials who are actually more knowledgeable on state aid than he is.

All of us in the state aid reform community have our work cut out for us in explaining to the public, elected officials, and journalists why the proposed increases have to be changed.

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See Also

Tuesday, March 13, 2018

Tentative Reaction to Murphy FY2019 Budget Proposal

UPDATED STATE AID ANALYSIS IS HERE

On Tuesday, March 13th, Phil Murphy gave his first budget address.

The budget address gives the amount of money Phil Murphy wants the state to spend in various categories. It does not include the amount of state aid every district will get. District-specific data will come out two days later, on Thursday, March 15th. Murphy's speech is, by necessity, light on details, but more information is available in the FY2019 "Budget in Brief."

The budget assumes $1.7 billion from various tax increases that the legislature may not approve. These tax increases of uncertain fate include raising the top income tax bracket to 10.75% (+$765 million), raising the sales tax to 7.0% and broadening it (+$581 million), "modernizing" corporate taxes (+$110 million), and taxing marijuana (+$80 million). It also assumes savings from various health benefits reforms (- $118.7 million).

Despite the large increase from natural revenue growth and tax increases, Phil Murphy only proposes increasing K-12 aid by $283 million, saying that this will bring New Jersey to "full funding" in four years.

Update: Uncapped Aid is available here.

Reactions:
Murphy Spreads Confusion Over the Size of the Deficit
As before, Murphy is pretending in public that SFRA's deficit is only $1 billion, despite the existence of the State Aid Growth Limits that reduce the amount of aid a district can gain in a year.

Buried in the "Budget in Brief" is a tacit admittance that there is a difference between the statutory deficit (using that term) and the real, Uncapped Aid deficit, "This budget represents year one of a four-year ramp-up to full statutory funding that will ensure every public school district has the resources needed to provide all of New Jersey’s children with the excellent education they deserve." (see page 9)

As welcome as this (obscure, tacit) concession is, the statute of SFRA itself is extremely flawed, since new aid is based on a district's existing aid, not the district's deficit, thereby giving the most underaided districts the smallest increases.

Moreover, Capped Aid is itself supposed to be an incremental target, so by setting a four-year ramp up to that, Murphy is creating a series of incremental steps to what is supposed to be an incremental target.

It would be extremely unfair to make districts who are getting less than 50% of their Uncapped Aid to wait four years just to get a 10% or 20% increase in what they get now.

Also, Murphy's FY2019 budget depends on new revenue from various tax increases and uses additional revenue from a temporary income tax surge NJ is enjoying. Since Murphy cannot pass a tax increase every year, and the income tax surge will taper off, this means that Murphy will not have enough money to increase K-12 aid by ~$280 million per year for the next three years.

This means that it is all the more important to phase-out Adjustment Aid and start doing it NOW.

A Wide Distribution of New Aid = Less Help for the Severely Underaided

If 94% of districts are indeed gaining state aid and only 65% of NJ's districts are underaided, then Murphy is increasing state aid for numerous districts who are already overaided. We won't know until Thursday what exactly he is doing, but it may be that he is undoing the cuts to Adjustment Aid that occurred in 2010, 2013, and 2017.

More of the State's Money is Going to Education Than Ever Before

The percentage of the state's budget going to education is at an all time high of 40% - $14.95 billion out of $37.4 billion. (that includes lottery money)

In FY2018 education spending was 39.6% of the budget. In 2001 education spending was only 30% of the budget.

$14.95 billion for New Jersey's 1,373,267 students works out to $10,886 per student, an amount that is nearly equal to the national local+state+federal school spending average of $11,392 per student.

Municipal aid is being flat-funded, with a $12 million increase, from $1.524.2 billion to $1.536.2 billion. That is a 0.8% increase, which is much less than inflation. (see page 17 of the BIB)

Huge Increase for School Construction (Probably for the Abbotts)

The $148.3 million increase in school construction money is much larger than the previous two years. For FY2018 school construction debt service only increased by $20.5 million; for FY2017 school construction debt service increased by $52.1 million.

I don't know exactly why there is going to be a tremendous increase in construction debt service. It was not predicted in recent State Debt Reports, so it is likely that Phil Murphy plans another round of Abbott construction bonding.

Tens of Millions for PreK and "Free" Community College, Flat Funding of Extraordinary Aid

There is no increase in Extraordinary Aid. Extraordinary Aid is being flat-funded at $195 million. (Extraordinary Aid is the state's reimbursement for Out Of District tuition for students with special needs)

Flat-funding of Extraordinary Aid will be devastating for Lakewood.

Flat Funding, in Per Student Terms, for Higher Ed
This budget continues the long process of abandoning NJ's middle class by neglecting higher ed.

Higher Ed funding (outside of communities colleges) is only increasing by 3%. In per student and inflation-adjusted terms, that's flat funding at best.

NJ's higher ed funding as a percentage of the budget is probably falling to new low.

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See Also