Sadly, East Orange residents, students, and teachers have gone through a shock this year as the East Orange Public Schools have announced a grievous error in their budgeting and must make mid-year cuts of 93 positions, including 73 teachers in order to prevent a $25 million deficit from developing by the end of the year. Although many of the teachers will apparently be hired by Paterson and other districts, that's still a painful transition for them and a gigantic problem for East Orange's students.
The cause of this budget disaster has been underexplained, but the superintendent admitted, “We did not do our due diligence in, quite frankly, understanding what the financial reality was as soon as we started the school year.”
The closest thing Superintendent Christopher Irving has given for an explanation is that East Orange didn't get as large state aid increases as Newark and Orange:
“Around us, Newark received $100 million, and our colleagues in Irvington and Orange received almost $15-30 million respectively. And we got $200,000. And for us, we know that’s unfair.”
As I'll explain, it actually isn't unfair. East Orange students are less-poor than in the other former Abbotts and its tax base is stronger. Also, evaluating fairness by year-to-year changes is not appropriate. East Orange was overaided in 2023-24 and the other Abbotts were slightly underaided.
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The point of this post is to unpack East Orange's fiscal situation. East Orange should have known and understood why it was getting only a small state aid increase because East Orange began the S2 era (post 2018-19) overaided and only recently, for 2024-25, tipped into being slightly underaided and hence got only a small increase. The fault is on East Orange's administration and Board of Education, but the New Jersey Department of Education made a disaster like this more likely by not publicly releasing state aid target data which journalists could have picked up on.
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I don't think it is significant at all that East Orange's 2024-25 aid increase is smaller, since East Orange was well over its state aid target in 2023-24 and the S2 era:
The reason East Orange, in contrast to nearly all other overaided districts, did not lose state aid was a provision in S2 that protected districts with high-municipal taxes from losing state aid.
By contrast, Newark and Irvington were underaided at the beginning of the S2 era and into 2023-24. For 2023-24, Newark had a $36 million state aid deficit and Irvington had a $2.4 million deficit. Orange had a $4.6 million surplus in 2023-24, although it gained over 200 students for 2024-25, hence it got an increase for 2024-25.
It is true that East Orange's state aid is somewhat smaller than its local peers:
But there is a logical reason for this, since East Orange's students are actually less-poor than students are in Newark or Orange:
And East Orange has, by far, the lowest percentage of Multilingual Learners:
Hence, its Adequacy Budget Per Student is the lowest
East Orange's tax base per student is the strongest too, which means it is due less Equalization Aid.
East Orange's Local Fair Share is only a 1.24% tax rate, which is slightly below the state average too, so it does not have that ground for complaint.
There is a problem with SFRA/S2 for East Orange in that SFRA does not take into account a district's municipal tax rate and East Orange genuinely experiences municipal overburden, with a crushing 1.774% municipal tax rate.
However, municipal overburden would be a separate problem and I have not read about East Orange complaining about that in its context to improperly prepare its 2024-25 budget.
East Orange, which is not subject to the tax cap due to its Abbott status (like Jersey City) has almost doubled its taxes, although it is still $24 million ($2500 pp) below its Local Fair Share.
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In conclusion, East Orange's budget mess is largely due to its own failure to evaluate the State Aid Summaries to see that it was only gaining $200,000 and budget for that, but culpability is also on the state Department of Education's because the NJ DOE does not publicly release "state aid targets" with the annual State Aid Summaries, so that East Orange would have been more likely to understand that it was technically overaided through 2023-24 and therefore no large increase was coming.
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