Showing posts with label 2018-19 state aid. Show all posts
Showing posts with label 2018-19 state aid. Show all posts

Tuesday, July 17, 2018

2018-19 State Aid Disparities Narrow, But Remain Stark


Thanks to the determination of Senate President Steve Sweeney, his legislative allies, and grassroots
support from parents in underfunded districts, Gov. Phil Murphy agreed to allow a limited redistribution of K-12 state aid to take place and to focus new state aid on NJ's most underaided districts.

The redistribution of $32.1 million of Adjustment Aid combined with the input of $351.4 million in new aid brings NJ $381 million closer to state aid justice, but as we are about to see in this blog post, 100% funding for every district in seven years is likely unachievable.

As usual, I've put all the state aid data referred to here online.

The Outline:

The median district is underaided by $417 per student and receives only 85% of its Uncapped Aid.

The Overaided:
Yet, there are 190 districts receiving over 100% of what the School Funding Reform Act says they actually need.

Their total excess state aid is $651,944,818, which is larger than the $637,776,892 surplus for 2017-18.

The reason that excess grew for 2018-19 despite the legislature's $32.1 million cut to Adjustment Aid is because the overaided districts tend to have further enrollment loss and/or tax base growth.  Jersey City alone will be overaided by $20 million more in 2018-19 than in 2017-18, despite its loss of $3.5 million in Adjustment Aid.

There are 76 districts who are overaided by $2,000 per student or more and 19 districts who are overaided by $4,000 per student more. Asbury Park, as in years past, has the largest excess in NJ, at $10,869 per student. Asbury Park's excess is an outlier, since the second most overaided district, Weymouth Township, only has an excess of $8,690 per student.

In terms of percentages, there are 54 districts getting 200% or more of their recommended aid.  Washington Township in Burlington County is the most overaided in percentage terms, getting 521% of its real aid target. 

In terms of percentages, there are 54 districts getting 200% or more of their recommended aid.

The 100%ers:
There are 17 districts getting exactly 100% of what is recommended, the largest of which are Lakewood and Freehold Township.

The Underaided:

There are 370 districts getting less than 100% of what SFRA says they need.

Their total deficit is -$1,747,896,430.  There are 109 districts who are underaided by $2,000 per student or more and 35 who are underaided by $4,000 per student or more.  There were 118 districts with the $2,000 per student deficit for 2017-18.

Atlantic City is the most underaided district in NJ, with a deficit of -$7,378 per student, even including its $32 million in Commercial Valuation Stabilization Aid. Atlantic City's deficit remains enormous, but it is significantly less than the most underaided district for 2017-18, which was Bound Brook with a -$9,546 per student deficit.




The $1.748 billion deficit for 2018-19 is only $217 million less than the $1,965,333,325 deficit for 2017-18, despite the infusion of $381 million in new and redistributed state aid.

The reason that the deficit shrank by substantially less than the input of new+redistributed aid is because the true deficit increases every year due to weighted enrollment growth, tax base erosion, and inflation.  (see below)

Sweeney's state aid proposed was designed to give the biggest increases to districts with the worst percentage underfunding with the goal of a 58% threshold, so there are only eight districts getting less than 50% of their Uncapped Aid.  Woodbridge is now the most underaided in percentage terms, getting only 42% of what it is supposed to get. 

Chesterfield, which only got 10% of its recommended aid in 2016-17 and 20% of its recommended aid in 2017-18 will now receive 58% of its Uncapped Aid. From 2016-17 to 2018-19 Chesterfield's state aid has grown from $419,983 to $2,403,780, a 473% increase (with more to come).

Steve Sweeney often said that he was bringing every district up to 58% of its Uncapped Aid, but this is not accurate, since Sweeney and his allies were forced to cap aid limits for large underaided districts such as Woodbridge and even some small districts who were exceptionally underaided, such as Fairview.  As you can see inm the table below, there are 16 districts who remain below 58%, with Woodbridge being the state's most underaided in percentage terms.  

KEARNY 57.73%
ROBBINSVILLE TWP 56.09%
BLOOMFIELD TWP 55.44%
ATLANTIC CITY (see note) 55.07%
LINDEN 55.00%
PASSAIC COUNTY VOCATIONAL 54.08%
BOUND BROOK 51.75%
FAIRVIEW BORO 51.47%
CLIFTON CITY 47.31%
HACKENSACK CITY 47.24%
WEST ORANGE 47.06%
ELMWOOD PARK 44.46%
ATLANTIC CO VOCATIONAL 43.93%
EDISON TWP 43.04%
NORTH BRUNSWICK TWP 42.08%
WOODBRIDGE TWP 41.72%

Overall, 117 districts are now exactly at the 58% threshold.

Although the need to cap aid increases for 2018-19 is disappointing, in 2019-20 and beyond, these districts will have the largest increases proportionally, since (if Murphy signs S2), new aid will be based on each district's deficit, not its existing aid.

Per Pupil Gains and Losses from 2017-18

The legislature's increase for 2018-19 was structured onto Phil Murphy's SFRA-literalist proposal, in which state aid was determined by inflating a district's existing aid by (usually) 5%, so districts already getting 80-90% of their Uncapped Aid got the largest gains.  Hence Trenton gained +$793 per pupil and Newark gained +$729 per pupil, even though those districts were only underaided by about $2800 per student, which not even close to NJ's largest deficits.

Under Murphy SFRA-literalist approach, 13 districts (all Abbotts) gained 48% of all new state aid.

Aid increases in dollars per student are available here.

Sweeney and his allies kept Phil Murphy's original distribution for all underaided districts, but then
Bound Brook had been NJ's most underaided district in
dollars per student (-$9,546 pp for 2017-18). 
Although Sweney used percentage underaidin,
it gained the most in dollars per student (+$2289).
strove to bring every district up to 58% of its Uncapped Aid.  Under this plan, Newark and Trenton didn't gain additional aid, but they didn't lose any state aid either.  Because of the focus on the 58% threshold, severely underaided districts who were at or above that level did not gain any additional state aid under the Sweeney plan.  EG, Belleville is underaided by $4252 pp, but it gained nothing over it had originally been supposed to get under Murphy's plan because Belleville was already at 60% of its Uncapped Aid and the Sweeney team used percentage underaiding. 
  
In any case, these districts are the ones who are gaining the most in dollars-per-student.

DistrictGain in $/PPDistrictGain in $/PP
BOUND BROOK$2,289UNION COUNTY VOCATIONAL$1,606
ATLANTIC CO VOCATIONAL$2,213ABSECON CITY$1,515
MANVILLE$2,163DUNELLEN$1,446
CUMBERLAND CO VOCATIONAL$2,100RED BANK BORO$1,399
CHESTERFIELD$2,055ELMWOOD PARK$1,398
FAIRVIEW BORO$1,951GUTTENBERG$1,337
FREEHOLD BORO$1,890PASSAIC COUNTY VOCATIONAL$1,302
MANCHESTER REG$1,830MERCHANTVILLE $1,274
LITTLE FERRY$1,787ROCKAWAY BORO$1,246
RIDGEFIELD PARK$1,764KENILWORTH$1,225

What is also important to note is that the majority of NJ's severely underaided districts gained more state aid in the Sweeney model than the Murphy-Repollet SFRA-literalist model, although not always.



The reduction of Adjustment Aid was done through a more complex method that sometimes depended on spending relative to Adequacy and municipal overburden. Vo-techs were also exempted from any cuts.

The following districts lost the most:

District Loss in $/PP District Loss in $/PP
OGDENSBURG ($212) PEMBERTON TWP ($317)
LOWER CAPE MAY REGIONAL ($218) ALLENHURST ($321)
LAKEWOOD ($221) OCEAN TWP ($325)
CORBIN CITY ($223) HAMPTON BORO ($330)
DELAWARE VALLEY REGIONAL ($223) ALEXANDRIA TWP ($361)
KNOWLTON TWP ($243) DENNIS TWP ($373)
CLINTON TWP ($261) WEYMOUTH TWP ($470)
SPRINGFIELD TWP ($268) ASBURY PARK ($591)
MONTAGUE TWP ($277) WASHINGTON TWP ($801)
HOPATCONG ($288) GLASSBORO ($948)

Although the media focused on Jersey City being the "biggest loser" for losing $3.5 million and that being the most in total dollars, that loss is only $114 per student.

By contrast, Glassboro lost $1,816,764, which, divided by Glassboro's 1916 students, is $948 per student.

Sweeney's Plan is Good Policy, But It Won't Bring Every District to 100% of State Aid

Toms River, BrickFreehold RegionalManalapan-Englishtown, Jersey City, and Ocean City have been at the forefront of opposition to state aid reform, saying that it would "decimate" their districts if they receive only 100% of their state aid.

However, these districts should be aware of their continuing advantage, since even in seven years, today's underaided districts will still not be at 100% funding, so the overaided districts who are losing state aid now will still be advantaged.

Although the 2018-19 state aid distribution takes New Jersey $217 million closer to having every district at 100% funding, 100% funding will remain out of reach in 2024-25.

The major reason for the improbability of bringing every district to 100% is that the deficit for 2018-19 will be $1,747,896,430, so even the full redistribution of $651,944,818 will still leave New Jersey with a $1.1 billion net deficit.

The major reason NJ is unlikely to be able to fully fund the underaided districts is that the true deficit increases by $100-$200 million per year, so, even conservatively estimated, in 2024-25, the underaided districts could require another $1 billion on top of the $1.747 billion they would need to be fully funded in 2018-19.

Although Adjustment Aid will probably grow over the next seven years, not all of that $651,944,818 in 2018-19's Adjustment Aid will be available to be redistributed because several tens of millions of it goes to districts who are being protected from aid cuts by the carve-outs for being below Adequacy, having "municipal overburden," or being vo-techs.

I do not have the exact amount of "protected Adjustment Aid," but East Orange alone has $24.4 in excess aid, Keansburg has $7.6 million, Vineland has $5.4 million, Gloucester City has $1.2 million. Monmouth County Vo-Tech has $6 million in excess aid, Ocean County Vo-Tech has $4.3 million. Between those districts and other protected districts, there is probably $50 million in "protected Adjustment Aid."

On the other hand, unless there is a recession, the State of New Jersey will experience annual revenue growth, but the amount of money left over for K-12 aid after expenses for TPAF (+$392.5 mil for FY19) and post-retirement medical (+$51.8 mil) will not equal the $284 million it was for 2018-19 since the 2018-19 budget was powered by increasing income tax rates, the transfer of the state lottery, fiscal gimmicks, flat-funding Extraordinary Aid, flat-funding municipal aid, plus stronger income tax revenue growth.

So, future new money for K-12 aid will be much less than the $284 million it was for 2018-19.

There are two factors in NJ's budgetary favor.  
  • In 2022-23 NJ is projected to reach 100% of its pension funding, so starting in 2023-24 NJ should have much more new money available for K-12 aid (or other Property Tax Relief Fund spending).  
  • The Debt Servicing costs for construction debt should start to fall, (unless there is another round of Abbott construction bonding).
Reaching 100% of state aid for all districts will also depend on what decisions the governor and legislature make regarding other expenses that are paid out of the Property Tax Relief Fund, ie, municipal aid, direct property tax rebates, community college, and PreK.

Given the state's extreme budget pressures for debt streams like TPAF and post-retirement medical, plus the appropriateness of funding municipal aid and direct tax rebates, and the likelihood of increases for PreK, the need to redistribute Adjustment Aid will become no less acute in the future.

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See Also:





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

See Also:


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Definition of Uncapped Aid:
Uncapped Aid = the real full funding for every school district. The term "Uncapped Aid" derives from the fact that SFRA contains legal "caps" on how much a district can gain in a single year, which are usually a 10% or 20% increase on what the district received the year before. Due to these caps, a school district's statutory "full funding" may differ greatly from what SFRA's formulas say it actually needs.

Uncapped Aid also refers to the amount of state aid that overaided districts would get if it were not for the mechanism of Adjustment Aid delivering over 100% of their state aid to them. In the case of Adjustment Aid districts, "Capped Aid" might more accurately be called the "pre-Adjustment Aid state aid target," but that is too wordy, so I just call it "Uncapped Aid" even though the aid caps do not apply to districts who are already getting over 100% of their recommended state aid.