Actual Enrollment versus Weighted Enrollment for NJ School Districts

SFRA wonks reading this already know that SFRA is a "weighted aid formula" which sets higher spending targets for districts with more at-risk students than it does for districts with fewer at-risk students.  Thus, a district with more high school students, more students who are Free & Reduced Lunch eligible, and more students who are English Language Learners will have a higher Adequacy Budget than a district where the students are uniformly middle-class and Anglophone.  SFRA wonks know that SFRA also uses "exponential weighting" for at-risk students, which means that there are additional added weights for at-risk students who attend a district that is 40-60% FRL-eligible and a higher weight still if a district is over 60% FRL-eligible.

If you're curious about what the weights actually are, the 2016 Education Adequacy Report provides them.

Background:

SFRA uses its weighting formula to create an "Adequacy Budget" for a district, ie, the amount a district should spend in order to provide a "thorough and efficient education."

Under SFRA, if a district's tax base is insufficient to meet its Adequacy Budget, the district receives Equalization Aid to make up the difference under the formula.  SFRA's term for a district's tax-levy capacity is "Local Fair Share."

Hence, a district like Asbury Park, whose students are  over 90% FRL-eligible, has an actual enrollment of 2,168, but a "weighted enrollment" of 3,563.  Freehold Boro has an actual enrollment of 1,673 and a "weighted enrollment" of 2,503.

On the other hand, a district with middle-class or affluent students will have a much weaker weighting.  North Caldwell, an elementary-only district whose students are very affluent, has an actual enrollment of 651 and a weighted enrollment of 655.   Chesterfield, another elementary-only district, but which is more middle-class than North Caldwell, has an actual enrollment is 770 and its "weighted enrollment" is only 788.

After calculating a district's Adequacy Budget and separately calculating the Local Fair Share, SFRA applies this formula to calculate Equalization Aid, the most important stream of aid:

Equalization Aid = Adequacy Budget - Local Fair Share.

Anyway, if you've ever wondered what your district's weighted enrollment is or how high the weighting can inflate a district's enrollment, this Weighted Enrollment Spreadsheet gives you your answers.

The following districts whose enrollments are inflated the most through the "weighted enrollment" process.

District	Projected Enrollment	Projected Weighted Enrollment	Percentage Difference	Abbott?
ASBURY PARK	2,168	3,563	164.3%	Yes
UNION CITY	12,363	20,118	162.7%	Yes
EAST NEWARK	348	564	162.1%	No
ATLANTIC CITY	6,723	10,876	161.8%	No
PASSAIC CITY	14,235	22,960	161.3%	Yes
PLEASANTVILLE	3,546	5,677	160.1%	Yes
PLAINFIELD	10,252	16,362	159.6%	Yes
TRENTON	15,161	24,168	159.4%	Yes
BRIDGETON	5,923	9,441	159.4%	Yes
LAKEWOOD	5,997	9,558	159.4%	No
LONG BRANCH CITY	5,104	8,111	158.9%	Yes
DOVER TOWN (VICTORY GARDENS)	264	419	158.7%	No
PERTH AMBOY	10,388	16,457	158.4%	Yes
PAULSBORO	1,057	1,674	158.4%	No
ELIZABETH	26,158	41,389	158.2%	Yes
NEW BRUNSWICK	9,962	15,748	158.1%	Yes
MANCHESTER REG.	871	1,375	157.9%	No
CITY OF ORANGE TWP	5,247	8,266	157.5%	Yes
WILDWOOD CITY	717	1,125	156.9%	No
WOODLYNNE BORO	568	891	156.9%	No
NEWARK	51,896	81,253	156.6%	Yes
WEST NEW YORK	7,719	12,084	156.5%	Yes
IRVINGTON	7,739	12,111	156.5%	Yes
CAMDEN CITY	15,512	24,255	156.4%	Yes
PATERSON	28,716	44,855	156.2%	Yes
LINDENWOLD BORO	2,753	4,295	156.0%	No
DOVER TOWN	2,889	4,490	155.4%	No
HARRISON (Hudson)	2,138	3,314	155.0%	Yes
GUTTENBERG	1,333	2,061	154.6%	No
BOUND BROOK	1,765	2,711	153.6%	No

-----

2021 Update:

• Civic Parent lays out the details of Weighted Student Enrollment.
• 2020 Education Adequacy Report Drives Big Changes to State Aid

The Highs and Lows of Local Fair Shares in New Jersey

What do you think should be a "fair" school tax rate for New Jersey school districts?  How about 0.7% of property value?  Or how about 2%?  How about 1.4%?

Well, if you are the School Funding Reform Act (SFRA) your answer is ALL OF THE ABOVE, because Local Fair Shares in New Jersey range from as low as 0.7% to as high as 2%, with a statewide median of 1.42%.

To demonstrate the variation in Local Fair Share another way, how about this real-world scenario?

Secaucus and Lawrence Township (Mercer) both have $4.8 billion in taxable property, so they should have the same ability to fund their schools, right?

Answer: NO.  SFRA assigns a Local Fair Share of $52 million to Secaucus, which would be a 1.1% tax rate, and a Local Fair Share of $69 million to Lawrence Township, which would be a 1.4% tax rate.

And Secaucus compared to Lawrence Township is not extreme either.  Avalon's taxable property is $8.42 billion and Cherry Hill's taxable property is $8.34 billion, but Avalon's Local Fair Share is only $60 million while Cherry Hill's is $136 million.

Why?

The reason SFRA creates such divergent tax rate targets is that the formula for Local Fair Share uses the Aggregate Income of a district's permanent residents in addition to the Equalized Valuation (ie, taxable property), so if a district has little income relative to its Equalized Valuation, it will end up with a Local Fair Share that is a low tax rate.  On the other hand, if a district has a high income relative to Equalized Valuation, it will have a high tax rate.

As for comparing Lawrence Township and Secaucus, Lawrence Township's residents make $1.5 billion, whereas Secaucus' make $808 million, hence Lawrence Township's Local Fair Share is higher despite the two towns having identical amounts of taxable property.  Likewise for Avalon and Cherry Hill.  Avalon's permanent residents only earn $75 million , while Cherry Hill's earn $3.4 billion.  Hence SFRA calculates a higher Local Fair Share for Cherry Hill.

So the divergence comes from the Local Fair Share formula itself!!

(Equalized Valuation x 0.013828828) / 2 + (Aggregate Income x 0.046200477) / 2

Which in simpler terms is:

0.7% of Equalized Valuation + 2.3% of Aggregate Income =

(If you're curious about what your district's Local Fair Share is as a tax rate, see this spreadsheet)

See note at the end of this post for where EV and Aggregate Income come from and what the state does for non-K-12 districts.

To see how the Local Fair Share formula gives divergent tax rates for towns with identical tax bases, consider the following:

If a district is perfectly average in terms of its Equalized Valuation:Income ratio, and has an Equalized Valuation of $1 billion and an Aggregate Income of $300 million (which is near NJ's average ratio of 28.5%), its Local Fair Share will be:

($1,000,000,000*0.013828828+$300,000,000*0.046200477) / 2 =  

$13.8 million per year, which would be a 1.38% school tax rate.  (eg, numerous from Mt Laurel to Paterson to Freehold Regional)

But if another district has an identical $1 billion Equalized Valuation but a lot more non-residential property or second-home property, so that its Aggregate Income is only $200 million, its Local Fair Share will be:

($1,000,000,000*0.013828828+$300,000,000*0.046200477) / 2 =  $11.5 million per year, which would be a 1.15% school tax rate.   (eg, East Hanover, Ocean Township,  Asbury Park, Englewood Cliffs)

On the other hand, if yet another district has the same $1 billion Equalized Valuation, but very little non-residential property and a lot of high-earners, so that its Aggregate Income is $400 million, its Local Fair Share would be $16.2 million, or a 1.62% school tax rate.   (eg, Kingsway Regional, Cherry Hill, Glen Ridge, South Orange-Maplewood)

Every school district in New Jersey must tax all taxable property at the same rate, so the regular homeowners are either hurt by or benefit from the incomes (or lack thereof) of their neighbors.

There are many unintended consequences of using Aggregate Income in the formula for Local Fair Share.  

• If a district is economically diverse, the high-earners will skew Aggregate Income upwards and force middle-income and low-income property owners to have to pay a higher school tax rate.
• If a district has a lot of non-residential property or second-home property, it is already advantaged, but then the SFRA formula adds further advantage to that since non-residential property has no income attached to it and hence a district with a lot of non-residential property will have a lower Local Fair Share.
• Districts that have residents in tax-exempt property or PILOTed property will have higher Local Fair Shares.
• Districts where people live below their means will have higher Local Fair Shares.
• If a district happens to have high-income outliers, it would skew Local Fair Share to an amount unreflective of the average property owner's ability to pay.
• If a district has many people working off-the-books who do not report their income, the Local Fair Share will be lower.

---- The Highest Local Fair Share Tax Targets 

Are Mostly in South Jersey ----

The clearest observation I have of New Jersey's highest Local Fair Share districts is that they are overwhelmingly in South Jersey due to property values there being lower there relative to income than in North Jersey.

Audobon Park and Winfield are owned by tax-exempt mutual housing corporations.
They are not normal towns from the perspective of taxation.

Of the districts in New Jersey whose Local Fair Shares are above the state median (1.42%) and whose Local Fair Share is below Adequacy (meaning that actually the district should pay its full Local Fair Share), there is an overwhelming skew towards South Jersey, specifically the suburbs of Philadelphia.

Lindenwold, Woodlynne, Wenonah, Hi Nella have Aggregate Incomes that are half of Equalized Valuation, and hence their Local Fair Shares are approximately 2%.

County	Number of Districts w/ Above Median Local Fair Shares (and LFSs under Adequacy)	County	Number of Districts w/ Above Median Local Fair Shares (and LFSs under Adequacy)
Camden	34	Mercer	5
Burlington	23	Somerset	4
Gloucester	21	Monmouth	4
Atlantic	12	Passaic	4
Cumberland	9	Morris	4
Warren	8	Sussex	3
Salem	7	Hudson	2
Middlesex	6	Ocean	2
Bergen	6	Hunterdon	2
Union	5

Winfield and Audobon Park are outliers here, but that is because they are highly-unusual mutual housing co-ops that originated as housing for industrial workers in World War II.  Most property in both towns is tax exempt, hence their Equalized Valuations are artificially low.  I do not consider them to be treated unfairly by the Local Fair Share formula.  On the contrary, I think what they are doing is similar to PILOT exploitation and both towns underpay in county taxes.

Winfield, NJ has a 19% all-in tax rate, but
that is
due to it having an exceptional
amount of tax-exempt
property on which people live.

There are also affluent districts among those with the highest Local Fair Share tax rates like Essex Fells, Somerset Hills, and Mountain Lakes, but the full Local Fair Share of an affluent district or high-tax base district is irrelevant because their Local Fair Shares exceeds their Adequacy Budgets anyway.

For instance, Essex Fells' Local Fair Share is $9.2 million, which would be a 1.84% Equalized tax rate, but Essex Fells' Adequacy Budget is only $2.8 million, so Essex Fells would never have to have a $9.2 million tax levy.  Essex Fells' actual tax levy of $4.6 million is thus more than enough for Essex Fells' students and a low tax rate for its residents.

Likewise for Somerset Hills. Somerset Hills' Local Fair Share is legally $62,518,639, but its Adequacy Budget is only $27,095,338, so Somerset Hills' Actual $25.4 tax levy is more than plenty for the district while actually resulting in a low tax rate for Somerset Hills.

It is not only conventionally affluent districts that will never need to tax at full Local Fair Share.  Secaucus' has a lot of non-residential property. 

It is entirely possible that the affluent districts among the highest Local Fair Share tax rates, Saddle River, Essex Fells, Chester, Somerset Hills, and Mendham are on the list due to randomly having ultra-high income outliers living there.

----  The Lowest Local Fair Shares ----

The districts with the lowest Local Fair Share tax rates have an obvious thing in common, which is being at the Jersey Shore.

This tendency is from the fact that residential properties at the Jersey Shore tend to have extremely high valuations, but they are second homes with no permanent income attached to them.  Hence, they only contribute to a district's Local Fair Share through the real estate component of Local Fair Share, not the Aggregate Income component.

The only one of the lowest Local Fair Share tax rate districts that isn't at the Jersey Shore is Carlstadt, which is 74% non-residential.   However, like the Jersey Shore districts on this list, Carlstadt's Local Fair Share is well in excess of its Adequacy Budget and hence it will never need to tax at 100% of Local Fair Share.  Carlstadt's tax levy is only $10 million on a $19 million Local Fair Share.

And this brings me to Brick and Toms River...

Brick and Toms River have aggressively said that SFRA overcalcualtes their wealth and ability to pay

These waterfront
mansions in Brick are worth $2-$5 million,
but if they are second homes, they have no
income attached to them. Hence, Brick's Local Fair Share
is a lower tax rate than what the median town in
NJ's is.

taxes but the OPPOSITE IS TRUE because Brick  and Toms River have second home properties to which no income is attached.

Hence, Brick and Toms River have Local Fair Shares that are below the median.  Brick's Aggregate income is only 22% of its ualized Valuation, so its Local Fair Share tax rate is only a 1.22% tax rate.  Toms Rivers' income is 21% of its Equalized Valuation, so its Local Fair Share would be a 1.18% tax rate.

Neither Brick nor Toms River pays anything near its Local Fair Share anyway.  Both are at approximately 1%, not the 1.2% SFRA recommends.

(See "Property Type Extremes")

---- The Income Crossover Point: Why Having Affluent or Frugal Neighbors Will Raise Your Taxes ----

I do not know why the School Funding Reform Act uses income to calculate Local Fair Share.  County taxes are apportioned strictly by Equalized Valuation.  Taxes in regional school districts are almost always apportioned strictly by Equalized Valuation as well. 

But if New Jersey is going to use income at all, it should use something based on median income, not Aggregate Income, because Aggregate Income is distorted by high-income outliers and there is the unintended consequence of using Aggregate Income is that the more money residents make relative to their housing values, the higher their property taxes are supposed to be.  

In fact, there is an Income Crossover Point where a frugal person or rich person will raise a district's Local Fair Share by an amount greater than his or her taxes.

Based on how Local Fair Share is computed by taking 2.3% of a district's income, the Income Crossover Point is the inverse of 2.3%, which is 43.5x.  

Whenever someone's income is 43.5 times his or her school taxes, he or she will RAISE Local

Note, this only applies if the district is eligible for
Equalization Aid and 240 districts in NJ are not
eligible

Fair Share by a greater amount than what he actually pays in school taxes.  Since Equalization Aid decreases as Local Fair Share increases, frugal and/or rich people can hurt a district financially.  (43.5 = 1 / .023)

Imagine someone pays $10,000 a year in school property taxes and makes over $435,000.  2.3% of $435,000 = $10,000, so for every $1,000 over $435,000 that person earns, his district's state aid is reduced by $23!

Someone doesn't have to be rich to trigger a theoretical loss of state aid, but I'll use Phil Murphy as an example since he is a public figure with a known income and known property taxes, even though Phil Murphy's town of Middletown doesn't receive Equalization Aid.

Phil and Tammy Murphy pay $204,360 in property taxes on their Middletown compound, of which $130,381 is for the schools.  Phil and Tammy Murphy made $7.3 million in tax year 2015, which would increase Middletown's Local Fair Share by $167,900!



Livingston provides the supreme example of Equalization Aid loss since Livingston was the home of David Tepper, New Jersey's richest person whose taxable income was $800 million to $1 billion, which would be 28-34% of Livingston's total.   Although Tepper's house was spacious, it was not extravagant and only had an assessment of $2,155,900, or 0.03% of Livingston's total.

In Tax Year 2014/School Year 2016-17 David Tepper was a New Jersey resident and Livington's Aggregate Income was $3,809,964,019. That $3.8 billion number was used to calculate a Local Fair Share of $139,074,977.

Yet, in 2015 David Tepper moved to Florida and so in 2015/School Year 2017-18 Livingston's Aggregate Income fell to $2,943,567,080, which is actually less income than Livingston had in Tax Year 2013/School Year 2016-17. The departure of one ultra-high-wealth person, David Tepper, thus caused Livingston's Local Fair Share to fall to $123,636,221.

The fall in Livingston's Aggregate Income and Local Fair Share is totally anomalous.  All of the other affluent towns in NJ saw their Aggregate Incomes increase from 2014 to 2015.  We can thus conclude that the fall is entirely attributable to Tepper's departure.

$123 million is still in excess of Livingston's Adequacy Budget, so my point isn't to worry about Livingston itself, but the raise the possibility that if an ultra-high income person happens to live in a small town or a middle-class town, that person will distort the town's Local Fair Share.  What if David Tepper had fallen in love with an historic mansion in a middle-class town and moved there?  What if David Tepper had decided to live in a grand country estate somewhere in rural New Jersey?  Tepper's arrival would have crashed that district's Equalization Aid.  What if David Tepper lived like Warren Buffett in a middle-class house?  

Since a Board of Education cannot tax a rich person's income, it doesn't make sense to use Aggregate Income to calculate Local Fair Share.  

And, If New Jersey ever gets to the point where every district receives 100% of its Uncapped Aid and that principle is followed year to year, New Jersey will develop problems because Aggregate Income & Local Fair Share -- and hence Equalization Aid -- fluctuate year to year.

---- Residential PILOT and Tax-Exempt Property Distortion ----

Another oddity of using Aggregate Income to calculate Local Fair Share is that residents of tax-exempt buildings and PILOTed buildings will have their incomes count towards Local Fair Share, even though their properties are not taxable by a Board of Education.

---- Conclusion ----

New Jersey may not be able to ever have low or moderate property taxes, but at least we should have equitable taxes, in the sense where there is equity between taxpayers in different towns, where people generally pay the same property tax rates, unless one town is paying for extra services that other towns eschew.

SFRA is intended to equalize school spending and create a spending advantage for high-FRL districts, but as we can see here, it does not do as much to equalize school taxes and can actually exacerbate existing disparities.

The distortions from using Aggregate Income in the formula for Local Fair Share have been obscured by the completely off-formula distribution of state aid in New Jersey that existed because of Chris Christie and SFRA's own Adjustment Aid provision, but if New Jersey got to the point in 2024 where every district is funded at 100%, the disparities that result from SFRA's own core formulas will be harder to ignore.  

And since Boards of Education can't tax income, getting rid of income as a component of Local Fair Share (or at least using a median!) would make sense

----

See Also:

• Is SFRA Fair to South and Rural New Jersey?
• High Local Fair Shares Correlate with High Municipal Taxes

----

Note on Sources of Equalized Valuation & Aggregate Income 

To calculate Local Fair Share, the Department of Education uses Equalized Valuation from previous budget year (so tax year 2017 for 2018-19 state aid and Aggregate Income is from two pre-budget years previous, so 2016 for 2018-19.

Note on Non-K-12 Districts

If a town sends students to two sequential school districts, like a K-8 and then a 9-12, the tax base is split according to a formula where the percentage of taxable property is equal to the percentage of a town's students in a district.  If 75% of the students are in the K-8 district, then that district's Equalized Valuation is equivalent to 75% of the full, real Equalized Valuation.  If 60% of a town's students are in the K-8 district, then the K-8 district's Equalized Valuation and Income are equivalent to 60% of the full, real Equalized Valuation.

To give a real world example, Chesterfield's real Equalized Valuation (used for county taxes) was $793,850,669 for tax year 2017, but the Chesterfield Public Schools' Equalized Valuation is only $472,499,918 because Northern Burlington County Regional also taxes Chesterfield Township. 

This is because 60% of Chesterfield's public school students were at Chesterfield Elementary School and 40% of the students were at Northern Burlington Regional.

If a town has a K-8 district and then has a Send-Receive relationship for its high school-age children, then the state calculates Local Fair Share on the district's full Equalized Valuation.

How Overaided Districts Would GAIN Money if SFRA is Not Changed

Recently Senator Jennifer Beck has been disseminating misleading, incomplete

Jennifer Beck is Confused About What
She Wants

information about state aid in order to slow the redistribution of Adjustment Aid.

Part of her campaign in defense of Adjustment Aid is pointing out that 157 districts that now get Adjustment Aid should not lose state aid because SFRA says they actually should get MORE state money than what they get now!

She has now twice said something to this effect.

Example 1:

It’s not clear, that redistributing Adjustment Aid is going to be as uncomplicated as some have suggested .... 157 of those districts are also underfunded relative to what SFRA says they should get in state aid,” the senator added.

Example 2:

Sen. Jennifer Beck, a Republican member of the committee, cautioned against unintended consequences with the removal of adjustment aid. She said 157 of 181 districts receiving the aid remain underfunded by the state, and abruptly taking away funding would hurt those communities. The place to start, she said, would be to redistribute the roughly $11 million from 46 districts that are overfunded by the state.

Yes, how can a district getting Adjustment Aid "remain underfunded"?

When Beck refers to Adjustment Aid districts getting _less_ than SFRA says they "should get," she is indeed statutorily correct, but she is conflating what Adjustment Aid says a district should get legally with what it actually needs.

Verification of Beck's legal claim be easily seen in the Alternative Aid Scenarios that the Department of Education produces to show how much aid districts would get if SFRA were followed, with Adjustment Aid and the State Aid Growth Limits preserved. A quick glance at even Asbury Park will reveal that is is getting $2,056175 less than SFRA says it should get (!!!!)

Giving Asbury Park more money? How can SFRA do this?

This is a consequence of the fact that SFRA does not let any district receive less than 102% of what it got in 2007-08 and the fact that in 2010 and 2013 Adjustment Aid was cut.

Due to this the Adjustment Aid 102% promise, SFRA is blind to what a district's contemporary economic needs are; unless it has a large post-2008 enrollment loss, it can never receive less than 102% of its 2007-08 funding.

The first violation of the 102% promise was in 2010, when Chris Christie cut every district's aid by an amount equivalent to 5% of its budget. These cuts affected underaided districts and overaided districts alike, but the overaided districts lost some of their Adjustment Aid while the underaided districts lost Equalization Aid, Special Education Aid etc. (Christie's cuts were later reversed for the Abbotts.)

The second violation of the 102% guarantee was in 2013 when Christie, as part of a now-obscure fair-minded phase, actually did cut $40 million in Adjustment Aid from Adjustment Aid districts who were over Adequacy.

The 2010 cuts:
EG

• Brick lost $2.3 million.
• Marlboro lost $1.8 million.

The 2013 cuts were allowed to occur for all affected districts, including Abbotts.
EG

• In 2012-13 Asbury Park lost $2.4 million. 
• Keansburg lost $1.4 million. 
• Pemberton lost $2.5 million. 

Any budget that passes the legislature is automatically legal, but these cuts were contrary to SFRA's stipulation that no district receive less than 102% of what it got in 2007-08.

Even though these districts are all overaided according to what SFRA's core formulas say they should receive, SFRA still contains the 102% provision and thereby it has a zombie-like determination to reverse the cuts of 2010 and 2013.

For instance, Asbury Park's aid is $25 million higher than its SFRA target (ie, Uncapped Aid), but according to SFRA, Asbury Park is owed another $2 million.

• This is because Asbury Park's peak aid was $57.7 million in 2008-09 and the Adjustment Aid mechanism of SFRA wants to bounce it back up to that amount.
• Pemberton's aid is also $25 million higher than its SFRA target, but SFRA wants to give it another $1 million. 
• Keansburg is overaided by $7 million against its real real need, but is underaided by $500,000 against Capped Aid. 
• Brick is overaided by $23 million, but would get another $2.2 million under SFRA. 
• Marlboro is overaided by $5.3 million, but would gain another $800,000. 

Most NJ districts are slightly underfunded against Capped Aid and significantly underfunded against Uncapped Aid, but for 157 Adjustment Aid districts, they are underfunded against Capped Aid, but overfunded against Uncapped Aid.

If SFRA were followed as it is currently written, 157 of New Jersey's overaided districts would actually gain a total of $84 million!! Asbury Park's gain would actually be larger than Red Bank Boro's in per student terms. Toms River would gain $3.4 million, even though it is already overaided by $21 million.

Particularly ridiculous is that Allenhurst, who has $5.1 million in Local Fair Share for only three students, gain another $10,612 in state aid.

There are another 46 districts who are now slightly underaided, but whose aid in 2008-09 was greater than what SFRA calculates they actually need.  Since the 102% promise in Adjustment Aid applies to these districts as well, their Capped Aid is higher than their Uncapped Aid.  For Passaic, Capped Aid is $20 million higher than Uncapped Aid; for Perth Amboy it's $11.6 million.  For Montclair, the Morris School District, and Princeton, Capped Aid is about $1 million each higher than Uncapped Aid.

If these 46 districts got their Capped Aid they would become overaided by $43 million.

Projected Gains Per StudentUnder the Adjustment Aid/State Aid Growth

Limit Status Quo of SFRA

See: http://bit.ly/2pGkPTq and http://www.nj.gov/education/stateaid/1718/scenarios.shtml

If Asbury Park and Pemberton are brought back to their peak aid levels, as Adjustment Aid dictates, the amount of aid available for truly underaided districts, including Red Bank Boro and Freehold Boro in Jennifer Beck's own district, is reduced by $84 million.  If the 46 slightly underaided districts are brought back to their peak aid levels the amount of money to give to districts like Red Bank Boro and Freehold Boro is reduced by $43 million.

Jennifer Beck is UNDERMINING the cause of fairness by making any references to the 102% promise within SFRA.

We cannot cut Adjustment Aid and keep the 102% guarantee. Since Beck purports to be an ally of Freehold and Red Bank Boros, Beck's self-contradiction here is off-the-charts.

The solution to perverse consequences of SFRA that would pour more money into overaided districts is to eliminate Adjustment Aid.

Beck, who in the past I liked, doesn't know what she wants, other than that she likes to get photo opportunities with Freehold and Red Bank Boros.

---

See Also

• The Skews of Capped Aid
• The Long Wait for Full Funding Under Capped Aid

Adjustment Aid Has No Statutory Sunset

One claim I often see regarding Adjustment Aid is that Adjustment Aid was intended to be temporary:

For instance, journalists make this claim, eg, the New Jersey Spotlight:

Adjustment Aid, sometimes called “hold harmless aid,” was created by the 2008 School Funding Reform Act (SFRA) to make sure districts would not see big drops in their state aid when the new formula went into effect. It was calculated based on their aid packages in 2007-2008, and was supposed to gradually phase out as districts adapted to their lower aid allotment.

And so do politicians, eg, Steve Sweeney:

The original formula was altered to include provisions that have prevented districts with increased student enrollment from receiving fair compensation at the same time other school systems are overcompensated with money for students they don’t have. These add-ons – “growth caps” and “Adjustment Aid” – were intended to be temporary but continue to be funded eight years later.

Ok, the above is not correct.  SFRA only allows the most marginal decreases in Adjustment Aid, and only for districts that lose enrollment after 2008.  There are no decreases allowed for districts whose wealth increases but whose student enrollment is stable.  

The only section of SFRA that contains any references to reducing Adjustment Aid is this excerpted section:

For the 2011-2012 school year and for each subsequent school year, a district that has a decline in its weighted enrollment, adjusted for bilingual and at-risk pupils, between the 2008-2009 school year and the budget year that is not greater than 5% will receive Adjustment Aid in such amount as to ensure that the district receives the greater of the amount of State aid calculated under the bill or the amount of State aid that the district received in the 2008-2009 school year. In the case of a school district that has had such a decline in enrollment that is greater than 5%, the district will experience a reduction in Adjustment Aid in accordance with its percentage decline in resident enrollment that exceeds 5%.

What this means is that if a district loses 15% of its (weighted) enrollment post 2008-09, would lose Adjustment Aid equivalent to 10% of its 2008-08 per pupil Adjustment Aid.  (10% = 15% - 5%).

(In reality there is an additional complication because the amount of Adjustment Aid the district is entitled to could (theoretically) change due to changes in Local Fair Share, but the basic rule is as above.) 

The provision respecting the loss of Adjustment Aid is significantly flawed because it misses the following important scenarios under which a district's aid could become unfairly high:

• Districts were already overaided in 2008-09, hence the existence of Adjustment Aid in the first year of SFRA.  So, if a district had enrollment loss prior to 2008-09 and received Adjustment Aid in 2008-09, but thereafter its enrollment was stable, it does not lose Adjustment Aid, since SFRA's clock starts ticking only in 2008-09.

• If a district has an increase in wealth post 2008-09 and becomes overaided (or even more overaided) as a result of that, it likewise does not lose Adjustment Aid.

So, SFRA's mechanism for the reduction of Adjustment Aid only allows for marginal cuts. 

As SFRA is written, the only real reduction of Adjustment Aid would occur at a decades-long timescale, as inflation and state spending growth gradually push Adequacy Budgets and Categorical Aid spending upwards and Adjustment Aid erodes away under inflation and the increase in other streams of aid.

The inadequacy of the Adjustment Aid-loss provision in SFRA can be seen in the Department of Education's "2017-2018 Additional School Funding Scenario (Information Only)."

These funding scenarios give the amount of aid districts would get if SFRA were followed exactly as the legislature and Jon Corzine wrote SFRA back in 2008, meaning, with Adjustment Aid and the State Aid Growth Limits intact.  

Under these scenarios, there are only 41 districts in all of New Jersey who would lose any state aid and the grand total of their losses is $11.6 million.

Jersey City, which based on the core formulas of SFRA is overaided by $159.9 million, would only lose -$920,741 (0.6% of its Excess Aid). Hoboken would only lose $1.3 million, which is 17% of its Excess Aid, the highest percentage of any aid-losing district.

Asbury Park, which is overaided by $25 million ($11,000 per student) would actually gain $2 million, because the cuts to Adjustment Aid that Christie made in 2012-13 were technically against SFRA. Other districts who are actually substantially overaided based on their economic capacity-demographic needs, like Pemberton, Toms River, Brick, and Keansburg would gain as well.  

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See Also:

• How Overaided Districts Would GAIN Money if SFRA is Not Changed

State Aid Disparities Worsen for 2017-18

This post and the underlying data were accurate at the time of writing, but in June 2017 the legislature changed the state aid allotment.  This post reflects the new, updated aid distribution. 

The Department of Education has finally calculated Uncapped Aid figures.  I have gotten these data via an OPRA request and put everything online.

As expected, another year of Chris Christie's frozen state aid distribution means that New Jersey's state aid disparities have become even worse.

In 2016-17, the 212 overaided districts had a total surplus of $618 million and the 379 underaided districts had a total deficit of $1.93 billion.

But for 2017-18 things are even more unjust:

• There are 222 overaided districts with a cumulative surplus of $696,882,364.  ($27 million of this excess is from Interdistrict Choice)
• There are 369 districts with a cumulative deficit of $2.072 billion.* 

I do not know the Extraordinary Aid deficit, but it is at least $100 million.

Additional Material:

• The median NJ district gets $4,031 per student in K-12 state aid.
• The median NJ district is underaided by $460 per student (compared to uncapped aid.)
• The median NJ district gets 82% of its Uncapped Aid. 
• There are 72 districts that get 200% or more of their Uncapped Aid.
• Of the 222 overaided districts, 89 are overaided by $2,000 or more per student.
• The total excess aid of the overaided districts is $696.9 million.
• Of the 369 underaided districts, there are 127 districts that get 49.9% or less of their uncapped aid.
• Of the 369 underaided districts, there are 113 that have aid deficits greater than $2,000 per student and 58 with deficits greater than $4,000 per student.
• The total deficit for the underaided districts is $2.072 billion.

And to provide extreme examples:

• Asbury Park is the most overaided in per student terms, with an excess of $11,278 per student. SFRA's target for Asbury Park is $13,401 per student, but Asbury Park's actual aid is $25,595 per student.

• Deal is the most overaided in percentage terms, getting 1086% of what SFRA recommends. This is due to Interdistrict Choice money, although Deal is a small recipient of Adjustment Aid.
• Bound Brook is the most underaided in per student terms, with a deficit of $10,592 per student. (It gets $8.2 million when it should get $26 million for 1,724 students.)
• Chesterfield is the most underaided in percentage terms, getting only 9.5% of what it is supposed to. It gets $419,983 when it should get $4.22 million.
• Jersey City has the most untapped Local Fair Share. Jersey City's Local Fair Share is now $370 million, but its actual tax levy is $114 million.