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.

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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

Divergent Fates of New Jersey's Big Cities

For a 2017 Update, see this

http://njeducationaid.blogspot.com/2016/10/2016-equalized-valuations-out.html

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It's common knowledge that New Jersey's cities have had divergent fates in the last two decades. In this post I hope to quantify those divergent fates using changes in Equalized Valuation, both in absolute dollars and in each city's percentage of New Jersey's statewide Equalized Valuation.

Equalized Valuation is essentially the market value of all taxable real estate in a town. It is determined annually by the county tax assessor and is based on real estate sales.

Equalized Valuation is used to determine a town's share of county taxation and, for a town in a regional school district, that town's share of the school district's tax levy. Equalized Valuation is supposed to be used to determine how much Equalization Aid a school district gets but this provision of New Jersey's school aid law is not followed.

The source of this information is the Table of Equalized Values.  (It has been updated for FY 2016.)

I have put the data online.

Here goes:

Absolute Dollars

As a Percentage of Total State Equalized Valuation

Based on property wealth relative to the rest of the state, Camden, Trenton, Newark, Elizabeth, and Paterson have continued to struggle.  Trenton dropped from having 0.38% of Equalized Valuation to only having .19%. Camden dropped from 0.14%. Camden was extremely low to begin with and didn't have far to fall, but it dropped from 0.18% to 0.14%.  Newark had a bad 2015 and lost over $200 million and is now tied with Hoboken for the fourth highest Equalized Valuation in New Jersey,  Paterson and Elizabeth also continue to lose valuation in absolute and relative terms.

I don't mean to disregard any progress made or differences between those cities, but over the last two decades these cities have lost ground relative to other big cities in New Jersey and the state as a whole.

Hudson County has really triumphed, especially in the "recovery" from the recession.

Jersey City had 1.05% of EV in 1998, now it has 1.83%, or $21.6 billion.  If you factored in its $8 billion in "hidden" PILOTed property it would possess about $28-29 billion in Equalized Valuation, over 2.0% of New Jersey's total.

Jersey City and Newark were never really peers.  Their Equalized Valuations were approximately equal in 1998 but Jersey City's had 30,000 fewer residents.

Hoboken, the "Mile Square City," has 1.12% of New Jersey's Equalized Valuation. From 2013 to 2016 its Equalized Valuation rose from $9.6 billion to $13.3 billion, a $3.7 billion gain in only three years.  This gain alone is equal to all of Trenton's Equalized Valuation.

Hoboken now has New Jersey's fourth highest Equalized Valuation, after Jersey City, Toms River, and Edison.  Newark and Hoboken's Equalized Valuations are uncannily within $1 million of each other.

Atlantic City, at the opposite extreme, has collapsed.  In 2008 its Equalized Valuation was $22.2 billion.  Now it is only $8.4 billion.  Atlantic City's mayor predicts its valuation will stabilize at $7 billion but no one really knows.

Despite their increases in wealth, neither Jersey City nor Hoboken has lost education aid, although Hoboken's K-12 aid has been basically flat since 1996 and Jersey City's K-12 aid has been flat since 2006.  Counting Pre-K, the percentage of state aid going to both cities has actually increased in the last few years.

Conclusion:

The fact that wealth changes is obvious to absolutely everyone in New Jersey except for Chris Christie, the legislature, and the education Establishment like the Education Law Center and New Jersey School Boards Association, all of whom have recently opposed redistribution of state aid away from any district, no matter how overaided and lightly-taxed.

The frozen distribution of state aid is not sustainable.  There are forty districts in New Jersey that have aid deficits of at least $4,000 a student and 40,000 poor children in New Jersey who have no access to Pre-K.

The Pension Crisis makes it impossible to increase education funding and endangers the existing $8.6 billion aid stream.

At some point I pray that it penetrates the Establishment that redistribution is necessary.

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See for an update for tax year 2017.

http://njeducationaid.blogspot.com/2016/10/2016-equalized-valuations-out.html