Loss Of Adjustment Aid Only Rarely Would Be Damaging

One line of argument against redistributing Adjustment Aid is that the loss of Adjustment Aid would be very hurtful to aid-losing districts.

For Sen. Jennifer Beck of Monmouth, an off-and-on reformer, issued this cautionary note after the May 2017 Senate Budget hearing:

Sen. Jennifer Beck, a Republican member of the [Budget] 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 [sic, this is a profoundly wrong statement], and abruptly taking away funding would hurt those communities. ....

“The Legislature needs to address the school funding disparity in this budget cycle, but we also must be cautious when considering the complexities of redistributing Adjustment Aid,” Beck, who is in a tough re-election battle, said in a statement after the hearing. “One thing that is certain is that our most underfunded districts cannot wait any longer for relief.”

Although there are some districts for whom the loss of Adjustment Aid would be very painful, on the whole, most districts getting Adjustment Aid either

1. have Adjustment Aid as a small percentage of their budget.
2. have Adjustment Aid as a small percentage of their Local Fair Share.
3. are very high-spending as it is.

As we will see in greater detail below, there are only a handful of districts for whom the loss of Adjustment Aid would result in large budgetary impact who would not make up the lost revenue with local taxes.

(For this study I have attempted to be as accurate as possible and therefore subtracted aid excess that is the result of Interdistrict Choice money.  While the total amount of excess aid distributed for 2017-18 will be $696 million, $27 million of that amount is actually from Interdistrict Choice and therefore not subject to redistribution based on any proposal currently under discussion.  The 2017-18 Uncapped Aid figures are here.)

For the median district that is overaided, Adjustment Aid represents 10.2% of Local Fair Share.

There are 61 districts Adjustment Aid is not even 5% of the Local Fair Share.  Since the Adjustment Aid would be eliminated over five years, it's difficult to imagine why the loss of it should be difficult.

For another 38 districts for whom Adjustment Aid equals 5-10% of Local Fair Share.  For these districts there could be some difficulty adapting to reduced aid, but not enormous difficulty.

Hoboken (5% of budget but 2.4% of LFS, ), Upper Freehold (7.7% of LFS), Middleton (14% of budget but 3.8% of LFS), Weehawken (5% of budget but 3.1% of LFS), Hillsborough (6% of budget, 7.7% of LFS), and the Jersey Shore overfunded districts are among the districts who should not have a major problem adapting.

Then, admittedly, there are 105 districts for whom Adjustment Aid exceeds 10% of Local Fair Share, including 52 for whom it exceeds 20%. Asbury Park's $25.3 million of Adjustment Aid equals 184% of its Local Fair Share (39% of the budget), although Asbury Park is the outlier here.

Some readers may consider tax increases, even over five years, equal to 20% of Local Fair Share to be too onerous for voters to accept and therefore oppose cuts in Adjustment Aid because the reductions would force programming cuts.

It's true, if a district gets a large amount of Adjustment Aid, then losing that money would force cuts, but the complicating fact here is that these districts tend to already be very high-spending.  For them to lose significant money in Adjustment Aid would require cuts, but the cuts would be coming off of a level of spending that average and severely underfunded districts in New Jersey are nowhere near.

Let's look closely at the Budgetary Cost Per Pupil for the 52 districts for whom Adjustment Aid exceeds 20% of Local Fair Share.  (excluding non-operating districts)

My mistake. Brooklawn should NOT be on the list because its excess aid comes from Interdistrict Choice.
This strengthens my case.

These spending figures are almost always substantially above New Jersey's average.  The districts whose spending is the lowest Ocean Township (Ocean County) are districts who voluntarily keep their taxes very low.  Ocean Township's taxes are 66% of Local Fair Share.

Let's look at a few large, overfunded districts up-close:

• Pemberton, a rural Abbott in the heart of the Pinelands, is overfunded by $25 million, for just 4300 students.
  
  Because of that excess, Pemberton now spends $20,000 per pupil, even though it only taxes at 57% of its Local Fair Share ($12 million against $21.5 million).
  
  Pemberton's excess aid is $25.7 million, which is far greater an amount than it could possibly make up with its own taxes, but as Pemberton loses its Adjustment Aid, it would be simply falling to the state's average and still be vastly better off than the dozens of high-FRL NJ districts now who now spend as little as $10,000 per student.  As an Abbott, Pemberton would retain 100% state funding for construction projects and two years of "free" state-funded PreK.

• Brick is overfunded by $23 million for 8750 students.  Brick taxes at 77% of Local Fair Share, or $101 million compared to $131 million.   If it got a waiver and decided to make up for 100% of the lost aid through local taxes, Brick would still be under its Local Fair Share by $7 million.  

Lest I be accused of not acknowledging the impact of budget cuts on aid-losing districts, what also has to be considered is that even if Steve Sweeney's plan to redistribute all of Adjustment Aid and add another $500 million in school spending is implemented, it is not enough to bring every all of today's underaided districts up to 100%, because that would require $2.1 billion, not the $1.1 billion Sweeney is talking about.  So, even after the process of eliminating Adjustment Aid is complete, these aid-losing districts will be at 100% funding while there are many others that remain at 70%, 80% etc.

(See, Is Steve Sweeney Overselling His State Aid Proposal?)

So even if Sweeney's plan is implemented faithfully, there will still be a distribution of haves and have-nots.  Pemberton, Brick, Asbury Park etc will be at 100% funding, while Delran, Clifton,Cherry Hill, Chesterfield, Freehold Boro etc are still below 100% funding.

And most of New Jersey's poorest districts get no Adjustment Aid at all:

2014-15 Data

2014-15 Data

Central Avenue, East Orange.

At the risk of weakening my own case for redistribution, THERE ARE some overfunded districts for whom losing Adjustment Aid would be very difficult.  The district I would be the most worried about is East Orange.

East Orange is overfunded by $25 million, which is equivalent to 12% of East Orange's Total Operating Budget.  East Orange's school taxes are $20.7 million below Local Fair Share, so even if East Orange wanted to tax at its full Local Fair Share, cuts would still occur.

However, there is no way that East Orange could pay its full Local Fair Share because East Orange's municipal taxes are off-the-charts, at 3.5%, as part of an all-in tax rate of 4.6%.  Most New Jersey towns have municipal taxes at about a quarter of all-in taxes, but in East Orange municipal taxes  make up 72% of East Orange's total taxes.

I assume there is bloat in East Orange's municipal government, but much of that extreme tax burden is likely due to unavoidable need.

However, East Orange is an exception, and any painful cuts that other overaided districts will have to make as they lose Adjustment Aid has to be counterassessed against the deep existing budgetary deprivation existing in hundreds of underaided districts and the fact that even if Sweeney's plan is implemented, today's underaided districts will still not be at 100% funding.

For most districts that face losses of Adjustment Aid, the losses are manageable as long as there is some fix to the tax cap passed.

And when New Jersey's fiscal future is so grim, the elimination of Adjustment Aid is necessary.

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See Also

• Adjustment Aid, Who Gets It and Who Doesn't
• Adjustment Aid and DFG B, Who Gets It and Who Doesn't

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. 

The Skews of Capped Aid

Other than the Orwellingly named aid-hoarding mechanism known as "Hold Harmless Aid," the most unfair aspect of New Jersey's School Funding Reform Act is the State Aid Growth Limits, aka "Enrollment Caps."

Due to these limits on how much money a district can gain, the most aid a district can gain is a 10% or 20% of what it got the year previous, no matter how severely underaided it is. 

(Technical Note: due to the cuts of 2010 and how low-aid districts then lost large percentages of their state aid, there are districts who would gain more than 20% from what they get now, however, that is technically due to the mechanism of Adjustment Aid, which overrides the State Aid Growth Limits for districts getting less state aid now than they did when SFRA was passed. Since this is a benign effect of Adjustment Aid, and Adjustment Aid is usually odious aid-hoarding, I prefer not to get into the weeds about it.)

Due to the existence of the Aid Caps and the fact that the Caps are percentage based, the more aid a district already receives, the more aid a district gains in dollars-per-student, which is the real measure of budgetary-tax impact.

(I got Capped Aid and Uncapped Aid amounts via an OPRA request to the DOE.  I've made the data publicly available here)

For instance, the following underaided districts all would be gaining the same amount in percentage terms if SFRA were operating:

But in the all-important dollars-per-student, the amounts the districts are getting are completely different and skewed.

What is unfair about this is that Chesterfield, Bound Brook, Manchester Regional Freehold Boro are New Jersey's most underaided districts against Uncapped Aid (Uncapped Aid = real SFRA full funding).  In percentage terms, Chesterfield does worse than any other district.  For 2017-18, Chesterfield will only get 9.5% of its Uncapped Aid, with Bound Brook (-$10,592), Manchester Regional (-$7,562 pp) and, Freehold Boro (-$8,484 pp) among the worst in dollars per student.

Newark, Paterson, Trenton, and Elizabeth are indeed badly underaided, but not by nearly as much.  Newark's aid deficit is only $3,059 pp, Paterson's is $3,252, Trenton's is $3,003, and Elizabeth's is $3,198.

As a consequence of the percentage-based mechanism of the Aid Caps, new aid under SFRA goes disproportionately to large, moderately underaided districts.

Fortunately, reforming the State Aid Growth Limits (aka Enrollment Caps) is part of Steve Sweeney's state aid proposal.  Unfortunately, no one in the media and few among other politicians understands what the State Aid Growth Limits even are.

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See Also:

• The Long Wait for Full Funding Under Capped Aid
• SFRA Was Never Fully Funded

Estimating Local Fair Share for 2017-18

Update: Local Fair Share, Capped Aid, and Uncapped Aid are now available. 

The following is moot.

After the Department of Education came out with 2017-18 state aid proposals I made an OPRA request of the Department of Education for 2017-18 Uncapped Aid and Local Fair Share.

I wanted Uncapped Aid so I could see what the total deficit is for the underaided districts, see what districts are the most underaided, see the total surplus for the overaided districts, and see what districts are the most overaided.

I wanted Local Fair Share so I could see whose taxes are the heaviest, whose taxes are the lightest, and what the median district in New Jersey pays.

I did not request Adequacy Budgets because spending relative to Adequacy is also determined by local tax effort and a focus on whose spending is above and below Adequacy can distract from state aid fairness.  Also, Adequacy Budgets are embedded into the calculation of Uncapped Aid anyway.

To my disappointment, the Department of Education said it did not calculate Local Fair Share and Uncapped Aid for 2017-18.  They did not give a reason, but my conjecture is that it was Christie who made the final decision not to bother with even the hypothetical operation of SFRA.

Nevertheless, the Department of Education did send me the components of Local Fair Share, which are Equalized Valuation (from the previous fiscal year, so 2016) and Aggregate Income (from three  years previous, so 2014).

The formula for Local Fair Share changes year to year, but by plugging in Equalized Valuation and Aggregate Income figures into the 2016-17 formula, I can ESTIMATE 2017-18 Local Fair Share and compare district tax bases.

This is the (first) formula for Local Fair Share used in 2016-17:

(Equalized Valuation x 0.013156218 + Aggregate Income x 0.046185507)/2

To see more about changes in Equalized Valuation between FY2016 and FY2017, please see this post of mine.

As usual, I've put the data online here.  2016-17 data, to which I make comparisons, is available here.

Yet again, these amounts are ESTIMATES - especially the year to year comparisons - since I have no idea what the multipliers should be in the 2017-18.

On the other hand, the relational comparisons between different towns should be very solid, since I am applying the same multipliers to every district for 2017-18.  If these calculations show that Hoboken's Local Fair Share is New Jersey's third highest at $195 million, I'd be surprised if the DOE's calculations give any different ranking, even if the exact Local Fair Share turns out to be something other than $195 million.

Hopefully the legislature will pressure Department of Education to simply run the formula so that the public may have a more informed conversation about state aid.

Anyway here goes:

• Jersey City's Local Fair Share would increase by another $20 million to $353 million.  This is powered by a $4 billion increase in the Equalized Valuation  (to $25.7 bil) and a $502 million increase in the Aggregate Income (to $8 bil).
  
  Jersey City's Local Fair Share appears to be now 76% larger than the next largest district's, which is Edison at $200 million.  For 2016-17 Jersey City's Local Fair Share was "only" 60% larger than Edison's.

• Hoboken's gained $1.8 billion in Equalized Valuation and $357 million in Aggregate Income.  Whatever the exact  Local Fair Share formula ends up being, Hoboken's Local Fair Share would likely be around  $195 million and be the third largest in New Jersey, after Jersey City and slightly behind Edison.  This year Hoboken's Local Fair Share surpasses Toms River's.
  
  Hoboken's 2016-17 tax levy was only $42 million, so for 2017-18 Hoboken's taxes will be barely a fifth of Local Fair Share
  
  For the last year pro-reformers in the legislature have pushed to eliminate Adjustment Aid, but there are certain low-student population districts such as Hoboken, some wealthy enclaves like Alpine and Harding, and many Jersey Shore resort towns who have no need for any state aid whatsoever.  

• There is also increases in other Hudson County towns, powered by non-Hoboken/non-Jersey City Hudson County's $5 billion increase in Equalized Valuation.  West New York's would be $4 million larger, driven by 10% increases in Equalized Valuation and Aggregate Income.
  
  Union City, Bayonne, North Bergen, Harrison, Kearny, and others would have small increases (the small increases might be smoothed away if the DOE actually ran the formula)

• Asbury Park's Local Fair Share would actually shrank (by a tiny amount). That's outrageous, since Asbury Park is undergoing a building boom. Asbury Park is just as much an example of the exploitation of the PILOT law as Jersey City is.  

• Atlantic City's Local Fair Share fell by another $13 million, from $65 million to $52 million.  This is due to the loss of another $2 billion in Equalized Valuation and $8 million in Aggregate Income.
  
  Atlantic City's school tax levy for 2016-17 was $82 million, so Atlatic City's taxes may be 157% of Local Fair Share.


• Manchester Regional's taxes are likely the state's highest again.  My estimate is that Manchester Regional's Local Fair Share is only $4.9 million, so the $10.9 million (which falls disproportionately on Prospect Park and Haledon due to Manchester Regional's unique tax-apportionment scheme) is absolutely brutal.
 

• Newark's Local Fair Share may have grown slightly, by $6 million, from $161 million to $167 million. (Newark's actual tax levy is $123 million)

• Paterson's Local Fair Share may have grown slightly too, by $3 million, from $85 million to $88 million (Paterson's actual tax levy is only $41.5 million)

Again, the above figures are only ESTIMATES, but I hope this post generates discussion, particularly regarding Hoboken and Jersey City's state aid and the acute tax crisis in Atlantic City.

Please ask your legislators to demand that the Department of Education do these calculations for real.

At the very least, we have to know  what the total deficit is for the underaided districts.  For 2016-17 it was $1.93 billion, which is far beyond any realistic tax increase.  This deficit number is a critical point in the argument for why redistribution is necessary.

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See Also:

• Help for the Needless: New Jersey's Richest Districts and their State Aid
• Beyond the Point of Fairness: The Most Overtaxed Districts in New Jersey
• The Robbers and the Robbed: State Aid Disparities for 2016-17

Why Jersey City's Lawsuit Against Redistribution is a Good Sign

Mayor Steve Fulop and the Jersey City City Council have announced that Jersey City is going to hire

Up Until Now, Fulop has relied on Vincent Prieto
to block state aid redistribution.

a law firm to fight off any attempt to redistribute Jersey City's $420 million in state aid.

Before I get into why this is a good sign, let's have some backstory about Steve Fulop and state aid.

After state aid redistribution became a possibility in early 2016, Steve Fulop refused to discuss the subject in a serious way.

Fulop showed his immaturity in a series of petty attacks on Jack Ciattarelli, where when Ciattarelli said that Jersey City's economic growth indicated that its state aid needed to be redistributed, Fulop returned fire by bragging about Jersey City's economic growth.

“It’s easy for local policy makers to achieve tax reductions when the state subsidizes their services,” said the Assemblyman. “The fact is, fiscally speaking, we’re experiencing a very painful squeeze or crowding out effect with our state budget. Overly generous property tax abatements are one of the reasons why. These abatement are not only an exploitation of our state school funding formula, they are an injustice to property owners in places like Jersey City. In trying to solve the state’s problems, we need policy makers at all levels of government to take these issues seriously. In that respect, the statement issued by the Fulop camp is an embarrassment and a disservice – a disservice to the taxpayers of this state who fund Fulop’s school system.”

To which Fulop responded in a way that proved Ciattarelli's point:

“Jersey City had a tax reduction last year and just today we will adopt a budget without a tax increase. Jersey City has led the state in job creation just as we had a credit upgrade last year.

After that, Fulop switched tacks to refusing to say anything in public about state aid, but using his control over Assembly Speaker Vincent Prieto to block reform.

His comments at this point were few and far between. By September 2016, according to Jersey Journal reporter Terrence McDonald, "Mayor Steve Fulop has declined several times to comment on Christie's and Sweeney's plans" other than to say it was a " long road" to reform becoming a reality and then another ignorant statement on how SFRA works "Urban education is very complex. I don't think in certain areas parents and cities have the same means to pay as in some of the suburban areas."

Which of course is an untruth regarding Jersey City. For 2016-17 Jersey City's school tax rate was 0.47, less than half of New Jersey's 1.3 average, so certainly Jersey City can pay more than that.

Over the next few months Fulop was again silent, but he used his clout with Assembly Speaker Vincent Prieto to block state aid reform.  (even though Prieto actually represents several of New Jersey's most underaided districts)

Yet by February 2017 state aid reform had enough momentum that Fulop decided he had to say something and what he said was bullshit, claiming state aid redistribution was “clearly an attack on poorer, primarily African American, Latino and minority districts.” Fulop also gave a two-faced argument where he claimed that only Jersey City's waterfront is doing well (even though Jersey City is a single-entity from the point of view of taxation), even though Fulop constantly claims to Jersey City audiences that the whole city is thriving.

Anyway, after Steve Sweeney tore apart Fulop's arguments and Fulop's distortions were exposed again Fulop decided that what Jersey City needed to do was hire a law firm for $75,000 to fight off the redistribution of Adjustment Aid.

As Fulop spokesperson Jennifer Morrill said: "Our plan is to continue to fight for Jersey City students and residents every step of the way."

Or in other words, "if it's good for Jersey City, then screw everyone else."

Public Opposition is a Good Sign!

While many people are angry about Jersey City's litigation and blatant indifference to the fate of the rest of New Jersey, I think the litigation itself is a good sign.

Fulop never took state aid reform seriously prior to this winter.  Presumably he knew Prieto would block it.

But now that Fulop is actually speaking out against redistribution and wasting $75,000 of Jersey City's money on a law firm it means that Fulop has a fear of redistribution that he didn't have before.

We in the public have never been privy to what conversations Steve Fulop and Vincent Prieto have.  All we know is that Fulop is against state aid redistribution and he boasts "I have significant clout with the Speaker."

But if Fulop is now hiring a law firm, that means that either his control over Vincent Prieto is loosening or Prieto has told him that he isn't going to be able to block state aid redistribution much longer.

So while it's infuriating that Fulop and the City Council have this unbelievably self-interested mentality (they all purport to be progressives), the fact that they finally feel they have to fight for Adjustment Aid means that they finally take seriously the prospect of its elimination.

Jersey City City Council:
If It's Good for Jersey City,
Then Screw Everyone Else

New Jersey=Debtors' Prison: The 2017-18 Budget

Note, this post was accurate at the time it was written regarding flat-funding for K-12 operating aid.  In June 2017 Steve Sweeney pushed through a deal that did increase K-12 aid by $100 million, PreK by $25 million, and Extraordinary Aid by another $25 million.   See this update on disparities for a look after Sweeney's last-minute changes.

Everything in this post I say about categories of debt getting the lion's share of new money remains still accurate. 

The Garden State

For 2017-18 K-12 state operating aid for school districts is increasing by a measly $3,140,585, all of which is going for Interdistrict Choice and Host District Stabilization Aid for Newark.

Of New Jersey's 577 school districts, only 91 are receiving any aid increase at all.

Even New Jersey's most savagely underaided districts, like Manchester Regional, Freehold Boro, East Newark, Chesterfield are gaining nothing.  Bound Brook, who was the most underaided school district for 2016-17, is getting a $6,387 boost, which is for perhaps another Interdistrict Choice student.

Atlantic City, which had lost another $2 billion in Equalized Valuation, gained nothing other than $60,881 for Interdistrict Choice.  This is a contrast to last year, when Atlantic City gained $32 million last year for "Commercial Valuation Stabilization Aid."

Since state aid for 2016-17 was $8,031,337,333, the increase is an imperceptible 4 one-thousandths of a percent.  2016-17 was a bad year too, but at least in that year K-12 aid increased by $90 million.

Yet there is more to this story than just the headline aid increase of $3,140,585 and that untold story is large increases for New Jersey's debt.

• TPAF funding is increasing by $411 million.  
• Post-retirement medical funding for teachers is increasing by $69.9 million.
• Debt Service on Christie Whitman's Pension Obligation Bonds is increasing by $15.4 million.
• Debt service aid (which goes directly to districts) is increasing by $17.4 million.  

State Debt Servicing, which is for the bonds the Economic Development Authority floated for (mostly Abbott) construction is increasing by $20.5 million from $898.3 million to $918.8 million.

New Jersey's expenses for teachers Social Security is actually falling.  Perhaps this is due the 2016-17 budget cuts meaning that there are now fewer teachers?

Because TPAF and other education debt expenses increased so much, education spending (broadly defined as opex aid and other education-related expenses) is now 39% of the state budget versus only 31% of the budget in 2001. (FY2018 = $13.8 billion out of $35.5 billion)

Click to Enlarge.
Source, pg 41
http://www.nj.gov/treasury/omb/publications/18bib/BIB.pdf

And for comparison's sake, here is where the increase for 2016-17 went.  (the graph refers to "proposed increases," but these proposed increases actually were implemented.)

As you can see, it's the same story.