This is Part 2 of my two-part series comparing Maryland and New Jersey school taxes and spending.
Part 1 of my series looked at Maryland's county income taxes and discussed that Maryland's school spending is 22% per student lower than New Jersey's. (NJ's per student spending is $21,243 compared to Maryland's $16,985).
In counterpoint to the frequently-asserted notion that Maryland's school spending is lower because of less administration, my post showed that Maryland's spending is lower across-the-board, with the exception of school-level administration.
Maryland's lower spending is due to several factors, like less union power, less interdistrict competition, less empowered special-education parents, and control over taxes being in the hands of county councils, not Boards of Education.
This post looks at another major reason for Maryland's lower school taxes and how state aid is more broadly distributed there than in New Jersey.
The Same Constitutional Language
First, the Maryland and New Jersey constitutions have nearly identical constitutional language on education:
Maryland:
The General Assembly, at its First Session after the adoption of this Constitution, shall by Law establish throughout the State a thorough and efficient System of Free Public Schools; and shall provide by taxation, or otherwise, for their maintenance.New Jersey:
1. The Legislature shall provide for the maintenance and support of a thorough and efficient system of free public schools for the instruction of all the children in the State between the ages of five and eighteen years.
Many people say that NJ's Abbott-dominated state aid distribution is a "constitutional requirement," but really it is a "NJ Supreme Court requirement," because Maryland's constitution says almost the exact same thing about education and yet the Maryland Supreme Court has never interpreted its constitution like the NJ Supreme Court has. Hence, in Maryland, there is no 100% state funding for school construction in any district, nor two years of state-funded PreK, nor de facto permission for the urban districts never to raise their school taxes. (see "The Great Abbott Tax Freeze")
Different State Aid Formulas
Despite the virtually identical constitutional language, Maryland's state aid formula is quite different from New Jersey's.
Maryland's state aid formula contains minimum state funding requirements for every district's general education program and then its special needs programs.
The general education program is called the "foundation program" and the state minimum is 15%. The special needs programs are Compensatory Education, Special Education, and Limited English Proficiency Education. The state minimum funding for the special needs programs is 40%. (see page iii)
Due to these minima, every district in Maryland other than property-rich Worchester gets at least 32% of its budget from the state. (see page 87)
New Jersey has had no official state minimum funding rule since the Abbott II decision of 1990. SFRA, theoretically, would give every district at least $1,000 per student, but SFRA is non-operating and some districts get half of that amount. (all districts get considerable "indirect aid," see below.)
Maryland's formulas give high-need districts considerably more than the 15% and 40% minima, but the existence of those minima keeps the distribution of state aid flatter there than in New Jersey.
Adequacy is Calculated Differently
Maryland also uses a concept of an "Adequacy Budget," to calculate its equivalent to Equalization Aid. Maryland's calculation is also "weighted," so that districts with more at-risk students get more state aid. However, Maryland's calculation of an Adequacy Budget is "linear, not "exponential" and does not concentrate aid in high-FRL districts as much as New Jersey's does.
What "exponential weighting" means is that NJ's weights for FRL-eligibility themselves increase the higher the concentration of FRL-eligible students gets. NJ has one weight if a district is 0-39% FRL eligible, a higher weight if a district is 40-59% FRL-eligible, and then a higher weight still if a district is 60%+ FRL-eligible.
Specifically, the weight is 0.47 if a district is 0-20% FRL-eligible, 0.52 if the district is 40-59%, and then 0.57 if the district is over 60% FRL-eligible. (see page 7)
NJ also has an additional weight if students are FRL-eligible AND LEP-classified, rather than just adding the two weights together.
Maryland also has an extra weight if a student is FRL-eligible, but the weights do not increase as FRL-eligibility increases. For "Compensatory Education" Maryland calculates Adequacy on a constant 0.35, regardless of the district's concentration of disadvantaged students (see page 92)
This means that if one district in Maryland is 20% FRL-eligible and another is 80% FRL-eligible, each Maryland district will get the same amount of extra aid for its FRL-eligible students. The two districts wouldn't get the same aid per student, but they would get the same aid per FRL-eligible student.
Whereas in New Jersey the district with higher FRL-eligibility would have extra multipliers applied in the calculation of the Adequacy Budget and thereby qualify for even more aid per student and per FRL-eligible student.
Maryland's Local Taxes are Lower because the Middle-Class Gets More State Aid
Most Marylanders pay less in local taxes is because the distribution of state aid in Maryland is more favorable to middle-income districts than New Jersey's distribution is. As we will see, the richest district in Maryland, Howard County, gets more state aid than the majority of New Jersey districts.
A tradeoff of the Maryland model is that Baltimore City gets much less state aid than it would if it
were in New Jersey, a topic this post will examine.
HOWEVER, before I can actually show how much money Maryland's middle-class districts get, I have to point that there are several major differences between how many expenses each state government pays on behalf of districts.
Direct State Aid and Indirect State Aid:
Another major difference between Maryland and New Jersey is that a higher proportion of Maryland's state aid is direct state aid that goes to districts, whereas New Jersey's state government makes more payments on behalf of districts.
The only major indirect aid that the State of Maryland pays for is the unfunded liability of teacher pensions. For FY2018 this cost was $734 million, or $860 per student on average. Districts themselves pay the "normal cost" of pensions, but this is not that much money. For Baltimore County BCPS pension costs are only $32.2 million, which is 1.7% of a $1.89 billion budget.
The State of New Jersey's assumptions for indirect aid are much broader and more expensive than Maryland's. New Jersey pays for all pension costs, all Social Security costs, all post-retirement healthcare costs, and then Whitman-era Pension Obligation Bonds. I call these streams of aid "hidden aid" because they are infrequently acknowledged by the NJ education community and journalists.
For FY2018 NJ's costs for pensions were $1.5 billion, then $758 million for Social Security, then $1.2 billion for post-retirement medical, and then $226 million for the Whitman-era Pension Obligation Bonds. Those four costs have a combined cost of $3.7 billion, or $2,700 per student on average.
In addition to the above indirect state aids above, New Jersey also spends $918 million on construction debt per year, of which the Abbotts get 70%.
For approximately 235 New Jersey districts - 40% of the total - "hidden" state aid is greater than direct aid. (see note below on why this is an approximation)
In neither state do districts ever possess this indirect state aid; it is just spent on their behalfs. Instead, each state government deposits the money directly in the relevant state account, bypassing local education providers.
After you subtract the "hidden aid" streams, Maryland's direct state aid is a little lower than New Jersey's, $5.6 billion for 874,514 students, or $6,403 per student versus New Jersey's $8.8 billion for 1,347,166 students, or $6,532 per student.
(NJ's figures include PreK and Extraordinary Aid, since the equivalents are integrated into Maryland's regular state aid formula.)
Both New Jersey and Maryland let residents calculate taxable income after deducting up to $10,000 in property taxes. Maryland does not allow residents to deduct local income taxes. Since Maryland's property taxes are so much lower than NJ's, and its state income taxes are lower too for people with above-average incomes, Maryland's deduction is worth less than New Jersey's are.
Note on Data 1. The source for my Maryland data is this Overview of Maryland Local Governments done by its legislative research service. The source for the inclusive state aid data for New Jersey is the Taxpayer Guide to Education Spending, with support from OPRA'ed information from the DOE, the User Friendly Budgets, and the DOE Enrollment Files The TGES shows how much of a district's budget comes from state aid and what the Total Spending Per Student is, thereby allowing one to determine state aid. The convenient way to do this is in the Zipped files containing statewide data.
Most Marylanders pay less in local taxes is because the distribution of state aid in Maryland is more favorable to middle-income districts than New Jersey's distribution is. As we will see, the richest district in Maryland, Howard County, gets more state aid than the majority of New Jersey districts.
A tradeoff of the Maryland model is that Baltimore City gets much less state aid than it would if it
HOWEVER, before I can actually show how much money Maryland's middle-class districts get, I have to point that there are several major differences between how many expenses each state government pays on behalf of districts.
Direct State Aid and Indirect State Aid:
Another major difference between Maryland and New Jersey is that a higher proportion of Maryland's state aid is direct state aid that goes to districts, whereas New Jersey's state government makes more payments on behalf of districts.
The only major indirect aid that the State of Maryland pays for is the unfunded liability of teacher pensions. For FY2018 this cost was $734 million, or $860 per student on average. Districts themselves pay the "normal cost" of pensions, but this is not that much money. For Baltimore County BCPS pension costs are only $32.2 million, which is 1.7% of a $1.89 billion budget.
For FY2018 NJ's costs for pensions were $1.5 billion, then $758 million for Social Security, then $1.2 billion for post-retirement medical, and then $226 million for the Whitman-era Pension Obligation Bonds. Those four costs have a combined cost of $3.7 billion, or $2,700 per student on average.
In addition to the above indirect state aids above, New Jersey also spends $918 million on construction debt per year, of which the Abbotts get 70%.
For approximately 235 New Jersey districts - 40% of the total - "hidden" state aid is greater than direct aid. (see note below on why this is an approximation)
In neither state do districts ever possess this indirect state aid; it is just spent on their behalfs. Instead, each state government deposits the money directly in the relevant state account, bypassing local education providers.
After you subtract the "hidden aid" streams, Maryland's direct state aid is a little lower than New Jersey's, $5.6 billion for 874,514 students, or $6,403 per student versus New Jersey's $8.8 billion for 1,347,166 students, or $6,532 per student.
(NJ's figures include PreK and Extraordinary Aid, since the equivalents are integrated into Maryland's regular state aid formula.)
Both New Jersey and Maryland let residents calculate taxable income after deducting up to $10,000 in property taxes. Maryland does not allow residents to deduct local income taxes. Since Maryland's property taxes are so much lower than NJ's, and its state income taxes are lower too for people with above-average incomes, Maryland's deduction is worth less than New Jersey's are.
Note on Data 1. The source for my Maryland data is this Overview of Maryland Local Governments done by its legislative research service. The source for the inclusive state aid data for New Jersey is the Taxpayer Guide to Education Spending, with support from OPRA'ed information from the DOE, the User Friendly Budgets, and the DOE Enrollment Files The TGES shows how much of a district's budget comes from state aid and what the Total Spending Per Student is, thereby allowing one to determine state aid. The convenient way to do this is in the Zipped files containing statewide data.
Note on Data 2: Since New Jersey's indirect state aid does not appear in State Aid Summaries or the User Friendly Budgets, it is not possible to say exactly how much aid a district gets. The Taxpayer Guide to Education Spending does break down revenue sources by federal, state, and local percentages, but total revenue sources is not exactly the same thing as total spending, so applying those revenue percentages to total spending, to get spending per student, is not quite an exact exercise. (sorry)
Despite Spending Less Overall, Maryland Gives Middle-Class Districts More
Despite spending less overall per student, Maryland's distribution of state aid is more favorable to middle-class districts than New Jersey's is.
The distribution of state aid in Maryland ranges from $4091 per student for Talbot County to $12,091 per student in Baltimore City.
Maryland's wealthiest district by income is Howard County, whose median income is $110,238, and which gets $5,499 per student for opex and pensions. On top of the $5,499, Howard County has averaged $517 per student in construction aid for the last five years, giving it a grand total of $6,016 per student in state funds.
There are 302 districts in New Jersey that get less than that (and those districts educate 526,000 students). (again, this is an approximation due to the slight non-identity of revenue and spending)
When the highest-income district in Maryland gets more state aid than 52% of New Jersey districts, something is wrong with the Garden State.
Maryland's conventionally affluent districts and high-tax base districts usually get more state aid than their peers would in New Jersey. Maryland's higher wealth districts sometimes even get more than working-class districts in New Jersey
(All of the following include federal money for the calculation of state aid as a percentage of total budget)
Maryland's state aid distribution is progressive and does give more money to its poorer districts, but the extra aid isn't as high as in New Jersey. The difference in state aid for Baltimore City and its peers in New Jersey is greater than the difference between middle-class districts.
Baltimore City has 12.6% of Maryland's students, but that $943 million is only 14.9% of Maryland's total aid.
Other high-FRL districts in Maryland get less money than they probably would if they were in New Jersey:
Despite Spending Less Overall, Maryland Gives Middle-Class Districts More
Despite spending less overall per student, Maryland's distribution of state aid is more favorable to middle-class districts than New Jersey's is.
The distribution of state aid in Maryland ranges from $4091 per student for Talbot County to $12,091 per student in Baltimore City.
Maryland's wealthiest district by income is Howard County, whose median income is $110,238, and which gets $5,499 per student for opex and pensions. On top of the $5,499, Howard County has averaged $517 per student in construction aid for the last five years, giving it a grand total of $6,016 per student in state funds.
There are 302 districts in New Jersey that get less than that (and those districts educate 526,000 students). (again, this is an approximation due to the slight non-identity of revenue and spending)
When the highest-income district in Maryland gets more state aid than 52% of New Jersey districts, something is wrong with the Garden State.
Maryland's conventionally affluent districts and high-tax base districts usually get more state aid than their peers would in New Jersey. Maryland's higher wealth districts sometimes even get more than working-class districts in New Jersey
(All of the following include federal money for the calculation of state aid as a percentage of total budget)
- Montgomery County is 33.3% FRL-eligible, it gets $5,330 per student plus an average of $287 per student in construction aid. State funding is 32.6% of its budget.
- Anne Arundel County is 31.3% FRL-eligible, it gets $5,277 per student plus an average of $477 per student in construction aid. State funding is 37.8% of its budget.
- Carrol County is 19.3% FRL-eligible and gets $6,261 per student plus an average of $272 per student in construction aid. State funding is 45% of its budget.
- Calvert County is 21.2% FRL-eligible and gets $6,278 per student plus an average of $345 per student in construction aid. State funding is 44% of its budget.
The above are just Maryland's lowest FRL-eligible districts. As New Jersey districts become poorer and have Abbott status, there is a crossover point where New Jersey provides MUCH more money,
Readers know that districts in NJ with equivalent wealth as the wealthiest in Maryland would get nowhere nearly as much aid.
Lest I be accused of cherry picking, here are the 15 largest non-Abbotts in New Jersey, their FRL-eligibility rates, and their state aid per student.
(amounts include Extraordinary Aid and pensions, Social Security etc)
To go with NJ districts who are around the state's FRL-eligibility average just further exposes New Jersey as the state that has neglected its middle-class.
Lest I be accused of cherry picking, here are the 15 largest non-Abbotts in New Jersey, their FRL-eligibility rates, and their state aid per student.
- Toms River is 29% FRL-eligible, it gets $6070 per student. (it is overaided by $1376 per student)
- Edison is 21% FRL-eligible, it get $3,197 per student. State funding is 18.3% of its budget.
- Woodbridge is 35% FRL-eligible it gets $3,896. State funding is 23% of its budget.
- Hamilton is 39% FRL-eligible. it gets $8,163 per student. (it is overaided by $113 per student)
- Clifton is 57% FRL eligible, it gets $4,157 per student.
- Freehold Regional is 10% FRL-eligible. It gets $6,730 per student. 35% of the budget. (it is overaided by $2,329 per student)
- Cherry Hill is 20% FRL-eligible, it gets $3,258 per student. State funding is 17.9% of its budget.
- West Windsor-Plainsboro is 5% FRL-eligible. It gets $2,647 per student. 14% of the budget.
- Bayonne is 62% FRL-eligible. It gets $8,067 per student.
- Middletown is 13% FRL-eligible. It gets $4,264 per student. (it is overaided by ($627 per student)
- Old Bridge is 25% FRL-eligible. It gets $7,231 per student. (it is overaided by $737 per student)
- South Brunswick is 12% FRL-eligible. It gets $4,498 per student. 26% of the budget.
- Brick is 31% FRL-eligible. It gets $6,118 per student. 34% of the budget. (it is overaided by $2,703 per student)
- Bridgewater-Raritan is 10% FRL-eligible. It gets $3,333 per student. 17% of the budget.
- Jackson Township $7,976 per student. 44% of the budget.
(amounts include Extraordinary Aid and pensions, Social Security etc)
To go with NJ districts who are around the state's FRL-eligibility average just further exposes New Jersey as the state that has neglected its middle-class.
- Rahway is 42% FRL-eligible, it gets $7,961. State funding is 39.9% of its budget.
- West Orange is 43% FRL-eligible, it gets $3,936. State funding is 16.3% of its budget.
- Gloucester Township is 40% FRL-eligible, it gets $4,161. State funding is 17.7% of its budget.
- The Morris School District is is 34% FRL-eligible it $3,458. State funding is 17.1% of its budget.
- Piscataway is 32% FRL-eligible it gets $4,322 . State funding is 25.1% of its budget.
- Baltimore City is 86.5% FR-eligible and is its own independent county. If it were in New Jersey it would definitely be an Abbott. It gets $12,091 per pupil.
Baltimore City has 12.6% of Maryland's students, but that $943 million is only 14.9% of Maryland's total aid.
With its local revenue factored in, Baltimore City spends $16,942 per student, the second most in Maryland after Worchester, but significantly less than what New Jersey's Abbotts spend.
Other high-FRL districts in Maryland get less money than they probably would if they were in New Jersey:
- Prince George's County is 61.2% FRL-eligible. It gets $9,622. State funding is 59.8% of its budget.
Newark, by contrast, has only 3.5% of NJ's students but gets 9.2% of NJ's K-12 aid, or $745 million out of $8.1 billion. Its school tax levy is only $123 million, or $2,500 per student. It pays for 13.6% of its schools.
(if indirect aid were factored in, Newark's proportion of total state aid received would be lower.)
Paterson has 2% of NJ's students and yet gets 5% of NJ's state aid. Its school tax levy is only $45 million, or $1600 per student. It pays for 9% of its schools.
(see pg 44)
(if indirect aid were factored in, Newark's proportion of total state aid received would be lower.)
Paterson has 2% of NJ's students and yet gets 5% of NJ's state aid. Its school tax levy is only $45 million, or $1600 per student. It pays for 9% of its schools.
(see pg 44)
Baltimore City is its own county. It is the closest equivalent Maryland would have to a Newark or Paterson, but Maryland's state aid distribution is not nearly as favorable to Baltimore as New Jersey is to its poor cities due to the lack of an equivalent to Abbott.
By contrast, Montgomery County only spends $16,344 per student. Howard County only spends $16,313.
Conclusion:
Perhaps the biggest difference between Maryland and New Jersey is that Maryland has 24 large, economically diverse districts and this fact has something to do with why Maryland's taxes are lower.
But Maryland's lower costs and taxes have little to do with less central office administration. New Jersey's "General Administration" spending is $371 per student - Maryland's is $135 per student, but New Jersey's costs are higher across the board.
Conclusion:
Perhaps the biggest difference between Maryland and New Jersey is that Maryland has 24 large, economically diverse districts and this fact has something to do with why Maryland's taxes are lower.
But Maryland's lower costs and taxes have little to do with less central office administration. New Jersey's "General Administration" spending is $371 per student - Maryland's is $135 per student, but New Jersey's costs are higher across the board.
No comments:
Post a Comment