Thanks to the determination of Senate President Steve Sweeney, his legislative allies, and grassroots
The redistribution of $32.1 million of Adjustment Aid combined with the input of $351.4 million in new aid brings NJ $381 million closer to state aid justice, but as we are about to see in this blog post, 100% funding for every district in seven years is likely unachievable.
As usual, I've put all the state aid data referred to here online.
The Outline:
The median district is underaided by $417 per student and receives only 85% of its Uncapped Aid.
The Overaided:
Yet, there are 190 districts receiving over 100% of what the School Funding Reform Act says they actually need.
Their total excess state aid is $651,944,818, which is larger than the $637,776,892 surplus for 2017-18.
The reason that excess grew for 2018-19 despite the legislature's $32.1 million cut to Adjustment Aid is because the overaided districts tend to have further enrollment loss and/or tax base growth. Jersey City alone will be overaided by $20 million more in 2018-19 than in 2017-18, despite its loss of $3.5 million in Adjustment Aid.
There are 76 districts who are overaided by $2,000 per student or more and 19 districts who are overaided by $4,000 per student more. Asbury Park, as in years past, has the largest excess in NJ, at $10,869 per student. Asbury Park's excess is an outlier, since the second most overaided district, Weymouth Township, only has an excess of $8,690 per student.
In terms of percentages, there are 54 districts getting 200% or more of their recommended aid. Washington Township in Burlington County is the most overaided in percentage terms, getting 521% of its real aid target.
In terms of percentages, there are 54 districts getting 200% or more of their recommended aid.
In terms of percentages, there are 54 districts getting 200% or more of their recommended aid.
The 100%ers:
There are 17 districts getting exactly 100% of what is recommended, the largest of which are Lakewood and Freehold Township.The Underaided:
Their total deficit is -$1,747,896,430. There are 109 districts who are underaided by $2,000 per student or more and 35 who are underaided by $4,000 per student or more. There were 118 districts with the $2,000 per student deficit for 2017-18.
Atlantic City is the most underaided district in NJ, with a deficit of -$7,378 per student, even including its $32 million in Commercial Valuation Stabilization Aid. Atlantic City's deficit remains enormous, but it is significantly less than the most underaided district for 2017-18, which was Bound Brook with a -$9,546 per student deficit.
The $1.748 billion deficit for 2018-19 is only $217 million less than the $1,965,333,325 deficit for 2017-18, despite the infusion of $381 million in new and redistributed state aid.
The reason that the deficit shrank by substantially less than the input of new+redistributed aid is because the true deficit increases every year due to weighted enrollment growth, tax base erosion, and inflation. (see below)
The reason that the deficit shrank by substantially less than the input of new+redistributed aid is because the true deficit increases every year due to weighted enrollment growth, tax base erosion, and inflation. (see below)
Sweeney's state aid proposed was designed to give the biggest increases to districts with the worst percentage underfunding with the goal of a 58% threshold, so there are only eight districts getting less than 50% of their Uncapped Aid. Woodbridge is now the most underaided in percentage terms, getting only 42% of what it is supposed to get.
Chesterfield, which only got 10% of its recommended aid in 2016-17 and 20% of its recommended aid in 2017-18 will now receive 58% of its Uncapped Aid. From 2016-17 to 2018-19 Chesterfield's state aid has grown from $419,983 to $2,403,780, a 473% increase (with more to come).
Overall, 117 districts are now exactly at the 58% threshold.
Although the need to cap aid increases for 2018-19 is disappointing, in 2019-20 and beyond, these districts will have the largest increases proportionally, since (if Murphy signs S2), new aid will be based on each district's deficit, not its existing aid.
The reduction of Adjustment Aid was done through a more complex method that sometimes depended on spending relative to Adequacy and municipal overburden. Vo-techs were also exempted from any cuts.
The following districts lost the most:
Although the media focused on Jersey City being the "biggest loser" for losing $3.5 million and that being the most in total dollars, that loss is only $114 per student.
By contrast, Glassboro lost $1,816,764, which, divided by Glassboro's 1916 students, is $948 per student.
Sweeney's Plan is Good Policy, But It Won't Bring Every District to 100% of State Aid
Toms River, Brick, Freehold Regional, Manalapan-Englishtown, Jersey City, and Ocean City have been at the forefront of opposition to state aid reform, saying that it would "decimate" their districts if they receive only 100% of their state aid.
However, these districts should be aware of their continuing advantage, since even in seven years, today's underaided districts will still not be at 100% funding, so the overaided districts who are losing state aid now will still be advantaged.
Although the 2018-19 state aid distribution takes New Jersey $217 million closer to having every district at 100% funding, 100% funding will remain out of reach in 2024-25.
The major reason for the improbability of bringing every district to 100% is that the deficit for 2018-19 will be $1,747,896,430, so even the full redistribution of $651,944,818 will still leave New Jersey with a $1.1 billion net deficit.
The major reason NJ is unlikely to be able to fully fund the underaided districts is that the true deficit increases by $100-$200 million per year, so, even conservatively estimated, in 2024-25, the underaided districts could require another $1 billion on top of the $1.747 billion they would need to be fully funded in 2018-19.
There are two factors in NJ's budgetary favor.
Steve Sweeney often said that he was bringing every district up to 58% of its Uncapped Aid, but this is not accurate, since Sweeney and his allies were forced to cap aid limits for large underaided districts such as Woodbridge and even some small districts who were exceptionally underaided, such as Fairview. As you can see inm the table below, there are 16 districts who remain below 58%, with Woodbridge being the state's most underaided in percentage terms.
| KEARNY | 57.73% |
| ROBBINSVILLE TWP | 56.09% |
| BLOOMFIELD TWP | 55.44% |
| ATLANTIC CITY (see note) | 55.07% |
| LINDEN | 55.00% |
| PASSAIC COUNTY VOCATIONAL | 54.08% |
| BOUND BROOK | 51.75% |
| FAIRVIEW BORO | 51.47% |
| CLIFTON CITY | 47.31% |
| HACKENSACK CITY | 47.24% |
| WEST ORANGE | 47.06% |
| ELMWOOD PARK | 44.46% |
| ATLANTIC CO VOCATIONAL | 43.93% |
| EDISON TWP | 43.04% |
| NORTH BRUNSWICK TWP | 42.08% |
| WOODBRIDGE TWP | 41.72% |
Overall, 117 districts are now exactly at the 58% threshold.
Although the need to cap aid increases for 2018-19 is disappointing, in 2019-20 and beyond, these districts will have the largest increases proportionally, since (if Murphy signs S2), new aid will be based on each district's deficit, not its existing aid.
Per Pupil Gains and Losses from 2017-18
The legislature's increase for 2018-19 was structured onto Phil Murphy's SFRA-literalist proposal, in which state aid was determined by inflating a district's existing aid by (usually) 5%, so districts already getting 80-90% of their Uncapped Aid got the largest gains. Hence Trenton gained +$793 per pupil and Newark gained +$729 per pupil, even though those districts were only underaided by about $2800 per student, which not even close to NJ's largest deficits.
Under Murphy SFRA-literalist approach, 13 districts (all Abbotts) gained 48% of all new state aid.
Aid increases in dollars per student are available here.
The legislature's increase for 2018-19 was structured onto Phil Murphy's SFRA-literalist proposal, in which state aid was determined by inflating a district's existing aid by (usually) 5%, so districts already getting 80-90% of their Uncapped Aid got the largest gains. Hence Trenton gained +$793 per pupil and Newark gained +$729 per pupil, even though those districts were only underaided by about $2800 per student, which not even close to NJ's largest deficits.
Under Murphy SFRA-literalist approach, 13 districts (all Abbotts) gained 48% of all new state aid.
Aid increases in dollars per student are available here.
Sweeney and his allies kept Phil Murphy's original distribution for all underaided districts, but then
strove to bring every district up to 58% of its Uncapped Aid. Under this plan, Newark and Trenton didn't gain additional aid, but they didn't lose any state aid either. Because of the focus on the 58% threshold, severely underaided districts who were at or above that level did not gain any additional state aid under the Sweeney plan. EG, Belleville is underaided by $4252 pp, but it gained nothing over it had originally been supposed to get under Murphy's plan because Belleville was already at 60% of its Uncapped Aid and the Sweeney team used percentage underaiding.
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Bound Brook had been NJ's most underaided district in dollars per student (-$9,546 pp for 2017-18). Although Sweney used percentage underaidin, it gained the most in dollars per student (+$2289). |
In any case, these districts are the ones who are gaining the most in dollars-per-student.
| District | Gain in $/PP | District | Gain in $/PP |
| BOUND BROOK | $2,289 | UNION COUNTY VOCATIONAL | $1,606 |
| ATLANTIC CO VOCATIONAL | $2,213 | ABSECON CITY | $1,515 |
| MANVILLE | $2,163 | DUNELLEN | $1,446 |
| CUMBERLAND CO VOCATIONAL | $2,100 | RED BANK BORO | $1,399 |
| CHESTERFIELD | $2,055 | ELMWOOD PARK | $1,398 |
| FAIRVIEW BORO | $1,951 | GUTTENBERG | $1,337 |
| FREEHOLD BORO | $1,890 | PASSAIC COUNTY VOCATIONAL | $1,302 |
| MANCHESTER REG | $1,830 | MERCHANTVILLE | $1,274 |
| LITTLE FERRY | $1,787 | ROCKAWAY BORO | $1,246 |
| RIDGEFIELD PARK | $1,764 | KENILWORTH | $1,225 |
What is also important to note is that the majority of NJ's severely underaided districts gained more state aid in the Sweeney model than the Murphy-Repollet SFRA-literalist model, although not always.
The reduction of Adjustment Aid was done through a more complex method that sometimes depended on spending relative to Adequacy and municipal overburden. Vo-techs were also exempted from any cuts.
The following districts lost the most:
| District | Loss in $/PP | District | Loss in $/PP |
| OGDENSBURG | ($212) | PEMBERTON TWP | ($317) |
| LOWER CAPE MAY REGIONAL | ($218) | ALLENHURST | ($321) |
| LAKEWOOD | ($221) | OCEAN TWP | ($325) |
| CORBIN CITY | ($223) | HAMPTON BORO | ($330) |
| DELAWARE VALLEY REGIONAL | ($223) | ALEXANDRIA TWP | ($361) |
| KNOWLTON TWP | ($243) | DENNIS TWP | ($373) |
| CLINTON TWP | ($261) | WEYMOUTH TWP | ($470) |
| SPRINGFIELD TWP | ($268) | ASBURY PARK | ($591) |
| MONTAGUE TWP | ($277) | WASHINGTON TWP | ($801) |
| HOPATCONG | ($288) | GLASSBORO | ($948) |
Although the media focused on Jersey City being the "biggest loser" for losing $3.5 million and that being the most in total dollars, that loss is only $114 per student.
By contrast, Glassboro lost $1,816,764, which, divided by Glassboro's 1916 students, is $948 per student.
Sweeney's Plan is Good Policy, But It Won't Bring Every District to 100% of State Aid
Toms River, Brick, Freehold Regional, Manalapan-Englishtown, Jersey City, and Ocean City have been at the forefront of opposition to state aid reform, saying that it would "decimate" their districts if they receive only 100% of their state aid.
However, these districts should be aware of their continuing advantage, since even in seven years, today's underaided districts will still not be at 100% funding, so the overaided districts who are losing state aid now will still be advantaged.
Although the 2018-19 state aid distribution takes New Jersey $217 million closer to having every district at 100% funding, 100% funding will remain out of reach in 2024-25.
The major reason for the improbability of bringing every district to 100% is that the deficit for 2018-19 will be $1,747,896,430, so even the full redistribution of $651,944,818 will still leave New Jersey with a $1.1 billion net deficit.
The major reason NJ is unlikely to be able to fully fund the underaided districts is that the true deficit increases by $100-$200 million per year, so, even conservatively estimated, in 2024-25, the underaided districts could require another $1 billion on top of the $1.747 billion they would need to be fully funded in 2018-19.
Although Adjustment Aid will probably grow over the next seven years, not all of that $651,944,818 in 2018-19's Adjustment Aid will be available to be redistributed because several tens of millions of it goes to districts who are being protected from aid cuts by the carve-outs for being below Adequacy, having "municipal overburden," or being vo-techs.
I do not have the exact amount of "protected Adjustment Aid," but East Orange alone has $24.4 in excess aid, Keansburg has $7.6 million, Vineland has $5.4 million, Gloucester City has $1.2 million. Monmouth County Vo-Tech has $6 million in excess aid, Ocean County Vo-Tech has $4.3 million. Between those districts and other protected districts, there is probably $50 million in "protected Adjustment Aid."
On the other hand, unless there is a recession, the State of New Jersey will experience annual revenue growth, but the amount of money left over for K-12 aid after expenses for TPAF (+$392.5 mil for FY19) and post-retirement medical (+$51.8 mil) will not equal the $284 million it was for 2018-19 since the 2018-19 budget was powered by increasing income tax rates, the transfer of the state lottery, fiscal gimmicks, flat-funding Extraordinary Aid, flat-funding municipal aid, plus stronger income tax revenue growth.
I do not have the exact amount of "protected Adjustment Aid," but East Orange alone has $24.4 in excess aid, Keansburg has $7.6 million, Vineland has $5.4 million, Gloucester City has $1.2 million. Monmouth County Vo-Tech has $6 million in excess aid, Ocean County Vo-Tech has $4.3 million. Between those districts and other protected districts, there is probably $50 million in "protected Adjustment Aid."
On the other hand, unless there is a recession, the State of New Jersey will experience annual revenue growth, but the amount of money left over for K-12 aid after expenses for TPAF (+$392.5 mil for FY19) and post-retirement medical (+$51.8 mil) will not equal the $284 million it was for 2018-19 since the 2018-19 budget was powered by increasing income tax rates, the transfer of the state lottery, fiscal gimmicks, flat-funding Extraordinary Aid, flat-funding municipal aid, plus stronger income tax revenue growth.
So, future new money for K-12 aid will be much less than the $284 million it was for 2018-19.
There are two factors in NJ's budgetary favor.
- In 2022-23 NJ is projected to reach 100% of its pension funding, so starting in 2023-24 NJ should have much more new money available for K-12 aid (or other Property Tax Relief Fund spending).
- The Debt Servicing costs for construction debt should start to fall, (unless there is another round of Abbott construction bonding).
Reaching 100% of state aid for all districts will also depend on what decisions the governor and legislature make regarding other expenses that are paid out of the Property Tax Relief Fund, ie, municipal aid, direct property tax rebates, community college, and PreK.
Given the state's extreme budget pressures for debt streams like TPAF and post-retirement medical, plus the appropriateness of funding municipal aid and direct tax rebates, and the likelihood of increases for PreK, the need to redistribute Adjustment Aid will become no less acute in the future.
Given the state's extreme budget pressures for debt streams like TPAF and post-retirement medical, plus the appropriateness of funding municipal aid and direct tax rebates, and the likelihood of increases for PreK, the need to redistribute Adjustment Aid will become no less acute in the future.
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See Also:
- "Updated State Aid Disparities for 2017-18"
- "Looking at 2018-19 Disparities" (based on the original Murphy proposal)
