Showing posts with label Asbury Park. Show all posts
Showing posts with label Asbury Park. Show all posts

Saturday, December 15, 2018

NJ School District Consolidation and Tax Apportionment


A major political saga of 2019 is going to be the fate of Senate President Steve Sweeney "Path to Progress" tax savings recommendations.

Sweeney's task force differs from many previous attempts to address property taxes in New Jersey by making an assumption that NJ has a spending problem, not a revenue problem, and therefore makes 40 recommendations to help rein in state and local spending in New Jersey.

One of "Path to Progress's" recommendation that I'll address here is the recommendation to consolidate all non-K-12 districts into K-12 districts.

This blog post will then identify the complexities that will arise in tax apportionment in newly-consolidated districts and why taxation must be apportioned by Equalized Valuation and not student enrollment.

---- The Consolidation Recommendation ----

As NJ State Senator Vin Gopal writes:

One of the smartest ways to provide property tax savings is to regionalize services where we can save tax dollars while providing equal or better service.

Let�s start with school regionalization. On average, more than 50 percent of every property tax bill goes into funding education from preschool to 12th grade. New Jersey students score second only to Massachusetts on national standardized exams, and the quality of our schools is one of our best selling points as a state.
But we can do better and at a lower cost. Too often, our K-4, K-6 and K-8 school districts do not coordinate curriculum or teaching methods, textbooks or specialized services with the regional high school districts their children will be attending, so 7th and 9th graders arrive with different skill sets. 
Furthermore, a recent analysis showed that the 120 K-4 to K-8 school districts with 480 or fewer students spent 17 percent more on average � about $3,400 per child � than the 360 districts with more than 1,000 students. 
Clearly, it makes sense on both an educational and a cost basis to move forward with K-12 regionalization plans that will create larger districts with the more diverse curriculum that students need heading into high school while saving on duplicative administrative and back-office operations.

----Background on Enrollment and Taxes----

Although K-12 districts educate 71% of NJ's students, they are actually just 22% of NJ's geographically-defined districts.  (NJ non-geographically defined districts are charter schools, special education districts, and vo-techs.)
  • K-6, 56 districts, 12% of the total districts, but only 32,410 students, or 3.1% of enrollment.
  • K-8, 222 districts, 47% of the total, but only 179,473 students, or 17.2% of enrollment. 
  • 7-12 and 9-12, 64 districts, 14% of the total, but only 90,235 students, 8.7% of enrollment. 
  • K-12, 131 districts, 28% of the total, but 740,311 students, 71% of enrollment.
Overall, NJ's K-6s and K-8s have a slightly disproportionate share of NJ's overall tax base relative to K-12s but a much wider variation in wealth than K-12s.  K-6 and K-8 districts range from NJ's fourth poorest district in tax base, Woodlynne, whose Local Fair Share is only $2,343 per student, to all fifteen of NJ's richest districts in tax base, with Avalon as the absolute richest, whose Local Fair Share is $1,935,039 per student.

Of the sixty districts in NJ with the highest tax bases per student, 42 are K-6 or K-8 districts.

District TypeDistrict NameLocal Fair Share Per StudentDistrict TypeDistrict NameLocal Fair Share Per Student
K-8Avalon Boro$1,935,039K-8Colts Neck $36,596
K-8Stone Harbor Boro$1,146,4547-12 / 9-12Southern Regional$36,285
K-8Alloway Twp$1,006,527K-12Millburn $35,462
K-6Long Beach Island$236,582K-8Tewksbury $34,964
K-6Beach Haven Boro$170,436K-8Florham Park $32,272
K-8Spring Lake Boro$166,397K-8Belmar Boro$32,268
K-8Sea Girt Boro$153,326K-8Bradley Beach Boro$32,085
K-8Andover Reg$151,537K-8Spring Lake Heights Boro$31,695
K-8Bay Head Boro$148,283K-12Princeton$31,619
K-8Lavallette Boro$135,130K-6Edgewater Boro$31,576
K-6Saddle River Boro$121,1367-12 / 9-12Shore Regional$30,669
K-8North Wildwood City$105,581K-12Point Pleasant Beach Boro$30,291
K-8Deal Boro$93,959K-12Summit City$29,903
K-6Cape May City$92,527K-8Mendham Boro$29,491
K-8Margate City$90,812K-12Weehawken $29,326
K-12Hoboken City$79,1067-12 / 9-12Warren Hills Regional$29,205
K-8Englewood Cliffs Boro$70,8047-12 / 9-12Carlstadt-East Rutherford$27,958
K-12Ocean City$65,703K-12Mahwah Twp$27,740
K-8Wildwood Crest Boro$62,655K-12Paramus Boro$27,706
K-8Monmouth Beach Boro$57,5167-12 / 9-12Rumson-Fair Haven Reg$27,539
K-8Avon Boro$56,337K-8Watchung Boro$27,460
K-8Franklin Lakes Boro$45,511K-8Cranbury Twp$26,819
K-8Brigantine City$45,091K-8East Hanover Twp$26,682
K-6Essex Fells Boro$44,064K-8Woodcliff Lake Boro$26,594
K-8Bedminster Twp$40,784K-8North Haledon Boro$26,549
K-6West Cape May Boro$39,498K-8Demarest Boro$26,458
K-8Mendham Twp$38,0437-12 / 9-12Hanover Park Regional$26,254
K-8Carlstadt Boro$37,1127-12 / 9-12Watchung Hills Regional$26,190
K-12Somerset Hills Regional$36,9937-12 / 9-12West Essex Regional$25,963
K-8Rumson Boro$36,919K-6North Caldwell $25,908

So, Sen. Vin Gopal's statement about high spending is slightly incomplete about the causation of high average spending in small districts because many K-6s and K-8s are extremely rich in tax base and they skew the spending average higher.  Avalon Boro alone is an outlier and skews the spending of K-8s higher.

NJ Districts with the Highest Spending PP. The Small Districts on This List Have Huge Tax Bases
District TypeName2016-17 Total Spending Per PupilDistrict TypeName2016-17 Total Spending Per Pupil
B. K-8 / 0 - 400Avalon Boro$61,489B. K-8 / 0 - 400Alpine Boro$30,633
F. K-12 / 1801 - 3500Asbury Park City$36,957G. K-12 / 3501 +Lakewood Twp$30,441
B. K-8 / 0 - 400Margate City$34,881C. K-8 / 401 - 750Brigantine City$29,886
B. K-8 / 0 - 400Stone Harbor Boro$34,679H. 7-12 / 9-12Shore Regional$29,864
B. K-8 / 0 - 400North Wildwood City$34,213B. K-8 / 0 - 400Spring Lake Boro$29,642
H. 7-12 / 9-12Henry Hudson Reg.$32,760H. 7-12 / 9-12Monmouth Reg.$29,230
A. K-6Beach Haven Boro$32,305D. K-8 / 751 +Colts Neck Twp$29,007
H. 7-12 / 9-12Carlstadt-East Rutherford$32,230G. K-12 / 3501 +East Orange$28,655
A. K-6Long Beach Island$32,077E. K-12 / 0 - 1800Burlington City$28,460
B. K-8 / 0 - 400Califon Boro$31,485D. K-8 / 751 +Franklin Lakes $28,315
B. K-8 / 0 - 400Milford Boro$31,446G. K-12 / 3501 +Neptune Twp$28,252
C. K-8 / 401 - 750Demarest Boro$31,226C. K-8 / 401 - 750Mendham Twp$28,113
G. K-12 / 3501 +Camden City$31,151B. K-8 / 0 - 400East Amwell $28,109
E. K-12 / 0 - 1800Keansburg Boro$30,950B. K-8 / 0 - 400Frenchtown $28,008
H. 7-12 / 9-12High Point Reg.$30,800H. 7-12 / 9-12Northern Valley Reg.$27,945

---- To Apportion Taxes By Enrollment or Tax Base, That is the Question ----


Because there will be situations where K-6 and K-8 districts will be merged with districts who are much less wealthy or more wealthy than they are, a battle will arise on how taxes are to be apportioned.
  • If taxes are apportioned by enrollment -- so that a town that contributes 15% of the students pays 15% of the costs even if it does not possess 15% of the tax base -- then there will be divergences in tax rate between the towns.  
  • If taxes are apportioned by Equalized Valuation -- so that a town that has 15% of the tax base pays 15% of the costs -- then tax rates between the towns will be equal, although per pupil costs will diverge. 
To illustrate this point about how enrollment and tax base will not line up, let's just consider a hypothetical "Northeastern Monmouth Regional School District," which would consist of the six towns who now send students to Asbury Park High School: Lake Como, Deal, Allenhurst, Belmar, Interlaken, and Asbury Park itself.



Since Asbury Park has 71% of the students at this consolidated district, it would have to pay 71% of the costs, which is triple its share of the tax base.

Deal, which has 35% of the combined tax base, would pay merely 6% of the costs to match its 6% of the total enrollment.

Mathematically, Asbury Park's tax rate would be 18x what Deal's is if taxes are based on enrollment.

If taxes are based on enrollment, then the tax bases of Deal, Allenhurst, Interlaken, and to a lesser extent Belmar and Lake Como would effectively be "walled off" from being tapped and the tax base would appear artificially low in the eyes of SFRA.  The State of New Jersey would then have to deliver unneeded Equalization Aid.  Apportioning taxes by enrollment would thus make a mockery out of SFRA since the Equalized Valuations of towns with high tax base:enrollment ratios would be untouchable by the consolidated school districts.

BY CONTRAST, under tax apportionment by Equalized Valuation, every district would have an equal tax rate, although taxes per student would be very high and Deal, Interlaken, and Allenhurst. They would probably end up paying over $100,000 per student they actually send to the new district.

Many people living in Deal, Interlaken, and Allenhurst would argue that that is "unfair" to make them pay more per student than less-wealthy towns, but is it "unfair" if the taxpayers in a wealthy section of a town pay more per student than the taxpayers in a poor section? Is it unfair if the owners of a $600,000 house pay more per student than the owners of a $400,000 house?

If taxes were apportioned by enrollment, a family living in Asbury Park would pay thousands of dollars more per year in property taxes than a family living in a property of identical value in another town.  Since the tax rates would vary so much, even houses worth $100,000 in Asbury Park would pay more in school taxes than $1+ million houses in Deal, Interlaken, and Allenhurst.

The phenomenon of staggeringly unequal tax rates already happens in Manchester Regional High School in Passaic County, where North Haledon, Prospect Park, and Haledon have a unique hybrid tax apportionment formula that is based 50% on Equalized Valuation and 50% on enrollment.

Although North Haledon has 60% of the three towns' tax base, it only pays  21% of the taxes.  Conversely, Prospect Park has only 14% of the tax base, but it must pay 31% of the taxes.


See "Manchester Regional: NJ's Most Underaided and Divided School District"

If apportionment by student enrollment is duplicated in all consolidated districts, then inequality like will exist through New Jersey.

---- Conclusion ----

The elected officials who are promoting consolidation in the Path to Progress deserve respect for taking on multiple third-rails of NJ politics in school spending and home rule.

However, consolidation isn't something that will save every taxpayer money, even if school district administrative expenses decrease.  If newly consolidated school districts apportion taxes by Equalized Valuation, which I see as the only fair way to have apportionment, then some towns that have walled off their tax bases behind "home home" independence are going to have to pay higher taxes (aka, their fair share).

Although towns who have high ratios of tax base:students will resist fighting their fair share and make this an uphill struggle, it's a battle to make sure that all New Jersey taxpayers have somewhat equal burdens for local education and therefore a battle worth fighting.

-----

See Also





















So

Wednesday, March 21, 2018

Looking at the 2018-19 State Aid Disparities

UPDATED STATE AID ANALYSIS IS HERE.

http://njeducationaid.blogspot.com/2018/07/2018-19-state-aid-disparities-narrow.html

THE FOLLOWING POST REFERS TO MURPHY'S ORIGINAL PROPOSAL BEFORE LEGISLATIVE MODIFICATION.

This post compares the proposed state aid levels of all New Jersey districts for 2018-19 with their Uncapped Aid levels.  By comparing actual Aid to Uncapped Aid we can see how stark New Jersey's state aid disparities are. 

While I am very disappointed and angry at the proposed distribution for 2018-19, at least the Murphy administration is attempting to follow some rational distribution of aid.  From 2013 to 2018 the Christie administration more or less flat-funded all districts, with the exception of those who participated in Interdistrict Choice.  For 2017-18, the Christie administration did not even initially calculate Uncapped Aid .

Although the Murphy administration describes itself as a 180 turn from the Christie administration in education policy, and that's the reality in a lot of ways, one thing the Murphy administration and Christie administration have in common is that they have no choice but to prioritize the state's debt payments.  As large as Murphy's $283 million increase in K-12 aid is, it is significantly smaller than the increase for teacher pensions, ie the Teachers Pension And Annuity Fund.

(Note, this does not include money from the lottery that is going to education)

See below for a definition of "Uncapped Aid."

The Scope of the Disparities:

The Big Picture:
There are 212 overaided districts with a total surplus of $708.7 million.  This is almost $70 million more than 2017-18, when the surplus was $643 million.  (I am excluding Interdistrict Choice aid)

The Murphy administration's proposed increase for the 171 of the 212 overaided districts is $28,604,340.
There are 380 underaided districts with a total deficit of $1.913 billion.  This is $52 million less than 2017-18, when the deficit was $1.965 billion.  (again, I am excluding Choice Aid, plus I am also excluding Atlantic City's Commercial Valuation Stabilization Aid, which is $32 million.)

If New Jersey could redistribute Adjustment Aid, the net deficit is only $1.205 billion.

Notes on New Jersey's State Aid Have-Nots
There are 75 districts getting 50% or less of their Uncapped Aid.

If the state wanted to prioritize this sub-50% districts, it would only cost $106 million to bring them all up to at least 50% funding, or less than one-seventh of the total excess aid that the overaided districts receive.

Chesterfield is, yet again, in in last place, getting only 21% of the state aid SFRA recommends for it. River Edge is the next lowest aided, getting 24%, then Hasbrouck Heights at 24.5%, Elmwood Park at 26%, and Robbinsville at 27%.

There are 43 districts whose deficit is larger than $4,000 per student.  To bring all of these districts up to a deficit of $4000 per student (which is still terrible) would require $155.7 million, which is about one-fifth of the state's excess aid.
(The $155.7 million number does include Atlantic City's Commercial Valuation Stabilization Aid)
Atlantic City's Taxes are 287% of Local Fair Share. 
(+$52 million over LFS)
Phil Murphy's proposed budget will give Atlantic City $1.2
million in tax relief.

Bound Brook is the worst-off in deficit in dollars per student, at -$8,999 per student. Then Atlantic City (even with the $32 million CVSA), Manchester Regional, Fairview, and Freehold Boro.

Several vo-techs, like Atlantic County Vo-Tech, Cumberland Vocational, and Passaic County Vocational are also extremely underaided.

Atlantic City, has, by far, the worst taxes, with a tax levy at 287% of Local Fair Share. ($81,888,890 out of $29,396,657) 

Manchester Regional, up until his year, had the worst taxes, but its tax levy was in the low-200% rage of Local Fair Share. Manchester Regional's 2017-18 taxes are still at 219% of Local Fair Share, which is the second worst in New Jersey.

Newark's deficit is the largest in total dollars, $130,042,863.

Notes on New Jerseys' State Aid Haves

There are 68 districts getting 200% or more of what SFRA's real recommendation for them is is.  23 lucky districts get over 300%. Washington Township in Burlington County tops off the overaided districts, getting 563% of its aid target.

If the districts receiving 200% or more of their state aid got their aid reduced to "only" 200%, it would free up $76.8 million.

Tavistock is a non-operating district that claims three students living there.  It is getting $2299 on an aid target of $299, so it technically gets 1003% of its recommended aid.

Jersey City's Taxes are only 29% of Local Fair Share.
Jersey City is Gaining $1.8 Million in State Aid.
Deal, whose tax base is astronomically large, is getting $2,039,184 in Interdistrict Choice money, plus $200,045 in formula aid, on an aid target of only $187,443. That works out to 1195% of Local Fair Share, but I have decided to exclude Interdistrict Choice money from this analysis.


In total dollars, the biggest excess is Jersey City's, at $175 million. Powered by surging real estate and a little additional state aid from Phil Murphy, Jersey City's excess aid is up $24 million from its $151 million excess in 2017-18. Jersey City's school taxes are now only 29% of Local Fair Share.

Jersey City's excess aid is the ninth highest in dollars per student too, $5,716 per student. That's more than the total aid of its impoverished neighbors Guttenberg and Fairview get total!

Jersey City's Local Fair Share is $398 million. This is growth of $30 million in Jersey City's Local Fair Share in one year. This means that if Jersey City lost $30 million in state aid per year and made up for that loss with local taxes that its tax rate would not increase.

Also, Jersey City's Local Fair Share is growing at a rate where it will no longer qualify for Equalization Aid in 6-7 years.  Right now the Local Fair Share is $398 million, but once it reaches Jersey City's $590 million Adequacy Budget (for Equalization Aid) the only state aid Jersey City will qualify for will be the three categorical aids.

This means that even if Jersey City's Adjustment Aid is redistributed the state should still be able to use money currently going to Jersey City for needier school districts.

Hoboken's Local Fair Share is $217 million, which surpasses Edison to be the second largest in NJ after JC.
Hoboken's Local Fair Share is $217 million, the second largest
in NJ.  Hoboken's LFS is  $79,000
per student and yet it gets $10.5 million.
Hoboken's LFS per student is more than 2x Millburn's.

Pemberton's surplus state aid is $25,680,554, the second most in New Jersey.

Asbury Park is overaided by the most per student, with a surplus of $11,827 per student. That excess aid alone is more than what low-wealth non-Abbotts like Freehold Boro, Dover, Guttenberg etc get total for their students.

Loch Arbour is at 100%
Loch Arbor is the only district in New Jersey to get 100% of its Uncapped Aid: getting $3,944 for its 5 students, which is exactly SFRA's recommendation. (Since Loch Arbour's Local Fair Share is $1,301,988, it could give up all of its aid and not notice a thing.)

Abbott Specific Notes

The Abbotts are disparate. They range from Asbury Park and its mammoth $11,827 per student surplus to Plainfield, with its -$4,594 per student deficit (itself the 32nd largest in New Jersey).

For 2018-19 eleven Abbotts will be overaided, which is two fewer than the thirteen overaided Abbotts of 2017-18. The two Abbotts who slipped from overaided to underaided are Salem City and Burlington City. Their slippage, despite additional state aid, underscores how dynamic state aid is and that the deficit against Uncapped Aid constantly grows.

Only three of the Abbotts pay above their Local Fair Share (Burlington City, Salem City, and Phillipsburg)

The median Abbott only pays 56% of Local Fair Share. Hoboken's taxes are only 20% of Local Fair Share, despite having a levy that is extremely high in dollars-per-student.
  Lakewood
Lakewood is now overaided!

Lakewood actually has a rapidly growing tax base and its Local Fair Share increased from $92,974,112 for 2016-17 to $102,034,106 for 2017-18 to to $111,534,172 for 2018-19. During that time there has also been a decrease in the student population.

Thus, Lakewood's state aid deficit, which was $19 million for 2016-17, has increased to a small surplus of $1,566,821.

Although SFRA does not work for Lakewood and the district does require additional state aid, the district also has the ability to increase the tax levy in excess of 2% (which it has been doing).

Debt Takes Most of the Money

In a continuation of what happened under Christie, the state is putting much more money into various debt categories than it is putting into

See Also:


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Definition of Uncapped Aid:
Uncapped Aid = the real full funding for every school district. The term "Uncapped Aid" derives from the fact that SFRA contains legal "caps" on how much a district can gain in a single year, which are usually a 10% or 20% increase on what the district received the year before. Due to these caps, a school district's statutory "full funding" may differ greatly from what SFRA's formulas say it actually needs.

Uncapped Aid also refers to the amount of state aid that overaided districts would get if it were not for the mechanism of Adjustment Aid delivering over 100% of their state aid to them. In the case of Adjustment Aid districts, "Capped Aid" might more accurately be called the "pre-Adjustment Aid state aid target," but that is too wordy, so I just call it "Uncapped Aid" even though the aid caps do not apply to districts who are already getting over 100% of their recommended state aid.