SOMA School District receives increase of $566,400 or 11.25% under new funding plan

Interesting site. Thanks. 


I saw it on the news last night and was curious how much SOMA received.  Murphy made the announcement in West Orange, which received an additional $1.6 million or 13%. 


What I hadn't seen quite so starkly before was NJ's most economically disadvantaged districts. If you sort by the 2019-2020 Aid column, you see Newark at the top, receiving over $800 million... the most of any district, by far.


This is the best state aid year the SOMSD has had in a long time.

I want to point out that if Phil Murphy had followed the Education Law Center's demand that no underaided but above-Adequacy school district receive any new state aid, and that no overaided but below-Adequacy school district lose any state aid, West Orange and the SOMSD's increase would have been $0 because WO and the SOSMD are above Adequacy due to our high local tax efforts.

If Murphy had followed the second part of the ELC's demand, the overall increase for underaided districts (like Newark) would have been much smaller, since overaided districts whose local tax efforts are weak can still be below Adequacy.

http://edlawcenter.org/news/archives/school-funding/two-steps-to-reduce-the-number-of-new-jersey-students-in-underfunded-schools.html


John McKeon was standing behind Murphy during the announcement in West Orange.

Hmmmm........


Runner_Guy said:
This is the best state aid year the SOMSD has had in a long time.

I consider you the expert in school aid. I was wondering what your reaction would be. 


Runner_Guy said:
This is the best state aid year the SOMSD has had in a long time.
I want to point out that if Phil Murphy had followed the Education Law Center's demand that no underaided but above-Adequacy school district receive any new state aid, and that no overaided but below-Adequacy school district lose any state aid, West Orange and the SOMSD's increase would have been $0 because WO and the SOSMD are above Adequacy due to our high local tax efforts.
If Murphy had followed the second part of the ELC's demand, the overall increase for underaided districts (like Newark) would have been much smaller, since overaided districts whose local tax efforts are weak can still be below Adequacy.
http://edlawcenter.org/news/archives/school-funding/two-steps-to-reduce-the-number-of-new-jersey-students-in-underfunded-schools.html

 Is this computed annually?  Is this a one time thing or part of a new policy where this amount will carry forward?


FilmCarp said:


Runner_Guy said:
This is the best state aid year the SOMSD has had in a long time.
I want to point out that if Phil Murphy had followed the Education Law Center's demand that no underaided but above-Adequacy school district receive any new state aid, and that no overaided but below-Adequacy school district lose any state aid, West Orange and the SOMSD's increase would have been $0 because WO and the SOSMD are above Adequacy due to our high local tax efforts.
If Murphy had followed the second part of the ELC's demand, the overall increase for underaided districts (like Newark) would have been much smaller, since overaided districts whose local tax efforts are weak can still be below Adequacy.
http://edlawcenter.org/news/archives/school-funding/two-steps-to-reduce-the-number-of-new-jersey-students-in-underfunded-schools.html
 Is this computed annually?  Is this a one time thing or part of a new policy where this amount will carry forward?

 This is an interesting question.

Yes, the Department of Education annually computes annually how much state aid a district should receive, but NJ is off-formula.  In 2018-19 there were 370 districts who received less than the formula recommended and 200 who received more than the formula recommended.  In 2018-19 there were only seventeen districts who received 100% of the recommendation and under Christie in most years there were zero.  

S2, which was passed in June 2018, puts New Jersey on a course to getting (almost) every district to 100% funding by 2024-25.

Overaided districts will see their Adjustment Aid reduced according to a pathway where they lose 13% of their Adjustment Aid in 2019-20, 23% in 2020-21, 37%  in 2021-22 etc.  However, since Adjustment Aid is itself dynamic and can grow or shrink based on a district's demographic and economic conditions, the exact dollar amount cannot be predicted in advance.

Underaided districts like the SOMSD gain state aid according to their share of the statewide deficit.  If a district has 1% of hte total deficit, it gains 1% of new+redistributed aid.  If a district has 0.423% of the deficit, it gains 0.423% of new+redistribute aid.

Since we cannot predict exactly how large an increase in state aid there will be, an underaided district's increase is even less predictable than an overaided district's decrease, but we can be confident that if S2 is followed, the most severely underaided districts will gain the most of what New Jersey does have available.  

As for me, I am very pleased about this.  Phil Murphy very rarely speaks about state aid, so I was not sure if Murphy would follow S2.  

I don't think the net increases in state aid will be as large in the near future, but I think 2019-20 itself looks good.


Thanks for the answer, but holy cow could that be any more complex?  What a mess.


yahooyahoo said:
John McKeon was standing behind Murphy during the announcement in West Orange.
Hmmmm........

Why is that a "hmmm?" It's his district, the town he was the mayor of, the high school he graduated from. Mila and Dick Codey were there as well. 


FilmCarp said:
Thanks for the answer, but holy cow could that be any more complex?  What a mess.

Here's another version: the current school funding formula was passed into law in 2008. It determines how much total funding, from all sources, a district should have by assigning a certain dollar value to every general education student, every special ed student, every ESL student, etc.; that amount is called adequacy. They then go and use census data to determine how much the town's taxpayers should be expected to pay toward it; that's called the local fair share. Adequacy minus fair share should equal state aid. 

"Should."

In actuality, there were a bunch of schools that were supposed to lose aid in 2008 because, under that new formula, they didn't have the enrollment figures to support the aid they received. In order to keep them from taking too much of a hit at once, they received temporary aid that was supposed to gradually decline; unsurprisingly, it didn't. As a result, towns that should have received more never did. Last year, before S2 was passed to fix all this, you guys in SOMa were paying 105% of your local fair share and only getting 54% of the state aid you were supposed to. In my neck of the woods in WO, we were paying 135% of our fair share and getting only 34% of what we should have. Steve Sweeney's S2 bill fixed all this and started the multi-year process of dropping aid to the districts who'd been overfunded all these years (which let them keep their property taxes artificially low! Brick, for instance, was only paying 77% of their fair share and getting 272% of their state aid allotment -- keep that in mind when you see them marching in Trenton!)

You can see all the pre-S2 numbers here: 

https://docs.google.com/spreadsheets/d/1i8xTUEVfe_lAC3j9jY8QjAcSN9LXKBrDtay2OOnNwpM/edit#gid=77814114


FilmCarp said:
Thanks for the answer, but holy cow could that be any more complex?  What a mess.

SFRA and S2 complex, but it's important to remember that they exist within a broader universe of school funding and budgets, such as the tax cap law, the state's indirect aid streams (TPAF, Social Security etc), charter school funding, and the PILOT law.  

Although only a few dozen people in New Jersey understand SFRA, but I actually think that SFRA is not complex enough.

Complexity, of course, is not a goal in and of itself, but complexity in the context of school aid is a good thing because it better attempts to differentiate between different districts and provide state aid amounts that carefully meet each district's need.

Here are two examples where I think SFRA needs to be more sophisticated to better meet the fiscal realities of NJ school districts

1.  The Local Fair Share formula doesn't adjust for high muni taxes and low-incomes

2.  Districts who are merely above average in wealth are treated the same as districts who are rich or very high in tax base.

1.  Local Fair Share problems

This is the 2019-19 formula for Local Fair Share:

  (Equalized Valuation x 0.014523812) / 2 +  (Aggregate Income x 0.049819447) / 2 

Although every district has its own unique Equalized Valuation and Aggregate Income, it's still the same formula for every district, even if the residents are low-income and struggle to afford necessities and even if the district has high muni or county taxes that make paying 100% of the school Local Fair Share difficult or impossible.

I'll use an extreme example to demonstrate the inappropriateness of the LFS formula for low-income/high muni tax districts.

Irvington is a low income town with a 4% municipal tax rate (!).  Irvington's Local Fair Share is only $33.8 million, but when it has such brutal muni taxes and the residents are low-income too, it is never going to pay that.  Irvington's actual 2018-19 tax levy is $17.5 million. (and has been for several years)

Irvington gets 90% of its state aid, but it will always be a below-Adequacy district even at 100% of its state aid because the full Local Fair Share is unattainable. 


2.  Rich? Average? What's the difference?

Another lack of sophistication I see in SFRA is that it treats a districts who are extremely rich the same as districts who are only above average.

This is the formula for Equalization Aid

Equalization Aid = Adequacy Budget - Local Fair Share

If a district's LFS exceeds its Adequacy Budget by 1%, 50%, 100%, or 1000% the Equalization Aid is the same, $0.

In 2018-19, 260 districts in NJ are ineligible for Equalization Aid, among them is the SOMSD.

The SOMSD's 2018-19 LFS was $109,842,609, but our Adequacy Budget was $108,291,646, so we barely exceeded the threshold and would get $0 in Equalization Aid.

By contrast, Millburn's LFS was $172 million and its Adequacy Budget was $68 million.  It would get $0 in Equalization Aid too.

And there are districts in NJ who are way richer than Millburn.

Hoboken's LFS is $218 million.  Its Adequacy Budget was $46 million.  It would get $0 in Equalization Aid too.

Avalon's LFS is $59,986,223.  Its Adequacy Budget was $404,398.  It too would get $0 in Equalization Aid.  

If a district like the SOMSD, Millburn, Hoboken, or Avalon is ineligible for Equalization Aid it still gets the three Categorical Aids, Sped, Security, and Transportation, but the amounts are basically the same, despite vast differences in district wealth.

The SOMSD's full state aid target is $1,191 per student.

Millburn's is $1,125 pp.

Hoboken's is $1,207 pp.

Avalon's is $2,041 pp.

IMO, the SFRA formulas should be tweaked so that the SOMSD is eligible for more state aid and the Categorical Aids and indirect aids of rich and ultra-rich districts phase out.  

By giving rich and ultra-rich districts money for their operations, TPAF, Social Security, and post-retirement healthcare that they don't need, those rich and ultra-rich districts can outspend other districts and put higher spending pressure on other districts.  By giving them state aid, they can have even lower tax rates.  

The tax and budget advantages of rich and ultra-rich districts is one reason that district consolidation in NJ is such an uphill fight.

----


There are other lack of complexities in SFRA that others have pointed out too.  For instance, PILOTed properties aren't counted as part of a district's Local Fair Share.  If district actually gets PILOT payments (like in Atlantic City), it doesn't count for anything.

Also, the SFRA formula assumes that every district in NJ has 14.7% of its students with Special Ed classifications, which we all know isn't accurate.





All ridiculous. Fund education via the progressive income tax and send back the funding on a per-head basis in an amount that reflects the needs for a full and sufficient education.


No need for the great complexity.


jimmurphy said:
All ridiculous. Fund education via the progressive income tax and send back the funding on a per-head basis in an amount that reflects the needs for a full and sufficient education.


No need for the great complexity.

 I agree with funding via the income tax ... absolutely!  But I don't agree with going strictly "per head".  Some students and some districts need more money than others in order to provide for "a full and sufficient" education.


sac said:


jimmurphy said:
All ridiculous. Fund education via the progressive income tax and send back the funding on a per-head basis in an amount that reflects the needs for a full and sufficient education.


No need for the great complexity.
 I agree with funding via the income tax ... absolutely!  But I don't agree with going strictly "per head".  Some students and some districts need more money than others in order to provide for "a full and sufficient" education.

 Treat that separately as the extraordinary aid.


kenboy said:
Here's another version: the current school funding formula was passed into law in 2008. It determines how much total funding, from all sources, a district should have by assigning a certain dollar value to every general education student, every special ed student, every ESL student, etc.; that amount is called adequacy. They then go and use census data to determine how much the town's taxpayers should be expected to pay toward it; that's called the local fair share. Adequacy minus fair share should equal state aid. 

 

Local Fair Share takes income into account, while the municipal tax assessment only looks at property values.  But since, as you describe, Local Fair Share is used as part of the formula to determine state aid (or at least in theory), then you can think of Local Fair Share as a stealth income tax, on the average income for a district, but implemented as a property tax.  This actually further skews the property taxes upward for wealthy districts, in other words.  But since it's in aggregate for a district and not assessed on a per-taxpayer basis, as actual income taxes are, it disproportionately impacts low income workers and retirees in otherwise wealthy districts by raising the local property tax rate in those districts.  

Think of it this way.  If you are retired and have no income, you would normally pay no income tax.  But because of Local Fair Share, you are being assessed a stealth income tax, which is based on your neighbors' income, but you'll pay this extra amount in your property taxes. 

NJ really needs to move to a school funding system that takes into account an individual taxpayer's ability to pay, and away from property taxes and aggregate assessments like Local Fair Share.  



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