Corzine’s School Aid Plan: “Local Fair Share”
The proposed aid formula begins by calculating each school district’s adequate budget and “local fair share” contribution.
A district’s adequate budget is established by the State through a formula based upon student enrollment and demographics. It is the amount the State deems adequate to provide a thorough and efficient education to the district’s students
“Local fair share” is the total amount of property taxes the State deems a district should contribute towards its adequate school budget.
The difference between a school district’s adequate budget and its “local fair share” is the amount a district would receive in “equalized state aid”.
Equalized state aid = Adequate district Budget - Local Fair Share
Corzine’s proposed school spending and state aid plan is grossly unfair and should be rejected by state legislators. Here’s one more reason why.
Each district’s “local fair share” is calculated as follows:
(District’s Equalized Property Valuation x 0.0092690802 X .0.50) + (Districts Aggregate Income x 0.04546684 x .0.50)
A district’s equalized property valuation is the total value of the real estate property in the district as certified by the state’s Director of the Division of Taxation. A district’s aggregate income is the total income as reported by taxpayers on New Jersey State Income Tax forms.
The “local fair share” formula is heavily weighted to income and is especially advantageous to those districts with many property owners not living in the school district and therefore, not reporting income attributable to the district. One major example, nonresidential property used for business.
Keep in mind, “local fair share” is just the combined “fair share” of every property owner in a school district. Here’s an example of the formula’s gross inequity.
Two districts, District #1 and District #2, have the same state-established adequate school budget and the same total equalized property value.
In District #1, property owner A’s real estate is valued at $500,000 and he has an income of $100,000. His property is in District #1 and because he lives in the district, his $100,000 income is included in the formula.
Property Owner A’s Fair Share:
($500,000 x 0.0092690802 X .0.50) + ($100,000 x 0.04546684 x 0.50) =
$2,317.27 + $4,546.68 =
Fair Share = $6,863.95
In District #2, property owner B’s real estate is also valued at $500,000 and he has an income of $300,000. His property is in District #2, but because he lives outside the district, his income is zero in the formula.
Property Owner B’s Fair Share
($500,000 x 0.0092690802 X .0.50) + ($0 x 0.04546684 x 0.50) =
$2,317.27 + $0 =
Fair Share = $2,317.27
Property owner A’s “local fair share” reduces District # 1’s equalized state aid by $6,863.95. Property owner B’s “local fair share” reduces District # 2’s aid by only $2,317.27.
Clearly, Corzine’s “fair share” formula is terribly unfair to districts with a high percentage of property owner A types and few type B’s. Of course, Corzine would probably say “that’s not a bug in the formula, it’s a feature”.
Remember, every dime in state school aid comes from the state's income tax. That’s another element of “fare share” that’s missing.