Zeroing In On A New School Funding Formula
Definition of zero-sum game: “A situation in which participant gains result only from another’s equivalent losses. The net change in total wealth among participants is zero; the wealth is just shifted from one to another.”
Of course that’s exactly how New Jersey’s collection and allocation of state aid for education works. The state’s education “property tax relief fund” is precisely equal to the revenue collected in state income taxes and that money is distributed by the state, creating winners and losers.
New Jersey’s public schools are paid for with revenue from local property taxes, the state’s income tax (property tax relief fund) and federal taxes (federal funding). While residents (game participants) pay unequal amounts into these funding sources, you might expect the state to distribute aid to produce roughly equivalent spending per student in each district. But, that’s not the way it has worked in New Jersey. It’s long been a zero-sum game that adds insult to injury.
The U.S. Census and The New York Times have the final results of the New Jersey game for 2005. The average spending per student was $13,800, but the districts receiving the most aid, spent the most per student by wide margins.
In 2005, the Newark school district spent an average of $22,829 per student, Asbury Park $23,572 and Hoboken $22,221. Those three represent the so-called poor Abbott school districts. Wealthy Millburn, the town with the highest average property taxes in the state, spent $13,977 per student. Middleclass North Plainfield, with its homeowners paying the state’s average residential property tax, spent $12,617 per student.
Corzine has described the outrageous spending by the Abbott School districts as having "no rational basis of explanation". His administration has also told the New Jersey Supreme Court:
“Abbott districts have been spending at some of the highest levels in the State, and well beyond non-Abbott districts, with no discernable correlation to improved achievement.”
The new funding formula is supposed to change all that and provide real property tax relief.
Next year, Corzine expects New Jersey’s state income tax revenue to increase by $886 million, bringing the total “property tax relief fund” for public school aid for 2008 to $12.5 billion. The federal government will kick in $918.3 million on top of the $12 billion that will be collected by municipalities in school property taxes. That’s a total of $25.4 billion to educate 1,387,963 public school students, an average of $18,012 per pupil. The total pot should be more than enough to provide a “thorough and efficient” education to every child in the state and still have enough left over to provide major property tax relief to those who pay the bulk of the state’s income and property taxes.
So, that leaves us with three big questions. Will Corzine’s new school funding formula produce lower property tax bills or will it fuel new spending? Will state aid be allocated to produce roughly equivalent spending per student or will a new irrational explanation be used to justify spending more on those favored? Will 45 percent of the state’s districts still be considered “too wealthy” for basic state aid?