"Knowledge will forever govern ignorance

 and a people who mean to be their own governors

 must arm themselves with the power which knowledge gives."

Wednesday, February 27, 2008

Proposed State Aid To Municipalities

Governor Jon Corzine’s proposed 2009 New Jersey state budget calls for cuts to municipal property tax relief based on population.

Municipalities with populations of less than 5,000 would receive no municipal property tax relief from the state. Those with populations greater than 5,000 but less than 10,000 would have municipal aid cut in half. The remaining municipalities with populations greater than 10,000 would have their state aid reduced to the amounts received in 2006-07 budget.

Department of Community Affairs Commissioner Joseph Doria said. "The incentives are we have the grants for shared services and working toward consolidation. That's the carrot. The stick is not receiving the aid." The Governor proposes $32 million for this purpose.

A fair way to allocate municipal property tax relief would be to grant the aid on a per person basis and let the chips fall where they may. The new aid formula takes inequity to a new level. Many of the numbers are jaw dropping, even by New Jersey standards.

Update: We have posted the municipal aid information for every town, including actual state aid for 2007, 2008 and proposed 2009 aid based on the new guidelines. You’ll also be able to compare municipal aid per person for every municipality.

Click on the links below to view the information for each County.

Atlantic County
Bergen County
Burlington County
Camden County
Cape May County
Cumberland County
Essex County
Gloucester County
Hudson County
Hunterdon County
Mercer County
Middlesex County
Monmouth County
Morris County
Ocean County
Passaic County
Salem County
Somerset County
Sussex County
Union County
Warren County

New Jersey state municipal aid certifications for 2007 and 2008 may be reviewed here. The 2009 state municipal aid proposal may be found here.

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Tuesday, February 26, 2008

New Jersey State Budget Comparison 2008 vs 2009

The text of Governor Jon Corzine’s budget address may be read here and a summary of his proposed New Jersey state budget for 2009 may be reviewed here.

The following is a comparison of Governor Corzine’s 2008 vs. 2009 state budget by revenue source and expenditure by budget area.


Data Source: New Jersey Department of the Treasury – Office of Management and Budget
2008 New Jersey State Budget
2009 New Jersey State Budget

Update: The 2009 budget proposes $334 million be set aside as a "long-term obligations and capital expenditure fund". In other words, Governor Corzine is proposing no reduction in state spending as compared to his 2008 budget proposal. However, the Governor’s 2009 budget proposal is $177.9 million leas than 2008’s adjusted appropriations of $33,470,900,000.

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Friday, February 15, 2008

New Jersey Taxpayer Education Tour – Part 2

In our previous post we provided a high-level overview of the spending side of New Jersey’s state budget. Today, we’ll take a look at the revenue side and again compare the changes from 1998 to 2008

This year, the state’s income tax will generate $12.4 billion - more than all other state taxes, fees and revenue sources combined, with the exception of the state’s sales tax. The sales tax will bring in $8.8 billion and everything else, a total of $10.8 billion. In total, state revenue has increased by 86 percent or $14.8 billion since 1998.

New Jersey’s actual revenue for 1998, $17.2 billion, was greater than budgeted spending, $16.4 billion. The reverse was true for 2008, where budgeted spending, $33.3 billion, was greater than reoccurring budgeted revenue, $32 billion.

New Jersey State Budget
Revenue Sources
1998 vs 2008
(In Thousands)

Click to Enlarge

Revenue Source 1998 vs 2008. Chart

Revenue from the state’s income tax has increased 121 percent since 1998 and now comprises 39 percent of total state revenue. That’s up significantly from1998 when the income tax paid for about one-third of state spending.

Increasingly, New Jersey relies on families earning a $100,000 or more to support the state’s spending. As Governor Jon Corzine explained in his 2008 Budget in Brief, 85 percent of the state’s income tax revenue is paid by 20 percent of the state’s income tax paying households. Income tax revenue for 2008 is projected to be $6.8 billion more than in 1998.

Sales tax revenue has increased 84 percent, and supports about 28 percent of the state’s budget, as it did in1998. In the fall of 2006, the state’s sales tax was increased from 6% to 7% and expanded to cover additional goods and services. For 2008, sales tax revenue is projected to generate $1.9 billion more revenue than in 2006 and $4 billion more than 1998.

In total, all other taxes, fees and state revenue sources have increased by 58 percent or $4 billion, and now support just 34 percent of the state’s budget, as compared to 40 percent in 1998.

New Jersey State Budget
Revenue Sources By Category
1998 vs 2008
(In thousands)

Click to Enlarge

The corporation and bank tax is New Jersey’s third largest revenue source. Revenue from this tax has increased by 82 percent in the ten year period, although projected to take in less for 2008 than its peak of $3 billion in 2006. This tax category still supports about 7.5 percent of state spending as it did in 1998.

The inheritance tax ($602 million) is now the state’s fourth largest tax, fifth, if you count the Lottery ($848 million) as a tax. The motor fuels tax ($580 million) has fallen to sixth place. The insurance premium tax ($503 million) rounds out the list of state taxes generating more than a half-billion dollars annually.

Of New Jersey’s other major revenue sources, the realty transfer tax ($380 million) was the largest percent gainer, increasing 500 percent since 1998. On the losing side, motor vehicle fees ($278 million) are down 25 percent and cigarette tax revenue ($252 million) is down 23 percent. While revenue is down, the cigarette tax has increased from 40 cents a pack to $2.58 during this ten year period.

The state’s take from all other taxes, fees and revenue sources has increased 82 percent since 1998 and will generate a total of $4.3 billion in 2008.

Revenue source as a percent of the state’s total is shown in the chart below. Only two taxes carry a heavier load in 2008 than in 1998 – the income tax, shouldering 6 percent more of the budget and the reality transfer tax, 0.6 percent more.

New Jersey State Budget
Revenue Source As A Percent Of Total
1998 vs 2008
(In thousands)


Click to Enlarge

Data Sources: New Jersey Department of the Treasury – Office of Management and Budget and State of New Jersey Division of Taxation

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Tuesday, January 22, 2008

New Jersey Needs $38 Billion Plan For Employee Benefits

What’s the real purpose of Governor Jon Corzine’s $38 billion asset monetization plan? It’s all about paying for New Jersey’s public employee benefits. The conversation about the state’s bond debt and Transpiration Trust Fund is misdirection and cover for the real problem The funding requirements for both are basically flat, as we previously explained. It’s the staggering increases for public employee benefits that’s causing the state’s financial crisis.

In 2002, the total for all benefits (health insurance, pension, etc) for active and retired employees cost taxpayers approximately $2 billion and comprised 8.8% of the state’s budget. By 2008, that number had grown to $4.9 billion, gobbling up 14.8% of the state’s budget. Teacher retirement benefits, paid from the state’s income tax revenues, are included in those numbers.

The Governor’s 2008 budget (current year), also provided a forecast for employee health insurance and pension benefit costs for the next five years. By 2013, the total for health insurance was estimated to be $4.6 billion and pension contributions, $3.3 billion. That’s $7.9 billion per year, excluding employer paid payroll taxes.

Read the Governor’s January 2008 asset monetization presentation and you’ll find he’s now projecting that by 2010, health insurance costs will jump to $4.9 billion, just for retired employees. Missing from Corzine’s chart are the projections for health insurance for active employees and the pension contribution required for teachers.

The Report of the Benefits Review Task Force from December of 2005 sounded the alarm with the following cost projections for employee health insurance. The Governor and Legislature thanked the task force kindly and then did essentially nothing about the skyrocketing costs.

Health Insurance
The state’s pension plans were fully funded as of June 30, 2002, as shown in the following chart from the same Benefits Review Task Force report:

Pension Funds
The task force recommended a “one-time” payment of $8.6 billion, plus annual increases in the state’s pension contributions to eliminate the deficiencies.

We reluctantly acknowledge that such a large reduction in the liability might be achieved through the sale of a publicly-owned asset. While we are generally opposed to a one-time asset sale to generate revenue, we feel compelled to put aside our reservations and make the recommendation.
That’s the reality and that’s the problem Governor Corzine is trying to solve with his $38 billion asset monetization plan and the huge toll hikes required to pay for it.

That’s why we reluctantly support Jon Corzine’s Financial Restructuring Plan. (If someone has another way out of this mess we’d like to see the details.) However, taxpayers should insist on some key changes to the plan and future state spending as the price for their support. We’ll write about that in future blog posts.

Recommended Reading:
The Report of the Benefits Review Task Force – December 2005
The state of New Jersey Debt Report – November 2007
State of New Jersey Financial Restructuring – January 2008

Why The Sudden Panic Attack Over New Jersey’s Bond Debt?
Does New Jersey Need A $38 Billion Asset Monetization Plan To Solve an $800 Million Transportation Funding Problem?

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Wednesday, January 16, 2008

Why The Sudden Panic Attack Over New Jersey’s Bond Debt?

As of June 2007, New Jersey’s debt was $29,719,322,000. As you can see from the state’s payment schedule shown below, the required annual payment is fairly consistent - $2,570,837,000 in 2007 and by 2013, it’ll be $2,524,619,000.


That’s not to say New Jersey’s debt isn’t much higher than it should be. Take a look at the state’s credit card statement as of June 2007. (Click on the graphic to the left) There are things on there you’d expect to see - $7.98 billion for transportation, $1.5 billion for open space and farmland preservation, even the infamous $2.7 billion for pension funding. But some of the other stuff? Who remembers why we charged some of these things or what several of the charges are for?

There’s $616 million left to pay for the Sports and Exposition Authority - was that debt really necessary? Cigarette tax revenue, $1.4 billion – a cash advance, but what the heck did we do with the money? Anybody remember?

Then there are items put on the state’s credit card that only benefit certain municipalities or special interests - $6 billion for school construction in the Abbott districts, $176 million for municipal rehabilitation and $240 million for a business employment incentive program.

Look over the list and you’ll find your own “huh?” items.

Anyway, there’s no sense in crying about it now. We’ve already put this stuff on the credit card and we have to pay it back. But, why the sudden panic attack over the state’s bond debt? We can continue to swing the payments on our current income.

Sure our credit cards are maxed out and we can’t afford to buy new stuff, but why is Governor Corzine running around the state claiming we need to raise $38 billion when our current debt is only $30 billion? Or did Corzine charge up $2 billion more since June and the tab is now up to $32 billion? Either way, we can make the payments without new or increased taxes.

This year, state sales tax revenue will be $8.8 billion, half a billion more than last year and next year, it will be $800 million more than 2007. So, what’s up with all this talk about a financial melt down if we don’t adopt Corzine’s asset monetization plan?

Making our debt payments isn’t causing the state’s financial crisis. Raise road and bridge tolls a little bit and we’d have the money to pay for the expansion and maintenance of our transportation infrastructure. Obviously, the large toll increases Corzine is proposing are for a different purpose, which we explain in our next post.

Governor Corzine’s Recommended
Toll Increases

Click to Enlarge

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Wednesday, January 09, 2008

The Traitorous Twelve

Without the support of a small group of Republicans in the state Senate and Assembly, Governor Jon Corzine’s school spending and state aid bill would have failed. These senators and assemblymen have much to answer for having betrayed the public school students and taxpayers of New Jersey, their constituents and the Republican Party.

A tally of 41 yes votes was needed for the governor's measure to pass in the Assembly. The final vote was 41-36. In the Senate, 21 votes were needed and the bill passed the upper chamber with exactly 21 votes.

Here’s the list of the Traitorous Twelve:

Republican State Legislators
Voting Yes On School Spending and State Aid Bill
(Lame Ducks In Red & Assemblyman Moving to Senate in Blue)

State Senate
Nicholas Asselta (LD 1)
Martha Bark (LD 8)
Joseph Palaia (LD 11)
Peter Inverso (LD 14)
Robert Martin (LD 25)
Robert Singer (LD 30)
Gerald Cardinale (LD 39)

State Assembly
Bill Baroni (LD 14)
Jennifer Beck (LD 12)
Francis Blee (LD 2)
Ronald Dancer (LD 30)
Joseph Malone (LD 30)

All of them are unworthy of calling themselves representatives of the people and Republicans.

Senators Nicholas Asselta, Joseph Palaia, Robert Martin and Gerald Cardinale nullified the no votes cast by both assemblymen in their legislative districts. Bill Baroni and Jennifer Beck leave the Assembly on this sour note to take up new jobs in the Senate. These people are beneath contempt.

Over time, we will discover why the Traitorous Twelve voted against the best interests of the people. Nicholas Asselta’s reason was exposed today:

Yesterday, hours after Asselta cast a pivotal vote to help Gov. Jon Corzine win approval for his $7.8 billion school funding proposal, the governor approved his BPU appointment.
Defeated in his bid for reelection, Asselta sold out for a $125,000-a-year state Board of Public Utilities post.

These people have no shame.

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Tuesday, January 08, 2008

Republicans Should Support Corzine’s Plan

We have studied the numbers and we agree with Jon Corzine. There's little choice but to either raise taxes (which we oppose) or leverage state assets in some way similar to what he has proposed. Even with major spending cuts (which should occur regardless of what happens), the people of New Jersey are still in too deep.

In our view, Republicans are going about this all wrong – trying to stop Corzine. Instead of stopping him, we believe Republicans should make Corzine pay a big price for their support – one that will actually make the state more affordable.

More on this later.

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What’s Wrong With New Jersey? 2008 Edition - Exhibit #2

New Jersey’s Economic Development Authority approved $11.5 million in corporate or personal income tax cuts for filmmakers and stars including Alec Baldwin, Bruce Willis and Anjelica Huston.

The saga of a recovering sex addict and a film about a serial-killer piano tuner are among 11 movies that were approved for tax breaks today to encourage filming in New Jersey.
Well, at least your hard-earned tax dollars went to struggling artists making quality entertainment, suitable for the entire family. The state’s action also has the side benefit of encouraging people who pay taxes to leave.

New Jersey had a net 2006-2007 internal migration loss of 69,160 people

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Sunday, January 06, 2008

State Aid Profile – Quick Facts

The New Jersey Department of Education has posted the school spending and state aid details for each district based upon Governor Jon Corzine’s proposed plan.

Corzine’s plan is complex, but there are a few key figures in the State Aid Profile you should review to understand what the plan will mean for your school district and your property taxes. After reviewing the numbers, you can contact your representatives in Trenton here.

Local Fair Share: is the amount your distinct can afford to pay in school property taxes according to Corzine’s plan.

2007-08 Tax: is the amount of school property taxes actually paid in your district last year

Calculate Key Tax Number: Subtract the 2007-08 Tax amount from the Local Fair Share amount. The difference between the two amounts will be key to understanding the impact Corzine’s plan will have on your school district and your property taxes going forward.

A positive “key tax number” indicates your district could afford to pay more school taxes, while a negative number indicates your district might receive more school property tax relief in the future.

State Aid Summary

There are five key figures on the State Aid Summary Box you should review from your district’s State Aid Profile.

Equalization Aid: is the amount your district will receive for educating regular and gifted students, low-income (“at-risk”) students, limited English proficiency (LEP) students and combination “at-risk & LEP students.

Security Aid: is a new aid category Corzine added at the last minute as a “sweetener”.

Adjustment Aid: is used for districts that would otherwise not receive a minimum school aid increase of 2 percent based on formulas in Corzine’s plan.

Total 08-09: is the total property tax relief your distinct will receive from the state in school aid.

State Aid Difference
: is the total school aid increase your district will receive over last year.

Using the Key Numbers - Example School District: Livingston

Key Tax Number from Wealth Summary: $16,484,961
This number is the difference between Livingston’s Local Fair Share and actual school property taxes.

This means that according to Corzine’s plan, Livingston could afford to pay $16,484,961 more in school property taxes.

Total 08-09 School Aid from State Aid Summary: $4,987,544
This is the total school property tax relief Livingston will receive from the state based upon Corzine’s aid proposal for next year.

Compare Total 08-09 school aid and the Key Tax Number:
According to Corzine’s plan, Livingston is paying $16,484,961 less than its Local Fair Share of school costs. Total school aid for the district is $4,987,544.

This means that according to Corzine’s plan, Livingston could afford to lose all of its state school aid. Should Corzine’s plan be adopted, without “sweeteners” and other ad hoc aid adjustments in the future, Livingston could eventually lose all school property tax relief.

Equalization Aid from State Aid Summary: $0
This means Livingston doesn’t receive any education aid under Corzine’s plan for its regular and gifted students, low-income (“at-risk”) students, limited English proficiency (LEP) students and combination “at-risk & LEP students.

Compare Corzine “aid sweeteners” to State Aid Difference
There are two major “aid sweeteners” Corzine has proposed for next year to help get his plan passed - Security Aid and Adjustment Aid. Neither aid category existed in previous years.

Livingston is slated to get $425,774 in Security Aid, but the district’s total aid increase is only $240,457 over last year. This means Livingston would have actually lost aid without this “sweetener”.

More Information
For a fuller explanation of the State Aid Profile based read this post.

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Decoding Your School District’s State Aid Profile

You can now view your school district’s State Aid Profile based on Governor Jon Corzine’s school spending and state aid program.

To help you understand Corzine’s plan and the State Aid Profile, we’ve created this post to guide you along using the Livingston school district as an example. Livingston is represented by Senator Dick Codey, Assemblywoman Mila Jasey and Assemblyman John McKeon.

First, an overview of Livingston’s school aid for next year. As you can see from the chart below, Livingston’s property tax relief is limited to special education, transportation and security aid. The school district won’t receive any state aid for education.

Click to Enlarge

Now, on to an overview of the School Aid Profile using the Livingston school district as an example.

School Aid Profile - Property Tax Relief

Click to Enlarge

Understanding The State Aid Profile

Wealth Summary - Your Fair Share Of School Costs

First, look at the last two lines in the third box, which is labeled Wealth Summary. Here you will see an amount for Local Fair Share and 2007-08 Tax.

Local Fair Share is an amount your distinct can afford to pay in school property taxes according to Corzine’s plan. The amount shown next to 2007-08 Tax is the amount of school property taxes paid in your district last year. The difference between Local Fair Share and 2007-08 Tax is the amount of school aid your district is entitled to under Corzine’s plan.

The following is Livingston’s Wealth Summary chart from the Aid Profile.

Livingston’s Local Fair Share is $16,484,961 more than the school taxes the district paid last year. Therefore, under Corzine’s plan, Livingston is not entitled to any state aid. However, the Governor has agreed to “sweeten” the deal for next year and provide some forms of state aid to districts with a Local Fair Share that’s greater than actual school property taxes paid.

Districts with a Local Fair Share figure greater than the property tax figure are vulnerable to state aid cuts in future years.

State Aid Summary – Your Share of Property Tax Relief

To see the total aid your district received last year and a breakdown of state aid your distinct will receive next year, look at the first box in the Aid Profile, labeled State Aid (K-12) Summary. The chart for Livingston is shown below:

The total shown under FY08 is the amount of state aid your school distinct received last year. School Aid for FY09 is broken by various aid categories: Equalization Aid, two lines for special education student aid (Spec Ed Cat and Exord), Transportation Aid, Security Aid and two lines for aid adjustments (Adjustment Aid and Education Adequacy Aid).

Equalization Aid – State Aid For Education

Equalization Aid is the amount of property tax relief your district will receive under Corzine’s plan for the cost of educating students. This amount comprises aid for all students, including low-income (“at-risk:”), limited English proficiency (LEP) and those who are both low-income and of limited English proficiency (Comb).

Education aid per student is equal to the amount of Equalization Aid divided by the projected 2008 enrollment for your distinct.

Livingston will not receive any Equalization Aid under Corzine’s plan based on the district’s student enrollment and Local Fair Share.

Enrollment Summary – The Students In Your School District

Look to the middle box of the Aid Profile, which is labeled Enrollment Summary, to see your district’s enrollment in 2000, 2007 and projected for 2008. This box also provides a breakdown of students receiving free and reduced price lunches (at-risk), of limited English proficiency (LEP) and students who are both low-income and of limited English proficiency (Comb) who are enrolled in your district.

Livingston’s Enrollment Summary chart from the Aid Profile is show below:

The Livingston school distinct has students enrolled in all three “special needs” categories, but the district will not receive any state aid for their education. State education aid does not “follow the child” under Corzine’s plan.

Special Education Aid

Your district’s special education property tax relief is the sum of categorical special education aid (Spec Ed Cat) and extraordinary special education aid (Exord) as shown on the Aid Profile.

Seventy-nine percent of Livingston’s school property tax relief comes from special education aid. The distinct is slated to receive a total of $3,918,063 for special education students next year.

Categorical Special Education Aid

The Enrollment Summary does not provide special education student enrollment figures. It’s unnecessary, because under Corzine’s plan, Categorical Special Education Aid is not based upon the actual number of students receiving special education in your district. The plan uses a formula to arrive at a hypothetical number of special education students for aid calculation - your district’s total student enrollment multiplied by 14.69%.

Categorical special education aid is $3,632.33 per special ed student, adjusted slightly up or down depending upon the cost of living in your county.

Livingston will receive $3,243,212 in categorical special education aid. That amount is based on $3,788.80 per special ed student multiplied by 856, the number of hypothetical special education students in the Livingston school district.

Extraordinary Special Education Aid

Extraordinary special education aid (Exord) is allocated based upon the actual education costs of specific students in your district. The Extraordinary aid your district will receive is equal to 75% of the special education costs above $40,000 for educating a student in-district and 75% of the costs over $55,000 for educating a student in an out-of-distinct placement.

For the Livingston, this means that the district will receive $3,788.80 in Categorical Special Education Aid for the first $40,000 the district spends for a student with extraordinary special education needs, plus 75% of the costs above $40,000 in Extraordinary Special Education Aid. That’s assuming the student can be accommodated within the local school system.

For students with special education needs requiring an out-of-district placement, Livingston will receive $3,788.80 in Categorical Special Education Aid for the first $55,000 the district spends for the student, plus 75% of the costs above $55,000.

Livingston is slated to receive a total of $674,851 in Extraordinary Special Education Aid.

Transportation Aid

The Aid Profile provides the transportation aid your district will receive without providing any explanation of how the aid was calculated. However, Corzine is proposing to update the formula in the future based upon recommendations of the new Executive County Superintendents.

Until then, Livingston is slated to receive $643,707 in Transportation aid for its 5,826 students, an average of $110.49 per student. Transportation aid represents 13 percent of the district’s school property tax relief.

Security Aid

This is a new category proposed in Corzine’s plan that will provide security aid on a per student basis. Your district will receive $450 in aid for each low-income (“at-risk”) student enrolled in your district and $70 each for all other students.

Livingston is slated to receive $425,774 in security aid, which represents 8.5 percent of the school aid the district will receive. Without this new aid category, Livingston would have actually have received less school aid than last year. This means the district lost aid in other categories under Corzine’s plan.

Adjustment Aid

The Adjustment Aid category is used for districts that would otherwise not receive a minimum aid increase of 2 percent next year under Corzine’s plan. If your district has an amount in this aid category, consider this as a warning from the Governor. According to Corzine’s plan, your school district is spending too much, not paying its local fair share in property taxes or both.

Education Adequacy Aid

Education Adequacy Aid is limited to those districts receiving aid in this category last year and meeting the following criteria for this year. Your district will be eligible again this year if your district: 1) is not spending an adequate amount per student and 2) is considered failing and/or overburdened by property taxes.

Corzine plans to phase out Education Adequacy Aid within three years.

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Thursday, January 03, 2008

Republican Leaders Introduce School Aid Proposal

Governor Corzine has proposed a $711,836,000 adequate school budget for the Newark school district and $707,109,000 in state aid. That represents a 2 percent increase in state aid over last year.

Based upon Newark’s student enrollment of 44,720 students, Corzine’s spending and state aid per student is as follows:

Corzine’s Proposal – Newark District
Adequate budget per student: $15,918
State aid per student: $15,812
Funds per student required from Property Taxes and/or Federal Aid: $116

According to this press release, Senate Republican Leader Leonard Lance, Assembly Republican Leader Alex DeCroce, and Senate Republican Leader-elect Thomas Kean have a better idea.

The Republican leaders propose a 3.5 percent increase in state aid for the Newark school district, bringing the total to $717,507,475.

Based upon the Republican proposal, spending and state aid per student for Newark would be as follows:

Republican Proposal – Newark District
Adequate Budget per student: $15,918
State Aid per student: $16,044
Funds per student required from Property Taxes and/or Federal Aid: - $126

Truly mind boggling.

Update: We thought you might be interested to see how the hometowns of Republican Leaders make out under Corzine’s plan and the one Lance, DeCroce and Kean were scheduled to introduce today. Here are the details

Leonard Lance, Flemington

Corzine Proposal Flemington
Adequate Budget = $38,886,199
State Aid = $7,612,601
Enrollment = 3,412
Adequate Budget per student = $11,397
State Aid per student = $2,231
Funds per student required from Property Taxes and/or Federal Aid: $9,166

Republican Proposal Flemington
No Change from Corzine plan

Alex DeCroce - Morris Plains

Corzine Proposal Morris Plains
Enrollment = 838
Adequate Budget = $10,894,790
State Aid = $985,690
Adequate Budget per student = $13,001
State Aid per student = $1,176
Funds per student required from Property Taxes and/or Federal Aid: $11,825

Republican Proposal Morris Plains
Adequate Budget = $10,894,790
State Aid = $1,000,186 (reflects 3.5 % increase, a total of $14,496 more than Corzine’s plan)
Adequate Budget per student = $13,001
State Aid per student = $1,194 (reflects $18 more per student than Corzine’s plan)
Funds per student required from Property Taxes and/or Federal Aid: $11,807

Tom Kean – Westfield

Corzine Proposal Westfield
Enrollment = 6,205
Adequate Budget = $77,743,063
State Aid = $5,051,068
Adequate Budget per student = $12,529.
State Aid per student = $814
Funds per student required from Property Taxes and/or Federal Aid: $11,715

Republican Proposal Westfield
Adequate Budget = $77,743,063
State Aid = $5,125,348 (reflects 3.5 % increase, a total of $74,280 more than Corzine’s plan)
Adequate Budget per student = $12.529
State Aid per student = $826 (reflects $12 more per student than Corzine’s plan)
Funds per student required from Property Taxes and/or Federal Aid: $11,703

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Saturday, December 29, 2007

Corzine’s School Spending: Adequate Spending Per Student

Governor Corzine’s new school spending plan is based on the assumption that education recourses should be tied to a student’s relative economic status as well as the school district’s that he or she attends. His proposal establishes adequate spending for a thorough and efficient education at 47 percent more for an “economically disadvantaged student” and depending upon the school district attended, an extra 10 percent more.

Here’s the spending schedule the governor has proposed for next year:

Corzine’s plan uses economic status as a proxy for students “at-risk” as opposed to achievement test results which specifically identifies those students who truly are “at-risk”.

Under the governor’s plan, adequate spending remains unchanged for a student testing below grade-level if he or she is from a so-called “economically advantaged” family. However, a student from a low-income family is automatically considered “at-risk”, requiring 47 to 57 percent in additional spending, even if he or she has proven to be proficient or advanced through testing.

Clearly, the governor’s auto-pilot plan is not the best way to determine school spending needs and allocate scarce resources. It’s not geared to student achievement or school accountability and it’s certainly not equitable.

Corzine’s proposal is an expansion of the failed Abbott school distinct model. A spending model he told the New Jersey Supreme Court had no correlation to student achievement.

“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.”
As Department of Education Commissioner Lucille Davy said:

“We need to figure out why we are not getting the outcomes. It's clearly not a matter of resources."

Despite years of evidence that this spending model does not produce results, the Corzine administration proposes more of the same and calls it the “New Formula for Success".

The plan should be rejected by citizens and lawmakers - it’s a formula for more spending and higher taxes. It has no correlation to a plan for public school education success.

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Friday, December 28, 2007

Corzine’s School Aid Plan: State Aid Does Not Follow the Child

The Star-Ledger wrote in an editorial, School funding plan shows promise:

Whether a child goes to school in Perth Amboy or Mountain Lakes makes no difference.

The premise is that money should follow the child. It's hard to argue with that.
It just doesn’t happen to be true. State aid does not “follow the child” under Governor Jon Corzine’s proposed plan. Spending and state aid are totally dependent upon where the child goes to school.

Under Corzine’s proposal, the Perth Amboy school district will receive $11,098 in equalized state aid for one child. If that same child attends school in Mountain Lakes, the district would receive $0 in equalized state aid.

Perth Amboy would no longer receive $11,098 in aid for the child, but the district would no longer bear the cost of educating that student. Mountain Lakes, on the other hand, would have to spend money to educate the child, but would receive no state aid for the student. Cost followed the child, not state aid.

There are two reasons for this. Under Corzine’s plan, both adequate spending per student and “local fair share” vary based upon school district.

Equalized state aid is the difference between adequate spending minus “local fair share”.

Equalized state aid = Adequate district Budget - Local Fair Share
Aid per student is very dependent on “local fair share” and can range from 0 to nearly100 percent of adequate spending per student.

Two districts can have identical adequate school budgets, but very different “local fair share” contributions. The greater a district’s “local fair share”, the lower state aid will be.

“Local fair share” is based upon the value of real estate within a school district and the income of its residents. So there is little likelihood two districts will have identical “local fair share” contributions based on the proposed formula.

Local Fair Share = (District’s Equalized Property Valuation x 0.0092690802 X .0.50) + (Districts Aggregate Income x 0.04546684 x .0.50)
Clearly, state aid can not follow a student because it will be different in each school district a child might attend. That’s excluding, of course, 184 school districts where equalized state aid for the student will be the same, $0.

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Thursday, December 27, 2007

Corzine’s School Aid Plan: “Local Fair Share”

In this post we’ll review one of the basic components of Governor Jon Corzine’s proposed state aid formula for New Jersey’s public schools – the “local fair share” formula. We’ll also explain why it’s unfair and should be rejected by our lawmakers in Trenton..

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.

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Wednesday, December 26, 2007

Corzine’s School Spending Plan: Base Per Pupil Amount Unrealistic

Governor Jon Corzine’s adequate school spending and state aid plan is built on several key assumptions. If any of these assumptions are incorrect the entire Formula for Success should be scrapped . Many key assumptions are seriously flawed and Corzine’s proposal should be rejected.

Taking first things first. The most basic plan assumption is the base per pupil amount of $9,649. This is the adequate cost per student upon which the Governor’s entire school spending and state aid plan is calculated. If this number is unrealistic, and it is, than the entire plan is impractical. Here’s why

The State engaged “professional judgment panels” to determine the resources needed to provide a thorough and efficient education for New Jersey’s public school students. The panels came up with costs based upon school type - elementary, middle and high school – and district size – very small, small, moderate, large and very large. The panels determined larger school districts should have greater economies of scale and therefore, lower costs than smaller districts.

However, Corzine’s proposal uses only the large K-12 district cost model to determine the base per pupil amount. The plan then assumes the adequate spending for an elementary school student is equal to the base cost; the cost for a middle school student is 4 percent more than the base cost and for a high school student, 17 percent more than base cost.

The panels established that a large school district is one with an enrollment between 4,000 and 8,000 students. The State then established an adequate cost of $9,649 for an elementary school student, $10.035 for a middle school student and $11,289 for a high school student in large school districts.

Of the 615 school districts in the state, only 73 have enrollments between 4,000 and 8,000 students and 29 districts have more than 8,000 students. Four counties have not a single “large school district” - Cape May, Hunterdon, Salem and Warren. Clearly, the large school distinct cost model is not representative of the state’s school systems and yet, this is the model upon which Corzine’s proposal is entirely based.

Worse yet, there is not a single large or very large school district in the state currently spending at or below the per student costs established by the plan. There are only four large or very large districts currently with an average cost per student below the proposed high school student cost.

As shown by the chart below, the average cost per student is $14,204 for the 102 districts with enrollments of 4,000 and above - $2,915 more per student than the plan establishes for just high school students. Removing the 22 large or very large Abbott districts, with an average per student cost of $16, 521, reduces the average cost to $13, 081 per student - still well above the cost established in the plan just for high school.

Obviously, the large school district cost model isn’t even representative of the state’s large school districts upon which Corzine’s entire plan is based. The plan should be rejected for this reason alone – it’s not based on reality. The plan’s other key assumptions are even more seriously flawed as we shall prove in future posts.

New Jersey Cost Per Student
2007-2008 School Year
Large and Very Large School Districts


Click To Enlarge

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The “Simplified” Formula For Calculating Adequate Spending For New Jersey’s Public Schools.

The following is the proposed “simplified” formula for calculating adequate spending for New Jersey’s public schools. (We will refer to this information in subsequent posts)

Adequate Regular Education Student Cost

The cost per regular education student (RESC) is calculated as follows

RESC = base per pupil amount x grade weight

The base per pupil amount (BPA) is established by the New Jersey Department of Education and for the 2008-2009 school year will be $9,649. The BPA will be will be adjusted by the consumer price index (CPI) annually through the 2012-2013 school year.

The grade weight (GW) is established by the New Jersey Department of Education and will be:

Half-day kindergarten = 0.50
Full-day kindergarten = 1.0
Elementary (grades 1 through 5) = 1.0
Middle school (grades 6 through 8) = 1.04
High school (grades 9 through 12) = 1.17

Adequate School District Base Cost

The base cost (BC) for each school district is calculated as follows:

BC = (base per pupil amount) x (weighted enrollment for school district)

The weighted enrollment (WENR) for each school district is calculated as follows:

WENR = (0.5 x half-day kindergarten enrollment) + (1.0 x full-day kindergarten enrollment) + (1.0 x elementary enrollment) + (1.04 x middle school enrollment) + (1.17 x high school enrollment)

Adequate School District Budget

The adequacy budget (AB) for each school district is calculated as follows:

AB = (Base cost for school distinct + Low-income student cost + Bilingual student cost + Combination low-income bilingual student cost + Special education student cost) x Geographic cost adjustment.

Low-income Student Cost

Low-income student cost (ARC) is calculated as follows:

ARC = base per pupil amount of $9,649 x weighted enrollment of low-income students in the school district x low-income student weight

The low-income student weighted enrollment (ARWENR) for each school district is calculated as follows:

ARWENR = (0.5 x low-income half-day kindergarten enrollment) + (1.0 x low-income full-day kindergarten enrollment) + (1.0 x low-income elementary enrollment) + (1.04 x low-income middle school enrollment) + (1.17 x low-income high school enrollment)

The low-income student weight (ARW) is calculated as follows:

AWR = .047, if low-income students are less than 20% of district enrollment

AWR = ((low-income % - 0.20) x 0.25)) + 0.47, if low-income students are 20% or greater, but less than 60% of district enrollment

AWR = 0.57, if low-income students are 60% of district enrollment or greater

Bilingual Student Cost

The bilingual student cost (LEPC) is calculated as follows:

LEPC = base per pupil amount of $9,649 x weighted enrollment of bilingual students x bilingual student weight

The bilingual student weighted enrollment (LWENR) for each school district is calculated as follows:

LWENR = (0.5 x bilingual half-day kindergarten enrollment) + (1.0 x bilingual full-day kindergarten enrollment) + (1.0 x bilingual elementary enrollment) + (1.04 x bilingual middle school enrollment) + (1.17 x bilingual high school enrollment)

The bilingual student weight (LEP) weight is 0.5.

Low-income Bilingual Student Cost

The combination low-income, bilingual student cost (COMBC) is calculated as follows:

COMBC = base per pupil amount of $9,649 x weighted enrollment of combination low-income, bilingual student students x (low-income student weight + the combination low-income, bilingual student weight)

The weighted enrollment of combination low-income, bilingual students (CWENR) for each school district is calculated as follows:

CWENR = (0.5 x combination low-income bilingual half-day kindergarten enrollment) + (1.0 x combination low-income bilingual full-day kindergarten enrollment) + (1.0 x combination low-income bilingual elementary enrollment) + (1.04 x combination low-income bilingual middle school enrollment) + (1.17 x combination low-income bilingual high school enrollment)

The combination low-income bilingual student weight (COMB) is 0.125.

Special Education Student Cost

The special education student cost (SEC) is calculated as follows:

SEC
= (district enrollment (RE) x the State average classification rate for special education students (SEACR) x excess cost for special education students (AEC) x 2/3) + (district enrollment (RE) x the State average classification rate for speech-only special education students(SACR) x excess cost for speech-only special education students (AECSO).

SEACR = The State average classification rate for special education students is established by the New Jersey Department of Education and will be 14.69 percent for all school districts..

AEC = the excess cost for special education students is established by the New Jersey Department of Education and will be $10,898 for all school districts.

SACR = the State average classification rate for speech-only special education students is established by the New Jersey Department of Education and will be 1.89 percent for all school districts.

AEC = the excess cost for special education students is established by the New Jersey Department of Education and will be $10,898 for all school districts.

AECSO = the excess cost for speech-only special education students is established by the New Jersey Department of Education and will be $1,082 for all school districts.

Geographic Cost Adjustment

The geographic cost adjustment (GCA) is developed by the New Jersey Department of Education and will be:

Atlantic County = 0.9452
Bergen County = 1.0312
Burlington County = 0.9613
Camden County = 0.9463
Cape May County = 0.8762
Cumberland County = 0.8818
Essex County = 1.0432
Gloucester County = 0.9189
Hudson County = 1.0393
Hunterdon County = 1.0156
Mercer County = 1.0087
Middlesex County = 1.0180
Monmouth County = 1.0170
Morris County = 1.0633
Ocean County = 0.9424
Passaic County = 0.9987
Salem County = 0.9189
Somerset County = 1.0608
Sussex County = 0.8966
Union County = 1.0298
Warren County = 0.9467

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Saturday, December 22, 2007

New Jersey Employment 2007

New Jersey’s employment increased by 65,800 in 2007, a 1.6 percent increase over last year.

Government continues to be the fastest growing employment sector in the state, with 32 percent of new jobs created by state and local governments during 2007.

Total private sector employment increased by 45,100, state and local government employment grew by 20,800, while federal government employment in the state fell by 200, during the year.

New Jersey state government added 4,300 new jobs and local governments, 16,500.

Source: State of New Jersey Employment Information

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Friday, December 21, 2007

Exposing Corzine’s School Spending and Aid Plan As Absurd and Unfair

We keep waiting for sensible lawmakers to expose Governor Jon Corzine’s proposed school spending and state aid plan for what it is - absurd and unfair. How else would an objective person describe a plan that proposes greater state aid per student for some districts than it proposes for others to spend per student?

For example, Corzine’s plan has established that Glen Rock in Bergen County should spend $12,489 per student. Yet, the same plan also proposes state aid of $18,755 per student for Pemberton Township in Burlington County. Both districts serve students K-12.

The Governor’s plan cranks out an average of $12,482 in state aid per student for all of Cumberland County, just $7 less than the state expects Glen Rock to spend per student.

Pork-laden and inequitable is how a fair-minded person would describe a plan that allocates $23,004 in state aid per student to Asbury Park and $866 to Glen Rock.

And don’t think Glen Rock is the only school district getting a raw deal – it’s one of hundreds. Look up you own distinct here.

How can Corzine keep a straight face and call this plan A Formula for Success for All Communities? Clearly, it’s a formula that will expand the failed Abbott school district model to more schools. It’s a formula for more government spending, higher taxes – state and property – and no accountability.

We keep waiting for someone with clout to demand Corzine release the total per student each school district will spend from all funding sources. (That would include the $1 billion in federal school aid the state will receive and distribute.) Common sense would dictate all funding sources be incorporated into the state’s school funding plan. Taxpayers have a right to know all the facts and the bottom line, but it’s not happening.

Democrats in Trenton are busy drafting legislation to enact Corzine’s plan, even before all the facts are known and the public has had a chance to understand it. The goal is to have this boondoggle passed into law before January 8. Obviously, Corzine is hoping to ram this though while few citizens are paying attention and before the new legislature is sworn in next year.

What are Republican and other sensible lawmakers doing to expose and stop this nonsense before it’s too late? What are you doing? We fear the answer is nothing.

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