State Education Aid and Our Schools

Which school system do you think would receive the greater amount of state aid per student?  A district where the median family income is above $120,000 per year and only 5% of high schoolers are eligible for Free or Reduced Lunch?  Or another, where the median family income is below $78,000 and more than a third of high schoolers are eligible for Free or Reduced Lunch?

If you thought that the poor district would receive more aid you would be wrong.  Hillsborough, a district with a median income of over $120,000, receives more state aid than Bloomfield  --$3,600 per student versus $3,300, even though Hillsborough’s median income is 50% higher.  Or take Old Bridge, a town with a median household income of $82,000 and a public school population of 9,200: Old Bridge gets $44 million in state aid, while Clifton, a town with a median household income of $62,000 and a public school population of 11,000 gets $26 million.   Or a final example with a broader perspective: Hamilton Township, a Mercer Country district with 12,000 students, receives $73 million in aid--over 2.5 times more state aid than Hamilton Township’s eleven socioeconomic peer districts in Bergen, Essex, and Union counties combined, which receive only $27.5 million in state aid for 24,000 students.

Most debates about New Jersey school funding focus on the Abbott Districts, with many arguing that the Abbotts are overfunded.  The fact that urban districts like Newark receive huge amounts of aid – over 55% of the state’s total - is well-known and frequently discussed.  But a neglected story is about state aid disparities outside the Abbott districts – between rural-exurban districts and suburban-urban ones.

All too often, state aid between rural and exurban districts and suburban and urban ones exhibits double disparities, where a smaller, higher income district will receive more aid than a larger, lower-income one in the suburbs.  The division is not Republican versus Democratic districts, nor county versus county, nor large districts versus small ones —it’s about inner and middle-ring suburbs compared outer suburbs.  

How large is this imbalance and how did it come to be?

District Factor Group Comparisons

First, some terminology.  The state ranks districts into eight tiers based on socioeconomics called "

District Factor Groups."  From lowest to highest socioeconomic status the District Factor Groups are A, B, CD, DE, FG, GH, I, and J.  A school district’s classification depends on factors like the educational attainment of adults in the community, its unemployment rate, percent of individuals in poverty, and not solely the district’s income.

South Orange-Maplewood is a member of DFG-I, the second highest Factor Group. DFG-I is made up of almost 100 districts and is the largest of the DFGs.  The DFGs have not been updated since the 2000 census, but still, this classification system is a useful, if imperfect, way to compare districts of similar socioeconomic standing.  

I cannot reproduce here the entire list of districts and their per pupil funding, but a look at the top thirty-five districts (approximately the top-third) in DFG-I will give you an idea of where geographically the best funded districts are.  Were I to reproduce similar lists for other District Factor Groups the same trend would manifest itself.

(A * denotes that the district participates in Interdistrict School Choice. 

A # denotes that the district receives “Adjustment Aid” or “Additional Adjustment Aid.” (Adjustment Aid is omitted if the total is $2 or less.))

Greenwich Township*

$5,126

Warren

Clinton Town#

$3,942

Hunterdon

Byram Township

$3,774

Sussex

Green Township*#

$3,771

Sussex

Bethlehem Township*#

$3,607

Hunterdon

Hillsborough Township#

$3,586

Somerset

Lebanon Township*#

$3,409

Hunterdon

Washington Township#

$3,439

Morris

Evesham Township

$2,964

Burlington

South Brunswick Township

$2,609

Middlesex

Randolph#

$2,605

Morris

Millstone #

$2,518

Monmouth

Marlboro Township#

$2,135

Monmouth

East Brunswick Township

$2,127

Middlesex

Medford Lakes Boro

$2,038

Burlington

Wenonah Boro

$2,026

Gloucester

Califon Boro*

$2,201

Hunterdon

North Hunterdon/Voorhees Regional

$1,923

Hunterdon

Hunterdon Central Regional*

$1,908

Hunterdon

Voorhees

$1,871

Camden

Flemington-Raritan Regional

$1,803

Hunterdon

East Amwell*#

$1,782

Hunterdon

Lebanon Boro*#

$1,779

Hunterdon

Clinton Township*

$1,693

Hunterdon

Medford Twp

$1,678

Burlington

Franklin Township

$1,589

Somerset

Sparta

$1,574

Sussex

West Morris Regional#

$1,536

Morris

Rockaway Township#

$1,155

Morris

Branchburg

$1,118

Somerset

Mount Laurel#

$1,107

Burlington

Bridgewater-Raritan Regional

$1,055

Somerset

Avon#

$1,051

Monmouth

Montclair #

$977

Essex

Allamuchy

$957

Warren

The source for this data is the Education Law Center. (See “District State Aid FY 10-FY14") The source for absolute aid amounts is the state’s own documents.

There are only two DFG-I districts in rural areas that are not in the top-third of aid amounts.  Neither of those districts gets less than $730 per pupil. Of DFG-I districts in the bottom third nearly all are in the suburbs or at the Jersey Shore.

Where does South Orange-Maplewood appear?  Of the state’s $7.9 billion in aid to K-12 education in 2013-14 South Orange-Maplewood will receive $4,075,898, or $593 per.  This places South Orange-Maplewood approximately 50th in terms of overall state aid in DFG-I, despite having the highest percentage of students eligible for Free and Reduced Lunch in DFG-I.

(Note: the SOMSD’s FRL-eligible percentage is 18%.  The district with the second highest FRL-eligible percentage is Avon, at 16%.  Below Avon that several districts have 12% of students eligible for FRL.  The DFG-I average is 5% eligible.)

Some would argue that the relatively high income of South Orange-Maplewood justifies its inferior aid level, despite its having far more FRL-eligible students.  But many rural and exurban districts receive more aid than suburban districts that have equal or lower average incomes.

Consider the per pupil funding of DFG-FG districts (that is, two Factor Groups below DFG-I) in Bergen, Union, and Essex counties.  These districts have much lower incomes than the rural and exurban DFG-I districts listed above that receive so much aid.  Most of these districts have more than 10% of students eligible for Free and Reduced Lunch.  In the case of Bergenfield 30% of students are eligible.  

Dumont Boro

$3,237

Bergen

Bergenfield Boro*

$3,013

Bergen

Nutley Town

$1,714

Essex

Maywood Boro

$893

Bergen

New Milford Boro

$822

Bergen

Rochelle Park

$710

Bergen

Wood Ridge Boro

$686

Bergen

Hasbrouck Heights Boro

$576

Bergen

Fort Lee Boro

$512

Bergen

Clark Twp

$467

Union

Northvale Boro

$452

Bergen

Even more surprising is that when we compare some of the districts in the wealthiest DFG—J—we see them receiving more aid than some in lower DFGs.

For instance, South Orange-Maplewood falls behind four of the 25 DFG-J  districts.

Tewksbury *

$1,123

Hunterdon

Montgomery Twp#

$857

Somerset

Chester Twp#

$851

Morris

West Windsor-Plainsboro

$764

Mercer-Middlesex 

Tewksbury, with a median household income above $160,000 and 2% of students eligible for FRL, receives aid that is equal or greater to what DFG-DE districts such as North Arlington, Lyndhurst, West Paterson, and Garwood receive, even though Tewksbury's median household income is more than double what it is those comparison towns and those comparison towns have approximately 20% of students eligible for FRL.  

How did this come to be? 

The Anatomy of New Jersey’s School Aid

New Jersey's K-12 school aid for 2013-14 is divided into ten different streams of aid.  The following are the aid streams that contribute to the disparities that exist.

Equalization Aid: The largest aid stream by far is "Equalization Aid," coming in at just above $6 billion. Equalization Aid is given to districts whose local wealth supposedly does not allow them to adequately fund their schools in order to “equalize” school spending.

The formula for Equalization Aid is complex, but that complexity is intended to foster fairness.  Equalization Aid depends on two quantities, “Adequacy Budget” and “Local Fair Share.”  The Adequacy Budget depends primarily on the demographics of the district (more “at risk” students equals more aid), what county it is in, and the age of the students.  Local Fair Share is a measure of a district’s means to pay; depending 50% on property valuation and 50% on aggregate income.   Equalization Aid is triggered when Local Fair Share is less than the Adequacy Budget.

Some of the rural and exurban districts that receive large amounts of state aid indeed have low property valuations, even while their incomes are high. Greenwich Township, the top-aided DFG-I district, has a median household income of $140,000, but only $600,000 of valuation per student. Hamilton Township, which gets 2.5 times as much money from the state as the eleven fellow DFG-FG districts in Union, Essex, and Bergen counties, only has about $675,000 of valuation per student.

However, there are examples of exurban or rural districts with higher valuations and higher incomes than suburban and urban districts that receive less Equalization Aid.  Case in point: Hillsborough’s valuation per student is $830,000, as compared to Bloomfield’s at $664,000.  Yet Hillsborough receives $19,274,266 in Equalization Aid - about $2600 per student, whereas Bloomfield receives $15,125,042 - about $2300 per student.   Another glaring comparison is between Marlboro and West Orange.  Marlboro has more $1.3 million in valuation per student and a median household income of over $130,000.  West Orange, on the other hand, has $861,000 in valuation per student, with a median household income of $89,000 and more "at risk" students.  It is difficult to understand how under a rational system Marlboro would receive $6,247,588 ($1160 per student) in Equalization Aid while West Orange receives $1,793,898 (only $260 per student.)

South Orange-Maplewood’s valuation is approximately $886,000 per student.  The median household income is $135,000-140,000.  South Orange-Maplewood receives no Equalization Aid.

(Note: The source of the aid figures for the individual streams of aid are the amounts given by the state divided by the most recent enrollment figuresavailable.)

Special Education Aid: The next largest stream is "Special Education Categorical Aid," coming in at $763 million.  One-third of special education aid is given on a pure per student basis, regardless of how wealthy a district is.  Two-thirds of special education aid is given based on wealth, with less affluent districts receiving more aid.  (Note: the money does not depend on how many students have IEPs)

The disparities in Special Education Aid echo the disparities in Equalization Aid.  The average Categorical Special Education Aid for DFG-I districts in Hunterdon, Warren, and Sussex counties for 2012-13 is $560 per student.  The average Special Ed Aid for DFG-I districts in Union, Essex, and Bergen counties is much lower: $415 per student.  One would have to compare to the rural DFG-I districts to suburban DFG-FG districts to find parity in aid levels.  (Note: the averages are unweighted.)  

South Orange-Maplewood gets $3.6 million in Categorical Special Education Aid – representing 89% of our total state aid package.  That $3.6 million is about $550 per student, but it only covers about 38% of our in-district special education costs.

Adjustment Aid: After Special Education Categorical Aid is "Adjustment Aid," which totals $556 million.  Adjustment Aid was created as a political compromise to pass the  

School Funding Reform Act of 2008.  The original intention of the School Funding Reform Act was to redistribute aid to districts that had greater need (often away from the Abbotts), but districts that would have lost money objected to this. The legislature thus created a type of aid called “Adjustment Aid” that would “adjust” the aid upwards of any district that would lose money as a result of the School Funding Reform Act.  

Most Adjustment Aid money goes to the Abbotts, with a fifth alone going to Jersey City alone.  However, most of the districts that get Adjustment Aid are rural or exurban.

For instance, eighteen out of twenty-five Sussex County districts, ten out of twenty-three Warren County districts, and sixteen out of twenty-nine Hunterdon County districts get regular Adjustment Aid. (numbers are broadly similar for other rural parts of the state) By contrast, only six non-Abbotts total in Bergen, Essex, and Union counties get Adjustment Aid.  (Note: for 2013-14 there is a new aid category called “Additional Adjustment Aid” but the amounts given are much smaller and even there is a rural-exurban bias.)

Most of the rural-exurban districts getting Adjustment Aid are middle or upper income.  Of the Hunterdon, Warren, and Sussex county districts getting Adjustment Aid, two are in DFG-B, one in DFG-CD, nine are in DFG-DE, twelve are in DFG-FG, thirteen are in DFG-GH, and eight are in DFG-I.

Of the Bergen, Essex, and Union county districts that get Adjustment Aid all except Montclair are DFG-DE or lower. Despite having less wealth than the rural and exurban districts that get Adjustment Aid, the suburban-urban districts get less money.  Englewood City (DFG-DE; 63% FRL-eligible.) gets the most Adjustment Aid - about $400 per student.  By contrast, at least twenty-two districts in Hunterdon, Warren, and Sussex counties get over $500 per student.  Frankford (DFG-FG), gets over $2300 per student.

Interdistrict School Choice:  Then there is “Interdistrict School Choice Aid” (referred to as "Choice Aid" in DOE parlance).  Under Interdistrict Choice, a child who lives in one district can attend school in a different district.  The state essentially pays tuition to the receiving district, but makes no equivalent reduction in aid to the district of residence.

There is no statute discouraging large districts or suburban districts from participating, but in practice nearly all of the 109 participating districts in 2013-14 are small ones, often rural (Hunterdon County alone has 20 participating districts). The formula for aid is complex, but aid payments are $8,000-10,000 per Choice student per year.  

The money that districts receive for Interdistrict School Choice is expected to be used across a student population.  Clinton Township, for instance, has one of the largest Choice programs.  In 2013-14 it will receive $1,457,792. Since Clinton has 1690 students, the subsidy works out to about $860 per student.  Mine Hill, for instance, will get $1,091,262 in Choice Aid.  Since Mine Hill has 416 students, that works out to $2,620 per student.

The distribution of Interdistrict Choice Aid is not unfair in the same way the distribution of Equalization Aid is - after all any district legally can participate - but since the vast majority of the participating districts are rural, Interdistrict Choice increases the state aid advantage that rural districts enjoy.  

Districts that are at-capacity with their own residential students, like South Orange-Maplewood, and therefore have no feasible way to participate in Interdistrict School Choice, should be aware that Interdistrict School Choice is rapidly growing in popularity and its attendant cost growth will cut into funding increases for Equalization Aid and Special Education aid.  

Transportation Aid:  Finally, Transportation Aid plays a role in the disparities.  Transportation Aid is computed by a formula that considers mileage of bus routes and the number of students transported; therefore geographically spread out districts get more aid than compact ones and districts that bus a large number of children get more aid than districts that don't.  

Thus, rural and exurban districts get more Transportation Aid per student than suburban and urban ones. The DFG-I and DFG-GH districts of Sussex, Hunterdon, and Warren counties get over $200 per student in Transportation Aid.  The suburban districts get less than $50 per student.  Princeton, for example, which has fewer than 4,000 students, will get $846,431 in Transportation Aid next year; over three times the $259,803 the 6,700 students of South Orange-Maplewood will get.

(Note: Teaneck and Montclair are outliers among suburbs receiving very large amounts of transportation aid.)

Looking Ahead: Striving for Fairness

New Jersey's system of school funding is opaque and, under close analysis, shows that the distribution of aid often does not coincide with need.

If any district - urban, suburban, exurban, or rural - is low-income/high-needs then it should receive greater aid.  Ideally, the state would be able to spend more money on education total and fully fund the School Funding Reform Act of 2008.  However, with New Jersey having so many other spending obligations and already a very high tax rate, a large across-the-board increase in education aid may not be realistic.

I favor pragmatism regarding Abbott funding, but to see the Abbott funding as the only problem in state aid is to see only part of the picture.  Looking at the status quo it is apparent that there are many problems with how the state distributes aid.  For decades the State of New Jersey has striven for a fairer system of school aid.  Clearly we still have much to do.

Jeffrey Bennett is a member of the South Orange-Maplewood Board of Education, but he writes this as an individual. These opinions are his own.