|11-17-14 Education and Reated Issues in the News|
NJ Spotlight - Size Doesn’t Matter -- Study of NJ Municipal Government Costs Concludes…Rutgers analysts question ‘conventional wisdom’ that consolidation of state’s 565 municipalities would produce property tax savings ‘Even if two towns that merged achieved a 5 percent savings on the two-thirds of their budgets hat are not fixed costs, those savings would amount to just 0.88 percent on a typical property tax bill, which would translate into an annual savings of $66.27 for a homeowner paying $7,500 in property taxes, the Rutgers experts calculated. That is because municipal taxes represent just 28.5 percent of the average property tax bill. School taxes make up 52.2 percent of overall property taxes, county taxes another 18 percent, and special assessments the remaining 1.3 percent…’
Mark J. Magyar | November 17, 2014
What do Alpine and Harding, two of the state’s wealthiest enclaves, have in common with Newark, Camden and Trenton, three of New Jersey’s largest and poorest cities?
All five spend more than $2,000 per person on municipal government services -- 50 percent more than the average for the state’s 513 nonresort communities, Raphael J. Caprio and Marc Pfeiffer, who head Rutgers University’s Local Government Research Center, discovered after a comprehensive analysis of municipal spending.
In a study entitled “Size May Not Be The Issue,” Caprio and Pfeiffer noted that the wealthiest suburbs and poorest cities have the highest cost of local government services, reflecting the willingness of affluent taxpayers to pay for a higher level of services and the greater need of poorer populations for more police protection and social services that are paid for primarily with state aid.
Meanwhile, rural communities with low populations that are often considered prime targets for municipal consolidation have the lowest-cost municipal government services per person in the state -- directly countering the assumption that “consolidation of small, inefficient municipalities” would lower property taxes, the study said.
“We may need to rethink the conventional wisdom that forcing municipalities into larger organizations will be more effective, more efficient, and/or less costly,” Caprio and Pfeiffer concluded. “It should also give pause as to whether we should be advocating with uncompromising vigor that consolidation of municipalities is a solution to the state’s high property-tax problem.”
The Caprio-Pfeiffer analysis runs directly counter to the arguments advanced by Republican Gov. Chris Christie that municipal consolidation -- starting with the merger of his hometown of Mendham Township and neighboring Mendham Borough -- makes sense, and the push by Senate President Stephen Sweeney (D-Gloucester) to take a “big stick” approach to shared services by forcing municipalities to adopt cost-saving shared services or face a loss in state aid.
While Caprio and Pfeiffer argue that New Jerseyans generally get the level of municipal government services they want -- or, in the case of the poorest cities, the level of government the state is willing to pay for -- Christie and Sweeney argue that it is in the interest of all New Jerseyans to lower property taxes to enable the state to entice new businesses and home buyers, and to make it more affordable for cash-strapped senior citizens and middle-income families to stay.
Caprio, a public policy professor who often testifies in interest-arbitration cases, and Pfeiffer, a former deputy director of the state Division of Local Government Services, billed their analysis as the first in a series of studies focused on understanding “the differences in costs among municipalities and the extent to which consolidation, shared services, or other strategies might be effective in controlling local government costs.”
Their analysis concluded that previous studies suggesting that smaller municipalities are inherently inefficient -- and, therefore, that municipalities with fewer than 2,000 residents should be encouraged or forced to merge, as former Assembly Speaker Alan Karcher once urged -- were skewed by statistical analyses that included resort municipalities. These 50 Shore towns have disproportionately high per capita costs for municipal services not because they are inefficient, but because their year-round population is low and they have to spend a lot on police and other services for the thousands of tourists who flood in every summer.
With the Shore towns excluded, the cost of municipal services per person in municipalities with less than 3,600 residents is not appreciably different for municipalities with 11,500 to 40,600 residents -- and lower than the cost for cities and suburbs with more than 40,600 residents that make up the top 10 percent of municipalities by population.
That $1,340 per-person cost for municipal government services includes large suburbs like Toms River, Cherry Hill, and Middletown, but it is cities like Newark ($2,167), Trenton ($2,162) and Camden ($2,095) that drive up the cost.
Interestingly, the three cities with the highest costs per resident were actually smaller cities -- Weehawken with 12,554 residents ($2,893); Harrison, population 13,620 ($2,839), and Secaucus, population 16,264 ($2,785).
The study also questions the validity of the often-cited statistic that “New Jersey has more municipalities per square mile than any other [state] in the country,” which is used to justify the “folk hypothesis” that New Jersey has “too many municipalities and too much government.”
That statistic, however, simply reflects New Jersey’s status as the most densely populated state in the country, Caprio and Pfeiffer noted. With 15.6 government units per 10,000 population, New Jersey actually has about half as much government as the national average, and lags just behind New York (17.7 government units per 10,000 residents) and far behind both Pennsylvania (38.5) and Delaware (37.2).
In fact, New Jersey ranks just 34th in the nation in the number of general governments per capita, the study pointed out.
Groups like Courage to Connect NJ have held up the recent consolidation of Princeton Borough and Princeton Township as evidence of potential cost savings and service improvements that can be achieved through municipal mergers.
However, Caprio and Pfeiffer assert that the fact that the Princetons were the first successful consolidation since Vineland and Landis Township merged in the early 1950s shows that New Jerseyans do not believe mergers will save money. The problem is that both municipalities need to save money for a merger to go through, and the anticipated cost savings are usually smaller than the increased taxes that the more affluent of the two municipalities will incur.
“In the last 30 years, Chester Borough and Township studied it twice and determined it would not work in part because it would increase school taxes in the Borough,” the study noted. “Sussex Borough and Wantage Township formally studied it, and voters in Wantage decided against it. A study commission in Hardyston Township and Franklin Borough (and for a while Hamburg Borough) looked at it and found it would increase school costs and taxes and decided against it.”
Even if two towns that merged achieved a 5 percent savings on the two-thirds of their budgets that are not fixed costs, those savings would amount to just 0.88 percent on a typical property tax bill, which would translate into an annual savings of $66.27 for a homeowner paying $7,500 in property taxes, the Rutgers experts calculated. That is because municipal taxes represent just 28.5 percent of the average property tax bill. School taxes make up 52.2 percent of overall property taxes, county taxes another 18 percent, and special assessments the remaining 1.3 percent.
Caprio and Pfeiffer noted that New Jersey municipal governments have entered into hundreds of shared services agreements since the 1970s, but contend that shared services are not a “panacea” to lowering government costs.
While the issue of controlling property tax costs has dominated New Jersey’s tax-policy debate for decades, the Rutgers policy experts contended that too little attention has been paid to one of the biggest drivers of local property tax increases -- namely, cuts in state aid to municipalities.
In the wake of the Great Recession of 2007-2009, New Jersey’s cash-strapped state government cut unrestricted aid to municipalities from $1.727 billion in 2007 to $1.303 billion in 2010, reducing state aid from 15.4 percent to 10.6 percent of municipal budget revenue.
Of the $1.36 billion increase in property taxes over that three-year period, $423.7 million was needed just to make up for the cuts in state aid. As a result of those state aid cuts, property taxes rose from 51.7 percent to 58.3 percent of local municipal budget revenue.
“In effect, close to one-third of the statewide property tax increases experienced between 2007 and 2010 could be attributed to simply offsetting revenue loss from aid the state itself could not provide,” the authors noted. Caprio and Pfeiffer asserted that policymakers should stop pursuing the “folk hypothesis” that “consolidating our way to savings” and focus instead on solutions to the underlying problem. They called for an in-depth analysis of the impact of the 2011 pension and health benefits law, the municipal budget-cap laws, and the overhaul of the interest arbitration statute for police and firefighters to “determine their actual impact beyond the superficial attention they have received.”
They questioned whether “we need to design improved need-based property tax relief programs” that focus not just on senior citizens, but on lower-income property taxpayers, and suggested that creation of a new blue-ribbon commission to focus on property tax issues is “overdue and warranted once again.”
Press of Atlantic City - "That will destroy us": A.C. schools may need to slash budget ‘…The Update Report of Governor’s Advisory Commission on New Jersey Gaming, Sports and Entertainment released Thursday recommended that per-student costs in the district be reduced from a reported $25,676 to the statewide average of about $18,000. Haye said the projected cost per student for the current 2014-15 school year is $19,773, but that does not include pensions and social security, food service, debt service and capital outlay…’
By DIANE’AMICO Education Writer | Posted: Friday, November 14, 2014 7:13
Atlantic City school officials are planning drastic cuts starting now and into the next school year that Superintendent Donna Haye said Friday will affect every school and every program in the district.
But, she said, she is very worried that the severe cuts expected by the state to reduce costs in the district could destroy the progress that has been made over the past decade.
“We will all share in the pain; that is clear,” she said. “Everything is on the table. There will be deep cuts.”
The Update Report of Governor’s Advisory Commission on New Jersey Gaming, Sports and Entertainment released Thursday recommended that per-student costs in the district be reduced from a reported $25,676 to the statewide average of about $18,000. Haye said the projected cost per student for the current 2014-15 school year is $19,773, but that does not include pensions and social security, food service, debt service and capital outlay.
She said the district could have to cut as much as $40 million from the operating budget of about $165 million to meet that goal.
“That will destroy us,” she said.
That full $40 million would cut the school tax rate of $1.17 by about 35 cents, or $350 per $100,000 of assessed value. The average residential property in the city is assessed at about $207,500.
Haye said Friday she has met with officials from the state Department of Education and is coming up with two or three proposals to be presented at a meeting Dec. 1. She said after that meeting she will have more specific details on how the district will cut costs next year.
“We know the district best, and we are trying to present our plans rather than having the state present us with cuts,” she said.
She said she is already putting a freeze on hiring and expenses and making smaller cuts such as reducing district-funded class trips.
“But that is not going to save $40 million,” she said.
She said the district will not replace staff that retire and will be discussing early retirement plans and other options to reduce the impact on staff as much as possible. She said she will meet with the teachers union, vendors and the food service provider to discuss cost savings.
Atlantic City Education Association President Marcia Genova said she is aware that drastic cuts are planned, but she will wait to meet with Haye before deciding what actions the union might agree to.
The state report said the district could also be eligible for “significantly more” Equalization Aid from the state because of the depressed property assessments and district income levels. According to data from the state Department of Education, the district would get about $3 million. But many districts are also eligible for more equalization aid, so it is unclear how Atlantic City could be singled out.
Haye said she thought the cost comparison data used in the commission’s report were unfair, since the district was compared with Irvington and West New York, both of which get more than 80 percent of their budget from state aid. Atlantic City gets just 17 percent of its budget from state aid. She said Atlantic City also has a higher percentage of special education and English language learners, who require additional assistance and cost more to educate.
For 2014-15, Atlantic City will get about $18 million in state aid, while $134 million will come from the local property taxes. She said the district has been cost-conscious and raised property taxes just 1 percent over the past three years.
Haye said she would also like to make sure the district has a role in the state’s plans for the city. She said no one consulted her about the report, and while casinos may close, children must still be educated.
“We don’t want the district to be destroyed,” she said. “We want a seat at the table.”
She said the city has already been more than a month late in making tax distributions to the district, and if payments fall behind three months, the district would go into a deficit.
She questioned how the report’s plans would be accomplished and whether the emergency manager proposed for the city would also have authority over the schools.
The report makes it appear as though the manager would, but schools operate under different statutes than municipalities. Under school law, the Department of Education would appoint a fiscal monitor in a school district, as it has in Pleasantville and Woodbine.
Contact Diane D’Amico:
@ACPressDamico on Twitter
Press of Atlantic City - School choice program is hit with an enrollment freeze By DIANE D’AMICO Education Writer The Press of Atlantic City
As a result, many districts have stopped promoting their programs, although they will accept applications in case more openings occur. Districts were not notified of the freeze until Oct. 31, giving them little time to adapt or notify interested parents before the Dec. 1 application deadline.
Mainland Regional High School in Linwood will have just one open seat next year to replace a student who is leaving, guidance director Nathan Lichtenwalner said. But there is already more than one sibling applying, so there are unlikely to be any other openings.
“We are still getting a few applications, but interest has definitely waned due to the limited seats available,” Lichtenwalner said.
Districts that were just approved to join the program in the past two years say the state Department of Education should not have approved more districts last year if it was not prepared to fund them. Some schools had developed programs expecting the choice students and the extra state aid to support them.
“They should honor the commitments they made,” said David Salvo, Middle Township school superintendent. The district applied for 115 seats and was approved for 29. They filled 21 seats this year and thought they would have eight, plus six or seven for students who will graduate or leave, for a total of 14. But now they will only have the six or seven from graduating students.
He said they did an information session last week and had a good turnout, and he hopes he won’t have to turn away many applicants.
“It’s hard when the rules change every year,” he said.
State Department of Education officials confirmed that the freeze was put in place to manage costs and sustain the program.
State advocates for the program said they are trying to get the state to develop a better funding formula so that the program can be sustainable and even grow.
“The districts are scrambling,” said Valarie Smith, of the N.J. Interdistrict Public School Choice Association. “No one knew what was going on, and now we are not seeing as much parent outreach, because districts don’t have the seats available. At some schools there are waiting lists to get in.”
The state also did not take any new applications for choice districts this year, even though the state statute calls for an annual application period.
Currently, the state provides extra aid for each approved choice student. This year, 5,158 students are attending 136 choice schools, which are sharing almost $50 million in additional state choice aid, or about $9,500 per student. State education officials said the funding formula will be the same for fiscal 2016.
Approved schools can accept as many choice students as they want, but only get extra funding for the state-allocated number.
West Cape May was allocated only two choice seats for the 2014-15 school year for 18 applicants. The district used to accept tuition students and still does for its preschool, but for next year only six of the 14 anticipated choice students will get state funding, Superintendent Alfred Savio said.
“We were very disappointed that the state added 27 new choice districts last year, knowing that they were going to be limiting the funding for the choice program,” he said.
Districts that have been in the program for several years and have students graduating will have more open seats to replace those students, though that is still fewer than they hoped to offer.
Ocean City anticipates having 13 openings, and it has begun receiving applications, Superintendent Kathleen Taylor said.
Folsom, one of the original choice districts, will only be able to replace the graduating eighth-graders, about 16 students, but had hoped to add an additional 18 seats, Superintendent Evelyn Browne said.
Lower Cape May Regional has 39 choice students, but only four are graduating. They will likely be replaced by choice students attending their sending districts, who can be given preference.
LCMR Superintendent Chris Kobik said state funding for the program has helped the district continue to improve its dual college credit programs, prepare for new PARCC testing by investing in technology and minimize any budget increases.
Upper Township will have just one open seat, which will be filled by a sibling, Superintendent Vincent Palmieri said. They are also waiting to hear if Ocean City will accept the graduating eighth-grader.
Port Republic has 13 choice students and none is leaving, but three siblings will be accepted for next year, interim Superintendent Joetta Surace said.
School officials said it is frustrating to develop and promote a program, have it be welcomed by parents, then see it stalled at the state level.
“The issues are not really being addressed,” Smith said. “Parents are losing interest because there are no seats.”
Contact Diane D’Amico:
@ACPressDamico on Twitter
Garden State Coalition of Schools