Quality Public Education for All New Jersey Students

 

 
     Property Tax Reform, Special Legislative Session & School Funding
9-25-06 Savings Little -Costs at merged schools similar
Asbury Park Press on 09/25/06 "Maryland's model for public schools, held up by some Garden State lawmakers as a cheaper alternative to New Jersey's fragmented system, may not offer the kind of savings originally thought, two sets of federal statistics suggest..."

Costs at merged schools similar

Data: Savings would be little

Posted by the Asbury Park Press on 09/25/06

BY JONATHAN TAMARI
GANNETT STATE BUREAU

TRENTON — Maryland's model for public schools, held up by some Garden State lawmakers as a cheaper alternative to New Jersey's fragmented system, may not offer the kind of savings originally thought, two sets of federal statistics suggest.

The figures, from the federal Department of Education and the U.S. Census Bureau, show that New Jersey and Maryland devote similar percentages of their education budgets to administrative costs. In terms of pure dollars, New Jersey still spends more on administration, but it also spends more in every other area of education. In total, New Jersey spends more per student than any other state, according to the department.

The statistics challenge earlier evidence that seemed to indicate that Maryland's county-based school system could show the way to savings in New Jersey, where there are more than 600 local school districts. New Jersey School Boards Association spokesman Frank Belluscio said those assertions were based on flawed comparisons.

"Citizens need to know various options, but it really has to be accurate data. Unfortunately, in public discourse sometimes things get misinterpreted, and I think that's what happened," Belluscio said.

School funding is one of the key areas of focus for lawmakers seeking ways to rein in New Jersey property taxes. School bills make up the largest portion of property tax levies.

Belluscio said figures from the federal Department of Education show that a county-based school system doesn't necessarily save money. A July 2006 report from the federal department's National Center of Education Statistics shows New Jersey devoted 9.9 percent of its public school spending to administrative costs in the 2003-2004 school year. In Maryland that figure was a similar 9.2 percent. The national average was 11 percent.

"The best source for comparison is the federal Department of Education. They remove all the variables, and they have a consistent interpretation and a consistent definition," Belluscio said.

Census Bureau figures for the 2003-2004 school year, while different from the ones kept by the federal department, paint a similar picture: the data show New Jersey and Maryland dedicate similar portions of their budgets to administration, and both are close to the national average.

State Sen. Robert G. Smith, D-Middlesex, an advocate for county-based schools, said there was confusion at an earlier hearing he chaired that appeared to show that Maryland spent a far smaller portion of its school money on overhead than New Jersey.

Despite the mix-up, Smith said a revised comparison shows Maryland's central administrative costs — the costs for superintendents — are smaller than New Jersey's. He said the comparison illustrates the potential savings of using county districts.

"Instead of having 618 bureaucracies manage the entire system you would have 21 (county-based) bureaucracies, and that's where the savings come from," said Smith, co-chairman of a legislative panel examining government consolidation.

The superintendent expenses comprise a portion of overall administrative costs.

Because it spends more than Maryland on education in total, New Jersey's administrative costs are also higher in terms of dollars, according to both sets of federal statistics.

The federal DOE figures show New Jersey spends $1,319 per pupil on administrative costs. Those expenses are $454 more than Maryland's and $405 more than the national average.

New Jersey spends $13,338 per student overall. Maryland spends $9,433, according to the federal DOE. The national average is $8,310.

Belluscio said it is unlikely that combining school districts would save money. Smith plans to bring in private companies to analyze the efficiency of combining school districts and municipalities.

The Census Bureau's analysis of administrative spending reflects the different school systems, however. Maryland spends a larger percentage on principals' offices than New Jersey; New Jersey spends a larger percentage on executives, such as superintendents.

Jonathan Tamari:

jtamari@gannett.com

 

 

How we can tame tax hikes and pay for education
Thursday, September 21, 2006





States all over the country are searching for new ways to distribute the support they provide for public schools. This is designed to meet two objectives:

1) to ensure that education funding is linked to and consistent with education accountability, a component of standards-based reform.

2) to provide property tax relief since, among all taxes, property taxes are probably the most disliked by taxpayers.

Standards-based reform is the decade-old approach states are using to improve schools. Under the approach, the state role has changed from providing specific education programs and services to setting education standards, measuring how well students are doing, and holding school districts accountable for student performance (the federal No Child Left Behind Act uses this same approach but allows each state to define its own performance goals).

Some states are now trying to estimate the costs that school districts face in meeting standards rather than simply allowing available revenues to be the primary factor in determining state aid.

Property tax relief has been a goal of many states ever since the passage of Proposition 13 in California almost 30 years ago. Since that time, most states have implemented procedures designed to limit taxes either directly, by controlling tax rates, rate increases or changes in property assessment, or indirectly by limiting school spending.

New Jersey is now examining the way it supports public schools. Unlike most other states, New Jersey has dealt continually with school finance litigation stemming from a state Supreme Court decision in 1973 (the original suit, Robinson v. Cahill, was a class action that resulted in the court closing schools before the Legislature passed a state income tax to pay for a new funding system).

A later suit, Abbott v. Burke, only affected a specific group of high need, "Abbott" school districts. As a result of this litigation, the state now uses what amounts to two different approaches to fund schools – one for the Abbott school districts (which represent 5 percent of all districts in the state) and one for all other districts.

A single approach

Since New Jersey has also embraced standards-based reform, it is time to do two things. First, recognize the costs that districts face in meeting state student performance expectations. And second, use a uniform system to make state aid sensitive to the demographic characteristics of each and every school district. While all districts differ in terms of their education needs, there is no reason why a single approach could not be used to effectively measure those needs.

At the same time that the state is building a uniform way of appraising need and linking school finance and school accountability, it should address existing inequities associated with property taxes.

While New Jersey's property taxes are certainly high, the state does not rely to an unusual extent on property taxes to support schools -- in New Jersey, about 52 percent of all revenue for school districts comes from local sources, most of which is derived from property taxes – the national average was 43.6 percent in 2003-04. Nine states, including Connecticut, Massachusetts, Maryland, Pennsylvania and Virginia, had higher proportions than New Jersey).

In modifying the state aid system, it is important to keep in mind the following:

·  New Jersey has a disproportionate number of school districts (641 of the nation's 16,066 districts in 2004-05).

·  Many of the districts do not serve all grades (that is, kindergarten through Grade 12).

·  Districts differ in enrollment and cost of living.

·  There are significant differences in both wealth (based on either property valuation or personal income) and in the needs of districts (particularly in relation to the proportion of children coming from low-income families).

While no other state's school finance system can serve as a complete model for New Jersey (every state deals with idiosyncrasies in terms of education governance, taxation, and history), there are a few that exemplify the kinds of steps that New Jersey could take to improve its school finance system.

Maryland and Idaho examples

In 2002 Maryland reorganized its school funding procedures based on the recommendations of the governor-appointed Thornton Commission.

The new system specifies a base cost designed to reflect the cost of services needed for every student to become academically proficient. It also adjusts the base cost for students with special needs.

In fact, Maryland collapsed numerous programs created to provide services for students from low-income families into a single "weight" that reflects the cost of serving students with special needs relative to students with no special needs.

The use of such a weighted funding system allows districts – not the state – to decide how funds should be used to serve students. Districts are then held accountable for student performance.

The system has been successfully implemented over several years – and "Thornton" funds are viewed as untouchable in the state budget process.

Another state that New Jersey might look to for ideas is Idaho. This year, Idaho eliminated property taxes to support public schools and replaced them with an increase in the state sales tax. By doing so, Idaho joined several other states that have dramatically reduced reliance on property taxes (including Minnesota and Michigan) or have developed statewide property taxes to replace a portion of what had been local property taxes.

This can address some of the inequities of local property taxes that previously produced widely varying tax rates across school districts. It is not, however, a perfect solution, and can raise a variety of questions such as whether sales taxes are more "fair" than property taxes in terms of their impact on families of different income levels.

Circuit breakers

There are also other tools, such as "circuit breakers" and homestead exemptions, which some states have developed to reduce the impact of property taxes on low-income families.

Under a circuit breaker, such as the one used in Vermont, property taxes are limited to a proportion of a family's income, with the state making up any shortfall to the school district. Under a homestead exemption, homeowners are allowed to exempt a portion of the value of their home from property taxation if it is their principal residence.

As it decides how to change its school funding system, New Jersey can, and should, learn from other state experiences. In the process, the state will have the chance to improve both the adequacy and equity of its current system.

Any change will create political issues and is likely to require judicial review. But other states have shown that the job can be done if there is legislative and public will to do so.

John Augenblick is president of Augenblick, Palaich and Associates, Inc., a Denver-based consulting firm that works with states to evaluate and develop their school finance systems.