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The State Aid Proposal 20082009 Reock/Rutgers
In June 2007 a brief paper, Evaluating a New State Aid Formula: Establishing a “Baseline” was prepared and distributed to select audiences, anticipating the release in the fall of the year of a proposed new formula for state aid to New Jersey’s school districts. The “baseline” paper classified existing state aid programs as of 2005-06, enumerated the amount of aid in each classification, and reported the amount of aid of various kinds going to different types of school district when they are grouped by socio-economic status and by local community wealth.
This paper makes use of the data for 2008-09 provided by the Department of Education in December 2007 to make a limited analysis of the impact of the proposed formula in the same context as the earlier “baseline” paper. The legislative bill intended to implement the DOE proposal has not been examined, and a full understanding of the proposed formula may not be possible until detailed calculations for individual school districts are available.
The State Aid Proposal for 2008- 09 Reock/Rutgers
In June 2007 a brief paper, Evaluating a
This paper makes use of the data for 2008-09 provided by the Department of Education in December 2007 to make a limited analysis of the impact of the proposed formula in the same context as the earlier “baseline” paper. The legislative bill intended to implement the DOE proposal has not been examined, and a full understanding of the proposed formula may not be possible until detailed calculations for individual school districts are available.
Classification of Proposed 2008-09 State Aid
The baseline paper classified state aid in six categories based on the multitude of individual formulas in use at that time under CEIFA and related enactments:
1. Equalized General Support
2. Special Needs of Disadvantaged Pupils
3. Non-Equalized General Support
4. Categorical Aid
5. Special Program Aid
6. Special Abbott District Aid
The proposed new state aid formula for 2008-09 eliminates most of the individual formulas contained in the earlier state aid program and utilizes the state aid currently distributed under them, together with additional money, to fund a smaller number of new aid formulas. Table 3 shows a comparison of the existing formulas and those that have been proposed. Changes that have been made include:
1. Equalized General Support
At the present time, Core Curriculum Standards Aid is the only state aid that is equalized; that is, it is distributed through a foundation formula that recognizes the relative local resources of each school district and provides more state aid for poor places and less for more affluent districts. Equalized general support aid would increase from $3,005 million in 2005-06 to $5,662 million in 2008-09 under the proposed formula.
The proposal uses a foundation formula with two elements in the Adequacy Budget for each district.. The first element addresses the budget generally, using the district’s resident enrollment, weighted by factors for grade level, at-risk pupils (eligible for free or reduced lunch), limited English proficiency, and vocational program. The second element provides two-thirds of the estimated cost for general special education and the full cost for speech pupils when the district is assumed to classify pupils at the average statewide percentage rate. The results under the two elements are modified by cost factors on a county-by county basis for geographical differences in the cost of education.
Table 3. Classification of 2005-06 and Proposed 2008-09
in Millions of Dollars
|
|
2005-06 Aid |
2008-09 Proposed Aid | ||
|
1. Equalized General Support |
Core Curriculum Standards Aid 3,005 |
3,005 |
General Equalization Aid 5,019 Special Education Census Aid 643 |
5,662 |
|
2. Special Needs of Disadvan- taged Pupils |
Supp.Core Curric. Standards Aid 245 Demon.Effective Program Aid 199 Instruct.Supp.Aid 15 Early Childhood Aid 330 |
788 |
|
- |
|
3. Non-Equalized General Support |
Stabilization Aid 141 Supp.Stab.Aid 1 Add. Formula Aid 89 Consolidated Aid 148 Abbott Border Aid 20 |
399 |
Adjustment Aid 860 |
860 |
|
4. Categorical Aid |
Special Education Aid 926 Bilingual Aid 68 Transportation Aid 284 |
1,278 |
Special Education Aid 809 Security Aid 224 Transportation Aid 284 |
1.317 |
|
5. Special Programs Aid |
County Vocational Aid 39 Post-Secondary Vocational Aid 10 School Choice Aid 10 |
59 |
|
- |
|
6. Special Abbott District Aid |
Abbott Parity Aid 877 Abbott Supp. Aid 645 |
1,522 |
|
- |
|
Total Aid |
|
7,051 |
|
7,838 |
The local share under this formula is determined by a school district’s property wealth and the personal income of its residents. An equalized formula of this kind almost always results in some of the wealthier districts failing to qualify for any funds, unless a very large amount of money is provided.
In 2005-06, 242 school districts received no Equalized General Support state aid. Under the new proposal, the additional money made available reduces that number to 185.
2. Special Needs of Disadvantaged Pupils
Under current law, several separate formulas provided $788 million in state aid in 2005-06 for districts having concentrations of disadvantaged pupils, usually identified through their eligibility for free lunch programs.
The new proposal eliminates these individual formulas, uses the funds made available to expand Equalized General Support, and relies on the extra pupil weights in the equalization formula to provide additional funds for disadvantaged pupils. A drawback to this approach is that it may eliminate funding for some disadvantaged pupils in wealthier school districts that may not qualify for equalization aid. Fifty-six districts that received funds for disadvantaged pupils in 2006-07 would not receive this funding under the 2008-09 proposal, because the district would be considered too wealthy to qualify for equalization aid. This result would appear to be in direct conflict with the slogan of “The money follows the child” which accompanied release of the proposal for 2008-09.
3. Non-Equalized General Support
In 2005-06, five different formulas provided $399 million to school districts in the form of non-equalized general support (others were added in 2007-08).
All of the current formulas for Non-Equalized General Support are wiped out in the 2008-09 proposal. They are replaced by a single large new program of Adjustment Aid for $860 million. Adjustment Aid is a form of “hold harmless” aid. It is intended to guarantee that no district will receive less than a 2% increase in aid from 2007-08 to 2008-09. While the release of the proposal was accompanied by assurances that Adjustment Aid would probably continue for at least three years, the use of the “hold harmless” approach in such a magnitude will be a source of concern for many districts where the other formulas in the proposal generate far less than they are currently receiving.
4. Categorical Aid
Categorical Aid is one of the larger classifications of aid currently, amounting to $1,278 million in 2005-06, when it includes three separate formulas: Special Education Aid, Bilingual Aid, and Transportation Aid.
The 2008-09 proposal splits Special Education Aid into two parts. General special education aid is placed on a “census” basis, with eligibility for the aid being based in every district on the statewide percentage of pupils classified, rather than an actual count, and two-thirds of the aid being included in Equalized General Support. Districts not qualifying for equalization aid, thus, would not receive special education aid under this part of the program. The remaining one-third of general special education aid and all of the aid for speech therapy, though still calculated in a “census” approach, remains on a categorical basis and, thus, is available to any district. Overall, categorical aid for special education is reduced from $926 million in 2005-06 to $809 million in 2008-09, while the equalized portion of Special Education Aid adds another $643 million.
Bilingual Aid, as such, disappears in the 2008-09 proposal and is encompassed on a weighted pupil basis in the equalized portion of the plan. Again, this eliminates such aid for bilingual pupils in wealthier districts that do not qualify for equalization aid; 125 districts that received aid for bilingual education in the past would not receive any aid based on LEP pupils in 2008-09.
A new categorical program for $224 million is introduced for Security Aid in the 2008-09 proposal.
Aid starts at $70 per pupil for all districts and rises to $406 per pupil in districts with at least 40% of the pupils designated as at-risk.
Finally, Transportation Aid is continued as a categorical program at the same dollar level as in 2005-06, for total of $284 million.
5. Specal Progams Aid
Special programs, aided with $59 million in 2005-06, have been dropped as an aid category under the 2008-09 proposal, with aid for vocational pupils becoming an additional weighting factor within General Equalization Aid, and School Choice aid being eliminated.
6. Special Abbott District Aid
Special Abbott District Aid, the second largest category in 2005-06 at $1,522 million, has been eliminated. Abbott districts will receive all of their aid under the other aid formulas, with Adjustment Aid making up a significant portion of the total.
Distribution Patterns of 2008-09 State Aid
Three tables (3A, 3B, 3C) have been prepared showing the distribution of 2008-09 state aid for various groupings of school districts[1].
Table 3A uses the District Factor Groups that have been developed by the Department of Education to classify school districts by socio-economic status. Categories range from DFG A for the lowest SES communities to DFG I for the highest.
Under the 2008-09 proposal both the total amount and the per-pupil amount of Equalized Aid clearly is highest for the lowest socio-economic places and declines steadily as the SES level rises.
Categorical Aid shows a much less pronounced gradient. While DFG A school districts do receive slightly more categorical aid per pupil, most other district groups receive about the same amount per pupil. Categorical aid for special education and transportation aid on a per-pupil basis actually are higher in the higher status communities.
Adjustment Aid is heavily concentrated in the lower-status communities, largely because of the elimination of Special Abbott District Aid and its replacement by Adjustment Aid.
Overall, the magnitude of Equalized Aid overcomes the more uniform distribution of Categorical Aid and results in higher total aid in low SES places and a steady reduction as the SES of the community increases.
County vocational districts receive a relatively large amount of aid per pupil, due to the heavy weight placed on their pupils in the equalization formula.
Table 3B uses the district factor groups in a somewhat different pattern to provide four categories—Abbott Districts, Other Poor Districts (DFG A or B, but not Abbott), Middle Districts, and I and J Districts.
As might be expected, the patterns in Table 3B are similar to those in Table A. Equalized Aid per pupil is highest in the Abbott districts and declines sharply for Other Poor Districts, Middle Districts, and I & J Districts. Categorical Aid is more evenly distributed, and Adjustment Aid is heavily concentrated in the Abbott Districts.
Table 3C makes use of a composite wealth measure that combines a district’s property wealth (equalized valuation) and the personal income of its residents[2]. While these two measures usually are correlated, there are instances where they deviate sharply (such as in seashore resorts and highly industrialized communities). The state’s school districts have been divided into nine groups, each having almost the same number of districts, and ranging from the lowest to the highest by the composite wealth measure.
Patterns of 2008-09 state aid distribution are similar in Table 3C to those in the two earlier tables.
In addition to the basic tables, three charts have been prepared, all of them using the data in Table 3C.
Chart 5 illustrates the pattern of aid distribution for the three major kinds of aid under the 2008-09 proposal. Equalized Aid shows a typical pattern under a foundation type of formula, starting with a high per-pupil level for the poorest communities, steadily declining as wealth increases, and becoming zero for the most affluent group of school districts. If all data were used on a regular per-pupil basis, this probably would be a straight line. However, since aid is calculated on a weighted pupil basis (recognizing the presence of disadvantaged and LEP pupils), while the chart uses only actual resident enrollment, the line for Equalized Aid becomes concave in the low-wealth groups of districts.
Categorical Aid clearly is a nearly constant amount per pupil, regardless of community wealth.
Adjustment Aid is substantial in the two lowest groups because of the need to replace Special Abbott District Aid, but is relatively constant (and low) for the wealthier places.
The final two charts are comparative.
Chart 6 Compares the two Equalized General Support formulas: Core Curriculum Standards Aid in 2005-06 under CEIFA and Equalized Aid under the 2008-09 proposal. With a substantially increased amount of money available, all levels of community receive some increase, with the largest coming in the poorest places. If measured on a percentage-increase basis (not shown), the greatest increases between 2005-06 and 2008-09 would occur in the high-income group of districts (other than the top group, which receives no aid under either plan) that received little equalized aid under CEIFA.
Chart 7 addresses the situation that would occur if Adjustment Aid, which has been presented as a temporary program, were to be eliminated. It shows that the basic aid program for 2008-09 would be quite similar to the distribution of aid in 2005-06, with the increase, which occurs in every group of district except the highest wealth, being due to the additional money placed in the formula for the coming year. The highest percentage changes for 2008-09 appear in the mid-wealth places, from the Third Lowest to the Second Highest. Districts at each end of the wealth scale, especially the highest, do least well under the basic, non-Adjustment Aid, formulas.
Adjustment Aid and the Abbott Districts
While Adjustment Aid has some impact across the board, its greatest importance clearly is in the Abbott districts (See Table 4). Without Adjustment Aid, these districts would incur substantial reductions in state aid. If Adjustment Aid is continued, even indefinitely, at the currently proposed dollar amount, the support level for Abbott Districts will drift lower and lower, as costs continue to rise and aid levels elsewhere are increased. In all likelihood, the pressure of municipal and county taxes in these places will result in the adoption of lower budgets and the gradual restoration of the low budget-low quality school systems that caused the Robinson and Abbott court cases. One possible change to avoid this happening might be to index Adjustment Aid on a per pupil basis by the growth of state equalization aid generally.
ECR
12/31/07
[1] The “baseline” paper provides an extended discussion of the methods of classifying districts.
[2] An explanation of the Composite Wealth Measure is included in the “baseline” paper.
