Posts Tagged ‘education’

How State Dominated Educational Systems Level Down Accountability and Increase Costs

Monday, January 3rd, 2011

Introduction

The United States Constitution bestows plenary authority to govern education on the states rather than the federal government.  Accordingly, in the American governmental system all the powers of local governments including county governments and school districts are derived from the state.  Whatever authority the state grants to local governments, and, therefore, to local school districts, the state also can withdraw or modify.  

Still, the tradition of local control is rooted in our democratic principles.  It also symbolizes our democracy in action.  Local control enables a local school system to be accountable to its constituents rather than being controlled remotely by a governmental entity that imposes its political agenda which is incongruent with local priorities and needs.  Remote governing bodies, such as county or state governments, therefore, are not as accountable to the standards necessary to provide quality education as are local schools.  

A top-down, state dominated educational system is contrary to our democratic principles and traditions especially when it comes to the governance of our schools.  Increased control by the state through state politically appointed county departments of education, such as in New Jersey and California, means less local control because control is a zero sum game.  As such, every increase in or recapture of state or county power can only result from a corresponding loss at the local level.  

Special attention is given to the states of New Jersey and California because they embody the problems associated with state domination of local school systems as executed through the level of county government.  During recent decades, the cherished home rule tradition of school governance in New Jersey and California was eroded to the point where local control of education has been largely superseded by the state and its extension, county government.   

The rising power of the states of New Jersey and California (Fusarelli and Cooper, 2009) grew from the states’ increasing domination of school finance and, therefore, policy making because of the strings the states attached to funding.  Legal challenges to funding inequities and disparities led to court decisions, such as Serrano v. Priest in California and Abbott v. Burke in New Jersey, establishing financial neutrality as the basis for school funding.  The states tried to remedy the disparities among districts with the infusion of incremental state funds and regulation.  

Subsequent rulings focused on adequacy which required state governments to provide resources to disadvantaged districts such that the provision of education adequately met their constitutional requirements.  New Jersey’s state constitution went even further because of its provisions guaranteeing a thorough and efficient education or a “T&E” education as it became known and manifested in the Abbott v. Burke court decision. 

Legal challenges to subsequent state funding formulas such as law suits to address financial inequities and tax base disparities have caused states to greatly increase taxes so as to generate the necessary funds with which to offset the inequalities.  Nowhere is this more predominant than in the New Jersey and California.  

But greatly increased state taxes and spending have led to corresponding increases in state regulation of local school districts so as to enable states to better control the use of state educational aid.  This, in turn, has led to exponential increases in state mandates for administrative regulation, program requirements, standards, and budgetary controls.  Naturally, as state mandates and control over local schools increased, the size of state and county bureaucracies increased with a corresponding increase in the costs being passed on to local school districts.   

The rise in the power of the state has paralleled the increase in the state’s control over public education finance.  The transformation of the state’s educational finance system to a more centralized model has resulted in a corresponding loss of control by the local taxpayer over educational policy, programs, and services.  More importantly, it has greatly decreased the ability of local citizens as well as the state government to hold schools accountable for educational performance.  

County government (Fischel, 2009) is the entity through which states have traditionally executed their authority. But County government, as the implementation arm of the state, is too distant from the provision of education as well as the educational needs and priorities of local communities to be able to hold local schools accountable. 

History

Historically, the American system for organizing school districts has employed two major models based on traditional political boundaries:  counties and townships.  Every state except Hawaii employs one of these models or a combination as the basis for organizing its schools.  Hawaii is the only statewide school district in the nation and its public schools are 100% financed by the state.  

The settlers of New England (Fischel, 2009) established the township as the political unit within which school districts were organized and this model spread westward.  The Mid-Atlantic and Southern states, however, have generally used the county as the organizing structure for local schools.  Indeed, schools in the states (Kenney and Schmidt, 1994, cited in Fischel, 2009) of Maryland, Florida, West Virginia and Louisiana are organized into consolidated countywide districts without individual school districts.  For example, (Fischel, 2009, pp. 165-166) “the city of Baltimore is considered a county district in Maryland and is distinct from adjacent, suburban “Baltimore County”; each is a separate (county) school district.”  

New Jersey

While such court decisions as Robinson v. Cahill and Abbott v. Burke fundamentally changed the state’s role in education in New Jersey, recreating the office of the Executive County Superintendent of Schools as well as the passage of S1701 into law were similarly profound in their far reaching impact on New Jersey’s school system.  Because using property taxes as the primary basis for funding local school districts is inextricably linked to home rule, these actions transcended local taxpayers’ rights to determine the financial and human resources allocations of their local schools.  More importantly, these court rulings and laws directly affected local taxpayers’ democratic rights. 

Office of the Executive County Superintendent

When New Jersey Governor Corzine signed the CORE Act, CommUNITY Against Regionalization Efforts (2009), Assembly Bill A4 and Senate Bill S19, into law, he transformed the role of county superintendents of education from mere disseminators of state educational policies into powerful Executive County Superintendent of Schools.  In so doing, the governor empowered each Executive County Superintendent to begin consolidating all schools into K to 12 districts and ultimately to consolidate all schools within one countywide organization.  Indeed, passage of the pending New Jersey Senate bill (New Jersey Department of Education 2010), S450, would eliminate all local school administrators over the level of principal and establish the Executive County Superintendent as the official who will govern and operate all public schools within the consolidated countywide district. 

The Executive County Superintendent is a political appointee whose contract calls for him/her to focus on maximizing the reduction of expenses in all of the schools within the county rather than on improving student and school achievement.  These political appointees are empowered to veto local school district budgets despite their previous approval by their duly elected local board of education as well as any contracts for vendors or school personnel not covered by a collective bargaining agreement.  Also, they have unilateral authority to scale down, postpone, or eliminate any non-mandate protected program or service.  

New Jersey gave the Executive County Superintendent unprecedented powers over local school districts through the office of Executive County Superintendent of Schools.  These county superintendents have the authority to put New Jersey well on its way to duplicating Maryland’s centralization of power over local school districts at the county level.  Indeed, the Executive County Superintendents have the authority to consolidate all of New Jersey’s 600 plus school districts serving more than 1.3 million students statewide within one of 21 countywide districts.  

By creating the office of Executive County Superintendent of Schools, New Jersey moved to the verge of replicating the state of Maryland’s county school system model.  First, the state of Maryland eliminated all local school officials beyond the level of principal.  It then consolidated all of its schools serving less than one million students statewide within one of the 24 countywide districts in each county under an Executive County Superintendent.  

Although Maryland abolished all administrators above the level of principal from the local schools in the name of saving money, cutting administrative expenses, and cutting property taxes, these small one time savings were more than exceeded by the ongoing costs of the office of Executive County Superintendent of Schools with its ever increasing bureaucracy.  For example, in Maryland, the Montgomery County Department of Education alone has an annual operating budget of approximately $2 billion with nearly 22,000 employees despite having a total student enrollment of less than 138,000.  The office of Executive County Superintendent of Schools for Montgomery County, therefore, employs roughly one administrator for every six of its students!  

The Executive County Superintendent, who is appointed by the governor, supervises, directs and manages the functions of the County Office of Education as a representative and subordinate of the New Jersey State Commissioner of Education.  The Executive County Superintendent oversees all public school districts within his/her county.  To accomplish these goals, each county superintendent is given a staff and a budget which are not subject to taxpayer input, approval or elections. 

Contrary to core principles of democracy, the Executive County Superintendent has the authority to override a school district’s budget despite its prior approval by its duly elected board of education.  He/she can do so without any prior consultation or notification of the elected board of education or the local district’s superintendent or business administrator.  Indeed, the Executive County Superintendent’s exercise of a line item veto over non-instructional costs in a local school district’s budget would be contrary to the will of the locally elected board of education that represents the local taxpayers as demonstrated by their previous vote of approval for the vetoed items.  

In addition, a board of education is prohibited from transferring funds into any line item that was vetoed by the Executive County Superintendent.  The County Superintendent’s line item veto authority covers all non-instructional line items including administrative expenses.  The appointed Executive County Superintendent, therefore, could eliminate administrative positions deemed necessary by the elected local board of education who would then lack sufficient recourse.  

The Executive County Superintendent is empowered to review all district budgets within the county.  He/she has the authority to veto a portion of the district’s budget and the district will have to deduct this portion prior to the budget’s posting on the ballot for the public vote in April.  The district is then prohibited from transferring any funds into those line items or spending any funds toward the vetoed items for the fiscal year.  

The Executive County Superintendent’s is responsible for ensuring that each school district budget includes sufficient funds to meet the requirements of the state’s Core Curriculum Content Standards (CCCS).  The district’s administrative and support services per pupil costs are compared to the state median.  The Executive County Superintendent can administer reductions in these areas if the district’s costs exceed the state guidelines. 

The Executive County Superintendent is required to review, evaluate, and approve all employment contracts for administrators not covered by a collective bargaining agreement including but not limited to superintendents, assistant superintendents, and business administrators.  He/she must also enforce the state mandated caps on accumulated unused vacation and sick days.  

According to the School Funding Reform Act (New Jersey Department of Education, 2008), the Executive County Superintendent can withhold or recapture state aid if he/she discovers excessive spending, inefficiencies, or that the district has violated any state law or regulation.  Another condition for receiving state aid stipulates that every district must refinance all outstanding debt for which a three percent net present value could be realized. 

The Executive County Superintendent enforces the state mandated four percentage point cap on a local school district’s annual property tax levy.  The tax levy is also reduced if the district’s budget is found to exceed the state’s calculated adequacy level for that particular district and if the district receives an increase in state aid exceeding the greater of two percent or the Consumer Price Index (CPI.)   

The implication behind the creation of the office of Executive County Superintendent of Schools was that it would somehow save the taxpayers’ money and enable the state to have lower property taxes.  The experience of such a control model in the state of Maryland contradicts such assumptions as does the New Jersey’s county control model.  New Jersey’s 21 counties combine to spend over $6.3 billion annually in property taxes and hold more than $5 billion in outstanding debt.  County government places a tremendous burden on New Jersey’s taxpayers especially as compared to those in Connecticut where county government was eliminated in 1960.  

While economies of scale apply in the private sector especially in manufacturing, they do not apply as well to the education sector with its value added services.  In the education arena it usually takes a defined number of people per capita to provide a defined level of service.  Larger school systems such as regional or consolidated countywide school districts, therefore, are more expensive to operate than smaller, local school districts because of their “penalties of scale” (Coffin, 2010, p. 1).    

Decentralization rather than centralization brings decision makers closer to the taxpayers and local priorities.  Taxpayers have more of a stake in the success of their local school rather than county districts.  Indeed, separating the taxpayer from his/her ability to control and influence the operating budget and educational plan of his/her local school district cuts neither costs nor property taxes. 

S1701

When New Jersey Governor James McGreevey signed S1701 into law on July 1, 2004, as Chapter 73, Public Laws of New Jersey 2004 (New Jersey Department of Education, 2005), the state took a major step in its continued erosion of local control over school districts especially in terms of a district’s surplus, budget flexibility, administrative spending limits, and spending growth limitation adjustments.  While this legislation accelerated the loss of local autonomy for school districts the state did not apply it to county and municipal governments even though these levels of government also are funded primarily by local property taxes.  

S1701 reduced the maximum allowable district surplus to no more than three percent in the 2004-05 fiscal year and two percent in the 2005-06 fiscal year and beyond.  Prior to the passage of S1701, the state prohibited non-Abbott districts from having a surplus of less than six percent.  Because a district’s surplus serves as insurance against unforeseen expenses, S1701 forces a district to either cut non-mandate protected educational programs and services such as regular education or increase property taxes.  

S1701 required that any surplus in excess of the percentage limitations must be used for property tax relief.  But the property tax relief would be implemented by limiting the amount of property taxes a district could levy in the upcoming fiscal year rather than as a direct refund to taxpayers, furthering constraining local autonomy.  

S1701 (New Jersey Department of Education, 2005) limited a district’s budgetary flexibility by restricting the growth in the base budget to the higher of two and half percent or the Consumer Price Index (CPI).  It also limited Spending Growth Limitation Adjustments (SGLA) that enable districts to meet unbudgeted increases in expenses for such items as hazardous route transportation, courtesy busing, insurance, utilities, or legal services.  Once routine budgetary transfers such as line item transfers exceeding ten percent as well as transfers of surplus and unbudgeted revenue now require county approval.  

According to the New Jersey School Boards Association (2004), S1701 further eroded local taxpayer control by limiting a district’s use of second ballot questions, often referred to as second questions.  By casting votes on second questions, citizens exert control over the authorization of funds for specific educational programs and services that are in addition to the base operating budget.  Through the exercise of second questions (New Jersey School Boards Association, 2004, p. 3), “the community determines if it is willing and able to raise the money to fund the expenditure over cap for programs ranging from full-day Kindergarten and after-school enrichment programs to extra-curricular activities.”  

S1701 further eroded the ability of local school districts to develop, approve, and implement their operating budgets.  Decision making authority over many budgetary items such as the acquisition and allocation of a school district’s financial and human resources were largely transferred to the county level of government as the state’s execution arm.  Indeed, (New Jersey School Boards Association, 2004, p. 2) S1701 “lessened a community’s ability to determine school finance matters and related educational policy.”  

Upon taking office in January, 2010, New Jersey Governor Christie announced he would withhold $475 million in promised state aid to school districts statewide as part of his effort to close the state fiscal year budget deficit of approximately $2 billion.  What makes the governor’s plan significant is that he requires districts to make up for cuts in state aid by using their surplus and reserve account funds.  

Governor Christie’s plan requires districts to use all of their excess surplus plus 25% of the reserve accounts for capital, maintenance, emergencies and excess.  This means that most non-Abbott districts will lose most if not all of their state aid for the balance of the fiscal year that ends on June 30.  Because the state already required districts to roll over any surplus exceeding the two percent level as property tax relief according to S1701, this reduction in surplus will lead most likely to deeper cuts to non-mandate protected educational programs and property tax increases in districts statewide.  

California

While the California Department of Education has the overall responsibility to administer education throughout the state, it does so primarily through California’s 58 counties.  Each county department of education oversees the school districts within its boundaries.  While the counties collect property taxes on behalf of the state and the mill rate is established in the state constitution, it is the state that determines how much funding including revenue from property taxes each district receives and how those funds are allocated.   

But California had enjoyed a long tradition of local control of school district budgets, capital projects, human resources as well as the provision of educational programs and services according to local needs and priorities.  The role of the state and county governments in governing and funding local school districts was severely limited.  While the state provided a minimal funding level, local school districts levied property taxes to generate the overwhelming majority of their revenues.  Taxpayers’ votes determined district budgets as well as the members of their local boards of education.  A district’s financial and human resources allocations were based on the district’s educational plan as approved by the duly elected local board of education.  

The state ended this tradition by constantly eroding local control through the strings it attached to the funding it provided and the policies it mandated for local school districts.  Once the state gained the majority control over school finance, the state was then in a position to also control educational policy in all of the nearly 1,000 school districts.  

Today, local school districts depend almost entirely on the state for their revenues and largely lack the authority to raise revenues that only they can control.  Because state funds come with powerful strings attached, the state leverages its funding to determine how a district allocates its budget and human resources.  Districts have almost no discretion over their use of the majority of state funds.  

The strings attached to California’s state aid result in the majority of a district’s funds being restricted only for use according to the state’s mandates.  Most of the unrestricted state funding finances the salaries and benefits for a district’s employees.  A district’s financial and human resources allocation is overwhelmingly determined by the state according to its one size fits all approach which does not account for differences in local educational needs, priorities, and cost drivers.  By controlling school finance and making policy decisions that once were the province of local school districts, California consolidated and centralized the control of education at the state level.  

The current recession has adversely impacted the state’s budget over the last few years especially education which is the largest component of California’s expenditures.  This has caused the state to pass along revenue cuts, deferrals, and allocation formula adjustments to local school districts despite promises and legislative guarantees to the contrary.  Because legislation has forced local school districts to become overwhelmingly dependent on state revenues, districts were forced to depend on unreliable state aid and, therefore, have been disproportionately affected.  

But the seeds of California’s fiscal calamity were sown well before the current recession could impact its budget.  The roots of the financial crisis are found in California’s history of creating unsustainable state budgets especially during periods of economic growth while simultaneously forcing local school districts to become overly dependent on unreliable state revenue sources.  There are three fundamental causes of the fiscal crisis which continue to plague California’s local school districts.  These include a major court ruling, state constitutional amendments, and voter passed initiatives. 

The first causal factor was the 1971 California Supreme Court’s Serrano v. Priest ruling in which the court declared the system of funding local school districts based on primarily on local property taxes to be unconstitutional if differences in ratables (Fischel, 2001, p. 99) “led to disparities in educational opportunities, which the court apparently took to mean spending per pupil.”  This decision not only effectively ended the tradition of local control over school budgets, property tax levies, and capital projects but also led to the centralization of control over school finance at the state level. 

But the resultant centralization of school finance at the state level lowered the quality of education generally throughout the state because it separated local taxpayers from their connection or stake in their local schools.  This stake derives from the payment of local property taxes for local schools.  This demonstrated Fischel’s (2001) homevoter hypothesis because the benefits local taxpayers derived from the quality of the education provided in their local schools funded by their local property taxes were no longer capitalized in their property values.  Fischel (2001, p. 129) concludes, “voters are aware of this connection, and that statewide funding especially alienates the majority of the population who have no children in the public school system.” 

Fischel (2001) demonstrates how the Serrano v. Priest decision resulted in the passage of Proposition 13 with its dramatic end to local control over the then main source of revenues, local property taxes.  According to Fischel (2001,) the Serrano v. Priest decision led to the passage of a state constitutional amendment called Proposition 13 which was the second major cause.  The enactment of this legislation in 1978 severely cut the amount of local property tax revenue available to local school districts as well as the amount under local control.  The legislation enabled the state to collect and then redistribute local property taxes based on the state’s funding formula rather than according to local needs and priorities.  

The third major factor in the reshaping of California’s school finance system was the passage of Proposition 98 in 1988.  When voters approved this ballot initiative, the state of California was compelled to guarantee a minimal level of funding for all local school districts throughout the state. 

Prior to the Serrano v. Priest ruling, local school districts controlled their budgets including the levying of property taxes to fund school operations.  But post Serrano, the state imposed revenue limits on school districts and narrowed the gap in general purpose funding by capping the wealthier districts while providing larger subsidies to low income districts.  The (Perry, 2004) ceiling placed on wealthier districts combined with the sliding scale of increases for lower income districts helped the state achieve the equalization standard expressed in the Serrano v. Priest ruling.  

But the adoption of Proposition 13 went beyond the Serrano v. Priest ruling in changing the state’s role in school finance by severely limiting a district’s ability to levy and benefit directly from local property taxes.  Proposition 13 amended the California State Constitution with its main provisions including:  

No property should be taxed at more than one percent of 1975 fair market value; municipalities may impose “special taxes” by a two-thirds vote of the electors; assessments may not grow more than two percent annually from 1975-76 levels, to which they were rolled back, except for property sold after 1975-76; and no increase in state taxes may be enacted without a two-thirds vote of each legislature.  (Yudof, Kirp, Levin, & Moran, 2002, p. 798)  

Following the passage of Proposition 13, the state was empowered to establish a statewide mill rate, limit millage increases, and, more importantly, prevent local school districts from levying, collecting, and benefiting directly from local property taxes.  This overturned the Separation of Sources Act (Barbour, 2007 as cited in Perry & Edwards, 2009) which had granted exclusive control over determining and levying property taxes to local governmental entities including school districts in 1910.  

Because of the resultant drastic reduction in the control over and receipt of local property tax revenues, the state was forced to (Yudof  et al., 2002, p. 798) “bail them out by using $2.2 billion of the $3 billion state surplus to make up the difference.”  While the state gained control over the allocation of locally levied property taxes, the inequities in funding among school districts were then a function of the state’s school funding formula rather than ones caused by disparities in property values and ratables.  

Because Proposition 13 and the Serrano v. Priest ruling combined to both severely limit the ability of local school districts to raise their own revenue to fully fund their budgets and centralize the control over school district funding at the state level, the voters amended the constitution by approving Proposition 98 in 1988.  Proposition 98 guaranteed that the state would use the local property taxes that it now controlled plus other state tax revenues to fund a minimum level or floor of all local school district budgets.  

According to the requirements of Proposition 98, the state guarantees that at least 40% of its general fund resources will be dedicated to funding public education.  This guaranteed funding floor is established by modifying the amount a district received in the preceding fiscal year (Edwards & Leichty, 2010) for enrollment, attendance, and statewide income levels. 

In 1990, Proposition 111 modified Proposition 98 to the extent that if the state’s General Fund revenues decline, then the growth rate of the guaranteed funding level will be lowered correspondingly.  As a constitutional amendment, Proposition 111 enables the state to make “fair share” reductions to the guaranteed funding level during economic downturns (Edwards & Leichty, 2010, p. 5).    

The risk to local school district budgets of depending on unreliable revenue from the state’s unsustainable budgets materialized in major way during economic crisis following Governor Schwarzenneger’s election.  To alleviate the state’s budget deficit, Governor Schwarzenegger (Picus as cited in Fusarelli & Cooper, 2009) negotiated a one year suspension of Proposition 98.  Although the governor guaranteed that the funds would be repaid (Picus as cited in Fusarelli & Cooper, 2009, p. 14) he “did not include them in his annual budget” for the following fiscal year.   

Nationwide the soaring cost of under funded state mandates and regulation has forced local school districts to raise property taxes or cut non-mandate protected regular education programs and services resulting in a leveling down of educational quality.  California is no exception as Greenhut (2005, p. 1) reports that according to Proposition 4, which was approved in 1979, the state is required “to reimburse local school districts for the mandates it imposes on them.  California owes districts more than $3.6 billion.”  These deferred payments have caused severe cash flow problems for local school districts.  

As the state’s fiscal crisis deepened and with Proposition 98’s guaranteed educational funding being the largest state expenditure (Edwards & Leichty, 2010), the state cut educational funding to the bare minimum.  In this way the state not only reduced spending in the current fiscal year (Edwards & Leichty, 2010) but also minimized its obligations going forward.  These funding reductions caused districts to cut non-mandate protected regular education programs and services and exacerbated their cash flow problems.  

But Proposition 111’s amendments compel the state to accrue a maintenance factor for any shortcomings owed districts resulting from a suspension of or changes in the minimum funding guaranteed in Proposition 98.  The maintenance factor (Edwards & Leichty, 2010, p. 5) is the “difference between the actual spending level and what would have been spent under normal growth.”  By the second quarter of 2009 the state’s cumulative maintenance factor debt obligation reached $11.2 billion which further highlighted the funding shortfalls for local school districts.  

The Serrano v. Priest ruling combined with Propositions 13 and 98 resulted in the state controlling school finance and policy for all of its nearly 1,000 school districts.  The state determines how its various educational resources are allocated among the school districts and largely how they will be used.  

The state establishes revenue limits for each district.  But only through the passage of legislation can the state, rather than the local school district, adjust a district’s revenue limit.  When the local property taxes controlled by the state increase, the majority of schools do not benefit because any incremental property tax revenue is applied to the limit and the state’s component is lowered proportionately.  

Conclusion

The states of New Jersey and California exemplify the problems associated with state domination of local school systems particularly as executed through the level of county government.  State centralized funding leads to a one-size-fits-all approach for education but one that fits no district.  

The specific needs of individual school districts vary to such a large degree that they render uniform state funding and policy formulas inadequate.  Instead, public school districts need a mass customization of educational funding, control, and policy that can only derive from local control.  Oates (1972) supports the notion that public education should be provided at the lowest level.  Kenny (1982) also argues for the provision of public education by local school districts.  

Baker, Green, and Richards (2008, p. 66) explain how “the local property tax empowers local voters to express what they want for their local public schools.”  The consequence according to Baker, Green, and Richards (2008, p. 66) is that “when property taxes become statewide taxes, the political advantages of empowering local citizens and promoting competition and sorting among jurisdictions is lost.”  This mass standardization of school finance and policy leads to state funding guidelines that are incongruous with the needs and priorities of local school districts.  

It is difficult for state run school systems to be accountable to the taxpayer.  California demonstrates its lack of accountability by withholding or deferring funds which it is legally obligated to send to local school districts.  As a result, California has “fallen from its position a leader in per-student spending in the 1970’s to now spending well below the national average (Jacobson, 2007, p. 2).  As Jacobson (2007, p. 3) explains, because the state has centralized control over local school finance and policy, the state’s “financial resources are distributed in such an irrational way that schools serving similar student populations in similar locations receive different funding.”  

California regularly withholds funds that it is required to allocate spend on its public schools but uses these funds to help offset state budget deficits.  California has withheld nearly $15 billion of aid for its schools.  California owes local school districts more than $3.6 billion in reimbursement for under funded state mandates in violation of Proposition 4 requirements.  Moreover, the state’s owes local school districts $11.2 billion in Proposition 111 maintenance factor obligations.   

New Jersey is similarly expanding state control and authority through its counties at the expense of local control, autonomy, and accountability.  The state increased its bureaucracy and administrative expenses through the greatly expanded Office of The Executive County Superintendent.  This appointed official can override decisions made by duly elected boards of education through the exercise of the line item veto.  

The authority of the Executive County Superintendent supersedes that of locally elected boards of education effectively rendering local boards of education as no longer the trustees of a district’s financial and human resources whom the taxpayer can hold accountable.  Taxpayers have great difficulty holding the state accountable.  Examples of this include the state’s recapturing surplus and reserve funds governed by S1701, the failure of the School Construction Corporation, and the continued lack of student and school achievement in the Abbott districts. 

Any reduction in local school district control over the levying and allocating of property taxes decreases accountability and adversely affects public school quality.  Taxpayers are more involved in, have a much greater stake in their local school districts, and act to hold these school districts accountable when they pay local property taxes directly to their local schools rather than have their local property taxes controlled by the state and redistributed as if they were statewide revenues according to a state funding formula.  

Fischel (2001, p. 152) explains the consequences of statewide property tax redistribution using voters without children in the public schools, “At the local level, they are willing to support, or at least not oppose, high levels of spending because better schools add to the value of their homes.  At the state level, voters without children do not perceive such an offsetting benefit to their taxes.”  Having a lowered sense of ownership in their schools, taxpayers become more complacent as the proportion of state funding increases.  This causes a corresponding reduction in the level of accountability required by the stakeholders and the quality of their public schools’ education declines as a result. 

State control over schools interrupts the connection taxpayers’ make between their property values and property taxes.  As Sonstelie, Brunner, and Ardon explain (Sonstelie, Brunner, & Ardon, 2000, p. 102 as cited in , 2001, p. 136) the “reason that local control produces better schools is that the local property tax system channels the revenues of nonresidential property into public education.”  The greater is the proportion of non-residential properties in a district’s mix of ratables, the lower is the tax burden on residential properties.  This lowers their “tax price” (Fischel, 2001, p. 136) making their local schools relatively less expensive and as a result, taxpayers are “induced to spend more on education.”  

Typical taxpayers resemble investors because they want their major asset, their home, to appreciate in value.  As Fischel (2001, p. 136) explains how “voters tolerate property taxes only when the public services financed by them are capitalized in home values.”  Home owners have a vested interest in the success of their local schools because the credit rating of a school district’s host municipality is largely dependent on the financial soundness and credit worthiness of its schools.  The higher is a municipality’s or a school district’s credit rating; the lower is its debt service expense. 

The greater is the quality of the local school district, the greater is the taxpayer’s property value because the demand for quality education leads to a higher market price.  As a result, taxpayers strive to protect and improve their property values.  They evaluate the quality of their school district so as to maximize their property values.  But if their school district’s quality deteriorates or is expected to decline, typical Tieboutian taxpayers will vote with their feet.   

By voting with their feet, taxpayers choose the local school district that best meets their needs and one that will contribute to their property values.  But taxpayers vote not only with their feet but also on school district operating budgets, capital projects, and board of education members.  Through the exercise of these votes, taxpayers control the quality of education provided by their local schools as well as the level of property taxes levied.  Their collective decisions lead to a Pareto efficient allocation of local public education.  In this context, Baker, Green, and Richards (2008, p. 21) state that the “Tiebout model represents the most basic form of school choice.” 

Tiebout (1956) argues that because crowding and congestion affect the provision of public goods and services, it is inefficient to provide public education at a centralized level and public education is more efficiently provided at the local level.  Fischel (2001) supports this conclusion with his assessment of California’s centralized school finance system in which taxpayers lost control over local schools and property taxes.  This led to reduced levels of taxpayer involvement in and support for public education.   

Fischel (2001, p. 161) concludes “the apparent quality of public education has declined nationwide as the states’ share of funding for it has risen.”  It is essential that taxpayers rather than states or counties have control over their local schools so they will be motivated to properly fund, support and improve public education.  

References

Baker, B. D., Green, P., & Richards, C. E. (2008). Financing Education Systems. Upper Saddle River, New Jersey:  Pearson Education, Inc. 

Barbour, E. (2007). State-Local Fiscal Conflicts in California:  From Proposition 13 to Proposition 1A. Public Policy Institute of California, http://www.ppic.org/content/pubs/op/OP_1207EBOP

Coffin, S. (2010, December 26). Penalties of Scale:  Why Large School Districts Need to Disaggregate. Retrieved from Coffin’s Education Center, http://www.coffinseducationcenter.com

CommUNITY Against Regionalization Efforts (2009). Core Act, C.A.R.E. Retrieved from http://www.saveoursmallschools.com/legislation

Edwards, B., M., & Leichty, J. (2010). School Finance 2009-10:  Budget Cataclysm and its Aftermath. Mountain View, California:  EdSource.  

Fischel, W. A. (2001). The Homevoter Hypothesis:  How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies. Cambridge, Massachusetts: Harvard University Press. 

Fischel, W. A. (2009). Making the Grade:  The Economic Evolution of American School Districts. Chicago and London:  University of Chicago Press.  

Fusarelli, B. C., & Cooper, B. S., Editors. (2009). The Rising State:  How State Power is Transforming our Nation’s Schools. Albany, New York:  SUNY Press.  

Greenhut, S. (2005). State meddling hamstrings schools. The Orange County Register, Retrieved from http://www.ocregister.com  

Jacobson, L. (2007). California’s Schooling is “Broken”:  Studies Call for Overhaul of Finance, Governance. Education Week, 26(28) Retrieved from http://www.edweek.org/ew/toc/2007/03/21/index.html 

Kenny, L. W. (1982). Economies of scale in schooling. Economics of Education Review, (2) 1-24. 

Kenny, L. W., & Schmidt, A. B. (1994). The Decline in the Number of School Districts in the United States 1950 – 1980. The Public Choice, (79) 1-18. 

New Jersey Department of Education (2005). S1701 Regulations. Retrieved from http://www.state.nj.us/education/finance.  

New Jersey Department of Education (2008). School Funding Reform Act. Retrieved from http://www.state.nj.us/education.   

New Jersey Department of Education (2010). S450. Retrieved from http://www.state.nj.us/education.   

New Jersey School Boards Association (2004). S1701 Signed Into Law. Retrieved from http://www.njsba.org/S1701-Update.     

Oates, W. E. (1972). Fiscal Federalism. New York:  Harcourt Brace Jovanovich.  

Perry, M. (2004). Rethinking How California Funds its Schools. Mountain View, California:  EdSource.  

Perry, M., & Edwards, B. (2009). Local Revenues for Schools:  Limits and Options in California. Mountain View, California:  EdSource.  

Picus, L. O., (2009). California. In Fusarelli, B. C., & Cooper, B. S., (Editors), The Rising State: How State Power is Transforming our Nation’s Schools, (pp. 9-26). New York, New York:  SUNY Press. 

Sonstelie, J., Brunner, E., & Ardon, K. (2000). For Better or for Worse? School Finance Reform in California.  San Francisco:  Public Policy Institute of California. 

Tiebout, C. M., (1956). A Pure Theory of Local Expenditures. The Journal of Political Economy, 64, 416-424.

Yudof, M. G., Kirp, D. L., Levin, B., & Moran, R. F. (2002). Educational Policy and the Law. Belmont, California:  Wadsworth Group/Thomson Learning.

TELs take their Toll on Education

Tuesday, June 29th, 2010

Tax and Expenditure Limits (TEL)

The major question confronting New Jersey’s educational system is most likely whether the state should implement a 2.5% cap on local public school districts’ annual operating budgets which is otherwise known as a tax and expenditure limit (TEL.) This question seems to arise from the most compelling issue facing public office holders, legislators, and policy makers as well as taxpayers statewide which is how to limit the amount and growth rate of New Jersey’s taxes especially its property taxes.  Governor Christie’s answer is to implement a 2.5% TEL on local property taxes and expenditures similar to Massachusetts’ Proposition 2.5 or California’s Proposition 13.

Why should taxpayers allow the passage of legislation that would enable the state of New Jersey to limit a local school district’s ability to determine the amount of property taxes it levies as well as its level of expenditures?  Voters currently have more control over their local school district’s property taxes than they have over any other form of taxation whether the tax is levied by their municipal, county, state or federal government.  Why then should the state be able to set an arbitrary one-size-fits-all limit on the amount of property taxes local school districts can levy when property taxes are set according to local needs and priorities?  Such a one-size-fits-all cap will fit no district because districts are unique.

Taxpayers can vote on their local school district budgets in all but a handful of towns but no taxpayer is able to vote on the budget of his/her municipal or county government despite the fact that these two levels of government are funded almost entirely by local property taxes.  Because taxpayers can vote on school budgets, they can hold their school systems accountable but without a corresponding vote on municipal and particularly county government budgets taxpayers can not hold these levels of government accountable.  This is one of the chief reasons why county government costs New Jersey’s taxpayers more than $6.1 billion annually! 

All Local School District Property Taxes are Invested in the Host Municipality

All of a local school district’s property taxes remain and are invested in the schools of the host municipality so that the taxpayers benefit fully from the property taxes levied.  County property taxes differ sharply from those levied to fund our public schools because they are redistributed to support an unaccountable, wasteful, and duplicative layer of government.  This leads many researchers, most notably O’Sullivan, Sexton, and Sheffrin (2007,) to conclude that “local governments” and public school districts “must have access to a revenue source that they can adjust to meet varying demands.” 

Funding our public schools through local property taxes is essential because county government siphons away crucial local property taxes and state governmental financial aid is unreliable.  O’Sullivan, Sexton, and Sheffrin (2007) demonstrate that “the property tax can be administered by local government” and public school districts “with relatively little fear of its tax base migrating to other jurisdictions, thus providing local governments with the needed fiscal autonomy. The property tax has been the source of economic independence of local units of government” and local public school districts for generations. 

Unfunded State and Federal Mandates Cause TELs to Cut Regular Education

There are only two kinds of programs and services offered by our public schools:  those that are mandate protected and those that are non-mandate protected.  Because school districts are forced by the state and federal governments to fully fund the unfunded portion of their mandates, public school districts must choose between cutting non-mandate protected programs and services or raising property taxes.  School districts have no control over many of their major cost drivers such as the costs resulting from increases in unfunded mandates, enrollment, utilities, transportation, health insurance, legal actions, and the number as well as the mix of special education students.  When a school district that is limited by a 2.5% TEL experiences increases in these uncontrollable expenses, it must cut expenses in other areas to stay within the cap. 

One major fallacy in the cap advocacy argument is that local school districts are required to fund the unfunded portion of all state and federal mandates over which local school districts have no control.  State and federal mandates drive the overwhelming majority of local school district expenditures and, hence, property tax levies.  Property taxes could be slashed nationwide especially those funding our public schools and there would be no need for TELs, if the state and federal governments would just fully fund all of their mandates! 

A TEL may force a typical school district to increase class sizes so as to minimize its expenditures for teachers and aides.  But this will lead to lower test scores and likely No Child Left Behind (NCLB) operational and financial penalties.  A TEL, therefore, gives a school district only one course of action:  hold property tax increases within the state imposed percentage point limit while simultaneously cutting non-mandate protected programs and services but fully funding the unfunded portion of all mandates.  That is, cutting regular education. 

There is No Such Thing as a Free Lunch

Governor Christie along with the proponents of TELs purport that school districts will be become more financially responsible because of the state imposed limit on their expenditures and tax levies.  TEL proponents argue that if school districts are left to their own devices, they would continue to spend and tax at ever increasing rates while the TEL’s implementation will force school districts to hold down expenditures and property taxes.  TEL proponents seem to expect units of local government and our public schools to provide the same level of public goods and services if not a higher quality of education but at a lower price. 

TEL proponents and policy makers disaffected by the seemingly ever increasing size and cost of public education assert that the TEL will lower property taxes and, therefore, make the provision of public education more efficient rather than cutting essential educational programs and services.  Although most people realize there is no such thing as a “free lunch,” TEL advocates claim that school systems could provide at least the same quantity of education without lowering the quality of education because the TEL would compel districts to eliminate waste.  But no TEL can guarantee that any school district will not cut non-mandate protected programs and services or regular education before eliminating any waste or inefficiency.  

The passage of the major TEL’s, Proposition 2.5 in 1980 in Massachusetts and Proposition 13 in 1978 in California, shows how voters frustrated with state governmental inefficiency, waste, and overspending resorted to a cap which they perceived as the only means available to remedy their situation.  Voters in both states believed prior to the vote that the imposition of the TEL would substantially eliminate inefficiency, waste, and overspending but it would do so without lowering the quality or quantity of public goods and services such as education.  But once the TELs were imposed in Massachusetts and California, however, taxpayers acted “consistent with the (O’Sullivan, 2001) regret theory of tax limits” or buyers’ remorse. 

The history of TELs, budgetary caps or even the wage and price controls imposed under former President Nixon demonstrates that placing arbitrary limits on revenues and expenditures results in a corresponding reduction in the quantity and quality of the public programs and services such as education provided by the TEL affected entity.  Indeed, Downes and Figlio (2008) describe the TEL proponents who assert that “constitutional constraints like Proposition 13 could reduce the size of local governments and, at the same time, have little or no effect on the quality of public services provided” as seeking a “free lunch.” 

Apples versus OrangesMassachusetts’ Proposition 2.5 versus Governor Christie’s 2.5% Cap

Contrary to Governor Christie’s 2.5% cap proposal, Massachusetts imposed its 2.5% TEL during an economic boom and provided significant amounts of incremental state aid to school districts to make up for the loss of local property tax revenue.  But New Jersey is mired in a deep recession with seemingly ever increasing state budget deficits which have already resulted in severe cuts to state educational aid.  Because state aid is declining and no additional state financial aid is forthcoming to offset lost property tax revenues, school districts would be forced to cut non-mandate protected educational programs and services much more deeply than was experienced in Massachusetts. 

State aid is unreliable.  Massachusetts educational aid fluctuates while California has not complied with Proposition 98’s constitutional guarantees to provide state aid to local school districts to make up for the property tax revenues lost under Proposition 13.  As a result of Proposition 13, California’s per pupil spending fell precipitously to an average of approximately $7,500 per pupil as compared to an average of $47,000 per inmate at its state penal institutions while its average class sizes became the second highest in the nation.  Also, Massachusetts imposed its 2.5% cap during a period of declining student enrollment while New Jersey’s enrollment levels continue to increase.  Hence, Massachusetts’ lower school district expenditures were largely offset by a much lower level of student enrollment which helped to greatly minimize the cuts to educational programs and services which would not be the case in New Jersey. 

Taxpayers’ Expectations for TELs

New Jersey taxpayers generally seem to believe that much greater accountability, efficiency, and transparency at all levels of government will lead to lower spending and, hence, lower taxes.  But voters do not want fewer public goods and services; just a much lower price for the public goods and services that they enjoy today.  Government at all levels tends to overtax, taxpayers contend, because governments waste financial resources and are inefficient.  Governor Christie’s 2.5% TEL, therefore, seems to be a tempting way to accomplish these goals.  

In addition, Governor Christie’s 2.5% TEL lacks the flexibility for state and local governments as well as our public schools to respond appropriately to unforeseen circumstances or a declining economy.  For instance, public schools tend to experience an increase of students transferring from private schools when the economy declines and parents are more challenged to find ways to pay for tuition in addition to property taxes.  Governor Christie’s 2.5% cap proposal, therefore, can not guarantee that any level of government will operate at peak efficiency before cutting the public goods and services including education that they provide. 

Governor Christie’s 2.5% cap proposal would enable the state to determine the budgetary and property tax policies of local governments and school districts through its state imposed limitations.  If enacted, the 2.5% cap would lead, therefore, to increased centralization of educational funding along with its concomitant increased control over local school districts’ operations.  The 2.5% TEL would lead to limitations on local school district expenditures and property tax levies which in turn would lower the quality of public education. 

TELs’ Impact on Education and Student Achievement

TELs not only limit the amount of property tax revenue available to school districts but also and more importantly adversely impact how a typical school district provides educational programs and services.  Downes and Figlio’s (1999a) findings explain how “the imposition of tax and expenditure limits results in the long-run reductions in the performance of public school students.”  Students attending schools in TEL affected districts (Figlio, 1997; Downes, Dye, & McGuire, 1998; Downes & Figlio, 1999b) not only experienced much larger class sizes but also scored significantly lower on mathematics, language arts, and social studies standardized tests.  When it comes to education, therefore, TELs lead to a reduction in the quantity as well as the quality of education, an increase in class sizes, and a leveling down of student achievement. 

TELs seem to adversely impact student achievement disproportionately to the amount of property tax revenues lost or expenditures cut.  Downes and Figlio (2008) conclude that TELs “lead to reductions in student outcomes that are far larger than might be expected given the changes in spending.”  Possible explanations for this result include disproportionate cuts in instructional rather than administrative expenditures, higher student-teacher ratios, and a shift especially of the more talented students to private K to 12 schools.  Because teacher salaries and benefits generally account for more than approximately 70% of a typical school district’s budget, it stands to reason that these expenses would be cut more severely.  Reductions of teachers under the constraints of a TEL often lead to larger class sizes which when combined with the loss of regular educational programs and services tends to result in the transfer of many students especially the more gifted ones to private schools (Downes & Figlio, 2008.) 

Conclusion

While Governor Christie aims to limit local public school districts’ property tax revenues and expenditures to no more than a 2.5% annual increase, this cap will most likely lead to a leveling-down of the quality of public education.  Indeed, our nation’s two major TELs, California’s Proposition 13 and particularly Massachusetts’ Proposition 2.5 on which Governor Christie’s proposal is modeled, demonstrate the downside of such caps.  These TELs (Fishel, 2001) destroyed the connection among local control, property taxes, school district budgets, educational quality, and taxpayer support because taxpayers essentially lost their ability to hold local school districts accountable to their goal of maximizing their property values. 

The fundamental problem with trying to hold all of New Jersey’s public school districts’ property tax revenues and expenditures to annual increases not exceeding 2.5% is that it leads to a one-size-fits-all approach for education but one that fits no district.  Baker, Green and Richards (2008) explain, “The local property tax empowers local voters to express what they want for their local public schools.”  But when the artificial budgetary constraints of a TEL are imposed by the state, as Baker, Green and Richards (2008) conclude, “the political advantages of empowering local citizens and promoting competition and sorting among jurisdictions is lost.”  Thus, the TEL leads to school district budgets that are incongruous with the needs and priorities of local school districts. 

Governor Christie’s proposed reduction in local school district control over the levying of property taxes and determining the operating budget decreases local school district accountability and adversely affects public school quality.  Because reductions of property tax revenues through the 2.5% TEL will reduce the level of local investment in the school district; the stake held by local taxpayers is similarly reduced.  Fischel (2001) explains this using the motives of taxpayers without children in the public schools, “At the local level, they are willing to support, or at least not oppose, high levels of spending because better schools add to the value of their homes.”  Through the imposition of a TEL, “At the state level, voters without children do not perceive such an offsetting benefit to their taxes.”  Having a lowered sense of ownership in their schools, taxpayers become more complacent without local control over their school district’s property taxes.  This causes a corresponding reduction in the level of accountability required by the stakeholders and, therefore, the quality of their public schools’ education declines.

Taxpayers choose the local public school district that best meets their needs and one that will contribute to their property values by exercising true Tieboutian choice (Tiebout, 1956) and voting with their feet.  But taxpayers vote not only with their feet but also on school district operating budgets, capital projects, and board of education members.  Through the exercise of these votes, taxpayers control the quality of education provided by their local schools as well as the level of property taxes levied.  Their collective decisions lead to a Pareto efficient allocation of local public education. 

But a TEL, such as Governor Christie’s 2.5% cap proposal, would destroy the Tieboutian equilibrium (Tiebout, 1956) enjoyed by local public school districts.  It would do so by artificially limiting budgets below the levels congruent with the needs and priorities of local school districts.  Because the quality of a taxpayer’s local public schools as well as his/her property taxes are capitalized in the value of their home, the consequence of Governor Christie’s 2.5% TEL would be to lower educational quality and, therefore, property values.  

References

Baker, B. D., Green, P., & Richards, C. E., (2008). Financing Education Systems, Upper Saddle River, New Jersey:  Pearson Education, Inc. 

Downes, T. A. & Figlio, D. N., (1999a). Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality. National Tax Journal, 52, 113-128. 

Downes, T. A. & Figlio, D. N., (1999b). Economic Inequality and the Provision of Schooling, Federal Reserve Bank of New York, Economic Policy Review, 5, 99-110.   

Downes, T. A. & Figlio, D. N., (2008). Tax and Expenditure Limits, School Finance and School Quality in The Handbook of Research in Education Finance and Policy, Ladd, H. F., & Fiske, E. B., (Editors) (373-388).  New York, New York:  Routledge Taylor & Francis Group. 

Downes, T. A., Dye, R. F., & McGuire, T. J., (1998). Do Limits Matter? Evidence on the Effects of Tax Limitations on Student Performance, The Journal of Urban Economics, 43, 401-417.

Figlio, D. N., (1997). Did the “Tax Revolt” Reduce School Performance?, The Journal of Public Economics, 65, 245-269.

Fischel, W., (2001). The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies, Cambridge, Massachusetts: Harvard University Press.  

O’Sullivan, A., (2001). Limits on Local Property Taxation:  The United States Experience in Property Taxation and Local Government Finance, Oates, W. E., (Editor) (177-200). Cambridge, Massachusetts:  Lincoln Institute of Land Policy.

O’Sullivan, A., Sexton, T. A., & Sheffrin, S. M., (2007). Property Taxes and Tax Revolts:  The Legacy of Proposition 13. Cambridge, Massachusetts:  Cambridge University Press. 

Tiebout, C. M., (1956). A Pure Theory of Local Expenditures, The Journal of Political Economy, 64, 416-424.

CEIFA’s Impact

Thursday, December 10th, 2009

The rising power of state government (Fusarelli and Cooper, 2009) has grown from the states’ increasing domination of school finance and, therefore, policy making because of the strings the states attached to funding.  Legal challenges to funding inequities and disparities led to court decisions such as Serrano v. Priest establishing financial neutrality as the basis for school funding.  States remedied the disparities among districts with the infusion of incremental state funds and regulation.  Subsequent rulings focused on adequacy and required state governments to provide resources to disadvantaged districts such that the provision of education adequately met their constitutional requirements.  New Jersey’s state constitution was deemed to go even further because of its provisions guaranteeing a thorough and efficient education especially in the Abbott v. Burke court decision. 

 

Although the state’s flawed approach to education is exemplified by the new funding formula contained in the New Jersey School Funding Reform Act (SFRA) of 2008, it is manifested in its predecessor, the Comprehensive Education Improvement and Financing Act of 1996 (CEIFA.)  Dr. Reock studied the financial impact on school districts of the state’s failure not only to not fully enact CEIFA but also to freeze most CEIFA funding beginning with the 2002-03 school year (Reock, 2007.)  Based on his study (Sciarra, 2008), Dr. Reock found that “the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state.” 

 

Instead of fully funding CEIFA’s school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs as well as state and federal unfunded mandates.  The shortfall was hardest on those districts that were most dependent upon state aid.  During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-Abbott DFG A and B districts, $758 in DFG C through H districts, $386 DFG I and J districts and $188 in Abbott districts.  

 

The impact of the CEIFA funding shortfall was minimized on the Abbott districts largely due to their “parity-plus” court mandated protection.  State law forbids the budget of an Abbott district from falling below its level of the prior school year (Hu, 2006.)  Furthermore, under state law, if an Abbott district increases local property taxes without a state directive to do so, it will lose a similar amount of state aid. 

 

The CEIFA funding shortfall caused serious imbalances between local school districts.  During the 2005-06 school year, Abbott districts received approximately 58% of all state financial aid while educating only 23% of New Jersey’s K to 12 student enrollment.  This meant non-Abbott districts were educating 77% of New Jersey’s students with only 42% of state aid.  This imbalance has continued to widen under SFRA with Abbott aid increasing to approximately 60% of all state aid or $4.64 billion.  State aid reductions and the ever increasing unfunded state mandates force non-Abbott districts to balance their budgets by raising property taxes, increasing class sizes as well as cutting regular education programs and services.   

 

As part of his statement of New Jersey Supreme Court certification in support of the Plaintiffs’ opposition to the School Funding Reform Act (SFRA) of 2008, Dr. Reock concluded (Sciarra, 2008) that “the State’s failure to fund CEIFA for the past six years directly resulted in an enormous shortfall of funding in districts across New Jersey.”  He went further to state, “By 2007-08, the sixth year of the CEIFA “freeze,” the total under-funding of state aid had reached $1.326 billion annually, despite the introduction of several new, smaller aid programs.”  The result was a state-driven increase in local property taxes within non-Abbott districts to make up for the shortfall. 

 

By passing through the majority of the cost of state mandates to local school districts, the State of New Jersey forces local schools to divert resources to bureaucratic regulatory compliance.  As a result, disproportionate amounts of a typical school district’s scarce financial and human resources are not invested in the classroom where they are needed most.  Local school districts would be able to operate more cost-effectively, earn a higher rate of return on their educational investment and provide greater accountability if they were free to concentrate on improving every student’s performance with the maximum possible level of local public support for the public funding of its public schools.

 

 

References

 

Fusarelli, B. C., & Cooper, B. S., Editors.  (2009) The Rising State: How State Power is Transforming our Nation’s Schools, Albany, New York: SUNY Press. 

Hu, W. (2008) In New Jersey, System to help Poorest Schools Faces Criticism, New York Times, October 30, 2006

Reock, E. C. Jr., (2007) Paper, Estimated Financial Impact of the ‘Freeze’ of State Aid on New Jersey School Districts, 2002-03 to 2005-06, Institute on Education Law and Policy, Rutgers University, Newark, http:// ielp.rutgers.edu/docs/CEIFA_Reock_Final.pdf.  

Sciarra, D. G., (2008) Certification of Dr. Ernest C. Reock, Jr. for the Supreme Court of New Jersey in support of the Plaintiffs’ opposition to the School Funding Reform Act of 2008, Education Law Center, Newark New Jersey, http://www.edlawcenter.org/ELCPublic/elcnews_080521_ReockCertification.pdf  

 

Local School Districts mean Better Education

Tuesday, April 7th, 2009

Is bigger really better?  This is the crucial question facing New Jersey’s schools as the state moves toward a consolidated county-wide school district framework.  The proposed consolidation would eliminate local school district administrative personnel and centralize the operation of each of the county’s schools within one county-wide district such as the model used in Maryland (Enlighten-New Jersey, 2006).  As a result, all decisions concerning local school functions would be made at the county level with little local recourse. 

 

While consolidation may sound tempting, because it is based on a presumption of economies-of-scale leading to assumed lower operating costs as well as improved administrative efficiencies which, in turn, are expected to result in lower property taxes plus greater parental engagement, the reality is much different, however.  It has been shown that county-wide districts often result in increased costs, increased bureaucracy, students being so remote that parents are less engaged, and increased special interest group control of the agenda, curriculum as well as the distribution of funds (Wenders, 2005).  

 

County-wide school districts tend to expand the county departments of education into unwieldy bureaucracies (Wenders, 2005).  These bureaucracies often become so large that their administrative costs exceed the combined cost of the local administrative personnel, including but not limited to superintendents, business administrators and directors of special education, they are supposed to replace.  Moreover, because these county departments of education are staffed largely by political appointees, they tend to operate without the essential public feedback that is the backbone of local boards of education. 

 

At the outset, New Jersey’s legislators used Maryland’s experience (School Board Notes, 2006) as a benchmark for the expected savings and efficiencies for New Jersey’s consolidation.  However, during her testimony to a panel of New Jersey state senators, Ms. Marie S. Bilik (2008), Executive Director of the New Jersey School Boards Association, demonstrated that the total state-wide administrative costs of the Maryland school system exceed those of New Jersey’s.  While testifying in front of the New Jersey Senate Budget and Appropriations Committee on March 20, 2008, Ms. Bilik referenced an U.S. Department of Education report (2006), “A recent report by the U.S. Department of Education ranks New Jersey 38th among the states and District of Columbia in the percentage of current expenditures devoted to administration.  That means 37 other states – including Maryland and Pennsylvania – spend more on administration than New Jersey.”  In addition, enrollment in New Jersey’s public schools was over fifty percent greater than that of Maryland during the same period and continues to exceed Maryland’s enrollment by similar margins.  Thus, rather than removing administrative costs, the Maryland model has actually added costs and administrative overhead (Bilik, 2008). 

 

While New Jersey has not yet moved to a complete county-wide model, its recent school consolidation legislation has significantly increased the power of the politically appointed Executive County Superintendent.  Among these expanded powers is the ability to compel the creation or expansion of regional school districts with the ultimate goal of consolidating the regionalized districts into one county-wide school district in every county.  New Jersey’s county-wide school districts would be run by Executive County Superintendents, political appointees, who would not be accountable to the voters but rather would serve at the discretion of partisan political forces. 

 

But consolidation of local school districts into county level districts also tends to result in more of a traditional military-type command-and-control decision making process rather than a process controlled by local school districts with the active participation of local constituencies most notably local parents.  In a command-and-control model, while the state and federal policy makers develop the overall strategy for policy implementation (Fusarelli and Cooper, 2009), it is the county-wide school districts that combine these policies with their political directives to determine the curriculum, priorities and budget for each school.  However, because the county level is too distant from where education actually takes place and is more easily influenced by special interest groups, the result is often less parental engagement. 

 

Concentrating the school system at the local district level rather than at the county level will not only enable more resources to be focused on those most affected by education, the students, but also enable those most intimately involved in providing education, the teachers, to provide better instruction.  But the rise of county departments of education will also cause the local school districts to spend less time on students as well as parents because more time will be required to be spent on bureaucratic obligations thereby decreasing parental engagement which is a key component in improving student performance.  It is the local districts that not only are closest to the students but also have the necessary local expertise to most effectively decide how to provide a quality education. 

 

Indeed, it seems as if the reason for preventing or eliminating county-wide school districts is embodied in the landmark Brown v. Board of Education case.  In Brown v. Board of Education, the Supreme Court not only ruled against school racial segregation by striking down the practice of separate but equal but also established the right of all students to attend their neighborhood school.  Consistent with this ruling, it is essential that every child be able to attend their neighborhood school within a local school district free from the burden of county level bureaucracies so that the schools are better able to concentrate on improving every student’s performance. 

 

Consolidating local school districts into larger county-wide districts removes decision making authority from those most affected by educational policy decisions:  the individual student as well as his/her parents, school and district.  It also concentrates policy formulation and decision making at a centralized level where special interest groups have greater leverage on the policy makers and, as a result, greater control of the policy outcomes including local school budgets.  Moreover, consolidation of local school districts into county level districts while fewer in number tends to result in higher state-wide total administrative costs due to the lack of accountability, more political patronage and reduced local parental input. 

 

_______________________________

References

Bilik, M. S. (2008).  Testimony: FY09 State Budget, Senate Budget and Appropriations Committee, Senate Annex, Committee Room 4, Trenton, New Jersey, March 20, 2008.   

Enlighten-New Jersey, (2006).  Is School Consolidation The Answer To New Jersey’s Property Tax Crisis?  August 9, 2006, Retrieved from http://www.enlightennj.com. 

Fusarelli, B. C. and Cooper, B. S., (2009).  The Rising State: How State Power Is Transforming Our Nation’s Schools, State University of New York Press, Albany.   

School Board Notes, (2006)  New Jersey vs. Maryland: The Facts,  September 14, 2006, Retrieved from http://www.njsba.org Trenton, New Jersey: New Jersey School Boards Association. 

U. S. Department of Education, National Center for Education Statistics (2006).  Common Core of Data, August, 2006.  

Wenders, J. T., (2005)  Deconsolidate Oregon’s School Districts  March 21, 2005, Retrieved from http://www.cascadepolicyinstitute.org. 

 

 

 

 

Guest Viewpoint by Dr. Bruce Cooper: “Beyond Bricks and Mortar” edweek.org 1-21-09

Thursday, January 22nd, 2009

Published Online: January 21, 2009
Published in Print: January 21, 2009

Commentary

Beyond Bricks and Mortar

 

With a worsening U.S. economy, America’s schools face tough times ahead. Can new leadership in Washington succeed in linking steps devised to relieve our economic woes with measures to improve education policies—and, in the process, moderate the effects of the recession on our schools?

It would be a terrible mistake to let the schools become a casualty of this downturn. We know from the work of economists such as Theodore Schultz, Henry M. Levin, Martin Carnoy, and others that societal investments in education pay long-term dividends in higher earnings, more-productive economies, increased gross domestic product, and a better way of life. In flush times, it is easy and useful to invest more in schools and the children who attend them. Not so in this terrible economy, with reduced tax receipts and lower allocations to schools at all levels of government. What President Barack Obama advises will be critical.

Of course, public schools, as well as private ones, will have to tighten their belts, eliminate waste, and use money more frugally. They must trim bureaucracies and learn to provide more instruction and support for students with less funding. But they are too valuable to the nation’s well-being to be wrecked or weakened. Federal leadership will be essential in this area, not only in reducing the negative impact on schools, directing funding to where it matters most, and eliminating unnecessary and ineffective spending, but also in providing schools with models of best practices and most-effective uses of funds.

As a first step, Mr. Obama has proposed one simple yet elegant solution: Use part of a government-financed stimulus package to hire the growing number of unemployed workers, who can help build new, much-needed facilities and renovate older schools to better foster student learning. The idea, drawn from the Depression-era Works Progress Administration and the Public Works Administration, which built bridges, roads, and public buildings in the 1930s, is a good one. But there are also other ways to meld educational and economic improvement. Here are some suggestions:

• Merit pay, improved outcomes.

Paying teachers consumes about half the budgets of U.S. schools. We need to keep adequate funding for compensation available, and the ranks of teachers strong. But these allocations could be used to do more than simply pay all teachers at a general salary level. They could strategically target funding, providing more to the teachers of low-achieving students, those working in difficult schools, and teachers in understaffed subjects like physics and math and special education. More also could be given to teachers who make outstanding improvements in student learning.

“Merit pay” has always been a scary term to teachers’ unions, but President Obama could work to persuade teaching professionals that differentiated pay for differentiated responsibility and better performance in hard-to-staff settings and subjects is not a plot to destroy unions. It is a strategy for making dollars go further to benefit students and their communities.

• With less funding available, more directed to the classroom.

Another, more controversial step would be to reduce total school funding, as the economy requires, while maintaining as much spending in the classroom as possible. In 1988, Robert Sarrel, then the business manager of New York City high schools, Sheree Speakman, an analyst at Coopers & Lybrand, and I devised a system (later called In$ite) that accounted for the proportion of real resources that reached the classroom for face-to-face, direct instruction of children. When Mayor Rudolph W. Giuliani of New York later instituted use of the Finance Analysis Model, only 33 percent of school funds were found to be reaching the children for direct instruction. Today, the level under his successor, Mayor Michael R. Bloomberg, has reached 57 percent for direct teaching and learning (including, for example, teachers’ salaries and benefits, textbooks, computers, and other materials), and a full 90 percent has been spent in the schools themselves, rather than the central office, reducing waste, bureaucracy, and overhead.

America can expand and broaden this trend by directing more of the diminished resources for education directly to schools, reducing the central bureaucracy, and by making more of that money available at the classroom level for instruction. This strategy would enable schools to absorb the decline in revenue creatively and to the benefit of students.

• Managing increases in special education students and costs.

The chief new costs in the field are for special education, as nearly 14 percent of children are now classified as eligible, and more than a quarter of all costs at the district level are for serving these students (from special transportation and occupational, speech, and physical therapies, to double time, scribes to write for kids, one-to-one paraprofessionals, interpreters, and nurses). As the numbers and services go up, the expenses rise. It’s time to build better programs, ones that are more economical and more local, and that make use of existing facilities and resources.

• “Leveling down” to greater equity.

In better economic times, the states have sought to equalize spending across districts, using concepts of equity and, more recently, of adequacy. Now, with states having much less money at their disposal, equity may mean a “leveling down”: Richer districts may find their budgets significantly reduced by a combination of higher real estate taxes and diminished housing values, while poor urban districts could be in slightly better shape. These are times to look at the effects of tax revenues and property values—the key way that local school districts raise money. Equity may change meaning, and the new president should keep a close eye on these changes in school funding across states and between states.

In education, money matters more now than it has since the Great Depression. More children are entering school, and, with preschool and pre-preschool programs growing along with college-going rates, they are staying in school longer. We know that healing the economy will be President Obama’s top priority. But schools, which seemed in the long campaign season to have fallen steeply on the nation’s priority list, are always important. By thinking through the new finances of schools, we can help build, fix, staff, and improve them, even—perhaps particularly—in tough times like these. History has shown us that today’s financial support and operational improvements will pay economic dividends in the future.

Vol. 28, Issue 18, Page 26

Creating Self-Governing Independent Public Schools

Sunday, January 11th, 2009

Our public schools must be given the choice of becoming self-governing so that they can be free to provide a top quality educational system.  A self-governing public school district is free of state control as well as federal intervention.  Therefore, it would be independent of the state system but remain a public school district serving the same local community rather than a charter school or a private school or a school run in full or in part by a private company.  While public school districts could elect to stay within the state system and continue to abide by all mandates, all districts should be given the opportunity to legally opt out.  The ability to opt for self-governance would be supported by legislation.  

 

Self-governance would provide public schools with the authority to improve education consistent with the priorities of their local school communities as well as the flexibility to innovate rather than be forced to march in lock-step to the state’s one size fits all mandates.  Public schools choosing to opt out would be independent public schools free of all state mandates except for perhaps reporting test results but they would also forgo all state aid.  Opting out of the state system would restore decision-making to the local school district level.  Because decisions guiding the operations of self-governing schools would no longer be made largely at the county or state level, parents, teachers, school administrators, boards of education, and local taxpayers would be better able to shape the quality of education which their students receive in their local schools. 

 

A public school district would become self-governing when a simple majority of the registered district voters who voted in a district-wide vote approved of the change.  While these votes would comply with the laws governing ballot procedures, campaigns and elections, they would be held in April so as to provide sufficient lead time to convert to self-governance by July 1, the beginning of the new fiscal year.  Once the district community voted to authorize the school district to become self-governing, it would be governed solely by its board of education.  Board of education members would be chosen from among the registered voters in the school district.  Municipal, county, state and federal governments would no longer play any role in the governance or management of self-governing school districts.  Therefore, boards of school estimate would no longer have any role vis-à-vis appointed boards of education. 

 

Local property tax levies rather than tuition would continue to be the primary source of funding for self-governing public school districts.  Still, these districts would be eligible to receive appropriate state or federal grants.  The annual operating budget and debt authorizations for a self-governing public school district would be decided by its board of education rather than be subject to district-wide public votes.  Indeed, this would be consistent with the fact that the annual operating budgets of municipal, county, state and federal governments are not subject to approval through a vote of their respective electorates.   

 

Becoming self-governing would enable a school district to operate more efficiently and cost-effectively through the exercise of many new choices.  A self-governing school district would be free to choose whether to have unions.  If it chooses to be union-free, it would be no longer subject to such legislative restrictions as the New Jersey Employer-Employee Relations Act which is commonly referred to as the “PERC law” (Strassman, Vogt and Wary, 1991.)  If the district elected not to have unions, then all union contracts such as those with its teachers would be dissolved and renegotiated once the district became self-governing. 

 

Free of outside governmental intrusion such as the No Child Left Behind (NCLB) Act, the district also would be free to determine its teacher licensing requirements including training, education and experience.  Because the district would no longer be subject to the New Jersey Core Curriculum Content Standards (CCCS,) it would be free to develop and determine its own curriculum.  The district also would be free to determine whether or not to offer special education because the Individuals with Disabilities in Education Act (IDEA) and state special education requirements would no longer apply.  If the district chooses to provide special education, then it would have sole discretion over what level and kinds of special education it offered.  

 

A self-governing public school district would be held harmless from frivolous lawsuits through its enabling legislation.  This would help to greatly minimize escalating legal expenses.  Law suits filed against the district would be heard first by one of several newly created arbitration panels.  Arbitration panel members would be appointed by a newly created state-wide association of self-governing public school districts. 

 

By changing to self-governance, a school district would be able to cut unnecessary expenses through the elimination of special education-based lawsuits with the ever increasing costs arising from such litigation.  As parents have become more knowledgeable about what constitutes special education programs and services, they have increased their demands to have their children receive not only more intensive services as well as increasing their children’s classification but also more placements in private schools which have resulted in more parents suing school districts for these additional benefits.  New Jersey’s legal system, however, operates according to a fee shifting principle in which a school district losing in an administrative court not only must pay all of the judgment costs but also all of the plaintiff’s legal costs including those for their attorneys and expert witnesses regardless of the length of the trial. 

 

Litigation for special education proceedings often takes longer than civil law suits which increase legal fees and court costs.  In addition, there is the cost resulting from the amount of time required of teachers, child study teams and administrators to appear in court rather than in school.  While school districts do settle a number of cases rather than run the risk of potentially more expensive outcomes, these settlements fuel the cost of providing special education.  Holding New Jersey school districts harmless from such law suits would be another way in which to enable school districts to allocate more of their scarce resources to student instruction.

 

The ever increasing cost of unfunded and under funded mandates is not only forcing school districts to cut regular education programs and, therefore, leveling down student achievement but also increasing property taxes.  But New Jersey’s public school districts can no longer afford to pay for these unfunded and under funded mandates because most school districts are forced to spend disproportionately more to meet the requirements of these mandates than these districts receive in total state and federal financial aid.  If local school districts opted for self-governance, therefore, they would eliminate the excessive financial and administrative burdens imposed by the county, state and federal governments. 

 

Opting for self-governance would increase the financial resources available for the classroom because it would be much more cost effective for local school districts to provide educational programs and services without the administrative burden of state requirements.  The funds that are currently used for regulatory compliance with state mandates could be redirected to improving student learning and achievement, which after all is the real mission of our schools.  Changing our state’s educational system in this way would not only improve the quality of education but also increase property taxpayers’ return on investment.  But Trenton continues to blame school districts for property tax increases rather than take responsibility for their role in keeping property taxes high.  Instead of fully funding their mandates to reduce the property tax burden which drives up the cost of public education, Trenton focuses largely on constricting school district funding, budgets, operations and the independence of local school districts.   

 

The state’s flawed approach is demonstrated in the new funding formula as contained in the New Jersey School Funding Reform Act (SFRA) of 2008 as well as its predecessor the Comprehensive Education Improvement and Financing Act of 1996 (CEIFA,) which caused higher property taxes and cuts in regular education.  Dr. Reock, Rutgers University Professor Emeritus, studied the financial impact on school districts of the state’s failure not only to not fully enact CEIFA but also to freeze most CEIFA funding beginning with the 2002-03 school year and reached a profound conclusion (Reock, 2007.) 

 

Based on his study (Sciarra, 2008), Dr. Reock found that “the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state.”  Instead of fully funding the CEIFA school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs as well as state and federal unfunded mandates.  The shortfall was hardest on those districts that were most dependent upon state aid.  During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-Abbott DFG A and B districts, $758 in DFG C through H districts, $386 DFG I and J districts, and $188 in Abbott districts. 

 

The impact of the CEIFA funding shortfall was minimized on the Abbott districts largely due to their “parity-plus” court mandated protection.  State law forbids the budget of an Abbott district from falling below its level of the prior school year (Hu, 2006.)  Furthermore, under state law, if an Abbott district increases local property taxes without a state directive to do so, it will lose a similar amount of state aid. 

 

The CEIFA funding shortfall also caused serious imbalances between local school districts.  During the 2005-06 school year Abbott districts received approximately 58% of all state financial aid while educating only 23% of New Jersey’s K to 12 student enrollment.  This meant non-Abbott districts were educating 77% of New Jersey’s students with only 42% of state aid.  This imbalance has continued to widen under SFRA with Abbott aid increasing to approximately 60% of all state aid or $4.64 billion.  State aid reductions and the ever increasing unfunded state mandates force non-Abbott districts to balance their budgets by raising property taxes, increasing class sizes as well as cutting regular education programs and services.   

 

As part of his statement of New Jersey Supreme Court certification in support of the Plaintiffs’ opposition to the School Funding Reform Act (SFRA) of 2008, Dr. Reock concluded (Sciarra, 2008) that “the State’s failure to fund CEIFA for the past six years directly resulted in an enormous shortfall of funding in districts across New Jersey.”  He went further to state, “By 2007-08, the sixth year of the CEIFA “freeze,” the total under-funding of state aid had reached $1.326 billion annually, despite the introduction of several new, smaller aid programs.”  The result was a state-driven increase in local property taxes within non-Abbott districts to make up for the shortfall. 

 

Creating state-wide self-governing public school districts free of state control is the solution that will lead to a top quality, cost-effective educational system while Trenton continues to force local school districts to pay for its under-funded and unfunded mandates that unnecessarily increase the cost of providing education and drive up property taxes.  By forcing school districts to divert necessary resources to paying for the escalating costs of the State of New Jersey’s mandates rather than investing these scarce resources in the classroom where they are needed most, the State of New Jersey harms the quality of education.  Local school districts, therefore, would be able to operate more cost-effectively with lower property taxes and earn a higher rate of return on their educational investment if they became self-governing by opting out of the state system. 

 

 _______________________________

References

Hu, W., (2008) In New Jersey, System to help Poorest Schools Faces Criticism, New York Times, October 30, 2006. 

Reock, E. C. Jr., (2007) Paper, Estimated Financial Impact of the ‘Freeze’ of State Aid on New Jersey School Districts, 2002-03 to 2005-06,” Institute on Education Law and Policy, Rutgers University, Newark, http:// ielp.rutgers.edu/docs/CEIFA_Reock_Final.pdf  

Sciarra, D. G., (2008) Certification of Dr. Ernest C. Reock, Jr. for the Supreme Court of New Jersey in support of the Plaintiffs’ opposition to the School Funding Reform Act of 2008, Education Law Center, Newark New Jersey, http://www.edlawcenter.org/ELCPublic/elcnews_080521_ReockCertification.pdf

Strassman, E. R., Vogt, K. R., and Wary, C. S., (1991). The Public Employment Relations Law, Trenton, New Jersey: New Jersey School Boards Association.    

 

 


Under-funded Preschool Mandate Drives Up Costs

Sunday, December 28th, 2008

While Trenton’s preschool mandate may seem well intended, it is another under funded mandate whose costly compliance will drive up property taxes and force cuts to regular education programs.  It is rather difficult to fathom how the state can continue to mandate under funded requirements that unnecessarily increase the cost of providing educational services and programs especially considering how our schools likely will be forced to build new classroom capacity.  But this is exactly what the state is doing with the (McNichol, 2008) “state’s biggest expansion of preschool for low-income students since the state Supreme Court’s Abbott v. Burke rulings, which ordered universal pre-kindergarten” in all 31 Abbott districts.  Moreover, the Court’s Abbott preschool decision was by itself a major expansion of the State of New Jersey’s thorough and efficient education clause because the State Constitution only pertains to students five to eighteen years old. 

 

Although every school district is required to ultimately enroll at least 90% of their eligible children by the 2013-2014 school year, the state is setting aside only $350 million to cover the costs of the educating another 30,000 preschool students statewide (Brody, 2008) over the next five years.  But the Corzine administration is already laying the groundwork for a deferral of the      $50 million set aside for the mandate’s first year if not the entire $350 million through its suggestions of spending reductions it may have to make in order to close projected budget deficits of $1.2 billion in the current fiscal year and $5 billion in the upcoming 2009 fiscal year.  Neither Governor Corzine nor Department of Education Commissioner Davy has said a word, however, about deferring the mandate’s costly requirements which will be paid for by local school districts. 

 

The New Jersey School Funding Reform Act (SFRA) of 2008, which is more commonly referred to as the new state school funding formula, included a preschool mandate requiring (Wojcik, 2008) all eligible “at-risk three and four-year-old children be offered high quality preschool program beginning at age three” in every school district statewide.  Eligible children include all those who are eligible for (Brody, 2008) “a free or reduced-price lunch.”  Each school district must begin by enrolling at least 20% of their district’s eligible student population by the 2009-2010 school year and increasing annually to 35% in 2010-2011, 50% in 2011-2012, 65% in 2012-2013, and 90% in 2013-2014.   

 

The mandate requires full day instruction and limits each preschool student class size to no more than 15.  Because these are mandate-protected classes, if a school lacks sufficient classroom capacity it will be forced to consolidate classes or increase class sizes for other grades to make room for the preschoolers in September.  But if a school district builds, acquires or leases additional classroom facilities to accommodate the preschoolers, none of these costs will be funded by the State of New Jersey.

 

Each class must be taught by a preschool certified Master teacher and one Master teacher’s aide.  In addition, each school district is required to have a Master teacher without any other teaching responsibilities plus a preschool intervention and referral team, a child advisory council as well as a community and parental involvement specialist.  However, only as much as 20% of the Master teacher’s compensation will be considered as outside of the state’s administrative cap and as part of the Special Revenue Fund rather than the General Fund.  Therefore, the mandated additional salaries and benefits not only will be paid for by local school districts rather than the state but also virtually all of these expenses will be included within the cap forcing other non-mandate protected programs to be cut. 

 

Making matters even more difficult is the prospect of forced intra-district busing.  Because of New Jersey’s two mile rule, if preschoolers live beyond the two mile radius or if there are too many preschoolers for the available space in their local school, then the school district will be required by New Jersey law not only to provide bus services for these preschoolers but also for all of its other students within the district.  However, the cost of busing students will not be funded by the state. 

 

With the ever increasing number, scope and cost of state under funded mandates, it begs the question of what costly programs will Trenton require next?  Given the mandate for full day preschool classes, can state mandated full day kindergarten be far off?  This preschool mandate seems to lay the foundation for mandated full day kindergarten because it is difficult to believe that Trenton would mandate full day preschool as well as first grade but allow kindergarten to remain as only a half day program. 

 

However, many districts in New Jersey provide only half day kindergarten as a way of saving on facility and faculty costs because one teacher can teach twice as many students.  Because it seems as if the state is reluctant to commit the necessary resources to fully fund its preschool mandate, it seems likely that the state would also under fund a full day kindergarten mandate.  Given Trenton’s track record, it seems reasonable to expect that not only will state education mandates continue to be under funded but also that they will continue to drive up property taxes as a result. 

 

_______________________________

References

Brody, L., (2008) The Big Picture: Districts grappling with preschool mandate, The Record, September 21, 2008. 

McNichol, D., (2008) Budget troubles endanger $350M preschool plan, The Star Ledger, October 30, 2008. 

Wojcik, S., (2008) Full-day preschool program in the works at Alpha School, The Express-Times, September 24, 2008.   

 

Allow Our Schools to Opt for Independence

Sunday, December 28th, 2008

To enable our public school districts to have the authority to improve education consistent with the needs of their local schools as well as have the necessary flexibility to innovate rather than march in lock-step to the state’s one size fits all mandates, local school districts should be empowered to opt out of the state system.  Public schools choosing to opt out would become independent public schools free of all state mandates except for perhaps reporting test results but they would also forgo all state aid.  Opting out of the state system would restore decision-making to the local school district level.  Because decisions guiding the operations of these schools would no longer be made largely at the county or state level, parents, teachers, school administrators and local taxpayers would be better able to shape the quality of education which their students receive in their local schools. 

 

Because the State of New Jersey forces most of its school districts to spend disproportionately more to meet the requirements of the state’s unfunded and under funded mandates than these districts receive in total state financial aid, if local districts opted out they would eliminate the excessive financial and administrative burdens imposed by the state.  This also would increase the financial resources available for the classroom because it would be much more cost effective for local school districts to provide educational programs and services without the administrative burden of state requirements.  The funds that are currently used for regulatory compliance with state mandates could be redirected to improving student learning and achievement, which after all is the real mission of our schools.  Changing our state’s educational system in this way would not only improve the quality of education but also increase property taxpayers’ return on investment. 

 

Rather than taking responsibility for its role in helping to create and foster the fundamental financial problems facing our educational system, Trenton seems to blame school districts for driving up property taxes.  Instead of fully funding their mandates driving up the cost of public education, their proposals to reduce the property tax burden focus largely on constricting school district funding, budgets, operations and the independence of local school districts. 

 

The state’s flawed approach is demonstrated in the new funding formula as contained in the New Jersey School Funding Reform Act (SFRA) of 2008 and its predecessor the Comprehensive Education Improvement and Financing Act of 1996 (CEIFA,) which caused higher property taxes and cuts in regular education.  Dr. Reock, Rutgers University Professor Emeritus, studied the financial impact on school districts of the state’s failure not only to not fully enact CEIFA but also to freeze most CEIFA funding beginning with the 2002-03 school year and reached a profound conclusion (Reock, 2007.)  Based on his study (Sciarra, 2008), Dr. Reock found that “the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state.”  Instead of fully funding the CEIFA school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs as well as state and federal unfunded mandates.  The shortfall was hardest on those districts that were most dependent upon state aid.  During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-Abbott DFG A and B districts, $758 in DFG C through H districts, $386 DFG I and J districts, and $188 in Abbott districts. 

 

The impact of the CEIFA funding shortfall was minimized on the Abbott districts largely due to their “parity-plus” court mandated protection.  State law forbids the budget of an Abbott district from falling below its level of the prior school year (Hu, 2006.)  Furthermore, under state law, if an Abbott district increases local property taxes without a state directive to do so, it will lose a similar amount of state aid. 

 

The CEIFA funding shortfall also caused serious imbalances between local school districts.  During the 2005-06 school year Abbott districts received approximately 58% of all state financial aid while educating only 23% of New Jersey’s K to 12 student enrollment.  This meant non-Abbott districts were educating 77% of New Jersey’s students with only 42% of state aid.  This imbalance has continued to widen under SFRA with Abbott aid increasing to approximately 60% of all state aid or $4.64 billion.  State aid reductions and the ever increasing unfunded state mandates force non-Abbott districts to balance their budgets by raising property taxes, increasing class sizes as well as cutting regular education programs and services.    

 

As part of his state of New Jersey Supreme Court certification in support of the Plaintiffs’ opposition to the School Funding Reform Act (SFRA) of 2008, Dr. Reock concluded (Sciarra, 2008) that “the State’s failure to fund CEIFA for the past six years directly resulted in an enormous shortfall of funding in districts across New Jersey.”  He went further to state, “By 2007-08, the sixth year of the CEIFA “freeze,” the total under-funding of state aid had reached $1.326 billion annually, despite the introduction of several new, smaller aid programs.”  The result was a state-driven increase in local property taxes within non-Abbott districts to make up for the shortfall. 

 

The fact that Trenton continues to force local school districts to pay for its under-funded and unfunded mandates that unnecessarily increase the cost of providing education and drive up property taxes is rather incomprehensible.  It is even more difficult to understand considering how our schools are suffering disproportionately from one of greatest financial crises ever to confront our nation.  Also, the State of New Jersey’s mandates harm the quality of education because they divert necessary resources to paying for the mandates’ costs rather than investing these scarce resources in the classroom where they are needed most.  Local school districts, therefore, would be able to operate more cost-effectively with lower property taxes and earn a higher rate of return on their educational investment if they opted out of the state system with its unfunded mandates. 

 

 

 _______________________________

References

Hu, W., (2008) In New Jersey, System to help Poorest Schools Faces Criticism, New York Times, October 30, 2006. 

Reock, E. C. Jr., (2007) Paper, Estimated Financial Impact of the ‘Freeze’ of State Aid on New Jersey School Districts, 2002-03 to 2005-06,” Institute on Education Law and Policy, Rutgers University, Newark, http:// ielp.rutgers.edu/docs/CEIFA_Reock_Final.pdf  

Sciarra, D. G., (2008) Certification of Dr. Ernest C. Reock, Jr. for the Supreme Court of New Jersey in support of the Plaintiffs’ opposition to the School Funding Reform Act of 2008, Education Law Center, Newark New Jersey, http://www.edlawcenter.org/ELCPublic/elcnews_080521_ReockCertification.pdf