NJ Education Report

This is a guest post by Jeffrey Bennett, who blogs at New Jersey Education Aid. It originally appeared in ROI.

Nearly 40 years ago, in February 1981, the Education Law Center launched on behalf of poor, urban districts statewide what would become the most educationally and budgetarily consequential lawsuits in New Jersey history: Abbott v. Burke.

Although former Education Commissioner Fred G. Burke is long departed, and the close identification of “poor” with “urban” has ceased to be accurate, the Abbott cases are still active, with the Education Law Center initiating another Abbott lawsuit, “Abbott XXIII,” this month.

This latest Education Law Center act is a demand that the state borrow billions for Abbott and only Abbott district construction projects. It is a lawsuit rooted in conditions of 1981, not 2019, and, if it were to succeed, it would reduce money available for numerous other state obligations, including, ironically, operating expense aid for public education, “Extraordinary Aid” for special needs students, and teacher pensions.

If successful, this would be the third time New Jersey has borrowed money for Abbott construction. The first time was in 2000 for $6 billion, with the Legislature and governor voluntarily agreeing to $2.6 billion to be shared by non-Abbotts and vo-techs. After that amount was exhausted, the second authorization was in 2008, for $2.9 billion for the Abbotts, with $1 billion for non-Abbotts and vo-techs.

The servicing costs for this debt are $1.1 billion per year, and that $1.1 billion debt service cost will not decline for seven years.

The debt servicing costs are paid out of the same income taxes that also fund K-12 opex aid, the Teachers’ Pension and Annuity Fund, municipal aid, direct tax rebates and aid for local agencies, all of which are underfunded.

For 2019-20, K-12 opex aid is underfunded by $1.8 billion, TPAF is underfunded by $631 million, and Extraordinary Aid is underfunded by $150 million. New Jersey also has no pre-funding at all for post-retirement medical care, which is entirely “pay as you go.”

Municipal aid and direct tax rebates are even more neglected and have been cut since 2001 in inflation-adjusted, per resident terms. In fact, education spending has encroached into revenue streams, like the sales tax and lottery, that were previously used for the General Fund. Thus, another round of Abbott borrowing would further cause these other essential and constitutionally-mandated services to be neglected.

The objection isn’t that the Abbott districts don’t have real needs or that new buildings don’t provide educational benefits; the issue is that it is unjust for the state to pay for 100% of construction projects without any copay proportional to district wealth, and that the Abbott list is artificial — hence, there are many non-Abbotts whose needs are no less acute.

Unlike K-12 aid, which has been theoretically based on a unitary formula since 2008 that treats Abbotts and non-Abbotts equally according to their needs and capacity, New Jersey’s construction aid remains a two-track system where some districts have special rights. Unlike K-12 aid, which requires at least a small copayment from even the poorest districts, construction aid requires no local “skin in the game.”

The logical case for 100% state funding for Abbott construction is weak, but, where logic fails, the New Jersey Supreme Court has stepped in.

First, the Abbott districts, as a class, are not “New Jersey’s poorest.”

What the Abbott districts are is a list made in 1990 by Chief Justice Robert Wilentz where he took the districts who were in District Factor Group A or B and which had the Department of Community Affairs’ “urban status,” while disqualifying Atlantic City because at the time it had a strong tax base.

Although there is no way to rigidly demarcate “poor” from non-poor and “urban” from non-urban, the New Jersey Supreme Court proceeded on the assumption that one could do that, and created a class of districts with special rights that excluded most of New Jersey’s poorest districts and even Guttenberg, New Jersey’s densest town.

Second, the data that the Abbott list is based on actually dates from the 1980 Census, and, thus, the Education Law Center is basing its demands on a reality that is 40 years old.

Although the Legislature and executive branch do have the power to amend the Abbott list, they have not done so except for the addition of Salem City in 2004.

The Abbott list never was the list of New Jersey’s poorest districts, but it has become more unfair over the last four decades. Hoboken is, by far, New Jersey’s richest K-12 district, with a Local Fair Share of $83,000 per student, more than twice what Millburn has. Were the Education Law Center to succeed, millions in state taxpayer money would flow to one of New Jersey’s richest and lowest-taxed towns.

Although Hoboken’s inclusion on the Abbott list is grotesque, Harrison, Asbury Park, Neptune Township and Jersey City also have tax bases that are around the state’s average and for whom 100% state construction funding is unjustifiable. Jersey City, the second-largest Abbott, has the same Local Fair Share per student as “affluent” suburbs like West Orange, Haddonfield and Manalapan-Englishtown.

Also problematic is that, if state construction aid were to be based on which districts have had the largest enrollment growth, the Abbotts, as a class, also don’t qualify.

Neptune Township has lost 62% of its students since 2008-09, Camden has lost 47%, Asbury Park has lost 30%, and Salem City, Keansburg, Millville, Burlington City, Newark, Pemberton and East Orange have all lost at least 5%. Is it appropriate to fund new schools in these districts when other New Jersey districts are bursting at the seams?

In several cases, the enrollment losses are due to students enrolling in charters, but that weakens the case for another Abbott victory, since the Abbott construction money sought would only go to traditional public schools and the charter schools would still be required to find their own money for construction.

There is no doubt that most of the Abbott districts remain poor and possess dilapidated buildings, but the Abbotts are disparate and do not have a monopoly on poverty, nor a monopoly on insufficient tax bases, nor a monopoly on old school buildings. The percentage of New Jersey’s poor students attending an Abbott district school has fallen to only 42%.

What New Jersey needs to do is write a unitary school construction law that distributes state money in inverse proportion to a district’s wealth. We also need a school construction funding law that recognizes the fact that large percentages of students in the Abbotts attend charter schools and that charter schools should have state money available for their construction projects.

Such a formula could be based on New Jersey’s 2008’s School Funding Reform Act by requiring the state to fund the same percentage of a district’s construction projects that it funds of a district’s Adequacy Budget. So, for New Jersey’s poorest districts, such as Camden, Bridgeton and Woodlynne, where the state is supposed to fund nearly 90% of the Adequacy Budget, it would fund 90% of its construction projects. For New Jersey’s richest districts, state funding might be as low as 7%.

Any state borrowing for construction would inevitably reduce money available for K-12 opex aid, TPAF, municipal aid and direct tax rebates, but at least under a unitary formula it would be distributed fairly and efficiently.

However, if a unitary formula is not politically possible to write or the New Jersey Supreme Court declares that the state Constitution requires 100% funding for the Abbotts, the only solution is to use existing powers that the executive and legislative branches possess and remove districts from the Abbott list.