1. STATE AID IN NEW JERSEY: CHOOSING THE FAIREST MODEL FOR REDISTRIBUTION

2. BACKGROUND: NJ’S STATE AID IS SUPPOSED TO BE DISTRIBUTED ACCORDING TO A LAW CALLED SFRA The most important stream of state aid is Equalization Aid. Equalization Aid is the difference Adequacy Budget and Local Fair Share, so: Adequacy Budget - Local Fair Share = Equalization Aid Adequacy Budget is a demographic measure of a district’s needs. It depends mostly on population, # of FRL-eligible children, and # of ELLs. Local Fair Share is an economic measure of a district’s ability to pay taxes. It depends on Total Income and Equalized Valuation. There are “categorical aids” like Sped Aid, Transportation Aid, and Security Aid which go to all districts, even wealthy ones.

3. HOW EQUALIZATION AID IS SUPPOSED TO WORK Example: If a district’s Adequacy Budget is $80 million and its Local Fair Share is $20 million, it would get $60 million in Equalization Aid plus Sped, Transportation, and Security Aid. If a district’s Local Fair Share is greater than its Adequacy Budget the district does not receive Equalization Aid.

4. APPROXIMATE ADEQUACY BUDGET PER STUDENT FOR ESSEX COUNTY TOWNS Millburn, 2% FRL, 1% LE$14,143 South Orange-Maplewood, 20% FRL, 1% LE$15,764 West Orange, 38% FRL, 4% LE$16,452 Bloomfield, 43% FRL, 4% LE$17,594 Belleville, 59% FRL, 5% LE$18,603 Newark, 84% FRL, 9% LE$20,070

5. SFRA WAS SUPPOSED TO BE PHASED IN OVER SEVERAL YEARS

6. WHAT WENT WRONG:

7. FACING NJ’S BUDGETARY REALITY, COMM. HESPE AND SEN. PRES. STEVEN SWEENEY RECENTLY ACKNOWLEDGED THE NEED TO REDISTRIBUTE SOME STATE AID “There are difficult decisions to be made [on state aid] and, without your input, we’ll probably end up making the wrong ones.” - David Hespe "There are some districts that get more money than they are entitled to," he said. "We are going to have pretty serious discussions, and a lot of people won't like it." - Steven Sweeney

8. REDISTRIBUTION COULD BE FAIR BECAUSE NUMEROUS DISTRICTS GET MORE MONEY THAN SFRA SAYS THEY NEED

9. 220 DISTRICTS GET 100% OR MORE OF THEIR UNCAPPED AID

10. THE SOMSD ONLY GETS 46% OF ITS UNCAPPED AID

11. THIS IS VERY LOW IN PERCENTAGE TERMS, BUT NOT DOLLARS PER STUDENT

12. IF AID WERE REDISTRBUTED BASED ON UNCAPPED AID IT WOULD BE PROGRESSIVE AND GOOD OR HARMLESS FOR HIGH TAX DISTRICTS LIKE THE SOMSD

13. A district can be underaided but Above Adequacy due to the acceptance of a high taxes. IF AID WERE REDISTRIBUTED BASED ON DISTRICTS BEING ABOVE ADEQUACY THE SOMSD COULD LOSE AID

14. THE SOMSD IS AT OR ABOVE ADEQUACY

15. Redistribution of aid is necessary, but we have to be watchful of the method used. Redistribution based on uncapped aid is the most consistent with SFRA and is good or neutral for high-tax districts like the SOMSD. Redistribution based on Adequacy Budget would hurt districts that tax themselves heavily and reward districts that do not accept their Local Fair Shares.