School Funding

1
School Funding
2
Historical Issues

• Prior to 1800s, schools were private, local
  entities
• In the mid-1800s, several states rewrote their
  constitutions to create statewide public
  education systems and established government
  responsibility for funding schools

3
New Jersey Constitution

• The Legislature shall provide for the
  maintenance and support of a thorough and
  efficient system of free public schools for the
  instruction of all children in the State between
  the ages of five and eighteen years. (amendment
  in 1875)

4
Sources of School Funding Today

• In the United States as a whole (varies by state,
  see p. 14 in the Education Trust report)
• Almost 50 comes from States (taxes on income,
  corporations, sales, lottery tobacco money)
  (42 in New Jersey)
• Over 40 from Local districts (property taxes)
  (53 in New Jersey)
• About 9 from the Federal level (mainly through
  special programs, like Title I) (4 in New Jersey)

5
Does our system of funding promote meritocracy or
social reproduction?

• 1) Sources of funding
• 2) Expenditure

6
Progressive and Regressive Taxation

• Regressive taxation maintains social inequality
  by taxing at an equal rate (flat rate no matter
  what the value, or higher tax for less value)
• Progressive taxation attempts to level the
  playing field by taxing less value at a lower
  rate than richer people (graduated rate, rising
  with the value)

7
Property Taxes

• Property taxes tend to be regressive socially, in
  that an owner of a house in a poorer community
  will pay more in taxes than an owner of a house
  of equal value in a richer community
• Some districts have high property values (houses
  worth 300k-1m) others have low property values
  (30k-100k), affecting the ability to raise
  money from property taxes.

8
Why is property worth less in one district than
another?

• Desirability of living there
• Presence of jail, waste treatment facility, and
  low-income housing in neighborhoods
• Redlining by mortgage and insurance industries
  making the cost of insuring a home prohibitive
  (if there is a fire, house is not repaired)
• Poor city services, including schooling (a cycle
  hard to break out of)

9
A hypothetical example

• Two districts 1) average home value 100,000
  2) average home value 1m
• Average of school-going children per household
  1.2
• Cost of educating child necessary to raise from
  local property taxes 7500
• Average property tax rate 4
• How much funding does one raise from each house?

10
Poor Towns Pay Higher Property Taxes(100
average of all southern NJ districts)

11
Wealthier Towns Pay Lower Taxes
12
Property Taxes

• As a result of a poorer tax base, poorer
  districts have to tax their existing houses at a
  higher property tax rate than rich districts in
  order to raise revenue for education.

13
Property Taxes

• If you had a 200k house in Camden, you would pay
  more in property taxes than you would if the same
  house was in Cherry Hill.
• But, there are more 200k houses in Cherry Hill
  than in Camden, so ultimately Cherry Hills
  revenue from property taxes is higher than
  Camdens.
• Another implication districts want only valuable
  real estate (high-priced housing)

14
Why does a school district or town prefer
high-priced housing to low-priced housing in a
development?
15
A Hypothetical Case

• A town has a vacant acre of land, on which they
  can build (i.e., give a permit to a developer to
  build)
• one 1m house
• 30 townhouses each worth 200,000
• The town can assume that each household will on
  average have 1.2 school-age kids
• The tax rate is 4 on each 100,000
• Educating each child will cost 7500 from local
  funds

16
A Hypothetical Case

• From the 1m mansion, one (1.2) child would enter
  the school system cost 7,500 revenue 40k
• From the 30 townhouses (worth a total of 6m), 36
  kids would enter the school system (requiring a
  new classroom and new teacher) cost 270k
  revenue 240k
• Now imagine that the one acre is really ten acres
  (36 children becomes 360 children, equivalent to
  another elementary school)

17
Scarcity of Affordable Housingin New Jersey

• Wealthier districts that can afford to do so
  resist having low-priced housing built within
  their boundaries
• As a result, there is a shortage of affordable
  housing in NJ
• Affordable housing that has been built has not
  been in areas experiencing job growth (i.e., in
  Camden, rather than Cherry Hill).

18
Mount Laurel Decision (1985)

• New Jersey communities have a constitutional
  obligation to provide housing for all income
  levels
• However, towns and developers have been able to
  skirt their obligations
• Under state guidelines, builders are allowed to
  pay a fee to the town rather than build
  affordable units
• The town can then build the affordable units,
  either inside or outside its boundaries

19
McGreeveys Plan, 2004

• For every ten units of housing built and every
  thirty jobs created in a community, one unit
  would have to be affordable (affordable to those
  earning 50 of average income or less)
• Communities could meet 50 of their
  affordable-housing obligations by building homes
  for senior citizens
• They could meet the other 50 through regional
  contribution agreements, in which towns pay other
  towns to build affordable units

20
Where are we now?

• On January 24, 2011, Governor Christie vetoed
  S1/A3447 (S1), a bill that passed through both
  the State senate and assembly.
• The bill would have eliminated the agency that
  regulated affordable housing in municipalities, a
  proposition favored by the governor, but would
  require all municipalities to dedicate
  ten-percent of all housing for lower-to-middle
  income residents. The governor disagreed with the
  latter portion of the bill.

21
Zoning Affordable Housing

• It is illegal to exclude families on the basis of
  race (although this still happens too) but
  perfectly legal to use lot size, zoning, and
  other legal powers to exclude all housing
  affordable by any but the top five to ten percent
  of families in terms of income.

22
Implications of Property Taxes on School Funding

• Because local revenue for education is dependent
  on property taxes, different districts have great
  differences in the amount of revenue available to
  them

23
What does Funding Affect?
24
A majority of states actually exacerbate gaps
between locally raised revenue by sending a
disproportionate amount of state money to the
districts with the fewest poor children
(Education Trust, 2006, p. 5).
25
How does New Jersey compare to the nationin
terms of spending differences between districts?
26
Why is this so?
27
Federal Level

• Nothing in the US Constitution requires the
  federal government to provide education for its
  citizens.
• The Supreme Court overturned a ruling by a Texas
  district court that found inequalities of
  education finance unconstitutional in 1973.
• This means that the pursuit of equality in
  educational finance is pursued at the state level.

28
Robinson v. Cahill (1970)

• Cities of Jersey City, Paterson, Plainfield, and
  East Orange joined Kenneth Robinson, a Jersey
  City student and his parents, in a challenge to
  the constitutionality of the State school funding
  system.
• They charged that large wealth-based variations
  in per-pupil expenditures across New Jersey
  school districts deprived students in low-wealth
  communities like theirs to a thorough and
  efficient education.

29
Superior Court ruling

• Clearly, a large number of New Jersey children
  are not getting an adequate education. This is
  caused by insufficient funds in many districts
  despite high taxes.
• Closets serving as libraries
• People teaching for over 20 years with only
  emergency teaching certificates
• Science books dating back 30 years, before people
  went to the moon

30
But.

• Despite initial attempts to fix this, the
  legislature did not continue to provide education
  funding. Disparity in spending and achievement
  between richest and poorest districts continued
  to grow.
• In 1981, Marilyn Morheuser of the Rutgers
  Education Law Center filed a class action lawsuit
  on behalf of the 28 poorest school districts in
  the state.

31
Nine years and four million dollars later, the
State Supreme Court ruled on the case (Abbott v.
Burke) and maintained that the system was
unconstitutional.
32
NJ Supreme Court, 1988

• Found that urban schools were underfunded
• Decided that there was a connection between
  school achievement and money
• Examined disparities in foreign language, art and
  music, science, and technology (p.12)

33
State Supreme Court

• In 1998, ruled that NJ must pay to build or
  renovate schools in the poorest, largely urban
  districts (the Abbott districts).
• Average age of school buildings in these
  districts is 62 years old.

34
The Big Picture of Last 30 Years

• There was significant reluctance on the part of
  the state to pay for education and to pay for
  educational parity. They were basically forced
  to do so by the State Supreme Court.
• There continues to be considerable reluctance on
  the part of the state (latest budget), despite
  drops in the achievement gap, higher graduation
  rates for African-American and Latino students,
  and high-quality preschool in the Abbott
  districts.

35
The National Picture

• Lawsuits brought in 45 states about equalization
  of educational finance in 1970s and 1980s
• In 27 states, the plaintiffs have won
• In less than half of the states in which the
  plaintiffs won have the states taken action in
  compliance with court orders.

36
No Child Left Behind

• This legislation does not directly address
  disparities in funding.
• However, advocates have used the legislation to
  argue that adequate funding is necessary for
  students to achieve the standards.

37
Some Other Approaches to Reduce Reliance on Local
Property Taxes

• Michigan in 1993 decided that they would move
  from a property-tax based system to one supported
  by state sales tax.
• Pennsylvania talked in 2005 about abolishing
  local property taxes and replacing it with a
  state property tax but this did not pass.

38
Not Just about Differences between Districts, but
also

• Differences between states (Education Trust 2006,
  p. 3 (Table 1)
• Differences within districts (Education Trust
  2006, Kozol 2005)

39
Are schools the way to reduce economic inequality?

• There are lots of different ways to reduce
  educational disparities between schools,
  including promoting neighborhoods of mixed class
  and racial background. Instead, the state has
  tried to compensate for existing inequalities
  generated by segregated residence by race and
  class.