The Big Picture on Property Taxes and School Budgets in the South Orange/Maplewood School District

For as long as I’ve lived in town, and longer, the school budget season, and the tension between the tax burden and school funding needs, have been more or less excruciating.  Superintendents and Boards of Education have come and gone.  State regulations and funding caps have changed.  Budgets have been cut.  My kids have grown from infants to middle schoolers.  They’ve experienced the wonderful things our schools offer, and my property tax bill has more than doubled.

I follow national and local education issues closely, and I understand that things are tough all over with respect to education, but normal egocentrism aside, it feels like it’s worse here.  That feeling is widely shared in our towns and leads some to believe that both our property taxes and our school spending are abnormally high.  In fact, by national and regional standards, only the first of those beliefs is true.  Our taxes are comparatively high; our spending is average at best.

A big picture view of both school revenues and school spending can show why this is the case, and just how we have come to be squeezed between the proverbial rock and a hard place.  Understanding won’t necessarily lead to a way to resolve the problem—which is largely outside of local control, but it might help us focus our energies in constructive directions as we face the ongoing challenges of our situation. 

Part I:  Revenues (the “rock”)

School finance levels and mechanisms vary widely.  There is significant variation among states, and among districts within any given state.  There is also variation from year to year, made more pronounced recently by the recession and short-term Federal stimulus funding over the past few years.  But all public schools rely on three major sources of revenue:  Federal, State and Local (primarily property taxes) funding. 

According to the most recently published data from the 2009-2010 school year, nationally about 13% of funding came from Federal spending, 43% from State funding, and 44% from local sources, generally property taxes.  However, for many reasons, those percentages vary widely from state to state.   The federal share of public school revenue by state, ranges from 8% to 22%.  The state share ranges from 28% to 63%.  And the local share ranges from 15% to 59%.

New Jersey, like most other northeastern states with a high cost of living, comes in at, or near, the “wrong” end of all of these ranges:  Federal contributions are 9% of our total education revenues, the State share is only 36%, and the local share is 54%.

Moreover, in New Jersey, as in most other states, Federal and State spending are not distributed evenly among districts.  Again, there are many reasons for this.  Historically, there has been significant inequity among local school districts.  In response, there have been decades of legal and political wrangling at the state level to try achieve school finance reform, and deliberate efforts to allocate state funding to try to ensure “adequacy” in spending for all districts, and reduce inequity among them.  (Both good goals to my mind.) 

In practice, the results are highly variable and political.  Currently in New Jersey most of the poorest districts receive upwards of 80% of their funding from the state; most of the wealthiest receive less than 10%, and the majority receive something in the national range, though the state share has been declining almost everywhere in recent years.  This year, South Orange/Maplewood will receive only about 4% of its education revenues from the state, and an even smaller share from Federal sources.  That means that more than 90% of school funding must come from local property taxes.

Given basically flat state spending, getting a larger share for South Orange/ Maplewood would mean that some other district(s) get a smaller one.  The majority of districts with a greater state share won’t readily reduce theirs.  The poorest districts have some protection from the courts.  Thus, the current legal and political constraints make increasing our share an unlikely prospect, though the school funding reform wrangling continues here, as elsewhere.

Finally, if funding more than 90% of the local school budget through property taxes is bad, it could always be worse, and, in South Orange/Maplewood, it is.  Property taxes are generally paid by both residential taxpayers and commercial taxpayers.  The individual homeowner’s burden in any community depends significantly on the mix of those two.  Localities with large commercial taxpayers including retailers (malls, shopping strips, big box stores), industries, corporate offices, tourism, etc., will have a correspondingly lower burden on local homeowners.  As we know, and generally enjoy, our quaint towns do not have a large commercial presence and this makes us among the most tax stressed homeowners in the state, and probably the nation. 

South Orange and Maplewood face a perfect storm of revenue conditions that do make our residential property taxes abnormally high, by any standard, even a New Jersey standard.

Part II:  Spending (the “hard place”)

So, if our taxes are too high, are we spending too much?  Some would say yes, and that is certainly the logic behind our current state mandated budget cap of 2% per year.

But, again, if we take a larger view, the answer is not so much.  In fact, I would argue, we are getting good value for the money.

Making comparisons is a little tricky here, given different data sources and different ways of counting total or per pupil spending, but based on the most recent comprehensive national data (school year 2008-2009), we’re not at all out of line for our region, or compared to our peers in the New York metro suburbs.

While the national average per pupil spending in operating budgets (leaving aside capital spending and interest on debt) came in around  $10,500, New York and New Jersey were over $17,000.  Our northeast neighbors in Connecticut and southern New England, (along with outliers Wyoming and Alaska) were not far behind at about $15,000.  South Orange/Maplewood came in at $14,723, below the state or regional average.  Most nearby metro area suburbs in Westchester, Long Island, and Connecticut where schools are considered good, came in closer to $20,000 or even $25,000.  Most other New Jersey “peer suburbs” came in closer to $15,000 give or take. 

Our spending is quite reasonable by local and regional standards.  While we can only dream of spending much more, it’s fair to wonder how much less we can spend and still maintain our status as a desirable suburb for families—to say nothing of providing our children with the education we want for them.

I don’t envy our Board of Education, Superintendent, or Teacher’s Union, all of whom have to operate between this rock and this hard place. 

Our property taxes are unusually high.  And our school spending is not.  The situation is not sustainable, and yet it endures—and has for a long time.  We are clearly made of tough stuff.  Whatever one thinks about the school budget or the tax levy, we’d all do well to remember that we are all feeling the squeeze.

Sources:

National Center for Education Statistics

http://nces.ed.gov

See especially:

Revenues and Expenditures for Public Elementary and
Secondary Education: School Year 2009–10 (Fiscal Year 2010)—First Look:  http://nces.ed.gov/pubs2013/2013305.pdf

Finance Graphs:  http://nces.ed.gov/edfin/graph_index.asp

Searchable Database of School Districts:  http://nces.ed.gov/ccd/districtsearch/