Archive for the ‘self-governance’ Category

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governance in New Jersey and California was eroded to the point where local control of education has been largely superseded by the state and its extension, county government.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.

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Glen Ridge: Creating an Autonomous Public School District

Wednesday, July 14th, 2010

Whether to Secede?

Unfunded state and federal mandates are strangling the Glen Ridge Public Schools as well as traditional public school districts nationwide.  Unfunded mandates drive school district budgetary deficits, property tax increases, operational restrictions, and educational program and service reductions.  When the costs and consequences of these mandates are combined with a statewide 2.0% tax and expenditure limit (TEL) or cap, the Glen Ridge school district is compelled to consider whether (Read, 2010) “to effectively secede from New Jersey’s public school system.”   

Glen Ridge along with the majority of New Jersey’s public school districts can no longer afford to pay for state and federal unfunded and under funded mandates because the district is forced to spend disproportionately more to meet the requirements of these mandates than it receives in total state and federal financial aid.  This creates a budgetary deficit.  Making up for this mandate-created deficit annually forces Glen Ridge to make extremely difficult choices.  The challenges involved in the budgetary decision making process were exacerbated when the Glen Ridge school district along with dozens of others statewide lost all of its state financial aid.  Moreover, the state of New Jersey’s imposition of a 2.0% TEL further constrains the district’s financial outlook. 

While the state and federal governments force Glen Ridge to fully fund the unfunded portion of their mandates, Glen Ridge must make up for the mandate deficit and balance its budget annually.  There are, however, only two kinds of programs and services offered by our public schools:  those that are mandate protected and those that are not mandate protected.  The Glen Ridge school district like public schools nationwide, therefore, must choose between cutting non-mandate protected programs and services or raising property taxes.

Unfunded Mandates Drive Budgetary Deficits

When a school district experiencing increases in mandate-driven uncontrollable expenses becomes limited by a 2.0% TEL, it must cut expenses even more severely to stay within the cap.  There is no exemption for the ever increasing costs of the state’s special education mandates included within Governor Christie’s 2.0% TEL (Maxwell, 2010,) for example.  Public school districts, therefore, must allocate scarce financial and human resources to pay for the unfunded portion of mandates and spend disproportionate administrative time on external reporting.  A school district spends less time and money on core educational programs and services as a result.   

Because traditional public school districts such as Glen Ridge are required to fund the unfunded portion of all state and federal mandates over which it has no control, state and federal mandates drive the overwhelming majority of the district’s expenditures and, hence, property tax levies.  Cuts to state aid or especially the elimination of state educational aid as is the case for Glen Ridge may force a traditional public 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 Act (NCLB) operational and financial penalties. 

Reduced or zero state aid particularly when combined with a 2.0% 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.  The ultimate irony is that 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 Question of Autonomy

Trenton continues to blame school districts such as Glen Ridge for their property tax and expenditure increases rather than take responsibility for its role in forcing district budgets to increasingly higher levels.  Instead of fully funding its mandates which drive up the cost of public education, Trenton focuses largely on constricting the funding, budgets, operations, and independence of local school districts. Given these state imposed burdens, costs, and constraints are most likely to become even more severe, what should a public school district do? 

How could Glen Ridge restructure its educational system such that the district would not only enable its public schools to increase the property taxpayers’ return on their investment but also greatly improve the quality of education while holding their schools accountable to these standards?  The question of how to achieve the proper level of autonomy, therefore, is the challenge confronting the Glen Ridge Public Schools.

What is autonomy?  Autonomy, in its most fundamental form, means that a school district is free to develop, design, and implement its own budget.  The budget is the financial representation of the district’s educational plan; therefore, the district must have full authority to acquire and allocate the financial and human resources necessary to providing those educational programs and services that fully meet the needs and priorities of the school district.  Indeed, if something is not in a school district’s budget, it will not be in any classroom!  This requires gaining control over all of a public school district’s financial, operational, pedagogical, curricular, and administrative functions so that the district is ultimately able to provide an academically rigorous learning environment that maximizes student achievement.  

Options for Autonomy

To achieve the proper level of autonomy for its school district, Glen Ridge is considering a number of options including (Read, 2010) “converting some or all of the four schools in the 1,932 student district to charter or private schools.”  The purpose of any conversion is to implement a new governance structure that will operate with much greater autonomy from state and federal mandates than the Glen Ridge school district currently enjoys.  Whatever form this new governance structure may take; it should provide the basis for financial soundness, operational flexibility, educational innovation, student achievement, and maximizing the taxpayers’ return on their investment in their local public schools, all of which are currently constrained by state control. 

Although (Read, 2010) “New Jersey will allow a public school to become a charter school if 51 percent of the teaching staff and parents sign a petition for it, according to the New Jersey School Boards Association.  That has never happened.”  The privatization concept is also being considered for which Dr. Bruce Baker, Associate Professor of Education at Rutgers University’s Graduate School of Education (Read, 2010,) stated that, “There are precedents in municipalities in Vermont and Maine. The towns raise tax dollars to send high school students to a private school.”  Another alternative is to transform the district into a set of private schools operated either by a locally elected board of education or by a private for-profit firm.  

Plank and Smith (2008) report that in the wake of Hurricane Katrina, “the Louisiana legislature created a Recovery School District” within which the “state intends to reopen most of New Orleans schools as charter schools, pioneering what stands to become the nation’s first all-chartered public school system.”  New York City has expanded its Empowerment Schools program (Plank & Smith, 2008.)  Chicago has implemented a more complex program (Plank & Smith, 2008) by “replacing up to 100 low performing schools” which can be operated as “district performance schools, charter schools or as contract schools.” 

But would any of the aforementioned options provide the proper autonomy such that Glen Ridge would gain control over its operating budget and, thereby, have the ability to provide a top quality education that meets the needs and priorities of the district rather than objectives set remotely in Trenton?  Glen Ridge should strive for the kind of governance structure that is worth the effort, if it is to confront the many challenges to achieving the proper kind of autonomy.  How, then, should Glen Ridge restructure its educational system?  

Autonomy and Self-Governance

To achieve the proper autonomy, Glen Ridge could reinvent itself by becoming an entirely unique version of a local public school district that is autonomous self-governing, self-funding, and as free as possible from state as well as federal mandates.  As an autonomous school district, Glen Ridge would eliminate the excessive financial and administrative burdens imposed by state mandates.  It would be much more cost effective and efficient for the district to provide educational programs and services without the administrative burden of state requirements.  Self-governance would increase the financial resources available for the classroom because the funds that are currently used for compliance with state mandates could be redirected to improving student learning and achievement, which after all is the real mission of our schools.  

Self-governance would empower the school district to improve the quality of education in ways more consistent with the priorities of the local community rather than state mandates.  Finding ways to legally opt out of the state system perhaps through a state sanctioned voter approved referendum would restore full decision-making authority to the local level.  Because decisions guiding the operations of Glen Ridge’s self-governing school district would no longer be made largely at the state level, parents, teachers, administrators, the board of education, and local taxpayers would be better able not only to shape the quality of education provided in the local schools but also to hold their local schools accountable for this outcome.  In this context, the conversion could be considered as achieving (Plank & Smith, 2008) “autonomy for accountability.”  

Becoming an Autonomous Self-Governing School District

An autonomous self-governing school district would be independent of the state system but would remain a public school district serving the same local community rather than a confederation of charter schools, private schools or schools run in full or in part by a private company.  But in return for the ability to become autonomous and, therefore, free from state mandates, a self-governing school district would forgo all state aid!  Self-governance would provide a public school district with the authority necessary to improve education consistent with the priorities of its local school community 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 that fit no district.  Opting out of the state system would restore full decision-making authority to the school district. 

Once the process leading to independence is approved by the state, a public school district could possibly become self-governing when a 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 without oversight from the County Executive Superintendent, Board of School Estimate or municipal government.  Board of education members would continue to be chosen from among the registered voters in the school district. 

Local property tax levies rather than tuition would continue to be the primary source of funding for a self-governing public school district.  An autonomous district would be eligible to receive appropriate state or federal grants.  The annual operating budget would be decided by its board of education rather than be subject to district-wide public votes so as to be consistent with the annual budget approval process for municipal and county governments which are not subject to approval through a vote of their respective electorates.  Alternatively, the annual operating budget would be subject to voter approval should municipal and county government budgets be similarly submitted for public votes. 

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! 

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. 

Locality is crucial for accountability.  Because state policy makers especially as compared to the local board of education are more distant from those most affected by the state’s mandates, students, teachers, and schools, the impact of their mandates is more adverse on a public school district’s finances and the quality of education it provides.  Our public schools, therefore, must be given the choice of becoming autonomous, self-governing, self-funding local public school districts free from state mandates so that they can be liberated to provide a top quality education while held being accountable to this standard by those who are the most capable of doing so, the school district’s taxpayers. 

Optional Compliance

Many states pass legislation known as (Fix & Kenyon, 1990) “optional compliance” to force state government to fund its mandates.  Optional compliance provides public school districts and (Fix & Kenyon, 1990) “units of local government the right not to comply with state mandates” and “can place added pressure on the legislature to fund the cost of mandates if it wishes to ensure that all local governments comply.  This right of optional compliance, in effect, can give the local governments” and local school districts “new leverage in dealing with the state legislature to ensure that they do get funding.  If they do not, they are under no obligation to carry out the mandate.”  

Still, states often find ways to provide much less than full funding for mandates by circumventing optional compliance laws.  States regularly restrict their obligation to reimburse the unfunded portion of mandates by (Fix & Kenyon, 1990) having a “narrow definition of what constitutes a mandate.”  States often enable (Fix & Kenyon, 1990) “the legislature to exempt the state from providing funding under certain circumstances.”  In addition, states often manipulate the labeling of the source of funds to minimize their payouts.  Fix and Kenyon (1990) demonstrate that “funds are provided simply by earmarking some portion of what is considered local aid or general revenue sharing.  If a state merely earmarks funds that area coming from another source as opposed to providing new funds, then the state is really not accomplishing the objective of mandate reimbursement.” 

States also manipulate the timing of when local school districts receive funding rather than pay local schools districts in advance of the mandate’s implementation.  Fix and Kenyon (1990) use California’s experience to demonstrate, “In California, however, funding is provided on a reimbursement basis; funding can occur long after the mandate is implemented.”  School districts and “local governments carry out mandates, submit claims, and hope to get paid.  In the meantime, they must carry out the mandate; they have no option.”  This forces California’s public school districts to either borrow or cut regular education programs to fund the unfunded portion of mandates while hoping for full state reimbursement which does not include the refunding of any incurred interest expense. 

Unfunded Mandates Force Cuts to Regular Education

While the State of New Jersey is increasingly mandating programs and services to be provided by the state’s public schools, its level of financial aid and the portion of the mandates for which it provides funding are declining rapidly.  But public school districts have no control over many of the major cost drivers resulting from under funded mandates such as the expenses associated with increases in enrollment, transportation, legal actions, and the number as well as the mixture of special education students.  The range of state and federal under funded mandates includes but is not limited to No Child Left Behind (NCLB,) Individuals with Disabilities in Education Act (IDEA,) Quality Single Accountability Continuum (QSAC,) Core Curriculum Content Standards (CCCS,) bilingual instruction, free and reduced price breakfasts and lunches, incremental state special education requirements, special education related law suits, biohazard training, radon testing, state and federal standardized testing as well as programs to prevent bullying, teasing, and taunting.  

School districts are required by state and federal laws to provide the special education programs and services included in a student’s Individual Education Plan (IEP); therefore, special education budgets cannot be cut and the under-funded portion of special education’s costs must be made up from other budgetary sources.  To offset the increased costs of under funded special education mandates, districts are increasingly forced to significantly reduce programs for regular education students because property tax increases have been limited largely through state legislation.  Under funded state special education mandates not only have sharply increased the competition between regular and special education programs for funding within a school’s budget but also have created sharp divisions within a school’s community because they pit the parents of special and regular education students against each other in the fight for funding.

In 2005, New Jersey state aid covered less than one-third of state mandated special education programs and services while the federal IDEA is funded only at approximately five percent of its cost to local school districts nationwide.  Since January 2008, special education financial aid has been further and significantly reduced for most districts statewide based on the new state funding formula that reduces a district’s special education aid calculation to the extent that its classification rate is above the state average.  In addition, wealthy districts have been losing entitlement aid for at-risk children, particularly special education as these and other categorical financial aid funds are now subjected to the formula’s wealth-equalizing local share calculation.

All of this comes at a time when the costs for special education are skyrocketing.  Increased costs for mandated preschool programs including intensive services for autistic students and lower special education student to teacher ratios are a major part of the problem.  But more importantly there are also increasing numbers of costly out-of-district placements as well as parental lawsuits against public school districts for the purpose of obtaining private school placements for their children at the public’s expense.

New Jersey has the highest proportion of special education students in out-of-district placements as well as the fourth highest classification rate for special education eligibility in the country.  Many of New Jersey’s school districts find that out-of-district placements can consume as much as 50% of the special education budget despite covering approximately ten percent of special education enrollment.  The students placed in out-of-district schools tend to be the most expensive because they are usually the ones most in need of special education programs and services.  Depending on the student’s disability, the annual cost of sending a student to an out-of-district private school can range from roughly $70,000 to over $250,000 especially for the most educationally and physically challenged students.

The legal costs arising from parental special education-based law suits are another major expense for schools.  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 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; increasing both legal fees and court costs.  There is the additional 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 could be another way in which to enable school districts to allocate more of their scarce resources to student instruction.

The State of New Jersey requires special education programs for children with educational disabilities ages three to five, particularly autistic children.  While the only difference for preschool aged children is the state requirement to have a speech pathologist on the child study team, the same IEP, evaluation, eligibility, due process, and least restrictive environment requirements apply for all special education students regardless of age.  These mandated pre-school programs put an additional expense burden on local school districts as long as the mandates continue to come without the requisite funding from the state. 

The special education students to teacher ratios are set by the State of New Jersey and they are, necessarily, lower than the student to teacher ratios for regular students.  These staffing ratios are based primarily on the student’s IEP, classification, and intensity of services required.  The student to teacher ratio for a class for children with the lowest level of disabilities having one teacher has a maximum of eight while the maximum is twelve for a class with one teacher and one aid.  Although ratios usually range from four to seven depending on the severity of the student’s disability, class sizes exceeding six students require two aids in addition to the teacher.

Classes for children with autism and other profound cognitive disabilities are limited to a ratio of three to one.  While providing a good education for students with special needs, without the requisite state funding for these mandated levels, the higher costs of such low student to teacher ratios are often offset by higher student to teacher ratios for regular education.  Because smaller class sizes have been shown to improve learning for all students, the under-funded state mandates for special education can have a deleterious effect on regular student education.

When the State of New Jersey requires its public schools to pay for an ever increasing proportion of special education costs through its under funded mandates, the state is not only forcing property taxes to increase but also pressuring districts to find the missing funds by reducing the regular education budget.  Such forced cuts to the regular education budget may cause school districts to reduce the number of regular education teachers which would result in much larger class sizes for regular education students.  Larger class sizes have been shown to lead to lower test scores which make it more difficult for students to achieve adequate yearly progress (AYP) as required by NCLB.  As a result, school districts are much more likely to be subjected to many of NCLB’s more stringent financial penalties.  This further reduces the financial resources available to support quality education. 

Unless the people of New Jersey wish to have not only higher property taxes but also a downward spiral in the quality of their public education, then the State of New Jersey should pay the full costs of its mandated school programs and services particularly special education.  If all of New Jersey’s special education mandates were fully funded, the quality of the education of all of New Jersey’s public school students, both regular and special, would be the greatest beneficiary. 

Conclusion   The consequences of centralizing most of the control over the allocation of a school district’s financial and human resources at the state level gives rise to many unintended obstacles for local school districts.  Chief among them is the contradictory challenge of trying to hold local school districts accountable to standards made remotely at the state level that do not reflect and often conflict with unique local educational requirements and priorities.  As a result, when the state imposes a one-size-fits-all approach to local school district resource allocation, funds tend not to be used as efficiently as they could be under local control.  School systems are more accountable when decision making over financial and human resources is made at the district level. 

A local school district can improve student and school performance best when the district is empowered to allocate its financial and human resources according to its educational plan rather than being required to follow state directives.  The school district would have all the tools it would need to hold its schools and students accountable because it could make real time decisions based on specific measurable performance goals for each school and student.  The school district is the most qualified to continually calibrate local performance goals because only the school district can combine a keen understanding of local educational necessities with the timely and specific assessment of individual school and student achievement.  State control is too remote which causes not only inappropriate delays but also decisions that tend to be inconsistent with the district’s educational plan.  

In response to the shortcomings of the state dominated school system, Glen Ridge needs to adopt a new model for the control structure of its local school system that is largely free of state domination.  Because a local school district’s control structure affects how all of the school system’s stakeholders combine to produce a quality education, Glen Ridge needs the most appropriate control structure that will provide the highest level of accountability.  As a result, Glen Ridge might consider adopting a control structure that provides for maximum autonomy and self-governance. 

What matters most in terms of maximizing autonomy and self-governance is that Glen Ridge employs the control structure that fosters the greatest public support for the maximum public funding of its autonomous public schools.  Glen Ridge would be able to operate more cost-effectively with lower property taxes and earn a higher rate of return on its educational investment if it became an autonomous self-governing school district by opting out of the state system. 

References

Fix, M. & Kenyon, D. A., (1990). Coping with Mandates:  What are the Alternatives? Washington, D.C.:  The Urban Institute Press. 

Maxwell, L.A., (2010). N.J. Property Tax Cap Sparks Funding Concerns. Education Week, 29(36). Retrieved from http://www.edweek.org/ew/articles/2010/07/12/.

Plank, D. N. & Smith, B., (2008). Autonomous Schools:  Theory, Evidence and Policy in The Handbook of Research in Education Finance and Policy, Ladd, H. F., & Fiske, E. B., (Editors) (402-424). New York, New York:  Routledge Taylor & Francis Group. 

Read, P., (2010, July 4).  Glen Ridge Considers Big Change to Schools. The Star Ledger, pp. 1, 4.

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

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How New Jersey Senate bill S450 will Increase Administrative Costs and Property Taxes Statewide

Monday, March 15th, 2010

Passage of the pending New Jersey Senate bill, 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 local public schools within each of the proposed consolidated countywide school districts.  When former Governor Corzine signed the CORE Act (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 Superintendents 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. 

 

By creating the office of Executive County Superintendent of Schools, New Jersey is moving to replicate the state of Maryland’s consolidated 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 local schools serving less than one million students statewide within one of the 24 countywide school districts in each county under an Executive County Superintendent.

 

Although Maryland abolished all school administrators above the level of principal from its local schools in the name of saving money, cutting administrative expenses and cutting property taxes, these small savings were overwhelmed by the ongoing costs of the office of the Executive County Superintendent of Schools with its ever increasing bureaucracy.  The reason Maryland’s total statewide administrative costs increased rather than decreased as promised following the implementation of the consolidated county wide school district is that the Executive County Superintendent is not accountable to the voters and this enables him/her to increase staff largely without taxpayer input. 

 

In New Jersey, the Executive County Superintendent also is appointed by the governor.  He/she 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. 

 

In Maryland, for example, the Montgomery County Department of Education by itself 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 the Executive County Superintendent of Schools for Montgomery County, therefore, employs roughly one administrator for every six of its students!  Furthermore, the Montgomery County consolidated school district has more than three times the number of administrators per student than it does teachers!  Contrary to what S450 purports, it will not provide for a more cost effective educational system rather it will increase costs especially administrative expenses.  Indeed, states that have adopted this model or a similar model such as California have increased costs. 

 

The implication behind Senate bill, S450, is that it would somehow save the taxpayers’ money and enable the state to have lower property taxes by eliminating administrators over the level of principal.  Proponents even a suggest savings of $553 million.  But Maryland’s total statewide administrative costs increased rather than decreased as promised following the implementation of its consolidated county wide school district.  Indeed, the experience of such a control model in the state of Maryland contradicts the assumptions inherent in S450 based on its consolidated county school district control model for New Jersey. 

 

Rather than add another bureaucracy, the most effective way to cut property taxes in New Jersey is to eliminate the tax burden imposed by county government.  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.  New Jersey’s 21 counties combine to spend over $6.1 billion annually in property taxes, hold more than $5 billion in outstanding debt and have more than 44,000 employees.  Indeed, just the three New Jersey counties of Union, Essex and Bergen together levy approximately $1.6 billion in annual property taxes. 

 

The question facing New Jersey’s taxpayers is whether more money would be saved by eliminating county government or by adopting a consolidated county school district model as advocated by S450.  The answer is rather straight forward.  Saving $6.1 billion annually in property taxes by eliminating county government would be the best way to ease New Jersey’s tax burden rather than implementing S450 and hoping its unsubstantiated savings of approximately $553 million materialize.

 

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 district 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. 

 

In these challenging economic times, every home owner wants to make sure their property taxes are as low as possible and are put to use where they can do the most good.  Nowhere is this more necessary than in New Jersey, where it is imperative that all levels of government do not waste our scarce financial resources and cut taxes particularly property taxes.  To accomplish this goal, it is imperative that New Jersey does not add another unaccountable bureaucracy which will increase administrative expenses and property taxes statewide as would result under S450 should it become law. 

 

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Posted in autonomy of schools, bigger is not better, board of education, Capitalization of property taxes, Capitalization of school district quality, county government, County Property taxes, county run school districts, county wide school districts, deregulation of schools, dumbing down, education, executive county superintendent, home rule, home values, homeownership, Local Education Authority (LEA), local property taxes, local schools, Maryland county run school districts model, New Jersey, New Jersey Commissioner of Education, New Jersey Property taxes, property taxes, property values, public education, public finance, regional schools, regionalization of schools, S450, school district consolidations, school district mergers, school finance, school funding, school governance, school performance, school reform, self-funding school districts, self-governance, tax base | No Comments »

Accountability: The Taxpayers’ Return on Investment

Thursday, December 10th, 2009

Democratic accountability is achieved through the electoral process by enabling the local taxpayers to elect their local board of education and to vote whether to accept or reject the local school annual operating budget.  This electoral process enables taxpayers to control the stewards of their local schools, the members of the board of education, and through this process the level of property taxes levied and how these tax revenues are allocated.  It helps to assure taxpayers that their duly elected representatives, the members of the board of education, will allocate their school district’s financial and human resources according to local priorities.  The locally elected board of education, in turn, makes sure that the local schools meet or exceed local needs and priorities.

 

Accountability is the means by which taxpayers can determine whether they are getting a proper return on investment from their investment in public education, their property taxes, by exercising local control.  Taxpayers benefit from having input into determining those educational programs and services on which their money is spent.  They are more strongly committed to and involved with their neighborhood schools because their children as well as those of potential buyers of their homes can also attend the local school within the district.  The process of enabling taxpayers to control local school funding, governance and educational content increases their willingness to fund their local schools because they can see and influence how their money is spent.  Based on these concepts, home rule or local control was established and has thrived.

 

The tradition of local control not only is rooted in our democratic principles but also symbolizes our democracy in action.  Local control enables our schools to be self-governing instead of being controlled remotely by a governmental entity that imposes its political agenda rather than supporting local priorities and needs.  Remote governing bodies, therefore, are not accountable to the standards necessary for local schools to provide quality education.

 

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

 

A governance model based on state control results in a traditional military-type command-and-control decision-making process.  This is contrary to a true democratic process that supports local school districts and fosters the active participation of parents with their willingness to fund public education.  In a command-and-control model, state level policy makers develop the strategy for policy implementation and combine this strategy with their political directives to determine the priorities and budgetary process for each school district. 

 

The typical one-size-fits-all approach removes decision making authority from those most affected by educational policy decisions:  the students, parents, taxpayers, administrators, teachers, school and district.  It also concentrates policy formulation and decision making at a centralized level where special interest groups have greater leverage over the policy makers and, as a result, greater control over legislation affecting education including school budgets and funding as well as programs and services.  A school’s annual operating budget is the financial representation of the school’s educational plan.  State control of the local school budgetary process, particularly the allocation of financial and human resources, means that the state can impose its own agenda and prevent local districts from acting according to local educational needs.

 

In a typical centralized state model local taxpayers lose control over how their money is allocated because decisions are made remotely and without local input.  In addition, local boards of education even though they serve as unpaid volunteers are often abolished or rendered virtual rubber stamps of the state department of education under the guise of saving money and increasing accountability.  Special interest groups have a disproportionate say in the local allocation of educational funds distributed by the state.  Indeed, the allocation process seems to be based more on special interest group political calculus than on local educational needs.  Because the approval and allocation process at the state level tends to be much more convoluted than those at the local level and more powerful special interests are involved, significant amounts of aid authorized for education seemingly do not make it ultimately to the local level.

 

Concentrating decision-making power at the local district level rather than at the state level enables more resources to be focused on those most affected by education and enables those most involved in providing education to provide better instruction.  State control causes local school districts to spend less time on students as well as parents because more time is required to be spent on state imposed bureaucratic obligations and requirements.  As a result, parental engagement decreases which harms student achievement because parental involvement is a key component supporting student performance.  The local school district not only is closest to the students, parents, teachers, and taxpayers but also has the necessary expertise to most effectively decide how to provide a quality education and to generate the necessary local taxpayer support for the public funding of public education.

 

 

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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  

 

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Posted in accountability, autonomy of schools, bigger is not better, board of education, Bruce Baker, Bruce Cooper, Capitalization of property taxes, Capitalization of school district quality, Charles Tiebout, data-based decision making, decision making, education, educational leadership, federal financial aid, home rule, local property taxes, local schools, mandates, New Jersey, New Jersey Property taxes, property taxes, property values, public education, public finance, school finance, school funding, school governance, school law, self-funding school districts, self-governance | No Comments »

Self-governance

Thursday, December 10th, 2009

Locality is crucial for accountability.  Because the greater is the distance between the policy maker or the policy making body and those most affected by the policy, the students, teachers and schools, the more adverse is the policy’s impact on a public school district’s finances and ultimately upon the quality of education it provides.  Our public schools, therefore, must be given the choice of becoming self-governing, self-funding, autonomous, local public school districts free from state and federal mandates so that they can be liberated to provide a top quality education while held being accountable to this standard by those who are the most capable of doing so, the local school district’s taxpayers.

 

A self-governing public school district would be free of state and federal mandates but would abide by all other state and federal laws.  It would remain a public school district rather than become a charter school.  It would continue to serve the same local community with the same regular and special education students.  While public school districts could elect to stay within the state system and continue to abide by all mandates, all districts would be given the opportunity to legally opt out. 

 

Self-governance is the alternative to a state dominated educational system that could provide public schools with the authority necessary to improve educational accountability consistent with the priorities of their local school communities.  It would also provide school districts with the flexibility to innovate rather than be forced to march in lock step to the state’s one-size-fits-all mandates which fit no district.  Because decisions guiding the operations of self-governing schools would no longer be determined at the state level, parents, teachers, school administrators, boards of education and local taxpayers would be better able to shape the quality of education which students receive in their local schools. 

 

Self-governance would eliminate the excessive financial and administrative burdens imposed by state mandates.  The ever increasing cost of the state’s unfunded and under funded mandates is forcing school districts not only to cut non-mandate protected education programs but also to increase property taxes.  For example, 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.  Self-governance would increase the financial resources available for the classroom because the funds that are currently used for compliance with state mandates could be redirected to improving student learning and achievement, which after all is the real mission of our schools.

 

How do we restructure our educational system such that we not only enable our schools to increase the property taxpayers’ return on their investment but also greatly improve the quality of education while holding schools accountable to this standard?  The answer is to give our public schools the choice of becoming self-governing, self-funding, autonomous local public school districts free from state and federal mandates.  This would empower public schools to improve the quality of education consistent with the priorities of their local communities as well as the flexibility to innovate.  Legally opting out of the state system through a state-wide voter approved referendum 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 state level, parents, teachers, school administrators, boards of education and local taxpayers would be better able not only to shape the quality of education provided in their local schools but also to hold their local schools accountable for this outcome.

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Posted in decision making, deregulation of schools, disaggregation, education, educational leadership, home rule, local schools, New Jersey, property taxes, property values, public education, public finance, school finance, school funding, school governance, school law, school reform, self-funding school districts, self-governance, state financial aid, state mandates | No Comments »