By Jeffrey Bennett
is no program on the New Jersey education landscape as overpraised
and underexamined as Interdistrict Choice.
contrast to the intense debate over other topics in education like charter
schools, student testing, teacher evaluation, and the Common Core, rarely is
anything critical said about Interdistrict Choice by politicians, activists,
and education analysts/bloggers. Articles about this under-the-radar
program are almost entirely laudatory and focus on the positive impact of
Interdistrict Choice on receiving districts and Choice students, without any
consideration of the financial impact on non-Choice districts whose state aid is
siphoned away. In an era when 80% of NJ districts get less aid than they got
before the recession and have had to accept painful budget cuts, there is very
little discussion of how the exponentially increasing cost of the Interdistrict
Choice program is a factor in aid stagnation.
is Part 1 of a two part guest blog series on New Jersey's Interdistrict Choice
program. This first post will focus on Interdistrict Choice's budgetary impact
on Choice districts, sending districts, and non-Choice districts. The
second part will appear after the state releases more academic and demographic
information on Interdistrict Choice and will evaluate the program’s enrollment
patterns and academic impacts.
Choice Aid: Where Money
Choice funding works by having state taxpayers assume 100% of the expenses for
non-resident students to enroll in participating Choice districts. This
amount is $10,500 on average in Choice Aid per student plus regular
state aid and extra Transportation Aid for the sending district. The
"Choice Aid" is equal to the receiving district's Local Fair Share,
that is, roughly the amount that local taxpayers pay per child for their
district's own resident children. Choice Aid varies by the wealth of
the district. High-resource Choice districts that have high Local Fair
Shares get as much as $15,000 in Choice Aid per Choice student.
Lower-resource Choice districts that have low Local Fair Shares may get
$3,000-$4,000 in Choice Aid per Choice student, but they get more in regular
state aid for the same number of incoming students. However, since
regular aid has been below-formula for the last few years, wealthier districts
get more money than less wealthy ones.
to 2010 Interdistrict Choice was limited to one-district per county but not
every county had a participating district. In 2010 the legislature,
nearly unanimously, eliminated that rule. Since 2010 the program has
grown from only fifteen districts to 136 for 2014-15. With that increase in
district and student participation the amount of education aid diverted into
Interdistrict Choice has grown exponentially, despite the recession and
stagnant aid for non-Choice districts. In 2010-11 Interdistrict Choice
cost $9.8 million, in 2011-12 it was $20.6 million, in 2012-13 it was $33 million,
and in 2013-14 it was $49 million (for 4,682 students). For 2014-15 the
Christie Administration put a 5% enrollment growth cap in place for existing
Choice districts and limited space in new ones, so total cost growth for the
new year will be only 10%, to $54 million.
money a district gets is completely independent of need and some of the biggest
winners in Interdistrict Choice are the highest-resource districts in New
Jersey. Deal, for instance, has an astronomically high $12 million in
property valuation per student and gets over $11,500 in Choice Aid per student
(both numbers used residential and Choice students for the denominators. Deal gets $1,000 per student in other
aids as well.). Deal has six times the property wealth per student of
Princeton and Millburn and yet it gets more state aid than Neptune Township and
Long Branch, its Abbott neighbors, both of which get $7,000-$8,000 in aid per
Choice districts are middle-resource, but half of NJ's Choice Aid goes to only
fifteen districts (2013-14 numbers): Upper Freehold, Mine Hill,
Pittsgrove, Englewood, Hoboken, Ocean City, Kenilworth, Deal, Hammonton, Morris
Hills, Middle Township, Clinton Township, Central Regional, Hoboken, and
Manchester Regional. Of the districts that get the majority of
Choice Aid all except Hammonton, Upper Freehold, and Pittsgrove have over $1
million in property valuation per student. Hoboken and the Shore districts have
more than $2 million per student.
are Choice districts, in any way, the neediest districts in terms of student
population. Choice districts can be Choice districts because they have
spare capacity, usually because of a shrinking student population. These
districts, by definition, are not ones that have to grapple with residential
student population growth and its attendant questions of how to pay more staff to
educate more students, buy more computers, provide more classroom space
etc. Although there are many fixed costs for a district with a dropping
population, by definition, these districts don't have the most acute budget
problems in New Jersey. Thus Interdistrict Choice is money for districts
with the least pressing needs.
Students who participate
in Interdistrict Choice tend to be ones who are less expensive to
educate. According to a Rutgers study done when Interdistrict Choice was in the pilot
phase, Choice students are half as likely as the general population to have
learning disabilities and the Interdistrict Choice legislation even gives
Choice districts permission to reject students with special needs.
A Windfall for Choice
Of the 105 Choice districts in 2013-14, 91 got Choice Aid that is
equivalent to at least $100 per student, 51 got more than $500 per student,
twenty-five get more than $1,000 per student, three got more than $5,000 per
student. Deal’s $11,500 per
student is the highest and allows Deal to finance over 40% of its budget with
Choice Aid alone.
Choice districts are paid, on average $10,500 for every Choice student they
enroll, the net increase in their student population doesn't necessarily equal
the number of students they take in, since a Choice district can also send its
own students out to other Choice districts. When Choice districts swap
students they are still only paid for the raw number of incoming students, so
that if a Choice district receives 20 students and has 20 students leave it is
paid for another 20 students ($210,000, on average), even though its net change
has absurd implications for the awarding of state aid. For instance,
since 2010-11 Cape May County districts have had a net decrease of 350
students, but despite the population decrease Cape May County districts receive
an additional $7 million in state aid ($5.6 million of which comes from
Interdistrict Choice). Between 2012-13 and 2013-14 West Cape May had a net loss of 22
97 to 75) and had a $178,000 increase in state aid because a higher proportion
of West Cape May students were Choice students.
absurdity is that Choice districts are (literally)
paid for non-existent students. When Choice districts have decreases in their Choice student
populations they receive as much aid as they got prior to the Choice student
decrease, with the money now rechanneled through a peculiar aid stream known as
"Additional Adjustment Aid." This practice means that Choice
Aid spending is a one-way ratchet up; where Choice districts get more money
when they take in more Choice students and they keep the money they got
previously when they lose Choice students. For a Choice district, it's heads
they win, tails they break even.
2013-14 the calculation of Additional Adjustment Aid was very opaque, but
Choice districts that lost students appear to have gotten a compensatory $600,000
in Additional Adjustment Aid. For 2014-15 the Additional Adjustment
Aid is carried over in the same amount for all Choice districts, but other
Choice districts that lost Choice students got another $1.8 million more in
Additional Adjustment Aid. The bottom line is that state taxpayers
are sending approximately $2.3 million in 2014-15 to Choice districts for
non-existent Choice students.
amounts of Additional Adjustment Aid going to Choice districts is very large in
a few cases. Hoboken is getting $255,000 in Additional Adjustment Aid for 2014-15. Englewood
is getting $497,000. Brooklawn is getting
$142,000. Clinton Township is getting $169,000. These aid
totals are huge amounts considering non-Choice districts only got an additional
$20 per student for 2014-15. (Choice districts get the same $20 per
Effects on Districts Losing
fair to Interdistrict Choice, since sending districts are supposed to lose
regular state aid when they lose students to Interdistrict Choice, there are
theoretical savings offsets for state taxpayers when children transfer out of a
high-aid district into a low-aid one. If a child leaves Trenton (which
gets almost $17,000 per student) and enrolls in Hopewell Valley (which gets
$700 per student), the state would actually save $16,300 on regular state aid,
an amount that is greater than the Choice Aid it would have to pay Hopewell
Valley. The state would realize savings in the same way when children
leave Asbury Park, Paterson etc.
the aid difference between sending and receiving districts is rarely as large
as it is between Trenton and Hopewell Valley. When students transfer
between districts that are at rough parity in per pupil aid, like in the
Hunterdon County and Cape May County Choice district clusters, the costs to the
state are extremely high.
The flip side of the state saving money through
aid reductions is that if a high-aid district has many students who participate
in Interdistrict Choice the sending district would have budget problems that
are very similar to the problems districts have when students transfer to
charter schools. The loss of state aid combined with the
transportation subsidy most sending districts must give parents could
potentially be very costly.
any case, for 2014-15 and 2013-14 school years the Christie Administration has
had a policy of not allowing any district to lose aid. This means there are no savings
offsets for state taxpayers.
How the Windfalls Are Used
Choice Aid can be spent in any way a district
wishes. It can be used to cut taxes, offset tax increases, offset budget
cuts, or expand academic programming. The ways Choice districts use the
money varies. Brooklawn, for instance, has not had a tax increase since
2001 and has let its per pupil funding become very low. At the other end
is Englewood, which has used its Choice money to create the Academies@Englewood, a school-within-a-school with selective admissions and unique
programming. Most Choice districts follow a middle path, using Choice
money to offset tax increases and budget cuts, but not offering any special
The Context of Aid Unfairness
Choice Aid for New Jersey in 2014-15 is only
$54 million. Even if you count Additional Adjustment Aid, extra
transportation aid, and administrative costs, the program is still only a small
portion of New Jersey’s overall $8 billion K-12 aid stream. Why
answer is that New Jersey’s distribution of K-12 aid is already so unfair and
irrational that even the diversion of less than $60 million should be scrutinized.
The first unfairness is that there is a funding
cliff between the Abbotts and low-resource non-Abbotts, where districts like
Carteret and Belleville get one-quarter to one-third as much aid as Jersey
City, Paterson, Elizabeth etc do, even though those districts need the money
almost as badly. The Funding Cliff means that "Abbott Rim"
districts have much lower spending and much higher taxes than the Abbotts
that are nearly their economic peers.
unfairness is that rural and exurban districts receive 2-3 times as much aid
per pupil as their suburban peers do. For instance, West Orange has 6,926 students, of whom 36% qualify for
Free and Reduced Lunch. Marlboro has 5,248 students, of whom 4% qualify for Free and Reduced
Lunch. West Orange only has
$860,000 in valuation per student, Marlboro has $1.3 million per student. West Orange’s per capita income is
$43,000 a year. Marlboro’s is over
By logic, West Orange should receive more state
aid than Marlboro since its students are poorer and its resources are smaller,
but the opposite is true. Marlboro
receives $11.5 million in aid, whereas West Orange receives $6.8 million.
In light of the unfairness in the distribution of state aid, is it wise to create and support a program that takes
money from the general K-12 aid budget and funnels it into districts that have
lost population and thus do not have the most acute needs?
Even if the Interdistrict Choice diversion is
not as large a factor in causing districts to be underaided as the recession
and the state pension crisis, Interdistrict Choice Aid stands out as one of the
only factors within the control of the governor and legislature. For that reason the costs of
Interdistrict Choice cannot be ignored as a factor in fixing New Jersey’s
inadequate, irrational, and unfair distribution of aid.
In theory Interdistrict Choice is a good
idea. Who would object to giving students more choice over their
educations? But the funding formula pays receiving districts way
beyond the marginal cost of additional students and exists against a backdrop
of severe underaiding in the suburbs and on the “Abbott Rim.” The
state’s funding priority should be money for SFRA and low-aid districts (which may have growing residential enrollments).
At the very least, Interdistrict Choice should
be examined and scrutinized as other innovations in education are. If the program is to be preserved the
absurdities of paying districts for non-existent students and based on the raw
number of incoming Choice students must stop. The demographics of Choice students should be examined to
determine if the full Local Fair Share payment is justified. If not, Interdistrict Choice is just
another locked in privilege that benefits the few at the expense of the many.
Jeffrey Bennett is a Board of Education member in Essex County. His opinions are not those of his Board of Education.