On Wednesday March 18th, Superintendent Walker proposed a budget that significantly increases local investment in our public schools. The budget includes a $64 million school levy increase, which represents a 47% increase over last year’s levy.
Mayor Fulop “blasted” the increase, citing the harm to taxpayers, stating that “They’re going to destroy the taxpayers. They’re going to destroy residents, both renters and homeowners.”
I’ve received the same question from several people: does the mayor’s rhetoric have merit? What does this 47% increase really mean? Also: what role can the city levy play in helping mitigate a school levy increase?
Let’s unpack the tax math and underlying meaning so we can have a shared, informed dialogue as a community.
Mr. Walker’s Budget Aims to Stop the Public School Funding Decline & Invest in Our Kids
Last year, Jersey City Public Schools lost 250+ positions including 160 teachers. This year, parents have been pushing for investment, not more divestment.
Superintendent Walker’s proposed budget is an investment; it includes a $201 million school levy, it excludes layoffs (in contrast to last year), and it outlines numerous concrete investments, including: “the continuation of all existing programs and services…investments in ESL and World Language….a STEAM Academy for 2021…visual arts…thirteen new social workers, a position to address human trafficking, a mental health specialist, psychologist, and three additional high school counselors.”
Quantifying Investment in Our Kids
The state of NJ has a progressive school funding formula called “SFRA” that aims to define “Adequacy” for every school district. This “Adequacy Budget” is based on the student population – and the related needs – in our district. Consider some of these needs in our ~30,000 student school district:
- 19,000+ JCPS studens are “at risk”. This is quantified by students who qualify for free or reduced lunch. We can see many of these kids still need food while the schools are closed during the Coronavirus Pandemic…and the Jersey City Public Schools are providing the food. This is just one of many “outside the classroom” services provided by our schools.
- 3,700+ students are English language learners. They need language support services and social workers.
- 4,000+ students have special needs. They need specially certified teachers, specially outfitted classrooms, and a host of therapies that require one-on-one care.
SFRA is progressive; it aims to give more to those who need more. But … Jersey City has been falling woefully short in enacting the promise of SFRA as the chart below illustrates.
Superintendent Walker’s proposed budget is shown in the green portion of the line above; it aims to fix this terrible downward-sloping curve that our city’s kids have been living through for the past 10 years.
These underfunded needs are clear to parents, which is why parents are advocating: we must fund our schools.
47% – What Does it Mean?
The 47% increase represents the dollar-for-dollar increase to the school levy. It does not represent a 47% increase in property tax. Let’s go over the tax math: the 2019/20 school levy (funding this year’s school year) was $137 million; Superintendent Walker is proposing a 47% increase — $64 million – to bring the school levy up to $201 million.
It should be noted: even with this 47% increase, our public schools will still be underfunded by over $50 million. This 47% increase in investment is desperately needed. Jersey City Together advocates petitioned for such an increase as recently as January (full disclosure: I was part of the Jersey City Together team calling for this investment.)
A question arises: how are Jersey City’s schools so egregiously underfunded in the first place, given our recent, rapid growth?
Jersey City’s Tax Base Has Grown the City While the Schools Have Been Left Behind
In the last 20 years, as Jersey City’s tax base has grown, Jersey City’s city levy has grown, but the school levy has been left behind. This combination of tax base growth plus lagging school levy growth is core to why our schools are underfunded in 2020.
Also key to understand here: as the tax base grows, state aid declines. As state aid declines, the expectation – per the state funding formula and NJ property tax policy – is that the school levy must go up. Jersey City’s leadership has been on notice of this funding paradigm since 2008. They have failed to take action.
Superintendent Walker, recently appointed in Fall 2019, is the first leader to take action to fix it. Now, Mayor Fulop is “blasting” him for trying to fix it.
What About Taxpayers? What’s the Homeowner Impact?
Here’s how we can understand the tax impact of this proposed school levy increase:
- Compute the new school tax rate based on the proposed levy and the new tax base.
- Multiply the new school tax rate times a home’s assessed value to get new, presumed school tax expense.
- Compare the new school tax expense with last year’s school tax expense.
Let’s walk through an example. I want to note: my example below strays slightly from page 48 of the BOE presentation. Here’s why: in the BOE presentation, the updated average assessed home value changes from 2019/20 to 2020/21, which is in keeping with prior years’ budget presentations; the BOE budget uses an average assessed home value in the budget each year to give taxpayers a sense of the average tax impact. However, a homeowner’s assessed value would typically NOT change year on year unless it was re-assessed by the tax office or if the city conducted an annual citywide revaluation. Also: the examples below show 2-digit decimal precision for the tax rates (for presentational purposes), but the underlying analysis is based on 4+ digit precision analysis.
Let’s use the average home values as presented in the proposed BOE budget for 2019/20: $439,789.
- In 2019/20, the school tax rate was 0.3868% (or 0.39%, rounded). If we multiply that rate times $439,789 we get school tax expense of $1,701.
- The proposed 2020/21 budget includes a 0.5284% (or 0.53%, rounded) school tax rate. If we multiply that times $439,789 we get school tax expense of $2,324.
- This represents a $623 annual, or $52 per month, increase, for this sample home. For large portions of the city, particularly for low- and moderate-income families who own or rent, the impact would be much less. Here’s why: the expense will go up or down depending on the assessed value of the home. Meaning: homes with lower assessed values (including rental properties) will have a lower bill; homes with higher assessed values will have a higher bill. Again — the BOE presentation presents an average to help give a pulse point on the tax expense impact of the levy.
What about the city levy?
The city can help mitigate the tax impact here, by choosing to keep its levy FLAT. Here’s why: the tax base grew by about $4 billion. If the city can keep its levy flat, it could reduce the city tax rate and “make levy space” for the schools.
Taxpayers have to decide: do we care about and value our city’s kids? Currently, only 24% of our property taxes go to the schools. That ratio is among the lowest in Hudson County. It’s lower than Newark. It’s far lower than nearby suburbs. The public data is provided below, in a Tableau visualization I created last year. How much do we value (or not value) our city’s kids?
Child/Student Harm vs Adult/Taxpayer Harm – It’s All Concerning
The mayor’s rhetoric reflects a priority for taxpayer harm. But his comments ignore current, ongoing student harm due to systemic underfunding. While it’s fair to highlight taxpayer concerns, particularly in light of the Coronavirus Pandemic, it’s also imperative to point out: this school funding crisis has been unfolding for years, parents have been ringing an alarm for years, and the Pandemic will only worsen the crisis for our kids, absent local leaders acting on our kids’ behalf.
Also, it’s important to note here the NJ Division of Treasury Senior Freeze Program. Long-time resident and income-eligible seniors throughout Jersey City may qualify for this property tax relief program. This is a program that City and BOE officials can help socialize/amplify throughout the community, given their combined communicative reach as governing bodies.
2019/20 – Page 48 Annotated Version:
Page 49 of the 2019/20 proposed budget includes key data to help taxpayers understand the tax impact of the proposed $61 million levy increase. I’ve shared the page below, along with how the new tax rate is computed, as sourced support for the visuals and data above.