NJ’s “Cost Per Pupil” is a flawed comparison of school district cost.

On its face, the NJ Department of Education's "cost-per-pupil" is an inviting metric upon which to compare and contrast school spending among New Jersey's 600+ districts. However, cost-per-pupil is misleading as it distorts the intentional, extra investment for students with more needs, including at-risk students and students with limited English proficiency.  Specifically, the intentionally extra investment - mandated by the state's school funding law - can be misinterpreted as "overspending."  The Education Law Center highlighted this issue back in 2010, quoting Melvin Wyns, former head of the Division of Finance for the NJ Department of Education, who called cost-per-pupil "highly inappropriate and misleading." 

Let's dig into the nuance, because it matters for equity.  To help anchor and contextualize the discussion, I will compare Jersey City (in Hudson County) to Summit (in Union County).

The Highlights:

  1. Jersey City is one of the most diverse cities in the nation in terms of ethnicity and language. Jersey City is also income diverse. This diversity includes a larger share of higher-needs students - measured by free or reduced lunch eligibility and limited English proficiency - as compared to a district like Summit.
  2. NJ's school funding law aims to allocate more funding for students with extra needs ... including students who are free or reduced lunch eligible and students who are not yet proficient in English.
  3. NJ's school funding law aims to capture this "extra" need in a figure called "weighted enrollment" that applies additional weight to a student's enrollment if that student has extra needs.
  4. Cost-per-pupil, however, ignores weighed enrollment, which in turn distorts the metric from "funding extra needs for those who are most in need" to "overspending."
  5. How we frame cost-per-pupil matters for equity and inclusion, with particular concern for students who need extra educational services (and related funding) to thrive.

Linguisitic Diversity

Jersey City was recently ranked (again) as the most diverse city in the country by WalletHub, which evaluated census data pertaining to ethnicity, language, and country of origin.  Jersey City was ranked high for "linguistic" diversity.

Income Diversity

Wallet Hub did not look at income, but this is another important lens for diversity, particularly as it relates to school funding.  We can once again use census data to glean insight into income diversity, this time shared by the joint "Data USA" project from Deloitte and DataWheel.

Two helpful measures to focus on for school funding purposes are median income and property value.

Source: WalletHub

Income Diversity -- through lens of median income

Using census data from the DataWheel project, we can see that in 2018, median household income in Jersey City ranged from $16,000 up to $133,000+ (below on the left). By way of comparison, if we look at a smaller city like Summit (below on the right) we can see bands of median income that start much higher, at $77,000+ and stretch upward to north of $200,000.

Income Diversity -- through lens of property value

Another lens into income diversity with respect to public schools is property value. In New Jersey you must, generally speaking, live in the district to attend the district's public schools (NJ does have a school choice program, but the choices are limited and Summit is not - by way of example - a "choice district"). This "home rule" paradigm of public schools means you must be able to afford to "buy into" a community in order to attend its public schools.

Again drawing from the DataWheel project, we can see that the 2018 median property value in Jersey City was $416,900; in Summit it was $879,000.

This data helps give us a directional sense of Jersey City and Summit in terms of resident income and wealth. Generally speaking, you have to earn more, and invest more, to live in Summit. We can contrast that with Jersey City, which is more inclusive of families with lower income.

Income & Language Diversity are included in our funding paradigm.

In terms of aggregate spending, Jersey City had the 2nd highest budget in NJ in 2018 - $732 million - per the Taxpayer Guide to Education Spending (Newark was the largest at $1 billion).  By comparison, Summit, had the 92nd largest budget in NJ, at $90 million. We often see the schools budgets framed in this total, aggregate sense.

But to really get under the hood of the school funding paradigm, we have to understand who we are funding. What are the demographics of the student population? What is the diversity, and what is required to support it?

Funding the diversity of needs can be viewed through several lenses, but I want to lift up two lenses specifically, both of which are written into our state's school funding law:

  • Income diversity -- students eligible for free or reduced lunch are deemed "at-risk" and are supposed to receive more funding that is targeted at services to help mitigate the gap between a child in poverty and her wealthier classmate.
  • Language diversity -- students who are not fluent in English are deemed to have "limited English proficiency," or "LEP" for short and are also supposed to receive more funding to help that child - and his parents and/or caregivers - receive services to put him on a more level playing field as his English-fluent classmates.

Both income and linguistic diversity are captured in New Jersey's annual public schools enrollment data. And we can see both types of diversity in Jersey City and Summit for 2018-19.

Free or Reduced Lunch: a Measure of Income Diversity

In 2018-19, Jersey City had 26,785 students and of that total, 73% of qualified for free or reduced lunch.  To put this into statewide perspective: if we ranked all 672 separate school districts in NJ from the highest poverty to lowest poverty as measured by free or reduced lunch eligible students, Jersey City would be 80th out of 672.

As a comparison, Summit had 3,932 students and 13% were free or reduced lunch eligible.  In the same statewide ranking as above, Summit would have ranked 445th out of 672.

Limited English Proficiency - a Measure of Linguistic Diversity

In 2018-19, 14% of Jersey City's 26,785 students had limited English proficiency. If we were to rank all 672 districts, with districts having the largest share of limited English proficiency students at the top, Jersey City would have ranked 37th.

And in that same year, 4% of Summit's 3,932 students had limited English proficiency. In the same statewide ranking noted above, Summit would have ranked 158th in terms of its share of students with limited English proficiency.

This data shows that each district has both income and language diversity.  But Jersey City, in comparison to Summit, has a larger proportional share of students who have extra needs, as measured by income and language diversity. As we'll see below, this will, in turn, make Jersey City's per-pupil cost proportionally larger too.

In NJ, "weighted enrollment" aims to capture diversity of needs. It is also an important cost driver.

All of this data about needs matter because in NJ, need drives the cost.  And an important measure of need in NJ's funding formula is a figure called "weighted enrollment."

Weighted enrollment is a count of the students in the school but with extra weights attached to students who have extra needs. The state's "2020 Education Adequacy Report" details the most recently available explanation of the weights, which include students who are at-risk, who have limited English proficiency, who are in certain grade levels, or who are enrolled in county vocational schools. [*A note: this post is narrowly about weighted enrollment as it relates to cost-per-pupil, but if you'd like a deeper dive into how "Adequacy" is computed and why weights exist for certain categories of students, check out the links at the bottom of this post.]

How "weighted enrollment" works

Here's a simplified example of how weighted enrollment works, for a sample student who is elementary aged and who qualifies for free lunch.

  • One elementary school student in Jersey City has a "base" weight of 1.0.
  • A student who lives in Jersey City who also qualifies for free or reduced lunch is deemed "at-risk" and thus receives an extra weight of 0.57 enrollment (a weight provided in the Education Adequacy Report).
  • So that student would count as 1.0 student for "average daily" enrollment purposes but 1.57 students for "weighted" enrollment purposes.

This can grow more nuanced; for instance, weights may be higher or lower depending on the concentration of poverty within the district as a whole.  The important insight here is: weighted enrollment is not a simple count of a student, but rather a policy-driven attempt to quantify that student's need.

Cost-per-pupil is presented as a cost comparison between districts. However, the comparison is misleading because weighted enrollment is ignored.

Weighted enrollment is used to determine cost. So it stands to reason that to fully understand cost, we should have full insight into weighted enrollment.  And this is where the NJ Department of Education drops the ball; in both its public enrollment data and "Taxpayer Guide to Education Spending" data, the DOE ignores - leaves out completely - weighted enrollment.

Cost-Per-Pupil -- the formula.

"Cost per pupil" measures "Total Cost" divided by "Total Average Daily Enrollment."  And average daily enrollment is what we would intuitively think of as "enrollment," i.e. a count of the students who attend the school, without regard to need.

Each year, news articles are written about what the new "average cost per pupil" is, with local news lifting up the local cost per pupil for each district. We can see examples of how cost-per-pupil is framed in the NJ School Boards Association, NorthJersey.com, and NJ Spotlight.

As a single measure to get a pulse on school funding, cost-per-pupil is a helpful, albeit simplistic, metric. However, it's also a flawed metric because it completely ignores "weighted" enrollment, thus leaving it up to the reader - be it reporters, taxpayers, or advocates - to interpret why costs may be higher in some districts versus others.

The point is: the state is presenting a figure about cost, but it has removed critical information about what is driving the cost.

Removing weighted enrollment distorts the relationship between cost and cost driver

Cost-per-pupil inflates the perceived “cost per student” because it erases a key cost driver - weighted enrollment - from the equation. In effect, the cost piece of the formula (the numerator) reflects the weighted cost, but a factor driving cost upward - extra weight assigned to enrollment for students with more needs - is stripped out. This has the formulaic effect of increasing cost-per-child....which leads to claims of "over-spending per child" versus what may actually be happening, which is "extra public investment per child."

An example can help crystalize this; let's look again at Jersey City and Summit. We can compare cost-per-child for each district using average daily and weighted enrollment**:

  • Total cost is the same regardless of the type of enrollment used: $732 million for Jersey City and $90 million for Summit.
  • Using average daily enrollment, Jersey City had 28,197 students while Summit had 3,928 students. With this measure, "cost-per-pupil" is higher for Jersey City ($25,973) than Summit ($22,918).
  • But using weighted enrollment, a different picture emerges. The numerator (total cost) stays the same at $732 million for Jersey and $90 million for Summit. But the denominator grows at a different rate for each district; Jersey City's enrollment based on need grows 64%, from 28,197 to 46,119 while Summit's enrollment based on need grows 12%, from 3,928 to 4,397. This has the effect of LOWERING Jersey City's cost-per-pupil to $15,880 and Summit's cost-per-pupil to $20,475.

Cost per pupil based on average daily enrollment (what the state publishes) suggests that Jersey City is "overspending" relative to Summit. But cost per pupil using weighted enrollment shows that Jersey City is actually underinvesting in its students as compared to Summit.

And, this points to a deeper systemic reality: Jersey City underfunds its schools - by approximately $60 million as recently as 2020 - while Summit overfunds it schools - by approximately $3 million in 2020.  The chart below uses data from the Education Law Center's SFRA District Profile data portal (plus $86 million of locally funded payroll tax which was not reflected in the ELC's chart***).

Jersey City is not overspending compared to Summit. It is under-investing compared to Summit.

The Education Law Center highlighted this issue with cost-per-pupil back in 2010 and called on the Department of Education to use weighted enrollment.  The Education Law Center now shows both average daily and weighted enrollment on its SFRA District Profile, in part to help illustrate the connection between need and weighted enrollment.

Absent the NJ Department of Education changing the way it presents this data, taxpayers and school advocates should be aware of this disconnect.  While we can compare spending between districts, we should do so in a way that welcomes dialog around the nuance related to the cost drivers, i.e. the relative needs that exist within each district. This is particularly important if the aim is equity for all students, including those with the most needs.

* Additional reading:

** Total cost and average daily enrollment figures are from the 2020 Taxpayer Guide to Education Spending, which reported 2018-19 enrollment. I obtained weighted enrollment figures previously published by NJ Education Aid, via OPRA request from the NJ DOE.

*** 2020 Payroll tax revenues were pulled from the 2021 proposed Jersey City Schools budget available at Public Board Docs here.


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