NJ Business Matters: The Blog of the CIANJ

Economic Growth Committee Passes School Choice Legislation

Earlier today, the Senate Economic Growth Committee voted to pass S-1607, the Urban Enterprise Zone Jobs Scholarship Act. The bill, long-supported by CIANJ, would allow corporations to make tax-deductible contributions to scholarship organizations. The dollars would be used by children in Newark, Camden, Trenton, Elizabeth, Lakewood, Paterson, Orange and (as of this morning) Jersey City to attend participating public or non-public schools of a student's choice.

Regular blog readers already know our reasons for support by heart. For the rest of you, here's a link to our press release and here's a link to the testimony of your friendly blogger.

Now for some mythbusting...here are the top three myths we heard perpetuated at this morning's hearing.

• Myth one: S-1706 will divert money from public schools

No it won't. Here is a link to the bill. Read it from cover to cover and you will find nothing that says the tax credit money will be taken from public school funding. In fact, many urban schools are held harmless under the new school funding formula for three years, even as they lose population.

• Myth two: This five-year pilot program would drain $360 million from the State Treasury at a time when public schools are already struggling for adequate resources. The Legislature would almost certainly cut funding for public schools by $360 million to pay for this program.

Again, that is not in the bill language. To believe that adding $24 million in education investments in year one would somehow result in draining public schools of money is to speculate about what the legislature will do down the road and act as though it is fact. Also, not all students in the program will attend private schools. The intent of this legislation is to give children in failing schools a choice as to where they get their education.

• Myth Three: New Jersey cannot afford this program

This bill is an example of New Jersey spending money to save it. Private schools in New Jersey's urban centers are closing, and as each one closes its students move into public schools. The pilot districts have some of the highest per-pupil spending in the nation! That does not include the potential need for new school construction. In a state that spends about $24 billion in education, this $24 million investment in year one would represent 0.012% of overall spending. Keeping private schools open saves taxpayer dollars and helps boost student achievement.

Those voting YES were the bill sponsor, Senator Raymond Lesniak (D-20), Senator Joseph Kyrillos (R-13), and Senator Stephen Oroho (R-24). CIANJ thanks them for their support, despite enormous pressure from the teachers' lobby. Senator Teresa Ruiz (D-29) voted NO.

Senator Lesniak Blogs for School Choice Bill

On Thursday, the Senate Economic Growth Committee will consider legislation that CIANJ has long-supported and with which regular blog readers are very familiar - the Urban Enterprise Zone Jobs Scholarship Act. The bill (S-1607) would allow corporations to receive a 100% tax credit for dollars contributed to scholarship organizations in seven New Jersey cities.

The organizations would then distribute the funds in the form of scholarships to poor children in these cities to be used at public or non-public schools. Scholarship amounts would be set at roughly $6,000 per-pupil for grades K-8 and $9,000 for students in grades 9-12. This would lower the state's per-pupil expenses by between 40% and 60% for each scholarship recipient. Plus, students would undergo testing to ensure student achievement is being improved.

Senator Ray Lesniak, Chairman of the Economic Growth Committee, has written about the legislation on his NJVoices blog. Both he and Senator Tom Kean, Jr. have sponsored the bill, which would offer taxpayer savings while improving student achievement in the seven pilot districts. As Senator Lesniak aptly notes,

Just a few stats serve to describe the taxation sword of Damocles hanging over our heads. New Jersey has the highest public school per-pupil spending in the U.S.: more than double that of parochial schools. [Should private schools continue to close], More teachers would have to be hired, at the highest average salaries in the nation. Our unfunded liability for teacher pensions and retirement healthcare--already the highest per capita in the U.S.--would rise again. And new schools would have to be built to accommodate the additional students--while existing parochial schools were left empty and unused.

Those who oppose S-1607 argue that New Jersey cannot afford the $24 million first year cost at a time of fiscal distress when other services are being pared. I say New Jersey cannot afford not to preserve its faith-based school systems.

If we allow these financially distressed schools to close, educating its students in far more expensive public schools would far exceed the cost of the scholarship program. It would also leave these same taxpayers with a Hobson's choice: either tolerate further overcrowding in the public schools or pour yet more billions into additional public school buildings. This would be fiscal irresponsibility at its worst.

Similar programs have already been launched in states such as Pennsylvania and Arizona, benefitting tens of thousands of children and the taxpayers alike. Giving New Jersey's inner-city school children the same opportunity should be a priority of legislators everywhere.

Maybe We Should Make More Copies of the State Audits

Yesterday, the Education Law Center and their supporters argued before the Supreme Court that New Jersey's Abbott school districts are under-funded. Then, they got in their cars and drove through a city that spends more than $16,000 per-pupil in education, with state taxpayers picking up 80% of the tab.

"At bottom, the state's proposal (would) turn its back on the severe and extreme disadvantages of Abbott school children repeatedly identified," the brief filed by the Education Law Center, lead attorneys in the Abbott case, says. "There is simply no basis ... to, once again, consign untold future generation[s] of Abbott children to pay the price so dearly exacted upon prior generations of those children."

Last year New Jersey state taxpayers distributed $7.3 billion in state aid. More than half that went to the 31 Abbott districts, leaving more than 500 non-Abbott districts to divide the rest. At some point, the legislature has to come to the conclusion that spending more money on the problem of urban education does not make the problem go away - it only makes it more expensive.

The Urban Schools Scholarship Act, which would allow corporations to fund a school choice pilot program for poor children in seven New Jersey cities, is long overdue.

A True Measure of Reform

Last week we blogged on a tax credit scholarship bill that CIANJ has been proud to support for more than seven years, and which will finally be given committee hearings this Spring. Today, we highlight an op-ed in the Trenton Times that points to the bill as a revolutionary step necessary to reform our school system.

A quick rundown of the S-176,

• Corporations would make tax deductible contributions to scholarship organizations in seven cities - Newark, Camden, Trenton, Orange, Lakewood, Elizabeth and Paterson.
• Children in these cities whose families earn less than 250% of the federal poverty level can use the scholarships to attend a public or non-public school of the student's choice.
• The tax credit scholarships offer savings both in reducing per-pupil expenses and in the avoidance of school construction costs
• Public or non-public schools participate in the program on a voluntary basis.

The bill allows poor children in these cities the opportunity to attend a better school, and it offers savings to New Jersey's overburdened taxpayers. It is already being successfully implemented in Pennsylvania, to the benefit of 25,000 children and with the help of more than 2,000 corporations. Remember that in some Abbott districts, about half of all students fail to pass the High School Proficiency Assessment, which the education commissioner has called a "middle school level test." This is despite some of the highest per-pupil spending figures in the nation.

The fault is not with the students, but rather with a system that remains in staunch opposition to necessary reform and that believes there is an increased funding solution to virtually every problem.

As Hank Butehorn succinctly writes it in the Times,

Rather than following the failed court-mandated policies of the past, New Jersey lawmakers should be pushing this tax credit scholarship plan to help children in failing schools, advance educational opportunities and ease the economic burden of education (and related construction). The empirical evidence will then lead to full implementation of school choice.

In a budget season of priorities, improving education while simultaneously saving taxpayer dollars should be atop the list.

School Choice Bill Finally Set To Get Its Hearing

Saturday's Asbury Park Press carried good news on the school choice front: a new version of the Urban Schools Scholarship Act will finally get a committee hearing.

CIANJ has been in support of this bill for seven years, and the pilot program would function this way:

• Corporations would make tax-deductible contributions to scholarship organizations in the cities of Orange, Camden, Lakewood, Newark, Paterson, Elizabeth and Trenton.
• The scholarships would be distributed to poor children in these districts to be used at other public or at non-public schools.
• Scholarship amounts would be awarded at about $6,000 for K-8 students and $9,000 for high schoolers. Those totals are about 40%-60% of the current cost of educating students in failing urban schools.

The program allows poor children in these cities to attend better schools while simultaneously saving taxpayer dollars.

Dan Gaby, [New Jersey Excellent Education for Everyone's]executive director, said the program would collect $24 million from business in its first year, funding about 4,000 scholarships of $6,000. The loss of revenue to the state through tax credits, Gaby said, would be offset by the $18,000 the state wouldn't have to spend educating scholarship recipients in public schools.

"Children ought to have a right to be able to opt out of failing urban school systems," Gaby said. "Everyone has school choice if they have money. And our argument has always been those children without money should have those same opportunities."

The bill has languished on desks of legislators for the better part of this decade. Look for a hearing, which will be chock full of NJEA opposition, sometime next month.

What NJ High School Diplomas Should Mean

Derrell Bradford, Deputy Director for our friends at Excellent Education for Everyone, penned a column which ran in Tuesday's Record and cut to the heart of the failures associated with the Special Review Assessment (SRA).

For those unfamiliar, in order to receive a diploma from a New Jersey high school, a student is expected to pass the High School Proficiency Exam (HSPA) - which tests to ensure 8th grade skills have been acquired before a student can graduate high school. After the HSPA's implementation, the SRA was introduced as a way to test students who 'froze' during the exam and therefore had failed to pass the HSPA three times.

Now, more than 13,000 students annually - who have failed to pass a test of 8th grade skills - are granted their diploma through the SRA.

This raises a host of questions which Bradford poses - such as how does a student without 8th grade skills get promoted through high school and how does this happen in urban districts which spend upwards of $20,000 per pupil on education. He closes,

Reauthorization or extension of the SRA should not be supported. Its abuse is symptomatic of a critical failure in New Jersey's schools that overwhelmingly affects communities of color, and stymies the transparency necessary to identify deficiencies and make genuine school change.

As former Education Commissioner William Librera said in 2005: "It's time to get rid of [the SRA] and refocus our efforts on helping our kids pass [the HSPA]."

Regular blog readers already know that CIANJ is proud to work with E3 in support of the Urban Schools Scholarship Act. This legislation would allow companies to make tax deductible contributions to scholarship funds so that up to 4,000 children in our poorest school districts can use the money to attend other public or non-public schools. Mayor Booker, a cofounder of E3, also supports the program as a way to improve education "by any means possible". Let's hope legislative leaders in Trenton are willing to take the same approach when they reconvene in November, even if it means taking a stand against the powerful education lobby.

Calling a Charade a Charade

Kudos to the Star-Ledger this morning for calling the Special Review Assessment what it is - a charade that allows students in failing districts to earn a diploma that is nearly meaningless.

The SRA is given when students cannot pass the standard High School Proficiency Assessment (HSPA) in order to graduate. While the HSPA is given in English, the SRA is offered in multiple languages, not timed and is administered and scored within the same districts students attend. As you might imagine, there is some opportunity for manipulation.

Statewide about 12% of high school seniors rely on the SRA to graduate, but in our poorest districts that number rises to nearly one-third. Therefore, in Camden the "real" graduation rate is only about 15%. And both you regular blog readers know that because we fund Abbott districts at the same rate as our wealthiest districts, NJ spends close to $20,000 per student in those districts for such a low graduation rate.

Meanwhile, languishing on desks in Trenton is a bill that would help 4,000 students. The Urban Schools Scholarship Act would allow corporations to make tax-deductible contributions which students in these districts could use to attend other public or non-public schools. Per student caps would mean that not only would these children get a better education, but it would happen at roughly one-third of the present cost. It would also hold failing districts accountable, as they saw children leave because of the unacceptable status quo.

The problem, the Ledger aptly notes, is not in the test but in the schools,

Ending the SRA outright would have dire consequences. Dropout rates would likely increase, but continuing the charade of awarding diplomas that are hardly worth the paper they are printed on is just as bad.

The use of the SRA is a manifestation of a bigger problem: failing school districts.

Has the need for change ever been so apparent?

More Protectionism

The case against protectionism made on this piece of cyber real estate often relates to those trying to protect their jobs or products from competition. Without that competition for prices, talent and resources, the consumer suffers.

Protectionism does not only apply to international trade. Government bureaucracies can also insulate themselves from competition and we the consumer are worse for it. Today, Newt Gingrich addresses the Detroit school system's bureaucracy and the way it has failed consumers: students, taxpayers and businesses. The Motor City graduates only 25% of its entering freshmen on time and has seen that accelerate increased unemployment, crime and sagging population.

The bureaucracy is responding as though their primary concern is self-preservation, even rejecting a $200 million offer of support from the private sector.

There is ample evidence of what works in education, but the bureaucracy has systematically ignored all of it. The innovations include merit-based pay; increasing teacher-to-student ratios; revamping union rules to reward the best teachers; bonuses and incentives for new teachers; charter schools; and offering parents a coupon that allows them to send their children to the school that works best for their children and not the bureaucracies.

I've even suggested rewarding students in the poorest neighborhoods by paying them if they get a "B" or better in math and science.

Ultimately, Detroiters must decide what is in the best interests of their children and the future of their city. They can decide to accept business as usual, or they can demand real change.

But real change requires real change, not new rhetoric while doing more of the same old thing. Propping up the failed past at the expense of future generations leads to prison and poverty vouchers for too many of our children.

Here in New Jersey, we face the same challenges in our inner-cities. The mantra from the NJEA and their allies in government is that an investment in education is an investment in our future. We agree on that point, but then why disallow tax deductible corporate investments through the Urban Schools Scholarship Act? If we are seeking the best interest of the child, does that not mean allowing them to attend the best possible school? Surely that benefits the child more directly than non-merit based pay and free health insurance for retired teachers.

Meanwhile, the children of Newark prepare for another school year, and if the pattern of previous years remains steady, then 38% of seniors will hold a regular high school diploma at the end of the term. Just doesn't seem right.

Camden School District Ranks Last While Urban Schools Scholarship Act Awaits A Hearing

Camden's school district was the worst performing among those monitored by New Jersey's Department of Education. Today's Courier-Post details some of the findings,

Camden fared the worst in all five categories among the seven districts reviewed, meeting only 6 percent of the benchmarks in instruction, 5 percent in personnel, 39 percent in operations management, 11 percent in governance and 31 percent in finance.

The report said the district does not disqualify individuals with criminal backgrounds or revoked licenses from being hired. It lacks policies for supervising and evaluating teachers and meeting their professional-development needs. The school board hasn't even evaluated the superintendent in recent years.

The district does not provide mandated programs for gifted and talented students, lacks an approved plan for improving special-education activities and relies on a high-school geometry and calculus curriculum that is 17 years old, the report found.

In addition, the report said, the district does not spend federal or state grant funds as required and has no rules for addressing the deliberate falsification of annual reports on violence or vandalism.

The district did satisfy all of the performance indicators in early-childhood education and operates "exemplary" health and nursing programs, the report said.

A separate audit of curriculum and professional-development in the district found that the instruction program for some subjects pre-dated the state's creation of content standards. The audit, also released on Tuesday, cited "fragmented and partial documentation" to explain the expenditure of $256,000 for teacher training. (emphasis ours)

In case you have forgotten, the Urban Schools Scholarship Act (USSA) was introduced in January and has still not been officially heard in either of the education committees. The USSA would give up to 4,000 children in Camden, Newark, Orange and Trenton the opportunity to utilize scholarships (funded through tax-deductible corporate contributions) to attend other public or non-public schools. Furthermore, the children taking advantage of this opportunity would be educated at about half the cost of what the Camden school district currently spends. A hat tip to Asw. Nilsa Cruz-Perez (D-Camden) for being a primary sponsor of the bill and putting the interests of her constituents first.

Pennsylvania has already instituted a similar program, benefiting more than 20,000 students. How much longer will reaching six percent of instruction benchmarks continue before NJ is willing to do the same?

Regionalization and Monetization

Dr. David Rebovich has a very thoughtful piece on the daunting task of creating a new school aid formula posted to PoliticsNJ.com. Asset monetization may be all the rage in political circles these days, but the single biggest opportunity for property tax relief within the state's current range of capabilities remains altering our disjointed school funding formula.

What the legislature and the governor did do in the new budget was increase state aid to non-Abbott school districts by three percent. This is the first time in five years that those districts have received more state aid.  The new budget also includes a hike in direct aid for increases in enrollments and targeted assistance for at risk students, both of which have created financial pressures on many non-Abbott districts. In addition, the state is providing more funds for full-day kindergarten and for pre-school programs. 

According to the Joint Legislative Committee on Public School Funding Reform, a new school funding formula should address these issues and more. The committee's final report recommended that a new formula be based on the characteristics of the student population of a district as well as the district's ability to pay. This would mean that state aid would "follow the children" and not be based on geography alone. In addition, the committee wants public-funded pre-school programs for all children who qualify, whether they live in Abbott districts or not, and all-day kindergarten in all districts.

What also needs to be resolved is the cost of a thorough and efficient system of education. The committee suggests relying on "professional judgment panels," a standard practice nationally, to determine the resources needed to achieve educational standards. Any such calculation, however, should also take into account the added costs of educating students deemed at risk, with special needs, and with limited proficiency in English.

What taxpayers will want to know, of course, is who will foot the bill for a new school funding formula..  Well, the joint committee recommended that school districts look seriously at sharing and regionalizing services, adopt best practices in administration and program delivery, find ways to reduce school transportation costs, and cut unnecessary state mandates. Yes,  616 school districts are too many for state the size of New Jersey, but the committee did not decide how many school districts the state should have.  However, it did state that the Abbott districts should be reviewed and consideration given to making residents in those districts pay more toward their schools.

Along with stricter caps on local property tax increases, some of these recommendations are already being considered by school officials. But without requiring districts - Abbott, suburban or rural - to pursue savings measures, education costs will continue to rise. And, if the state plans to help districts implement the goals and programs above, the cost will likely be a billion dollars or more a year.  From where will that kind of money come?

There is now consensus that a new, more equitable school funding formula must be in place. Consolidation of services, accountability and the Urban Schools Scholarship Act should be part of that matrix. As noted in the CIANJ 2007 Legislative Agenda,

Where appropriate, the private sector routinely streamlines operations to make itself more efficient and reduce costs to the consumer. CIANJ favors mandatory consolidation of government services, especially administrative functions. A base-closing style commission could issue recommendations that would be voted on in their entirety by the legislature, without the possibility of amendments. This would remove the political impediments that have frustrated past efforts to consolidate. The majority of property tax dollars are used to fund public schools.

Creation of countywide oversight with the power to line-item veto budgets; funding Abbott districts at the statewide average and not at the level of the wealthiest counties; and reduction in the number of school districts would all make significant improvements to New Jersey's property tax situation.

Remember that businesses in New Jersey often pay our nation's highest property taxes twice: Once by virtue of the nearly one-third of taxes collected being generated by commercial property and then again through the higher wages necessary to support a quality of life in NJ that attracts and retains a talented workforce. Each budget passed without a new formula costs the state's taxpayers. New Jersey's special session on property tax reform produced a litany of suggestions. Before the legislature begins to move on ideas such as universal healthcare and paid family leave, turning the biggest of those suggestions into an action should be atop the agenda. 

School Choice Success in Pennsylvania

Regular blog readers know about New Jersey's proposed Urban Schools Scholarship Act; legislation CIANJ proudly endorses that would allow corporations to make tax deductible contributions to provide school choice for children in Newark, Camden, Trenton and Orange. Up to 4,000 children in these school districts could use the scholarship money, funded by corporations, to attend other public or non-public schools. The bill also provides incentives for corporations to make contributions to improve technology and improve innovation in public schools.

The program is modeled after Pennsylvania's Education Improvement Tax Credit. That program, now in its 6th year, has provided numerous benefits to the children and taxpayers of Pennsylvania. Here are two of the highlights noted during budget testimony in the Keystone State,

• More than 33,000 children across Pennsylvania are benefiting from EITC scholarships.
• Pennsylvania's EITC program, with a $36 million state investment, has saved PA taxpayers more than $294 million per year.

As we have noted in this space time and time again during the budget process, politicians like to point out budgets are about more than funding levels and balanced books; they are about setting priorities. The Urban Schools Scholarship Act (even as only a test program) would benefit 4,000 inner-city children, and save taxpayer money while doing it. It's tough to see why that priority shouldn't be near the top of the list.

Labels: FY08 NJ Budget, school choice, school funding, urban schools scholarship act