On the Relative Efficiency of New Jersey Public School Districts

PDF of Brief: Baker.Weber.NJEfficiency_8_2_16

Bruce D. Baker

Mark Weber

Contrary to current political rhetoric, New Jersey’s least efficient producers of student achievement gains are not the state’s large former Abbott districts – largely poor urban districts that benefited most in terms of state aid increases resulting from decades of litigation over school funding equity and adequacy. While some Abbott districts such as Asbury Park and Hoboken rate poorly on estimates of relative efficiency, other relatively inefficient local public school districts include some of the state’s most affluent suburban districts and small, segregated shore towns. And yet these districts will be, in effect, rewarded under Governor Chris Christie’s “Fairness Formula,”[1] even as equally inefficient but property-poor districts will lose state aid.

Findings herein are consistent with previous findings in cost-efficiency literature and analyses specific to New Jersey:

• There exists some margin of additional inefficiency associated with Abbott status relative to non-Abbott districts in the same district factor group, but the margin of additional inefficiency in the poorest DFG is relatively small.
• The state’s most affluent suburban districts – those with the greatest local fiscal capacity and currently lower overall tax effort – tend to have equal degrees of inefficiency as compared to less-affluent Abbott and non-Abbott districts.
• Districts in factor group I (the second highest category of socio-economic status) have the largest ratio of students enrolled in inefficient relative to efficient districts.

Coupling these findings with those of similar studies in New Jersey and elsewhere, it makes little sense from an “efficiency” standpoint alone to re-allocate resources from high-need, low-income, urban districts to affluent suburban districts for the primary purpose of tax relief. This policy proposal is based on the false assumption that the poor urban districts are substantively less efficient than affluent suburban districts to begin with, and ignores that providing such increases in aid to affluent suburban districts tends to stimulate even greater inefficiency.

Put bluntly, the Governor’s proposal not only fails on a) tax equity and b) student funding equity, as previously explained by Weber and Srikanth, but the “Fairness Formula” proposal also fails on the more conservative economic argument of “efficient” allocation of taxpayer dollars.

[1] http://www.nj.gov/governor/taxrelief/pages/formula.shtml