NJ Surplus Drill-down Redux


This is a quick reply to NJ Left Behind’s highly suspect if not outright bogus NJ Surplus Drill-down. The crux of my response to NJ Left Behind’s summary of NJ school district surpluses, is that his/her analysis completely distorts the distribution of school district surpluses by not taking into account district size (enrollment). Of course the larger districts on average have larger surpluses. And Abbott districts on average are larger. Now, this is not uniformly the case, but for the most part, the largest surpluses are in larger districts (indeed there are some large districts with no surplus and some smaller districts with large surpluses).

The more appropriate way to look at these numbers is in per pupil terms. First, here are the per pupil Total Surpluses by district factor group and by Abbott status:

Interestingly, relative to districts in the same factor group (wealth-income category), Abbott districts seem to be carrying somewhat smaller per pupil surpluses. Further, total surpluses per pupil in Abbott districts on average are lower than surpluses in DFG J districts.

Here is the proposed state aid withholding (in other words, proposed CUTS) by district factor group and Abbott status:

Note in this case that state aid withholding is systematically higher in poorer district factor groups, though lower in Abbott districts relative to others in their factor group.

Finally, here is the withholding as a share of total surpluses:

So, the bottom line here is that the poorest Abbott districts are in fact taking the biggest hit in terms of the share of total surpluses that will be withheld from state aid. A somewhat different story from the deceptively oversimplified NJ Left Behind post.



Published by schoolfinance101

Bruce Baker is an Professor in the Graduate School of Education at Rutgers, The State University of New Jersey. From 1997 to 2008 he was a professor at the University of Kansas in Lawrence, KS. He is lead author with Preston Green (Penn State University) and Craig Richards (Teachers College, Columbia University) of Financing Education Systems, a graduate level textbook on school finance policy published by Merrill/Prentice-Hall. Professor Baker has written a multitude of peer reviewed research articles on state school finance policy, teacher labor markets, school leadership labor markets and higher education finance and policy. His recent work has focused on measuring cost variations associated with schooling contexts and student population characteristics, including ways to better design state school finance policies and local district allocation formulas (including Weighted Student Funding) for better meeting the needs of students. Baker, along with Preston Green of Penn State University are co-authors of the chapter on Conceptions of Equity in the recently released Handbook of Research Education Finance and Policy, and co-authors of the chapter on the Politics of Education Finance in the Handbook of Education Politics and Policy and co-authors of the chapter on School Finance in the Handbook of Education Policy of the American Educational Research Association. Professor Baker has also consulted for state legislatures, boards of education and other organizations on education policy and school finance issues and has testified in state school finance litigation in Kansas, Missouri and Arizona. He is a member of the Think Tank Review Panel, a group of academic researchers who conduct technical reviews of publicly released think tank reports on education policy issues.

2 thoughts on “NJ Surplus Drill-down Redux

  1. My reply to NJLEFTBEHIND:
    http://njleftbehind.blogspot.com/2010/02/nj-left-behinds-surplus-drill-down-is.html

    On average, per pupil surpluses decrease with size. the largest per pupil surpluses tend to be in very small districts.

    Among districts with more than 5000 students, Abbott per pupil surpluses are about $150 per pupil greater than non-Abbotts of same size (not wealth)

    Among districts with more than 10,000 students, Abbott per pupil surpluses are about $120 per pupil greater.

    Interestingly, within DFG A, Abbotts had lower surpluses than other DFG A districts. That one caught me a bit off guard.

    That stuff aside… I agree with our point about one use of surpluses being property tax relief and agree that this use of surpluses doesn’t apply similarly to the abbotts. But, there are likely other reasons.

    That didn’t seem to be the point of your original post – which simply threw out there, the largest surpluses, implying that Abbotts are irresponsibly and greedily, disproportionately hoarding surpluses. On average, they are bigger. As such, it is prudent to hold bigger surpluses. What is most interesting are the differences in surpluses across otherwise “similar” districts. I’ve been tackling other stuff today, so I haven’t had time to dissect the surpluses.

    Just thought I’d take a fun poke at your analysis. Cheers!

  2. It turns out that as a share of prior year current operating expense per pupil, for districts enrolling over 5,000 pupils, those that are Abbotts, have smaller surpluses. For those enrolling over 10,000 pupils, Abbott reserves are a slightly larger share of prior year operating expense.

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