People Pay, Hospitals Profit: Rising Prices Drive High Health Care Costs

Editor’s note: This report was updated on March 15, 2023 to include new hospital data from RAND and clarify that the cost of hospitals overcharging was $1.2 billion from 2016 to 2018. 

Everyone in New Jersey deserves access to affordable health care, yet rising health care prices put high-quality coverage out of reach for far too many. The cost of medical care has outpaced both income growth and inflation for decades, driven in part by increasing hospital prices.[1] When hospitals charge beyond what’s needed to cover their daily operating costs, working families pay more for the same level of care. Recent spikes in premiums for New Jersey state employees highlight how rising health care costs are also passed on to public employees and state and local governments, stretching their budgets thin and costing the state more than $1.2 billion between 2016 and 2018.[2] By reining in high hospital prices, state lawmakers can make health care more affordable for patients, public employees, and state and local governments alike.

Excessive Prices Cost State and Local Governments Billions

Escalating prices for health insurance coverage are often attributed to increased utilization, costs to cover services, and inflation; however, these changes do not fully account for the significant climbs. This leaves rising prices and profits as not-so-hidden factors that could be costing state and local governments hundreds of millions of dollars each year.[3]

In New Jersey, increases in spending have outpaced utilization increases for years.[4] The state health benefits programs for public employees — the State Health Benefits Program (SHBP) and the School Employees’ Health Benefit Program (SEHBP) — are estimated to cover nearly 54,000 fewer people in Fiscal Year 2023 than in Fiscal Year 2015.[5] At the same time, medical benefit costs have increased by approximately $417 million (2022 Dollars).[6] Because of rising health care costs, the state must dedicate more funds toward this coverage each year despite having fewer people covered.

Hospital prices make up a significant portion of rising insurance costs, as the more that hospitals charge, the higher the price of coverage. There is little standardization of hospital prices paid by insurance plans, which are privately negotiated between insurance companies and hospitals.[7] As a result, the “Allowed Amount,” as these prices are known on insurance claims, often exceeds what experts estimate is needed for efficient, quality care.[8] In New Jersey, hospital prices far outpace Medicare rates, which the Centers for Medicare and Medicaid Services sets at amounts that “reasonably efficient providers would incur in furnishing high-quality care.”[9] They also outpace the higher commercial breakeven rate, an estimated “rate a hospital needs to receive from commercial payers to cover all of its expenses for hospital inpatient and outpatient services, without profit.”[10] This includes coverage for uncompensated care, bad debt, and expenses that Medicaid and Medicare do not cover. In New Jersey, the breakeven rate for hospitals is estimated to be approximately 150 percent of Medicare rates.

Claims data shows just how significantly the Allowed Amount for hospital prices in the state health benefits plans outweigh the costs for those same services and procedures at Medicare and commercial breakeven rates. From 2016 to 2018, state health benefits programs paid, on average, prices equal to 230 percent of Medicare rates for inpatient and outpatient care, and 1.5 times the commercial breakeven rate.[11]

With prices like these, programs like the SHBP and the SEHBP could be paying at least $400 million more per year than what we would expect to cover medical costs if prices were set to cover costs at the commercial breakeven level.

State Lawmakers Need to Rein in Rising Health Care Costs

With the potential loss of at least $400 million every year, New Jersey policymakers should look to better regulate and reduce high hospital prices. Cracking down on rising prices would provide savings to public employees and state and local governments alike, protecting the health care of the public workforce, reducing health care costs, and freeing up funds for other public investments.

While the state’s Office of Health Care Affordability and Transparency has spearheaded a new benchmark program to rein in the growth of health care costs with data-driven analysis, state lawmakers should explore other ways to contain costs driven by hospital pricing, such as price caps and reference-based pricing.[12] To put New Jersey on a path toward a more equitable future, the state cannot simply stick to one-time fixes as bandaids and continue to raise the cost of premiums on public employees and state and local governments. Instead, leaders must do more to rein in hospital costs to control premium costs.


End Notes

[1] New Jersey Office of Health Care Affordability and Transparency, New Jersey Health Care Affordability, Responsibility, and Transparency (HART) Program Blueprint, 2022, pg. 6. http://www.cshp.rutgers.edu/Downloads/Benchmark_Blueprint_March_31_2022.pdf

[2] New Jersey Monitor, Double-digit hike in insurance premiums approved for government workers, 2022. https://newjerseymonitor.com/2022/09/14/double-digit-hike-in-insurance-premiums-approved-for-government-workers/

[3] Health Affairs, It’s Still The Prices, Stupid: Why The US Spends So Much On Health Care, And A Tribute To Uwe Reinhardt, 2019. https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05144

[4] Health Care Cost Institute, 2018 Health Care Cost and Utilization Report: State Spending Trends, 2019. https://healthcostinstitute.org/interactive/2018-health-care-cost-and-utilization-report

[5] NJPP Analysis of FY 2017 – FY 2023 Budget Detail. New Jersey Office of Management and Budget, Budget Detail FY 2017 – FY 2023. https://www.nj.gov/treasury/omb/

[6] Ibid.

[7] For a study of the variability of prices charged by hospitals, see RAND Corporation, Prices Paid to Hospitals by Private Health Plans, 2022. https://www.rand.org/pubs/research_reports/RRA1144-1.html

[8] HealthCare.Gov, Allowed Amount, 2022. https://www.healthcare.gov/glossary/allowed-amount/

[9] RAND Corporation, Nationwide Evaluation of Health Care Prices Paid by Private Health Plans, 2020. https://www.rand.org/pubs/research_reports/RR4394.html; Centers for Medicare and Medicaid Services, Medicare Inpatient Prospective Payment System (IPPS) & New Technology Add-on Payment Provision, 2020, pg. 2. https://www.hhs.gov/sites/default/files/1.3-treitel-cms-508.pdf; Medicare Payment Advisory Commission, March 2022 Report to the Congress: Medicare Payment Policy, 2022. https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_v3_SEC.pdf

[10] The commercial breakeven rate is calculated from annual hospital filings with the Centers for Medicare and Medicaid Services, and takes into account a variety of factors, including patient hospital costs, shortfalls or profit from public coverage programs, administrative costs, revenue from all sources, and much more. The details on how this is calculated can be found at: National Academy for State Health Policy, Understanding NASHP’s Hospital Cost Tool: Commercial Breakeven, 2022. https://www.nashp.org/policy/health-system-costs/understanding-hospital-costs/commercial-breakeven/

[11] RAND Corporation, Nationwide Evaluation of Health Care Prices Paid by Private Health Plans, 2020. https://www.rand.org/pubs/research_reports/RR4394.html; National Academy for State Health Policy, Hospital Cost Tool, 2022. https://d3g6lgu1zfs2l4.cloudfront.net/

[12] New Jersey Office of Health Care Affordability and Transparency, Home Page, 2022. https://nj.gov/governor/admin/affordablehealthcare/index.shtml; New Jersey Office of Health Care Affordability and Transparency, New Jersey Health Care Affordability, Responsibility, and Transparency (HART) Program Blueprint, 2022. https://nj.gov/governor/news/news/562022/docs/20220331a_Benchmark-Blueprint.pdf; National Academy for State Health Policy, Disrupting Hospital Price Increases: Using Growth Caps in Insurance Rate Review, 2021. https://www.nashp.org/disrupting-hospital-price-increases-using-growth-caps-in-insurance-rate-review/; National Academy for State Health Policy, Overview of States’ Hospital Reference-Based Pricing to Medicare Initiatives, 2021. https://www.nashp.org/overview-of-states-hospital-reference-based-pricing-to-medicare-initiatives/

New Jersey’s Black Students Suffer a Decline in Access to School Mental Health Staff

Concern about the aftermath of the COVID-19 pandemic, along with renewed fears about school shootings, have put the mental health of New Jersey’s students into the spotlight.[i] Federal data show 74 percent of public schools in the Northeast report an increase in students seeking mental health services since the start of the pandemic.[ii] The state Legislature has responded by introducing several bills that directly address the need for schools to take an active role in identifying and treating student mental health issues.[iii]

Given these serious concerns, it is important to assess recent trends in New Jersey schools’ capacity to address students’ mental health. This report looks at these trends through a racial justice lens, specifically addressing this question: How has access to school mental health staff changed for Black, white, Hispanic/Latinx, Asian, and other students over the past decade?

Analysis of the available data shows a clear trend: While access to mental health staff for white and Asian students has increased over the past several years, it has decreased for Black students. A decade ago, Black and Hispanic/Latinx students had an advantage over white students in access to mental health staff; now white students have the advantage (albeit a small one).

Given New Jersey’s much higher poverty rates for children of color, and the profound influence poverty has on mental health, these trends are a cause for great concern. Additionally, studies show that school districts that enroll more students of color are more likely to impose disciplinary actions on their students, compounding this growing inequity. In other words: New Jersey’s Black and Hispanic/Latinx students are more likely to live in poverty and more likely to be suspended from school, even as their access to mental health professionals is decreasing.

Uneven Access to Mental Health Staff

Student mental health problems can be identified and treated by a variety of school staff. We include the following positions in the overall category of school mental health staff: nurses, counselors, psychologists, social workers, anti-bullying specialists, and substance use coordinators. The figure below shows the changes since 2008 in access to these staff for students of different races and ethnicities (see the “Methodology” section below for details).

Fewer School Mental Health Staff for Black Students, More for White Students

In 2008, all public schools in New Jersey had, on average, 8.2 mental health staff per 1,000 students; this rose to 8.6 staff per 1,000 in 2020. During the same period, mental health staff per 1,000 white students rose from 7.4 to 8.5.

In contrast, mental health staff per 1,000 Black students decreased from 10.3 to 8.5. For Hispanic/Latinx students, the figures declined from 9.0 to 8.4 per 1,000. In other words: During a period where access to mental health staff increased for New Jersey’s white and Asian students, access for Black and Hispanic/Latinx students decreased.

These trends have not been uniform across all mental health staff positions. The figure below shows trends by race/ethnicity for school nurses: while the number of nurses per 1,000 students has increased for white students, it has declined for Black and Hispanic/Latinx students. Notably, nurse staffing for Asian students remains considerably lower than for other races/ethnicities.

Number of School Nurses Declines for Black and Hispanic Students

Over the same period, school counselor staffing has changed dramatically. In 2008, there were 2.7 counselors per 1,000 white students; this rose to 3.2 per 1,000 by 2020. In contrast, Black students had 4 counselors per 1,000 in 2008; this dropped to 2.6 per 1,000 by 2020. It should be noted that the American School Counselor Association recommends 4 counselors per 1,000 students; overall, New Jersey remains far behind this goal.[iv]

More School Counselors for White Students, But a Sharp Decline for Black & Hispanic Students

Black and Hispanic/Latinx students still have an advantage in social workers per 1,000 students over white and Asian students. The gap, however, is narrowing, as the number of social workers for Black and Hispanic/Latinx students has declined.

Still More Social Workers for Black & Hispanic Students, But the Gap is Closing

Why Mental Health Staffing for Schools Matters, Especially for Students of Color

Some may argue that these trends in school mental health staffing reflect a move toward parity: A decade ago, white students had less access to these staff than children of color, but now their access is equivalent. This argument, however, fails to recognize a basic truth: New Jersey’s students of color are more likely to live in poverty than the state’s white students and, as a result, have greater mental health needs.

Poverty Rates Are Much Higher for Black and Hispanic Students Than for White and Asian Students

The poverty rates for Black/African-American and Hispanic/Latinx children are more than three times that for white or Asian children. This is critical, as a large body of research shows poverty has a profoundly negative impact on children’s mental health.[v] Certainly, more school mental health staff for white and Asian students would be, by itself, laudable; however, the accompanying trend of less access to these staff for Black and Hispanic/Latinx students raises serious concerns.

It is important to note that greater poverty rates and decreasing access to mental health staff for students of color are occurring in an environment where those same students are more likely to suffer harsh disciplinary consequences.

Students in School Districts with Greater Numbers of Black and Hispanic Students Spend More Days Out of School Due to Suspensions

As a New Jersey school district’s percentage of white students increases, it is, on average, less likely to have students miss school due to a disciplinary suspension.[vi] In contrast, schools with higher percentages of Black or Hispanic/Latinx students tend to have their students miss more days of school due to suspension. Research shows a clear link between student mental health and school discipline: when students feel supported and safe in school, disciplinary consequences diminish.[vii] The unequal discipline meted out to students of color is, therefore, yet another indicator that they are not getting access to the mental health supports they need.

As NJPP has previously reported, greater access to school staff of all sorts is directly influenced by school funding policies.[viii] Yet New Jersey’s students of color are much more likely to attend schools that are underfunded, according to the state’s own law, than white students.[ix] While the short-term infusion of federal school funds tied to the pandemic could help schools reverse trends in mental health staffing for students of color over a short period, longer-term funding solutions are necessary.

Such funding, however, should be guided by analyses like the one above. Lawmakers will not be able to address staffing trends that are racially unequal unless and until they are aware of them. Monitoring the deployment of school personnel of all types by student race—and by other student characteristics—should be the regular and ongoing work of policymakers.

Methodology

This report relies on two data sources from the New Jersey Department of Education: staffing files (obtained through Open Public Records Act requests) and enrollment files (available publicly at: https://www.nj.gov/education/doedata/enr/). All staffing files observations represent a school staffer, each with an accompanying job code. I aggregate the workers in different jobs for each school district (weighted by full-time equivalency); I then divide that aggregate by the total number of students in the district. These fractions of a staffer are then assigned to each student regardless of race/ethnicity. The numbers of students and the fractions of staff are then totaled across the state for each race/ethnicity category, as well as for all students. These figures are used to generate the “staff per 1,000 students” figures found in this report.


End Notes

[i] Wall, Patrick. (8/23/21) “How schools are racing to respond to a mental health crisis.” NJ Spotlight News. https://www.njspotlightnews.org/2021/08/student-mental-health-needs-nj-schools-response-pandemic/

[ii] 2022 School Pulse Panel, April findings. Institute of Education Sciences. https://ies.ed.gov/schoolsurvey/spp/#tab-4

[iii] Donyéa, Tennyson (6/10/22) “N.J. committee approves new school safety, teen mental health measures.” WHYY. https://whyy.org/articles/n-j-school-safety-teen-mental-health/

[iv] American School Counselor Association. “School Counselor Roles & Ratios” https://www.schoolcounselor.org/About-School-Counseling/School-Counselor-Roles-Ratios “Since 1965, ASCA has recommended a student-to-school counselor ratio of 250:1.” This translates to 4 counselors per 1,000 students.

[v] Schmidt, K. L., Merrill, S. M., Gill, R., Miller, G. E., Gadermann, A. M., & Kobor, M. S. (2021). Society to cell: How child poverty gets “Under the Skin” to influence child development and lifelong health. Developmental Review, 61, 100983. https://doi.org/10.1016/j.dr.2021.100983
Gibson, K., Abraham, Q., Asher, I., Black, R., Turner, N., Waitoki, W., McMillan, N., Child Poverty Action Group (N.Z.), & New Zealand Psychological Society. (2017). Child poverty and mental health: A literature review. http://www.cpag.org.nz/assets/170516%20CPAGChildPovertyandMentalHealthreport-CS6_WEB.pdf

Evans, G. W. (2016). Childhood poverty and adult psychological well-being. Proceedings of the National Academy of Sciences, 113(52), 14949–14952. https://doi.org/10.1073/pnas.1604756114
Coley, R. J., & Baker, B. D. (2013). Poverty and Education: Finding the Way Forward. ETS. https://www.ets.org/research/policy_research_reports/publications/report/2013/jqkw

[vi] We use data from the 2018-19 school year as this was the last full school year before the covid-19 pandemic caused school closures.

[vii] Prins, S. J., Kajeepeta, S., Hatzenbuehler, M. L., Branas, C. C., Metsch, L. R., & Russell, S. T. (2022). School Health Predictors of the School-to-Prison Pipeline: Substance Use and Developmental Risk and Resilience Factors. Journal of Adolescent Health, 70(3), 463–469. https://doi.org/10.1016/j.jadohealth.2021.09.032 https://www.jahonline.org/article/S1054-139X(21)00491-2/fulltext

[viii] Weber, M. (2021) The Consequences of School Underfunding. New Jersey Policy Perspective: Trenton, NJ. https://www.njpp.org/publications/report/the-consequences-of-school-underfunding/

[ix] Weber, M. & Baker, B. (2020) School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective: Trenton, NJ. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

New Jersey’s Teacher Pipeline: The Decline in Teacher Candidates Continues

A teacher shortage is hitting the nation, and New Jersey is no exception.[1] The problem has become so widespread that the Legislature’s Joint Committee on Public Schools recently held hearings on the issue, at which school leaders described shrinking hiring pools, fewer certificated teachers being available as long-term substitutes, and a surge of retirements. [2]

Schools can adequately replace these teachers if enough well-educated workers consider a career in public education. Unfortunately, even before the increased pressures on teachers and more school staff considered leaving their positions, fewer candidates were enrolling in and completing teacher training programs. If New Jersey does not act soon, there will not be enough qualified candidates to replace teachers leaving the profession.

The Decline in New Jersey Teacher Candidates Continues

The number of those completing teacher preparation has declined sharply in New Jersey. The 2018-19 school year was the first time in two decades when the number of New Jersey’s new teacher candidates was below 3,000, according to the most recently available data.[3]

New Jersey Has Far Fewer Teacher Candidates Than a Decade Ago, Despite Recent Uptick

Decreases in the number of students do not explain the teacher decline. Seven years ago,  almost five people completed teacher preparation for every 1,000 students in New Jersey; now, there are barely two.

New Jersey Colleges and Universities Produce Fewer Teachers Than the Rest of the US

On top of that, New Jersey’s colleges and universities – the providers of teacher training– produce far fewer teachers per 1,000 students than the rest of the nation, suggesting that the Garden State might be over reliant on out-of-state teacher trainings programs.

Not all teacher training programs lead to college degrees that prepare candidates for a career in teaching. But the number of teaching degrees awarded in a year is still an important measure of educator recruitment. The most recent data is troubling: New Jersey’s colleges and universities awarded a record low number of teaching degrees in 2020.[4]

Number of New Jersey College Students Earning Teaching Degrees Is Rapidly Declining

Some reports have noted that teacher shortages are particularly acute in math, science, and special education.[5] To explore this issue, the graph below shows the proportion of the number of people completing teacher training programs and earning credentials in a variety of areas. The graph also shows these proportions for the New Jersey teacher workforce in the same year.[6] As an example: 41 percent of the teacher candidates who completed their programs in 2018-19 earned a credential in elementary education. In contrast, 32 percent of the teacher workforce held a position teaching in elementary education that same year.

Majority of Teacher Jobs and Candidates Are in Elementary and Special Education

For the reasons below, the solution to the problem of teacher shortages is not simply to shift teacher candidates away from areas such as elementary education and toward math and other understaffed areas.

  • While math and science teacher candidates are proportionally “underproduced” compared to elementary candidates, the same is true for foreign language and art teachers, as well as, to a lesser degree, music, and physical education teachers. So the problem of “underproducing” teachers is not confined to only a few curricular areas.
  • Though special education is reportedly a hard-to-staff area, teacher candidates are proportionally overproduced, albeit by a slim margin. Shifting more teachers away from elementary and toward special education might help, but only if there are enough overall certifications to meet school districts’ staffing needs in all areas of teaching.
  • Even if elementary teachers are “overproduced,” excess teachers are needed for positions as long-term and short-term substitutes. As numerous school leaders testified before the Joint Committee on the Public Schools, the lack of qualified personnel to fill teaching positions during maternity leaves and sick leaves, or due to mid-year retirements, has become a serious problem.[7] Having more certificated candidates than full-time positions creates a pool of qualified workers who are available to fill these jobs.

 

Recommendations

While getting teacher candidates to consider teaching in hard-to-staff areas is important, there is little evidence that this alone will solve the current teaching shortage, especially if those completing teacher preparation programs find the profession unsatisfying and opt to leave after a short time for other careers. To deal with teacher shortages, getting more overall qualified candidates to enter and remain in the teaching profession must be the primary goal. These recommendations should be considered to improve the recruitment and retention of teachers:

  • Increase teacher compensation to attract the best candidates. Recent research confirms a well-documented “teacher wage gap,”  even when benefits are considered in addition to salary.[8] In today’s tight labor market, school districts are at a disadvantage compared to fields that can offer better wages, flexible schedules, and less pressure in the workplace.
  • Shore up the state teacher pension system and stop degrading teacher health care benefits. As NJPP reported previously, teacher retirement and health care benefits have eroded over the past decade[9] And this affects newer teachers more than veterans. New pension “tiers,” for example, have led to benefits packages that are substantially less generous for teachers in their 20s and 30s compared to those earned by older teachers.[10] If degraded benefits are not replaced with better wages, young, well-qualified job aspirants will have even less incentive to become teachers.
  • Streamline the process of obtaining a teacher certification as much as possible without sacrificing rigor. The state continues to implement programs like EdTPA, a portfolio assessment for student teachers, that recent research shows to be both ineffective and potentially harmful. These barriers to entry should be removed immediately.[11]
  • All of the state’s teacher preparation providers should continue to work together to attract teacher candidates of color. Research shows there are many benefits to a diverse teacher workforce.[12] New Jersey should expand its programs to recruit and retain teachers of color.
  • New Jersey’s leaders should commit to improving the state’s level of appreciation and regard for its educators. Teachers have been caught in the middle of culture war battles over masking, critical race theory, gender identity, sexual orientation, and other issues. New Jersey, unlike other states, has wisely avoided introducing controversial laws that would surveil and punish teachers (and students) for simply doing their jobs. Policymakers must continue, through their words and actions, to send a clear message to prospective teachers that New Jersey values its educators, sees them as professionals, and supports their work.

 


End Notes

[1] Cooper, D. and Hickey, S.M. (February 3, 2022) Raising pay in public K–12 schools is critical to solving staffing shortages. Economic Policy Institute. https://www.epi.org/publication/solving-k-12-staffing-shortages/

[2] Joint Committee on the Public Schools, NJ Legislature. Tuesday, February 22, 2022 https://www.njleg.state.nj.us/live-proceedings/2022-02-22-10:00:00/JPS/Meeting

[3] Figures for 2016-17 and 2017-18 do not match our 2019 report as those figures were updated in later data releases.

[4] To determine the number of degrees awarded that are directly relevant to teaching, I sum the number of bachelor’s and master’s degrees awarded in education and add certificates above the baccalaureate level. I only include institutions that are designated in the IPEDS data as offering teacher certification. I then subtract all degrees with Classification of Instructional Programs (CIP) codes designated as the following: Curriculum and instruction; Educational Administration and Supervision; Educational/Instructional Media Design; Educational Assessment, Evaluation, and Research; Social and Philosophical Foundations of Education; Education, Other. This method likely overstates the number of degrees awarded that would be directly relevant to teaching, as degrees that do not lead to certification may still be included in the total.

[5] Teacher Shortage Areas. U.S. Department of Education. https://tsa.ed.gov/#/home/

[6] The Title II data includes subject area codes that align with staffing data from the NJDOE; however, there are differences. For this graph, I exclude all observations in the staffing data that designate staff as administrators, teacher coaches, educational service providers (counselors, nurses, etc.), or non-certificated staff. I also exclude teachers of family and consumer sciences, industrial arts, and vocational education; these areas are not included in the Title II data. Special education positions are designated in the staffing data by their “jobcode subcategory”; I align these positions with the Title II codes for teachers of students with disabilities, teachers of deaf or hard of hearing students, or teachers of blind or visually impaired students. All of these categories are designated “special education” in the graph. Teachers of middle grades (5-8) are assigned to curricular areas; for example, a teacher with a “Mathematics Grades 5-8” jobcode is designated as teaching math. Elementary teachers, including those with jobcodes in elementary math, English, science, and social studies are assigned to the “elementary” category. For teachers with multiple job codes I use the first code designated (“job code 1”).

[7] Jennings, Rob (2/22/22). “Teacher shortage is a ‘crisis,’ N.J. state legislators say after educators raise alarm.” NJ.com. https://www.nj.com/education/2022/02/teacher-shortage-is-a-crisis-nj-state-legislators-say-after-educators-raise-alarm.html

[8] Cooper, D. and Hickey, S.M. (February 3, 2022) Raising pay in public K–12 schools is critical to solving staffing shortages. Economic Policy Institute. https://www.epi.org/publication/solving-k-12-staffing-shortages/
Weber, M. (2019) New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists, pp. 26-28. https://www.njpp.org/reports/in-brief-new-jerseys-teacher-workforce-2019-diversity-lags-and-wage-gap-persists.

[9] Weber, M. (2019) New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists, pp. 26-28. https://www.njpp.org/reports/in-brief-new-jerseys-teacher-workforce-2019-diversity-lags-and-wage-gap-persists.

[10] “Retirement Planning Member Guidebook” (January, 2022). New Jersey Department of Pensions and Benefits. https://www.nj.gov/treasury/pensions/documents/forms/sp0774.pdf

[11] Gitomer, D. H., Martínez, J. F., Battey, D., & Hyland, N. E. (2019). Assessing the Assessment: Evidence of Reliability and Validity in the edTPA. American Educational Research Journal. https://doi.org/10.3102/0002831219890608
Chung, Bobby W., and Jian Zou. (2021). Teacher Licensing, Teacher Supply, and Student Achievement: Nationwide Implementation of edTPA. (EdWorkingPaper: 21-440). Retrieved from Annenberg Institute at Brown University: https://doi.org/10.26300/ppz4-gv19

[12] Weber, M. (2019) New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists, pp. 26-28. https://www.njpp.org/reports/in-brief-new-jerseys-teacher-workforce-2019-diversity-lags-and-wage-gap-persists.

Breaking Down Governor Murphy’s FY 2023 Budget Proposal

Governor Murphy delivered the first budget address of his second term with New Jersey flush with cash, thanks to stronger than expected revenue collections. Along with targeted federal aid, higher wages, and new, sustainable sources of revenue, this kind of economic growth proves that progressive tax policy is fiscally responsible tax policy. These resources provide the state a big opportunity to invest in communities – with an emphasis on policies that are proven to build the economy from the bottom up and the middle out. The Governor’s $48.9 billion spending plan takes advantage of this windfall by attending to such long-standing obligations as a full pension payment for a second year in a row, another big increase in school aid, as well as no fare hikes for NJ Transit commuters and a property tax relief program to replace the Homestead credit.

With “affordability” the buzz word in Trenton — the Governor mentioned it more than 20 times in the speech — some of the new proposals raise the question: who does this budget make New Jersey more affordable for? The economic fallout of the pandemic continues to wreak havoc in thousands, if not millions, of households across the state, especially among those lacking the financial resources to weather tough times. Many workers who risked their lives on the job as COVID-19 swept through New Jersey have received no assistance. Families with young children still face school closures and a low availability of child care.[1] The state’s poverty rate remains quite high at the same time the highest earners nationally have seen their wealth grow even further.[2] Housing advocates warn of a spike in evictions without additional help. It’s important for policymakers to understand that these devastating effects of the pandemic will not disappear on their own.

A more balanced and equitable approach to crafting the next state budget is essential – one that centers people and communities with the greatest need to ensure an equitable recovery. Proven policies like cash assistance, tax credits for hard-working families, affordable health care, child care, and reliable and cleaner public transit are needed now more than ever to make New Jersey affordable for all.

Healthy State Finances Could Support More Investment

New Jersey’s financial picture is the brightest it has been since before the pandemic, with overall tax collections up 21.7 percent compared to this time last year.[3] Thanks in large part to a strong stock market, wage growth, and an uptick in consumer spending, the state has a $4.5 billion surplus.[4] This comes on the heels of enormous federal support sent to New Jersey state and local governments overwhelmed by the health and economic damage wrought by the pandemic.[5] These resources provide a once-in-a-generation opportunity to target immediate relief and make long-overdue investments in New Jersey’s underserved communities, rebuild emergency savings, and put our state on a path to a more equitable economy.

Absent from the budget are major improvements to a state tax code that still has inequitable features and does not bring in as much revenue as it could for important public investments that help communities thrive. While the state appears to be in good fiscal shape in the short term, additional resources will be critical to sustain investments in such areas as public education, the public employee pension system, and property tax relief once federal pandemic relief funds are exhausted and amid an uncertain global landscape.

Pensions

The FY 2023 budget includes another full pension fund contribution — which would be the second in as many years — to bolster the retirement security of more than 800,000 public workers and retirees. A full payment is a necessary step in the pension fund’s long road back to solvency after more than two decades of skipped or incomplete payments. The proposed $6.82 billion payment is possible due to another year of healthy tax collections and New Jersey Lottery receipts, plus freed-up resources thanks to federal COVID-19 relief funds.[6]

If the pension fund’s annual returns cool off in tandem with financial markets, it is expected that resources from other state-funded support and services will have to be siphoned to make the required payments.

Rainy Day Fund

New Jersey’s surplus is expected to total more than 10 percent of the state’s general fund — nearly double what it was in FY 2021. Despite such a robust buffer, the Governor’s proposal does not include replenishing the state’s rainy day fund.

New Jersey has a rocky history when it comes to keeping its emergency savings account ready to cover costs incurred from such unexpected events as a hurricane or a deep recession. A healthy rainy day fund enables the state to meet increased demand for essential state services instead of resorting to deep, harmful budget cuts at a time when families and communities need help the most. New Jersey was left with no choice but to do exactly that when faced with drastic shortfalls at the start of the pandemic. The rainy day fund would have been more robust had it not been left empty for 11 years. Budget experts recommend having enough socked away to run state operations for at least two months.[7]

With an expected $4.6 billion surplus, New Jersey could easily make a deposit of, say, $1.5 billion now and still have billions in surplus to shore up any mid-year shortfalls next year.[8]

Federal Pandemic Relief

New Jersey’s economy works best when it works for all of us. An inclusive recovery is one where those hit hardest by the pandemic — workers of color, and Black and brown women in particular — reach full employment and have the resources they need to make ends meet. That’s why it’s so important for New Jersey to its spend Fiscal Recovery Funds (FRF) in ways that reflect the principles set by the Biden administration: to directly address the public health crisis, help the people who need it most, and reduce racial and economic inequities exposed and worsened by the ongoing pandemic.

With $3.5 billion in federal relief funds from the American Rescue Plan Act still unallocated, the state should immediately act to stabilize residents facing hardship and keep their children safe from the short- and long-term effects of poverty. Based on past economic crises, it’s clear that some New Jersey residents will continue to experience hardship even after the effects of the pandemic begin to subside.

The most straightforward way to boost household income of families living paycheck to paycheck is to provide direct cash payments with no strings attached and regardless of immigration status. This proposed budget would use $53 million of federal funds for $500 direct payments to individual, low-paid ITIN holders —  an alternative to the now-expired Excluded New Jerseyans Fund. Another approach to FRF-funded cash assistance should be to compensate low-paid workers for the risks taken during the shutdown and as COVID-19 variant surges swept through the state.

Relief funds could also be used to spearhead a robust overhaul of departmental IT platforms, as well as an outreach campaign and application assistance for all social assistance and support services, not just those funded by federal relief dollars. This campaign could target communities that face systemic barriers to learning about and accessing support programs, including immigrants and people of color with low incomes, and should be tailored to families living in poverty who are less likely to owe and file taxes and, as result, may miss out on tax credits for low-paid workers and their families.

Bringing More Relief to Working Families

Every family in New Jersey deserves to live the American Dream and raise their children with the basics they need to thrive. But New Jersey’s high cost of living means that families often need support to pay for rent, bills, unexpected health care costs, and food. The state has a variety of programs to put money into families’ pockets. The proposed budget would increase funding for some helpful programs, but more remains to be done to remove barriers to economic security for working families who do not get paid enough or receive enough hours to pay for everyday expenses.

Tax Credits for Working Families

 Since 2000, the New Jersey Earned Income Tax Credit (EITC) has provided a critical lifeline to workers and their families.[9] With this tax credit, the state pays back low- and moderate-wage workers for a percentage of their earned income, lowering their taxes or, for those owing little or no taxes because of low incomes, providing cash.

The EITC is a powerful poverty-reduction tool. It helps to reduce racial income inequality while raising low-income households’ bank balances. In FY 2019, over 530,000 households claimed the credit, averaging about $850 per credit. Beginning in tax year 2021, adults ages 18-21 and adults 65 and over without dependents became eligible to apply for the credit, closing key gaps left by the preexisting credit and making 90,000 more taxpayers eligible.[10] The FY 2023 budget continues strong support for the EITC with $114 million in additional funding.[11]

But the EITC could be improved further by eliminating barriers that keep some workers excluded from the credit, such as immigrants who file taxes with an (ITIN). New Jersey should also build on the credit’s anti-poverty effects and raise the credit amount to 50 percent of the federal credit.

Property Tax Relief

Property taxes are a perennial source of concern among New Jersey residents and, fittingly, were a big theme of Governor Murphy’s budget address. The Governor’s ANCHOR proposal would revamp the state’s flagship property tax relief program, the Homestead rebate, by increasing overall taxpayer benefits, eligibility, and funding by more than $570 million. Expanded property tax relief under the proposed ANCHOR would be phased in over three years.

The ANCHOR program would provide relief to homeowners with up to $250,000 in annual income and renters making up to $100,000. Renters, who tend to have lower incomes than homeowners, were previously not eligible for Homestead rebates.

The ANCHOR proposal would expand property tax relief to households earning up to $250,000, well into the top 20 percent of New Jersey households.[12] As proposed, it would provide more funding ($158 million) to households earning $150,000 or more than it would to all renters ($101 million).[13]

Temporary Assistance for Needy Families

During the pandemic, millions of individuals and households needed increased assistance. Yet, enrollment in WorkFirst NJ — the state’s Temporary Assistance for Needy Families (TANF) program — has dropped below pre-pandemic levels.[14] This decrease is the direct result of the outdated changes in “welfare” during the 1990s that supporters said would assist very low-income families with cash assistance, child care, and job placement.

But the strict eligibility requirements these changes imposed are a barrier to more residents qualifying for WorkFirst NJ and have kept the program’s maximum benefit levels for cash assistance far too low to lift families out of poverty. TANF benefits max out at 30 percent of the Federal Poverty Level —  a mere $559 per month for a single-parent family of three.[15] That inadequate level of support is slated to remain the same, based on the Governor’s proposal for FY 2023.[16]

To meet its goals of helping families and individuals rise from poverty, the WorkFirst NJ program should be reformed in next year’s budget, with higher benefit levels to better reflect the state’s cost of living and new rules so families are no longer punished for saving money and children are no longer cut off from resources.

Bringing Equity to Education Funding 

New Jersey’s public schools consistently rank among the best in the nation, thanks to robust state funding. Schools with adequate funding can provide students with a high-quality education, as well as better health, counseling, and other services to those having difficulty reacclimating after an abrupt and prolonged pivot to online learning. Adequate funding also helps school districts recruit and retain well-qualified teachers[17] and helps keep school buildings in good repair and safe in the face of the ongoing pandemic.[18]

K-12 School Funding

School funding is one of the biggest investments New Jersey makes in any year. Yet, state lawmakers have never fully funded New Jersey’s school funding formula as mandated in the School Funding Reform Act, or SFRA.This formula defines how much each school district needs to provide an “adequate” education. While many affluent districts spend above this amount, many districts spend well below it.[19] Ensuring that all schools have adequate funding must be the top educational priority of the Legislature and the Governor in the current budget cycle and beyond.

In FY 2021, New Jersey schools received $2.4 billion less than the adequacy level set by SFRA. A substantial portion of this adequacy gap was due to districts not contributing their “local fair share,” but the state’s contribution was still well below what it should have been under the law.[20] Many of the students suffering from this chronic underfunding are Black and Hispanic/Latinx children whose districts cannot raise adequate revenues due to systemically racist housing practices.[21]

For FY 2023, the Governor proposed increasing K-12 formula aid by $578 million. This additional aid, as well the redistribution of aid to underfunded districts, will help close the adequacy gap. Still, a large number of students will be enrolled in underfunded schools. As previously reported, funding targets set by SFRA are likely inadequate.[22] This proposed increase is a step toward providing New Jersey’s schools with what they need to properly educate the state’s children. But more work remains to correct the course toward equity.[23]

Pre-Kindergarten

For younger students, New Jersey’s investment in pre-kindergarten education continues to grow steadily. Governor Murphy’s budget proposes $991.9 million toward existing and new Pre-K programs — a 41 percent increase since FY 2009. Of the proposed $70 million increase for FY 2023, $40 million will support 3,000 new seats in 40 school districts.[24]

Greater Investments Needed for Health

COVID-19 Response

As essential workers, working families, and communities continue to face immediate and long-term harm from the COVID-19 pandemic, investments in public health, mental health services, and the broader health care system continue to be essential for an equitable recovery.

Federal dollars through the American Rescue Plan and increased Medicaid and hospital funding support many of these services. In response to a spike in the need for mental health services, the Governor has proposed a $12.8 million allocation to establish a new federally mandated 988 suicide and crisis helpline, as well as allocating American Rescue Plan funds toward student mental health initiatives.[25]

But more is needed. Funding for federally-qualified health centers (FQHCs), for instance, remains below pre-pandemic levels.  These nonprofit, community-based organizations offer comprehensive primary care services and are a key safety net provider for historically underserved people.

Finally, state dollars toward reimbursing charity care continue to grow despite great strides in health insurance expansion. Charity care is the system under which hospitals provide services without charge to patients who cannot afford to pay and are reimbursed by the state. After a recent change in the funding formula for charity care, the Governor’s budget proposes $339 million in funding for FY 2023, an increase of 17.4 percent over pre-pandemic levels.[26] As the state continues to expand coverage for more residents, these costs should decrease in the future.

Harm Reduction

Health care for people who use drugs should meet people where they are, focusing on reducing harm rather than punitive treatments. This helps people who use drugs find their paths to long-term health. Last year saw an increase in state spending to support syringe-access programs, continuing a trend of greater investment since FY 2020.[27] However, this funding was not fully allocated due to restrictions on establishing new syringe access programs beyond the current seven.

This year, state policymakers expanded their commitment to overcoming these obstacles, as Governor Murphy signed two pieces of legislation to decriminalize syringe possession and remove restrictions to expanding syringe-access programs across the state.[28] Funding for the program in the proposed budget reflects this commitment to establishing more harm reduction centers, with an additional $500,000 – a 10 percent increase over the current fiscal year[29]

Reproductive Health Care

Every New Jersey resident, regardless of gender, income, or immigration status, deserves access to the reproductive health care that meets their needs. Legislation signed by Governor Murphy at the beginning of the year codifies abortion rights, yet necessary access and equity improvements remain unaddressed.

Funding in the FY 2023 budget reflects the Murphy administration’s continued commitment to maternal and infant health services in response to New Jersey’s wide racial disparities. This includes an additional state appropriation of $8.5 million to the new Universal Home Visiting program, which entitles all parents with newborn infants to at least one free postpartum home visit.[30] New Jersey is only the second state to implement such a policy.[31] However, the initial proposed budget provides no information on whether covered contraceptive and prenatal services would be expanded to include abortion care.

Cover All Kids Implementation

All kids deserve quality, affordable health care, and New Jersey has taken significant steps toward that goal. After passing Cover All Kids legislation in June 2021, the state eliminated waiting periods and premiums in  NJ FamilyCare, the state’s publicly-funded health insurance program, and expanded outreach to improve enrollment of eligible children.[32] Now, the Governor has proposed taking the next important step toward universal access for children by expanding eligibility for NJ FamilyCare to all children, regardless of immigration status. To fund the expansion, $11 million has been set aside in the proposed FY 2023 budget.[33]

State Subsidies on Marketplace

For many New Jersey residents, health insurance continues to be unaffordable, even with financial assistance that lowers premiums for those with plans in GetCoveredNJ, the state-run health insurance marketplace. To address this, the state introduced additional state subsidies that reach more residents on GetCoveredNJ in 2021.[34]

More than 324,000 residents enrolled during open enrollment for 2022, an increase of 54,000 over  2021.[35] To meet the growing need, funding for these subsidies would increase by roughly 10 percent in FY 2023 to $168 million.[36]

More Pandemic Relief Needed for Immigrants

Excluded New Jerseyans Fund

No one should have to live in fear that getting sick or other circumstances beyond their control will cost them their home or the ability to put food on the table. To ensure this basic protection during the health and economic crises of the past two years, unemployment insurance benefits and federal relief checks were sent to families and individuals. But undocumented New Jerseyans, who are disproportionately represented in service sector jobs, were ineligible forthese programs.

To address this gap, the Murphy administration created the Excluded New Jerseyans Fund, a $40 million state program to support workers ineligible for federal pandemic relief. Using funds from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, the relief program got off to a rough start. An onerous application process dictated by federal rules kept the majority of eligible residents from receiving assistance. When the fund expired at the end of 2021, the administration replenished the program using  American Rescue Plan relief funds instead, which allowed for a much simpler application process. When this version of the program ended in February, the Excluded New Jerseyans Fund received over 35,000 applications, making clear that the $40 million total fell far short of the needs of New Jersey’s immigrant communities.[37]

Now, the Governor proposes a one-time, $53 million relief fund for Individual Taxpayer Identification Number (ITIN) holders who have not received federal stimulus aid. This new program will build upon the Excluded New Jerseyans Fund and provide a $500 benefit to over 100,000 ITIN holders.[38] This investment is key to an inclusive recovery but, as outlined above, does not quite match the need. Individual ITIN holders deserve a $2,000 benefit, matching what the majority of working families in New Jersey received during the peak of the pandemic.

Criminal Justice: More Support Needed for Community Programs

Community-Based Violence Interruption Programs

All New Jerseyans deserve to feel safe in their communities but, often, police responses to issues of public safety cause more harm than good, especially for people who face a legacy of racism, classism, and misogyny. Community-based violence interruption programs that do not involve a law-enforcement response are effective, preventive tools that help keep people safe and out of the criminal justice system.

To combat violent crime, especially shootings, the Governor’s proposal maintains a $10 million investment to support the state’s existing violence intervention programs, which includes 25 nonprofits in 15 communities across the state.[39] Continuing to fund these programs is essential to building upon a safer New Jersey for all and, as the need for a non-police response to crises becomes increasingly evident, the budget should include increased funding for more alternative response teams.

Toward Sustainable Funding for NJ Transit

New Jersey’s future prosperity depends on a safe and reliable transportation system that works for everyone. Over the past decade, however, New Jersey has shortchanged the public with inadequate investments in NJ Transit, resulting in delays, cancellations, and overcrowding. What’s more troubling is that transportation is mostly powered by fossil fuels, which are major contributors to air pollution and worsen the dangers posed by climate change.

While the Governor proposes $2.76 billion for NJ Transit operations — a 21 percent increase since FY 2008 — with no fare hikes, this doesn’t tell the whole funding story.[40] The state continues to supplement funding for the transit authority by diverting $82.1 million from the Clean Energy Fund — resources meant to offer financial incentives, programs, and services to help save energy, money, and the environment, not fund public transit.

At the same time, the governor proposes using $721 million from the Turnpike Authority to supplement NJ Transit operations.[41] While this is a more reliable source for NJ Transit — and more appropriate than using revenue from the Clean Energy Fund — the state continues to use capital funds to fund operations, which is not sustainable in the long run. For instance, the $4.5 billion in capital needed to implement NJ Transit’s electric bus replacement program still has no identifiable funding source.[42]

The good news is that NJ Transit has been granted $1.6 billion in federal relief funds to support operations plus another $4.2 billion from the federal Infrastructure Investment and Jobs Act to improve public transit infrastructure.[43] This massive investment will enable NJ Transit to retain employees and maintain safe and reliable bus and rail services –  without further diversions from other sources.

 


End Notes

[1] According to the most recent Household Pulse Survey data, for New Jersey families with kids under age 5, the majority of households had to have a parent stay home to care for children. U.S. Census Bureau, Household Pulse Survey: January 26 – February 7, 2022: Education

Table 1. New Jersey Childcare Arrangements in the Last 4 Weeks for Children Under 5 Years Old, February 2022. https://www.census.gov/data/tables/2022/demo/hhp/hhp42.html

[2] Board of Governors of the Federal Reserve System, FEDS Notes: Wealth Inequality and COVID-19: Evidence from the Distributional Financial Accounts, August 2021. https://www.federalreserve.gov/econres/notes/feds-notes/wealth-inequality-and-covid-19-evidence-from-the-distributional-financial-accounts-20210830.htm

[3] New Jersey Office of Legislative Services, January 2022 Revenue Snapshot. https://www.njleg.state.nj.us/publications/budget/ols-snapshots/FY22_January.pdf

[4] State of New Jersey, Governor’s FY2023 Budget in Brief, March 2022 at pg. 8 (hereinafter “Budget in Brief”). https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

[5] New Jersey Governor’s Disaster Recovery Office, Financial Summary by Federal Act, December 2021. https://gdro.nj.gov/tp/en/financial-analysis/financial-summary

[6] Budget in Brief at pg. 18.

[7] Government Finance Review, Uncertainty, Risks, and Budgets in the Age of Coronavirus, June 2020 at pg. 27. https://gfoaorg.cdn.prismic.io/gfoaorg/33f669de-20be-4e13-8186-ec2cd632f3c4_GFR_04-2020-UncertaintyRisksBudgets.pdf

[8] Budget in Brief at pg. 73.

[9] New Jersey State Library, Legislative History for P.L. 2000, c. 80. https://repo.njstatelib.org/xmlui/bitstream/handle/10929.1/20234/L2000c80.pdf?sequence=1&isAllowed=y

[10] See New Jersey Department of the Treasury, Press Release: As Filing Season Kicks Off, Treasury Reminds Taxpayers that More Money is Available to More People Than Ever Before Under Expanded Earned Income Tax Credit Program, January 28, 2022. https://www.nj.gov/treasury/news/2022/01282022.shtml

[11] Budget in Brief at pg. 50.

[12] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table B19080: Household Income Quintile Upper Limits (indicating upper limit of 80th percentile at $166,319).

[13] NJPP analysis of Budget in Brief at pg. 12.

[14] New Jersey Department of Human Services, Current Program Statistics, December 2021, 2021. https://www.state.nj.us/humanservices/dfd/news/cps_dec21.pdf

[15] New Jersey Department of Human Services, New Jersey State Plan For Temporary Assistance for Needy Families (TANF), FFY 2021-FFY 2023, 2020, pg. 63, Attachment B. https://www.state.nj.us/humanservices/dfd/programs/workfirstnj/tanf_2021_23_st_plan.pdf

[16] Budget in Brief.

[17] New Jersey Policy Perspective, New Jersey’s Shrinking Pool of Teacher Candidates, May 2020. https://www.njpp.org/publications/report/new-jerseys-shrinking-pool-of-teacher-candidates/

[18] New Jersey Policy Perspective, New Jersey’s School Re-openings Are Racially Unequal, October 2020. https://www.njpp.org/publications/blog-category/new-jerseys-school-re-openings-are-racially-unequal/

[19] New Jersey Policy Perspective, School Funding in New Jersey: A Fair Future for All, November 2020. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[20] New Jersey Policy Perspective, School Funding in New Jersey: Preparing Now for the 2020-21 School Year, August 2020. https://www.njpp.org/publications/report/school-funding-in-new-jersey-preparing-now-for-the-2020-21-school-year/

[21] New Jersey Policy Perspective, Separate and Unequal: Racial and Ethnic Segregation and the Case for School Funding Reparations in New Jersey, September 2021. https://www.njpp.org/publications/report/separate-and-unequal-racial-and-ethnic-segregation-and-the-case-for-school-funding-reparations-in-new-jersey/

[22] New Jersey Policy Perspective, New Jersey School Funding: The Higher the Goals, the Higher the Costs, February 2022. https://www.njpp.org/publications/report/new-jersey-school-funding-the-higher-the-goals-the-higher-the-costs/

[23] New Jersey Policy Perspective, New Jersey School Funding: The Higher the Goals, the Higher the Costs, February 2022. https://www.njpp.org/publications/report/new-jersey-school-funding-the-higher-the-goals-the-higher-the-costs/

[24] Budget in Brief at pg. 13.

[25] Budget in Brief at pg. 63 and 44.

[26] New Jersey State Assembly, A6072 – Increases number of hospitals eligible for highest amount of charity care subsidy payment; appropriates $30 million, 2021. https://legiscan.com/NJ/bill/A6072/2020; PoliticoPro, Middlesex Dems fast-track bill to boost charity care for St. Peter’s Hospital, 2021. https://subscriber.politicopro.com/article/2021/12/03/middlesex-dems-fast-track-bill-to-boost-charity-care-for-st-peters-hospital-9427950; NJPP Analysis of FY 2022 Detailed Governor’s Budget; Budget in Brief atpg. 32.

[27] New Jersey Policy Perspective, Shining a Light on New Jersey’s FY 2022 Budget, 2021. https://www.njpp.org/publications/report/shining-a-light-on-new-jerseys-fy-2022-budget/

[28] Office of Governor Phil Murphy, Governor Murphy Signs Legislative Package to Expand Harm Reduction Efforts, Further Commitment to End New Jersey’s Opioid Epidemic, 2022. https://www.nj.gov/governor/news/news/562022/20220118b.shtml

[29] NJPP Analysis of FY 2022 Detailed Governor’s Budget; Budget in Brief at pg. 30.

[30] Legiscan, S690 – Establishes Statewide universal newborn home nurse visitation program in

DCF, 2021. https://legiscan.com/NJ/bill/S690/2020; Budget in Brief at pg. 25, 62.

[31] NJ Spotlight News, Home visits boost health of newborns, mothers, July 2021. https://www.njspotlightnews.org/2021/07/new-nj-law-provides-home-based-wellness-checks-for-mothers-and-newborns/

[32] Budget in Brief at pg. 27-28.

[33] Budget in Brief at pg. 27 and 63.

[34] GetCoveredNJ, Get Financial Help, 2021. https://nj.gov/getcoverednj/financialhelp/gethelp/#premiumtaxcredit

[35] NJPP Analysis of GetCoveredNJ Final Snapshots, 2021 and 2022.

[36] NJPP Analysis of FY 2022 Detailed Governor’s Budget and Budget in Brief, pg. 28.

[37] Budget in Brief at pg. 41.

[38] Budget in Brief at pg. 41.

[39] Budget in Brief at pg. 41.

[40] Budget in Brief at pg. 33.

[41] Budget in Brief at pg. 33.

[42] NJ Transit. Capital Plan Project Sheets, Appendix B: Bus Fleet. pg 7. https://njtplans.com/downloads/capital-project-sheets/Bus%20Fleet%20-%20Project%20Sheets.pdf

[43] Senator Bob Menendez, “Menendez, Booker Announce $1.6B in ARP funding to support NJ Transit.” Press Release, January 12, 2022. https://www.menendez.senate.gov/newsroom/press/menendez-booker-announce-16b-in-arp-funding-to-support-nj-transit; Senators Cory Booker, Bob Menendez, “Bipartisan Infrastructure Investment and Jobs Act Delivers for NJ.” Press Release, August 13, 2021. https://www.booker.senate.gov/news/press/booker-menendez-bipartisan-infrastructure-investment-and-jobs-act-delivers-for-nj

[44] P.L. 2021, c. 308. Available at https://www.njleg.state.nj.us/Bills/2020/PL21/308_.HTM.

[45] Budget in Brief, at pg. 26.

[46] New York Times, Tracey Tully. “2,258 N.J. Prisoners Will Be Released in a Single Day,” November, 9 2020. https://www.nytimes.com/2020/11/04/nyregion/nj-prisoner-release-covid.html

[47] New York Times, Tracey Tully. “2,258 N.J. Prisoners Will Be Released in a Single Day,” November, 9 2020. https://www.nytimes.com/2020/11/04/nyregion/nj-prisoner-release-covid.html

[48] New Jersey Monitor, Sophie Nieto-Munoz. “Early release for hundreds of ex-offenders across N.J.” February 11, 2022. https://newjerseymonitor.com/2022/02/11/early-release-for-hundreds-of-ex-offenders-across-n-j/

[49] New Jersey Office of Management and Budget. Summary of Governor’s Budget Recommendations: State of New Jersey FY2023 Budget in Brief, Pg. 42. March 8, 2022. https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

[50] According to the most recent Household Pulse Survey data, for New Jersey families with kids under age 5, the majority of households had to have a parent stay home to care for children. U.S. Census Bureau, Household Pulse Survey: January 26 – February 7, 2022: Education

Table 1. New Jersey Childcare Arrangements in the Last 4 Weeks for Children Under 5 Years Old, February 2022. https://www.census.gov/data/tables/2022/demo/hhp/hhp42.html

[51] Board of Governors of the Federal Reserve System, FEDS Notes: Wealth Inequality and COVID-19: Evidence from the Distributional Financial Accounts, August 2021. https://www.federalreserve.gov/econres/notes/feds-notes/wealth-inequality-and-covid-19-evidence-from-the-distributional-financial-accounts-20210830.htm

Making New Jersey Affordable for Families: The Case for a State-Level Child Tax Credit

Picture a child living in New Jersey. Think about what that child needs to grow up safe, healthy, and educated. The child will need food and clothing, a roof over their head, regular doctor’s visits, child care, and before- and after-care if they’re in school — not to mention transportation to and from those places. Given that many families across the income spectrum need help covering these costs,[i] New Jersey should create its own state-level child tax credit to make the Garden State a more affordable place to start a family.

The success of the expanded federal Child Tax Credit has shown how a simple solution — a monthly tax-refund check for families with children — can reduce food insecurity, avoid debt, and improve savings, keeping 3 million children out of poverty.[ii] Building on previous federal tax credits has a strong record of success in New Jersey, notably with the state Earned Income Tax Credit, which boosts the take-home pay for hard-working, low-paid families statewide.

A state-level child tax credit would recognize the unique costs of raising children and the support that most families need to care for their kids and set them up for success. When families can pay for basic expenses and save for their children’s futures, it improves child well-being immediately by reducing key costs like food and rent, makes it more likely for children to reach their full potential, and reduces societal costs created by child poverty later in life.

To support this proposal, NJPP analyzed the benefits of multiple state tax credit scenarios for families based on overall number of people reached, race/ethnicity, and income level.

Based on this analysis, NJPP determined that an effective program, like the current federal program, would start from some basic foundational points:

  • Fully refundable credit going directly to households with children
  • Relatively simple eligibility
  • Must avoid perverse incentive of lower-income families getting less help

 

The two scenarios presented in this report are inspired by the federal expanded Child Tax Credit, focusing on children in low-income and middle-income families — one targeting all families earning less than 250 percent of the federal poverty level (about $69,000 for a family of four, or $58,000 for a family of three)[iii], and one only available to young children up to five years old in the same income range. Both proposals cost roughly $100 million.

Two Proposals for a State Child Tax Credit in New Jersey

Each scenario serves a slightly different group of people, but both scenarios have key features that make them work for New Jersey families, including:

  • Money goes directly to hundreds of thousands of families with children to support their basic needs
  • Most of the money goes to the bottom 50 percent of New Jersey families in terms of income
  • Improving race equity because Black and Hispanic/Latinx families make up such a large share of this group

 

NJPP’s modeled tax credit proposals also include two significant groups of people excluded from the federal Child Tax Credit — children with Individual Tax Identification Numbers and adult dependent children under age 25.

New Jersey will be a stronger state with greater opportunity when every family can provide a safe, healthy life for their children. A state-level Child Tax Credit modeled on either scenario would support families, aid in child development, and — in the process — make the state tax system more equitable.

The Problem: Child Poverty and the High Costs of Raising a Family

New Jersey’s poverty rate remains stubbornly high at 10 percent.[iv] Nineteen states have a lower child poverty rate than New Jersey, which ranks in line with lower-income states like West Virginia, Indiana, and Ohio.[v] For a family of four renting a home in New Jersey, that’s an income of $30,150.[vi]

How does such a high-income state end up with 1 in 10 children living in poverty?

The answer is no surprise — New Jersey’s high cost of living, especially housing costs — which strain the budgets of low-paid families more than in other states. One way to measure housing burden is a household spending more than 30 percent of its income on rent, mortgage, or housing-related expenses such as insurance or taxes. Based on this metric, 76 percent of New Jersey low-income households have a high housing cost burden, even more than such other high-cost states as New York, California, and Massachusetts.[vii]

With such a large chunk of earnings eaten up by such basic costs as housing and child care, New Jersey families with children need a helping hand to meet other basic needs. Many studies over the years document how difficult it is for even middle-income families in New Jersey to make ends meet and pay for routine costs of child-rearing, including the United Way of Northern New Jersey’s ALICE (Asset Limited, Income Constrained, Employed) report, and Legal Services of New Jersey’s True Poverty rate report. These reports make clear that official governmental poverty measures so badly underestimate the extent to which families struggle to get by as to provide an incomplete picture of financial hardship in New Jersey. The bottom line: many families well above the official “poverty” line can’t make ends meet.

Because of these high costs, the federal Child Tax Credit, even if it is expanded again, will be inadequate to support many New Jersey children. The federal program does not account for varying cost of living from state to state. Families at a specific income level get the same amount of support in any state, even though that income goes much farther in some states than others. A state-level Child Tax Credit could help more families meet basic needs costs such as rent, food, and bills, while freeing up funds to pay down debt.

Living in poverty has dire consequences for the life trajectory of New Jersey children, and higher child poverty rates among Black and Hispanic/Latinx children exacerbate existing inequities among the adult population, especially among young children. Young Black and Hispanic/Latinx children are three to four times more likely to live in poverty than their white counterparts.[viii] These disparities are driven by past and current policy factors such as discrimination in home loans and hiring, school segregation and underfunding, and entrenched wealth inequality.[ix]

And the racial disparity in poverty compounds existing inequities. Children experiencing poverty are more likely to experience:

  • Adverse childhood experiences
  • Worse physical health
  • Structural changes in brain development
  • Decreased educational attainment
  • Increased risky behaviors[x]

 

Beyond the costs that children bear themselves, society suffers when children suffer. Children in poverty are less likely to reach their maximum potential, and higher long-term costs like health care are shared by society as a whole. One recent estimate pegged the costs of child poverty in the U.S. at $1 trillion, roughly a quarter of the annual federal budget.[xi] The overwhelming weight of evidence shows that exposure to poverty, especially early in life and for prolonged periods, harms children in the moment and for the rest of their lives.[xii]

Why Refundable Child Tax Credits Can Help Families Meet Basic Needs

Refundable child tax credits complement existing public investments in children and families in key ways:

  • Filling in gaps left behind by other programs
  • Ensuring aid goes to families who need it most
  • Limiting red tape by paying families directly through the tax system

 

Before diving into these benefits, though, a bit of terminology. Tax credits allow taxpayers to subtract certain amounts from their total tax bill. These are different from deductions (which allow taxpayers to reduce their taxable income) in that taxpayers can directly remove credits from the amount they owe in taxes.

A refundable tax credit means that even if a taxpayer has no end-of-year tax bill or already gets a refund from the government after tax is calculated, the taxpayer still receives the credit as part of their refund.

For the bulk of taxpayers who receive a refund after filing their taxes (roughly half of New Jersey full-time state income tax returns in 2016),[xiii] tax credits only help if they are refundable.

Tax Credits Fill In Gaps Left by Existing Programs

Refundable child tax credits reduce child poverty differently from other anti-poverty programs, like health insurance or food assistance, by putting cash directly in the pockets of families — all without new onerous applications or requirements, as the program uses data in the existing tax filing system.

The new refundable federal Child Tax Credit provides a prime example of how such credits can reduce child poverty. As part of the American Rescue Plan, the Child Tax Credit has provided historic relief to almost 90 percent of America’s children, reducing child poverty by almost half nationally.[xiv] The Child Tax Credit has also reduced food insecurity by more than a quarter among households with children nationally.[xv] These benefits came in the form of direct IRS tax relief payments either directly into bank accounts used for prior tax refunds or as checks to families.

The effectiveness of the Child Tax Credit in child poverty reduction lies in its almost-revolutionary simplicity. Unlike other traditional programs, a refundable Child Tax Credit’s payments are based on essentially only two inputs: their income on their tax returns and the number of child dependents they can claim. By streamlining the process of getting support out the door, the fully refundable Child Tax Credit has provided instant poverty relief for the majority of eligible households in just a few months.[xvi]

The federal expanded Child Tax Credit provides a blueprint for how a state-level credit might function. Because the IRS has banking and mailing address information for all households that submitted tax returns in the past two years, the agency could identify households with children below the income cap and distribute benefits payments accordingly. States could replicate this process through their tax agencies, sending checks out just like tax rebate checks.

Full Refundability Means Tax Relief Goes to Those Who Need It Most

Refundable tax credits allow all taxpayers to collect the full amount of the credit, regardless of whether they qualify for a refund at the end of their tax filing. This is critical for reaching low-income families, who often have lower income tax liabilities but still need the benefits provided by the credit. For example, New Jersey’s Homestead Benefit provides a refundable tax credit for property tax payers, recognizing that even though a property owner may have relatively little income and therefore little income tax liability, they still need assistance in paying their property taxes.[xvii]

Conversely, a tax credit that is only partially refundable or completely non-refundable does little to assist those taxpayers who would already receive a refund. For example, prior to the passage of the American Rescue Plan, the federal Child and Dependent Care Tax Credit allowed taxpayers with children under 13 or other dependents to claim up to $600 for one qualifying individual and $1,200 for two or more individuals. This seems like a substantial benefit for low-income families. But because it was nonrefundable, only those taxpayers who had liability at the end of the tax year received the benefits.

The results: Households with higher incomes made more dependent-care claims than low-income households, despite making up less of the population. By being nonrefundable, a tax credit designed to defray child care expenses ended up directing most of its aid to higher-income families. Recognizing the limitations of nonrefundable credits, the American Rescue Plan converted the Child and Dependent Care Tax Credit to a refundable credit for the 2021 tax year.[xviii]

Making a state tax credit fully refundable maximizes how much the credit helps the low-income families and children who need it most, without complex new means-testing requirements. A fully refundable child tax credit would also ensure that lower-income families do not perversely get penalized and receive less in assistance than higher-income ones.

Lower Administrative Costs for State Government and Applicants

Child Tax Credits do not have an onerous application process because the agency administering the program bases its payment on information provided in tax returns. Based solely on income and the age and number of children in a household, the agency would be able to calculate the benefit amount and send out the money via check or direct-deposit, the same way it already does with tax rebate checks.

This contrasts with most programs providing benefits to families and children, which require extensive application processes, including in-person interviews, health or financial disclosures, and other information that families may not have easily on hand.

These program restrictions mean many families that should or could qualify for programs often do not receive the benefits they are entitled to or simply do not participate. For example:

  • Only 16 percent of people living in poverty participated in New Jersey’s TANF cash assistance program.[xix]
  • Only 70 percent of working people in poverty participated in SNAP in New Jersey.[xx]

 

Additionally, a tax credit program requires relatively little staffing or overhead at the state level, given that it is largely a pass-through of cash from tax collections back into residents’ pockets.

Child Tax Credit Design Decisions

Small details in Child Tax Credit design can create substantial changes in the number of children reached, how much they receive and, ultimately, how much the program reduces poverty.

Income-Targeting vs. Universal

Almost all social safety net programs must balance targeting benefits to lower-income households with extending benefits to all families who may need them, even in the middle- and upper-income ranges.

In the U.S., states with child tax credits often set eligibility based on a range of incomes, with Maryland limiting the credit to the lowest-income families (below $6,000) while Idaho has no income limit at all.[xxi] For an overview of child tax credits at the state level, the National Conference of State Legislatures has an overview of current state tax credits.

Age-Targeting

Generally speaking, state and local governments provide the bulk of their benefits for children through the K-12 school system.[xxii] By one measure, New Jersey spends roughly 78 percent of its public investments in children in the Pre-K-12 education system.[xxiii] But this leaves out younger children, with very little investment in infants and toddlers.

Some states with Child Tax Credits limit eligibility by age.[xxiv] California and Colorado both provide credits specifically for children 5 years old and under.[xxv] The federal Child Tax Credit expansion also includes a 20-percent higher benefit for children under 6 ($3,000 maximum credit for children ages 6-17 and $3,600 for children under six years old).[xxvi]

When a child is born, their costs are introduced all at once, shocking family finances at a pivotal point in their parents’ economic lives.[xxvii] Young children are more likely to live in poverty than their older counterparts.[xxviii]

Targeting a tax credit to younger ages might help those parents at a critical point in their children’s lives before substantial public investment in public schools. But the costs of children do span their entire lifetimes, not just the early years.

Smaller Regular Payments vs. Annual Lump Sum

The expanded federal Child Tax Credit provided advance monthly payments administered by the Internal Revenue Service.[xxix] Different child allowance systems globally provide the benefit annually, monthly, bi-weekly, or at some other frequency, while some programs allow the claimant to elect for one version or another.[xxx]

Given the relatively small benefit amount of most scenarios NJPP tested, the annual lump sum is more likely to alleviate family costs. In early research on the EITC — when the benefit was much lower than it is today — many families preferred annual lump sum payments.[xxxi] However, a new child tax credit program should provide options with different frequency of benefits delivery, in order to determine whether the frequency affects spending, well-being, or whether families simply prefer one kind to the other.

Phase-Outs

Assuming the full amount of the refundable credit is available to any household earning any taxable income in the year, the question then becomes how and when to phase the credit out. As with other benefits, a steep cliff where benefits go from a maximum amount to vanishing creates perverse economic incentives where it may be more beneficial to stay under an income threshold.[xxxii]

A smooth benefits phase-out can gradually reduce the benefit as a percentage of additional income. But determining where and how the phase-out should begin and end is an open question. And because this is a tax program, the determination will largely be based on annual gross income, rather than poverty status (which is based on the number of individuals living in the household). Nonetheless, the federal Child Tax Credit’s phase outs offer some guidance, with one phase-out for the expanded credit starting at $150,000 for joint-filers and $75,000 for single-filers, while the complete phase-out of the original credit starts at $400,000/$200,000 for joint/single filers and reduces the credit eventually to zero as income increases.

On the one hand, a lower-dollar phase-out targets benefits to lower-income households. On the other hand, stretching the phase-out into higher income ranges may better reflect the higher cost of living in New Jersey. The question of targeting versus universality is essentially functionalized in the question of phase-outs.

Eligibility

The federal Child Tax Credit expansion notably leaves out two key groups: children without a Social Security Number and adult dependent children. Only children with Social Security Numbers, ages 16 and under, are eligible to be claimed.

Children Without a Social Security Number

Roughly 6 percent of New Jersey children are foreign-born, compared to about 3 percent nationally.[xxxiii] Given that the purpose of a Child Tax Credit is to help families receive tax relief to alleviate the high cost of child-rearing, there is no economic distinction between foreign-born and U.S.-born children. Immigrant children must be housed, fed, clothed, and cared for, just like U.S.-born children, regardless of their citizenship.

Nonetheless, noncitizen children are often excluded from the patchwork of child financial supports that exist. For example, immigrant children have also missed out on a wide range of federal COVID-19 relief.[xxxiv] Even citizen children whose noncitizen parents work and file taxes are ineligible to receive benefits through the Earned Income Tax Credit, even after the American Rescue Plan improvements.[xxxv]

Procedures exist to allow children to be included in tax relief. The IRS provides a process to apply for tax ID numbers for minors, even those that do not earn enough income to file taxes.[xxxvi]

Given New Jersey’s diversity, there is no functional reason to exclude otherwise-eligible children from receiving tax relief for basic necessities.

Young Adult Dependents

Federal tax law allows certain adult children to be counted as dependent children, including children up to age 19, children in college up to age 24, and children with qualifying disabilities of any age. However, the new federal Child Tax Credit only applies to children ages 0 to 17.

If an adult child is listed as a dependent, they have low enough income that their parents must still pay for more than half of their basic necessities.[xxxvii] Young adults in this age range are often left behind in tax relief programs, receiving comparatively less in direct public benefits.[xxxviii] Yet, the poverty rate among young adults is the highest for any age range in the United States.[xxxix]

Including adult dependent student children up to age 24 in a Child Tax Credit can help close this benefits gap.

Two Proposals for a New Jersey Child Tax Credit

To model a potential refundable Child Tax Credit for New Jersey, NJPP uses the federal expanded Child Tax Credit as a baseline, then sets the rough cost to the state of $100 million. For comparison, the state EITC costs roughly $486 million, while the state Child and Dependent Care Tax Credit costs roughly $11 million. The cost modeling below was conducted by the Institute on Taxation and Economic Policy (ITEP).

Given the relatively modest outlay of $100 million (by comparison, the federal expanded CTC payments totaled over $1.5 billion in New Jersey in just four months of the year-long program), the proposals have to target a smaller population.[xl]

The phase-out at 250 percent of the federal poverty level was based on research showing that New Jersey’s high cost of living makes a basic-needs budget substantially higher than the traditional federal poverty level.[xli]

NJPP outlines two versions of this credit for low-income New Jersey families — one targeted towards young children (up to age 5) only, and another that includes all children under 18 (and adult dependents up to age 24).

Option 1: Young Child Tax Credit

The proposed “Young Child Tax Credit” helps correct for systemic underinvestment in young children as a part of state spending. New Jersey’s young child poverty rate is routinely one or two percentage points higher than the poverty rate for older children.[xlii] The bulk of state and local spending on children in New Jersey goes to K-12 education, which dwarfs other spending substantially.[xliii] Some of this disparity was recognized in the federal expanded Child Tax Credit, which included an additional $600 of tax credit for children under age 6. California has created an entire Young Child Tax Credit to address this same issue.[xliv]

Directing aid to families with young children addresses the higher poverty rates among young children’s families. This age-targeting will also increase the benefit amount per child by shrinking the pool of eligible children. Although this small credit will not be nearly enough to cover all the expenses of young children, it can help fill in the gaps left behind by other programs. For example, SNAP, WIC, and other food support programs do not cover diapers, a substantial expense for children in this age range.[xlv]

Option 2: All Ages Child Tax Credit

Alternatively, a broader age range would cover more children but provide less per child. This proposal ensures that all families with dependent children get some aid, even if payments only cover a fraction of the true cost of child-rearing. This model would also include adult dependent children up to age 24, who are in school and/or earn so little work income that they qualify as the taxpayer’s dependents.

This universality has advantages, particularly the recognition that regardless of current levels of government program spending by age range, families often need financial support to cover basic needs for their children. The costs of children do not evaporate entirely when they enter K-12 schooling. Continuing the payment through later ages also ensures stable payments rather than a short-term patch, allowing families to plan around it as they do the EITC and other tax credits.

Comparison of Two State-Level Tax Credits for Children

Both credits are provided at the full amount for each eligible child in families up to 100% federal poverty level phasing out to $0 at 250% federal poverty level.

Comparison of Two State-Level Tax Credits for Children

Both Proposals Would Improve Race and Income Equity for Children

Racial income and wealth inequality begins from the moment a child is born in New Jersey, because of systemic injustices, ranging from housing discrimination to wealth inequality. A Child Tax Credit focused on low- and middle-income families would help address some of these inequities while benefiting most New Jersey children.

That is, all households with children benefit regardless of race, especially households with multiple children. But because of the overrepresentation of Black and Hispanic/Latinx families and children in lower income ranges, Black and Hispanic/Latinx households receive a higher share of the tax benefit.

Distribution of Proposed Credits by Race, by Percentage of Total (Regardless of Presence of Child)

Both Proposals Would Target Low- and Moderate-Income Families

In both scenarios, the cap at 250 percent of the federal poverty level means that the entire tax benefit is concentrated in the bottom 60 percent of New Jersey households with incomes below $90,000.

Benefits of the Child Tax Credit Proposals Concentrated in Lowest-Income Households

Recommendations

New Jersey should pass a state-level fully refundable Child Tax Credit to provide cash relief to working families with children to help them meet the high costs of raising children in New Jersey. The credit is an investment in families and children to achieve their full potential and reduce the economic costs of child poverty. Although not a substitute for other community investments, a Child Tax Credit can close existing gaps in programs, while getting investment directly into communities that are under-resourced.

These proposals are a starting point for how New Jersey can ensure that children get what they need from day one, and provide a generalized child tax credit that is not linked to a specific program, use, or parental attributes.

In its FY 2023 budget, New Jersey should include this Child Tax Credit with the following features:

  • Fully refundable for all eligible families. As described above, full refundability without preconditions or additional requirements is critical to ensuring that children can have their needs met. Anything short of full refundability creates perverse inequality that disproportionately hurts children living in the lowest-income households.
  • Focus on low-income and middle-income families. Although the federal Child Tax Credit includes many families in higher income ranges, New Jersey’s more limited fiscal toolbox makes this program a better fit for a smaller population to maximize each credit’s impact. However, families should remain eligible even if their income goes past the range traditionally considered “low-income” (200 percent of federal poverty levels), given New Jersey’s high cost of living.
  • Easy, user-friendly eligibility determination. Rather than juggle work requirements or complicated income calculations, a straightforward child tax credit should be easy for all working families in New Jersey to complete and easy for the state tax agency to calculate and distribute from existing records.
  • Expanded eligibility to include groups excluded by the federal CTC. All children need food, shelter, clothing, health care, and education. These have costs on all children regardless of the happenstance of their place of birth. A state-level Child Tax Credit should include a method for child dependents without a Social Security Number to be claimed.
  • Substantial outreach for free tax filing and non-filing support. In many ways this prong may be the most important. New Jersey and the federal government already use the tax code to distribute tax relief. Yet, many families are unaware of these benefits or deterred from using existing filing or non-filer portal systems. A state-level child tax credit should include a budget for outreach to potentially eligible taxpayers as well as grants to community organizations in high-poverty communities to assist parents and caregivers. This could build on existing services like Volunteer Income Tax Assistance (VITA) and online services like MyFreeTaxes.com.

 

Conclusion

New Jersey’s competitiveness and long-term success as a state depend on ensuring that raising children in New Jersey can be affordable for working families across the income spectrum, not just the wealthy.

Using either of these two proposals as a base, a state-level Child Tax Credit would provide a huge win for New Jersey families by reducing high costs for low- and middle-income families raising children in the state, helping to close New Jersey’s pernicious racial child poverty gap, and building resilience among children to succeed later in life and mitigating the harms of poverty on child development.

 


End Notes

[i] As of 2018, the Bureau of Economic Analysis Regional Price Parity calculation estimated that New Jersey residents pay roughly 13 percent more for goods and services than the national average. See Federal Reserve Bank of St. Louis, Economic Research Division, Cost of Living Calculator, available at https://research.stlouisfed.org/publications/cost-of-living/calculator (retrieved on November 9, 2021)

[ii] Zachary Parolin et al., Center on Poverty and Social Policy, Monthly Poverty Rates Among Children After the Expansion of the Child Tax Credit, 5 Poverty & Social Policy Brief No. 4, at p. 3, available at https://static1.squarespace.com/static/5743308460b5e922a25a6dc7/t/612014f2e6deed08adb03e18/1629492468260/Monthly-Poverty-with-CTC-July-CPSP-2021.pdf

[iii] U.S. Dep’t of Health and Human Services, HHS Poverty Guidelines fo 2022, available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines

[iv] NJPP, when possible, uses the Supplemental Poverty Measure. Kids Count Data Center, Children in Poverty According to the Supplemental Poverty Measure, https://datacenter.kidscount.org/data/tables/11230-children-in-poverty-according-to-the-supplemental-poverty-measure#ranking/2/any/true/1985/any/21625 (retrieved November 9, 2021)

[v] NJPP, when possible, uses the Supplemental Poverty Measure. Kids Count Data Center, Children in Poverty According to the Supplemental Poverty Measure, https://datacenter.kidscount.org/data/tables/11230-children-in-poverty-according-to-the-supplemental-poverty-measure#ranking/2/any/true/1985/any/21625 (retrieved November 9, 2021)

[vi] Liana E. Fox and Kaylee Burns, The Supplemental Poverty Measure: 2020, September 2021, at p. 29, available at https://www.census.gov/content/dam/Census/library/publications/2021/demo/p60-275.pdf.

[vii] Kids Count Data Center, Children in Low-Income Households with a High Housing Cost Burden in the United States, https://datacenter.kidscount.org/data/tables/71-children-in-low-income-households-with-a-high-housing-cost-burden#ranking/2/any/true/1729/any/377 (retrieved November 9, 2021)

[viii] American Community Survey 5-year averages for 2015-2019 indicate poverty rates for Black children under age 5 at 27% and for Hispanic/Latinx children under age 5 at 24.7%, while white non-Hispanic children have a 7.8% rate. For a helpful summary, see the New Jersey Department of Health’s State Health Assessment Data indicator report for children under five years of age living in poverty, available at https://www-doh.state.nj.us/doh-shad/indicator/complete_profile/EPHT_LT5_pov.html

[ix] Areeba Haider, Center for American Progress, The Basic Facts about Children in Poverty, January 2021, available at https://www.americanprogress.org/issues/poverty/reports/2021/01/12/494506/basic-facts-children-poverty/

[x] The National Academies of Sciences published an extensive report on child poverty, summarizing existing research and proposing evidence-based solutions. The National Academies of Sciences, Engineering, and Medicine, A Roadmap to Reducing Child Poverty (2019), available at https://www.nap.edu/read/25246/. This list is derived from that report’s summarized findings. Ibid. at 73.

[xi] Michael McLaughlin & Mark R. Rank, Estimating the Economic Cost of Childhood Poverty in the United States, 42 Social Work Research 73 (2018), available at https://academic.oup.com/swr/article-abstract/42/2/73/4956930?redirectedFrom=fulltext.

[xii] See National Academies of Sciences report at 89, https://www.nap.edu/read/25246/chapter/5#89.

[xiii] State of New Jersey, Department of the Treasury, Office of Revenue and Economic Analysis, Statistics of Income: 2016 Gross Income Tax Returns (2019) at Table D, “Cash Payments Summary by Return Type”, https://www.state.nj.us/treasury/taxation/pdf/pubs/soi-tables2016.pdf

[xiv] Congressional Research Service, The Child Tax Credit: The Impact of the American Rescue Plan Act (ARPA; P.L. 117-2) Expansion on Income and Poverty, July 13, 2021, at p. 12, available at https://crsreports.congress.gov/product/pdf/R/R46839.

[xv]Claire Zippel, After Child Tax Credit Payments Begin, Many More Families Have Enough to Eat, Off the Charts Blog, Center on Budget and Policy Priorities, August 30, 2021, https://www.cbpp.org/blog/after-child-tax-credit-payments-begin-many-more-families-have-enough-to-eat.

[xvi] The American Rescue Plan Act was signed into law on March 11, 2021. https://www.congress.gov/bill/117th-congress/house-bill/1319/text Child Tax Credit payments began July 2021. https://www.irs.gov/newsroom/irs-monthly-child-tax-credit-payments-begin

[xvii] New Jersey Division of Taxation, How Homestead Benefits Are Calculated, July 16, 2021, https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml

[xviii] Congressional Research Service, The Child and Dependent Care Tax Credit (CDCTC): Temporary Expansion for 2021 Under the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2), May 10, 2021, at . 2, available at https://crsreports.congress.gov/product/pdf/IN/IN11645

[xix] Laura Meyer & Ife Floyd, Center on Budget and Policy Priorities, Cash Assistance Should Reach Millions More Families to Lessen Hardship, November 30, 2020, at appendix table 1, available at https://www.cbpp.org/research/family-income-support/cash-assistance-should-reach-millions-more-families-to-lessen

[xx] See Food and Nutrition Service, U.S. Dep’t of Agriculture, SNAP Participation Rates by State, Working Poor People, last updated August 2020, available at https://www.fns.usda.gov/usamap

[xxi] Compare Idaho Stat. 63-3029L (2021) available at https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3029l/, with Maryland Code Sec. 10-751 (2021) available at https://govt.westlaw.com/mdc/Document/N10B5DBA0801E11EB901A96A6365F968D?originationContext=document&transitionType=StatuteNavigator&needToInjectTerms=False&viewType=FullText&contextData=%28sc.Default%29.

[xxii] Julia B. Isaacs, Eleanor Lauderback, & Erica Greenberg, Urban Institute. Public Spending on Children in New Jersey, April 2021 at 4. https://www.urban.org/sites/default/files/publication/104122/public-spending-on-children-in-new-jersey-an-analysis-from-the-urban-institutes-state-by-state-spending-on-kids-dataset_1.pdf

[xxiii] Ibid.

[xxiv] See National Conference of State Legislatures, Child Tax Credit Overview, October 19, 2021, https://www.ncsl.org/research/human-services/child-tax-credit-overview.aspx

[xxv] Ibid.

[xxvi] See Congressional Research Service, The Child Tax Credit: Temporary Expansion for 2021 Under the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2), May 12, 2021, at p. 2-3, available at

https://crsreports.congress.gov/product/pdf/IN/IN11613

[xxvii] Bridget Ansel, Having a Child Comes with Significant Financial Consequences, October 4, 2016, https://equitablegrowth.org/having-a-child-comes-with-significant-financial-consequences/.

[xxviii] See Areeba Haider, The Basic Facts about Children in Poverty, January 12, 2021 at fig. 4, https://www.americanprogress.org/issues/poverty/reports/2021/01/12/494506/basic-facts-children-poverty/

[xxix] Internal Revenue Service, Child Tax Credit Update Portal, https://www.irs.gov/credits-deductions/child-tax-credit-update-portal (retrieved on November 9, 2021)

[xxx] Sophie Collyer et al., The Century Foundation, What a Child Allowance Like Canada’s Would Do for Child Poverty in America, July 21, 2020, at tbl. 1, https://tcf.org/content/report/what-a-child-allowance-like-canadas-would-do-for-child-poverty-in-america/?session=1

[xxxi] Jennifer L. Romich & Thomas Weisner, How Families View and Use the EITC: Advance Payment versus Lump Sum Delivery, 53 Nat’l Tax Journal 1245 (2000), available at https://www.journals.uchicago.edu/doi/abs/10.17310/ntj.2000.4S1.09

[xxxii] See Manoj Viswanathan, The Hidden Costs of Cliff Effects in the Internal

Revenue Code and Proposals for Change, 164 U. Penn. Law Review 931 (2016), available at

https://repository.uchastings.edu/cgi/viewcontent.cgi?article=2265&context=faculty_scholarship.

[xxxiii] Kids Count Data Center, Child Population by Nativity in New Jersey, updated October 2020, https://datacenter.kidscount.org/data/tables/116-child-population-by-nativity?loc=32&loct=2#ranking/2/any/true/1729/76/448

[xxxiv] Protecting Immigrant Families has provided an extensive list of eligibility for various federal programs here: https://protectingimmigrantfamilies.org/immigrant-eligibility-for-public-programs-during-covid-19/

[xxxv] Crystal Muñoz, Georgia Budget and Policy Institute, Immigrant-Inclusive Tax Credits Are More Important Than Ever, https://gbpi.org/immigrant-inclusive-tax-credits-are-more-important-than-ever/

[xxxvi] Internal Revenue Service, FAQ: Dependents, Last updated Nov. 4, 2021, https://www.irs.gov/faqs/filing-requirements-status-dependents/dependents/dependents.

[xxxvii] Internal Revenue Service, Publication 501 (2020), Dependents, Standard Deduction and Filing Information, at table 5 https://www.irs.gov/publications/p501#en_US_2020_publink1000196863.

[xxxviii] James Hawkins, Berkeley Institute for the Future of Young Americans,The Rise of Young Adult Poverty in the U.S., Issue Brief (June 2019) at p. 5, available at  https://gspp.berkeley.edu/assets/uploads/page/poverty_FINAL_formatted.pdf.

[xxxix] Ibid.

[xl] See U.S. Dep’t of the Treasury, Advance Child Tax Credit Payments Disbursed October 2021, by State, October 15, 2021, available at https://home.treasury.gov/system/files/131/Advance-CTC-Payments-Disbursed-October-2021-by-State-10142021.xlsx

[xli] Legal Services New Jersey, Poverty Research Institute, True Poverty: What It Takes to Avoid Poverty and Deprivation in the Garden State, July 2021, at 20, https://proxy.lsnj.org/rcenter/GetPublicDocument/00b5ccde-9b51-48de-abe3-55dd767a685a (identifying 320 percent federal poverty level as the true cost of living for New Jersey families with children). Other estimates place the real survival budget near $88,000 for a family of four, see United Way of Northern New Jersey, ALICE in New Jersey: A Financial Hardship Study, 2020 New Jersey Report, at p. 4, available at https://www.unitedforalice.org/Attachments/AllReports/2020ALICEReport_NJ_FINAL.pdf.

[xlii] Kids Count Data Center, Children in Poverty by Age Group in New Jersey, last updated September 2020, https://datacenter.kidscount.org/data/tables/5650-children-in-poverty-by-age-group?loc=32&loct=2#detailed/2/32/false/1729,37,871,870,573,869,36,868,867,133/17,18,36/12263,12264

[xliii] See Julia B. Isaacs, Eleanor Lauderback, and Erica Greenberg, Urban Institute, Public Spending on Children in New Jersey, April 2021, at 4. Available at https://www.urban.org/sites/default/files/publication/104122/public-spending-on-children-in-new-jersey-an-analysis-from-the-urban-institutes-state-by-state-spending-on-kids-dataset_1.pdf

[xliv] For more detail on the California Young Child Tax Credit, see Alissa Anderson, California Budget & Policy Center, The CalEITC and Young Child Tax Credit: Smart Investments to Broaden Economic Security for Californians, October 2019, https://calbudgetcenter.org/resources/the-caleitc-and-young-child-tax-credit/.

[xlv] Diana Boesch, The Gender Policy Report, Federal Assistance Does Not Help Poor Mothers Pay for Diapers, May 29, 2018, https://genderpolicyreport.umn.edu/federal-assistance-does-not-help-poor-mothers-pay-for-diapers/.

New Jersey School Funding: The Higher the Goals, the Higher the Costs

Executive Summary

New Jersey benefits when all children receive a quality education, allowing them to lead fulfilling and productive lives. Since the passage of the 2008 School Funding Reform Act (SFRA), which determines the allocation of school aid, school standards have become more rigorous. Yet, many schools are not receiving the level of funding needed to teach to these more demanding standards.

This report outlines changes in New Jersey’s learning standards since 2008. It also estimates the costs of providing students with a more rigorous education by using a challenging but attainable goal (average Massachusetts educational outcomes).

Using the National Educational Cost Model (NECM), the analysis finds that greater financial investment is associated with better student performance: the higher the goals, the higher the costs. New Jersey’s most affluent school districts have the resources they need — and more — to provide a rigorous education. The state’s large, high-poverty districts, however, have far less funding than needed to meet the same exacting standards. The estimated per-pupil spending gap ranges from $2,275 in Clifton to nearly $22,000 in Trenton. The scope of the underfunding, based on estimates from a statistical model, suggests New Jersey must revise its school funding formula.

New Jersey’s large districts enroll many students whose families live in poverty and many students of color — students who have historically attended inadequately-funded schools. The spending gap these children’s schools face is the result of two flaws in New Jersey’s school funding system:

  • Failing to fully fund the current SFRA formula.
  • Failing to recalibrate the SFRA formula to meet today’s standards.

 

To make sure all students get the education they need to thrive, New Jersey must first address these flaws by fully funding SFRA — then should adjust the base spending and student weights in the funding formula to reflect current school and student needs. Only then can New Jersey claim to truly offer equal educational opportunity for all students.

Introduction

New Jersey, as part of the state budgeting process, tells school districts every year how much aid they will receive. This aid, combined with local revenues, accounts for most of the school districts’ funding. State aid is supposed to be determined by New Jersey’s school funding law, the School Funding Reform Act (SFRA) of 2008. The state, however, repeatedly puts less money into the school aid fund than the law requires, so schools get less than what the SFRA formula dictates. This results in many districts — including many majority Black and Hispanic/Latinx districts — not having the funding the law says is needed to provide an adequate education.[i]

But even if the law were fully funded, the money New Jersey provides to its school districts likely wouldn’t be enough because the SFRA formula is based on older, less rigorous learning standards and less challenging student exams than now are in use. New Jersey, in effect, demands that school districts educate students to higher standards but has not changed its school funding law to reflect these new, more rigorous goals. This is important because a large and growing body of research shows that adequate school funding is necessary for students to achieve any specific educational outcome.[ii]

How much more do New Jersey’s schools need to reach the state standards?

This report uses fiscal and student achievement data to estimate the cost for New Jersey’s students to achieve challenging but attainable learning outcomes. The report begins with a brief overview of SFRA, explaining how the law determines student costs and local revenues. It then outlines the changes in New Jersey’s learning standards since SFRA passed in 2008, showing that students are now challenged to meet more rigorous goals and pass more difficult tests.

Next, the report compares New Jersey students’ performance to two similarly high-performing states, Massachusetts and Connecticut, to set rigorous yet achievable benchmarks for student achievement. Using the National Education Cost Model, the report estimates the costs of achieving these benchmarks, given the wide variation in student characteristics found in New Jersey school districts. [iii] The report focuses specifically on New Jersey’s large, high-poverty districts, as these have the largest number of students of color and students living in poverty.

The estimates in this report show that SFRA needs review after more than a decade. For example, the estimated per-pupil spending gap ranges from $2,275 in Clifton to nearly $22,000 in Trenton. For all New Jersey students to reach challenging educational goals, the state must supply the funding necessary for schools to provide a rigorous education. This report aims to help lawmakers equitably calibrate the SFRA formula so students in all schools can meet the higher expectations the state has set for them.

The Purpose of SFRA: Determining Student Costs and Providing Needed Revenues

New Jersey’s school funding law, the SFRA, addresses two major factors: the cost of education and sources of revenue to pay that cost.

Two factors determine why some school districts receive more or less state aid than others: districts have different types of learners and needs, and varying capacities to raise local revenue. The primary goal of SFRA is to provide school aid in a way that makes up for these differences.

The revenue component of the funding formula takes into account a district’s ability to collect local funds for schools. For instance, a more affluent district with higher property values is better able to fund education through local property taxes (New Jersey’s main source of local revenue for schools and services) than a less affluent district. The SFRA takes these differences into consideration to determine state aid to schools. NJPP has previously reported on the racial inequities inherent in local tax systems and the resulting educational inequities.[iv] This report focuses on how the SFRA calculates educational costs for the purpose of determining school aid.

Cost is the amount of money needed to educate students to a particular level, accounting for differences in student needs and school contexts. The SFRA considers a variety of factors when determining per-pupil costs, such as: how many students are English Language Learners (ELLs), the concentration of poverty in a school district, cost-of-living differences, and the grade levels the district enrolls. For example, it costs more to teach a student who has a learning disability, such as dyslexia, to read at average grade level than a student without that disability because of the need for extra support. Similarly, a school in a high-cost-of-living region will have greater staffing costs than one in a lower-cost region, as it will cost more to recruit and retain qualified teachers and staff. Further, lower-income districts enrolling many students in poverty will have higher costs than more affluent districts to achieve similar results.[v]

Like school funding formulas in many other states, the SFRA uses a weighting system to determine what a school district’s per-pupil costs will be. The original 2008 law set the “base” cost per pupil, which is then adjusted by “weighting” a student more heavily if that student qualifies for free or reduced-price lunch (a proxy measure of economic disadvantage), is an English language learner (ELL), is enrolled in a higher grade level, etc. For example, a district’s per-pupil cost for each bilingual elementary student is 1.5 times the base weight, or $17,963. In other words, the formula states that the costs for adequately educating a bilingual student is 1.5 times more than an average student who doesn’t have learning needs and isn’t in poverty. The table below shows the current weighting and base costs, as reported in the Fiscal Year 2020-2021 state aid notices.

How New Jersey Determines the Cost of Educating Students, Per Pupil

It’s important to understand that both the base and the weights were set based on the goal of having most students reach standards of academic performance as laid out by the state.[vi]  New Jersey’s initial cost estimates were calibrated with the 2008 goal of having between 50 and 80 percent of students achieve “proficiency” on state tests. The state could have set a higher target: for example, 90 percent of students reaching proficiency. It could also have set a higher bar for “proficiency,” increasing the difficulty of the tests.

However, these weighting costs estimates were based on the state’s educational goals in 2008. While there have been some adjustments to the estimates to account for changes in the price of educational inputs, such a teacher salaries,[vii] the estimates assume that the goals for students haven’t changed – that the same percentage of students will achieve the same level of proficiency on similar tests of the same content.

New Jersey’s Move to Higher Student Standards and Outcomes

Over the past two decades, much of the focus of K-12 education policy has been on standards and assessments. Driven by concerns that US students academically underperform compared to the rest of the world, a movement grew that emphasized raising the bar for student achievement. In 2009, the Common Core State Standards (CCSS) were launched with the goal of creating a challenging set of student expectations that would be uniform across all states.[viii] Initially, most states adopted these standards, including New Jersey, which replaced its previous standards in math and English with those of the CCSS. A largely political backlash against CCSS, however, quickly led to many states withdrawing from the initiative, again including New Jersey.[ix] The state introduced another new set of standards in 2016: the New Jersey Student Learning Standards (NJSLS). But while the name changed, there was, in fact, little difference between the CCSS and the NJSLS.[x]

The result of these changes is that New Jersey has more challenging standards in math and English than when SFRA was enacted in 2008. The more recent NJSLS standards expect students to acquire deeper knowledge and demonstrate higher-order thinking skills, solving real-world problems as they master new material. The insert below gives an example of how the bar for New Jersey’s students has been raised since SFRA was ratified.

New Jersey’s More Rigorous Learning Standards: An Example

The goal of the Common Core State Standards was to “…establish clear, consistent guidelines for what every student should know and be able to do in math and English language arts…”[xi] In general, the CCSS – which eventually became the New Jersey Student Learning Standards – are more explicit and more rigorous than New Jersey’s previous standards.

Here’s an example: both the old and new Grade 5 math standards require students to demonstrate the ability to measure geometric objects. The new NJSLS, however, are much more specific in their demands, requiring students to “solve real-world problems” and not merely “recognize” concepts. They also require students to measure the volume of objects; the older standards only required measuring area (measuring volume was introduced in Grade 6 in the older standards).

Students who are expected to meet the more rigorous standards will need more intensive, personalized instruction, delivered by well-trained teachers, with extra support for students with learning disabilities or who are English language learners. Lawmakers cannot simply assume the costs of meeting older, less rigorous standards will be the same as meeting new, more challenging ones.


Grade 5: New Jersey Core Curriculum Content Standards (2008)[xii]

4.2.5 E. Measuring Geometric Objects

1. Use a protractor to measure angles.

2. Develop and apply strategies and formulas for finding perimeter and area.

• Square

• Rectangle

3. Recognize that rectangles with the same perimeter do not necessarily have the same area and vice versa.


Grade 5: New Jersey Student Learning Standards (2016)[xiii]

C. Geometric measurement: understand concepts of volume and relate volume to multiplication and to addition.

3. Recognize volume as an attribute of solid figures and understand concepts of volume measurement.

a. A cube with side length 1 unit, called a “unit cube,” is said to have “one cubic unit” of volume, and can be used to measure volume.

b. A solid figure which can be packed without gaps or overlaps using n unit cubes is said to have a volume of n cubic units.

4. Measure volumes by counting unit cubes, using cubic cm, cubic in, cubic ft, and non-standard units.

5. Relate volume to the operations of multiplication and addition and solve real world and mathematical problems involving volume.

a. Find the volume of a right rectangular prism with whole-number side lengths by packing it with unit cubes, and show that the volume is the same as would be found by multiplying the edge lengths, equivalently by multiplying the height by the area of the base. Represent threefold whole-number products as volumes, e.g., to represent the associative property of multiplication.

b. Apply the formulas V = l × w × h and V = B × h for rectangular prisms to find volumes of right rectangular prisms with whole number edge lengths in the context of solving real world and mathematical problems.

c. Recognize volume as additive. Find volumes of solid figures composed of two nonoverlapping right rectangular prisms by adding the volumes of the non-overlapping parts, applying this technique to solve real world problems.

New Jersey’s Move to Higher Student Standards and Outcomes

Changes in standards inevitably require changes in student assessments: higher standards lead to harder tests. New Jersey’s earlier NJASK exam was replaced in 2014 by the PARCC (now called the NJSLA), an exam aligned with the CCSS.[xiv] The newer exam was designed to be predictive of success in college-level courses (see the Appendix for a full discussion).

However, for the purposes of informing school finance policy, it is important to determine whether the state’s exams have become more difficult, particularly between the PARCC/NJSLA and NJASK. To answer that question, the authors compare outcomes on different New Jersey tests to the National Assessment of Educational Progress (NAEP), an exam designed as a stable measure of student achievement over time by tracking test outcomes.

TABLE 1

New Jersey's Outcome Standards Have Become More Challenging

Table 1 reports the NAEP equivalent scores for New Jersey’s proficiency scores in 2005, 2009, and 2019 along with the NAEP equivalent scores for the PARCC’s college readiness standards.

For example, to be “proficient” in Grade 4 reading in 2005 required a NAEP equivalent score of at least 191. By 2009, the NAEP equivalent for proficiency had risen to 221, and by 2019 to 225.[xv] Grade 4 math standards have also increased.[xvi] In addition, while Grade 8 reading standards dropped slightly between 2005 and 2009, they increased under new assessments in 2019.

These comparisons across time show that New Jersey’s students are being held to a higher standard of performance than a decade ago. The original outcome goals of SFRA, which were used to set the original cost estimates, are out of date. New Jersey expects more of its students than it did in 2008; consequently, the state must recalibrate its cost estimates to reflect more rigorous standards. 

Comparing New Jersey to Other High-Performing States 

Before estimating the costs of achieving more rigorous standards, the authors explore the levels of student performance that are both challenging and reasonable. Comparing New Jersey’s NAEP scores to those in similar states provides a way to set outcome goals that are ambitious yet attainable. The following figures show instructive comparisons of New Jersey’s outcomes on NAEP scores along with those of Connecticut and Massachusetts — three Northeastern states ranked first, second, and third on the Grade 8 Reading NAEP in 2019.[xvii] Included for context are the proficiency standards for the NAEP and the NAEP equivalent scores for PARCC college readiness standards.

Figure 1 shows that Massachusetts students have scored, on average, around the level of the PARCC NAEP proficiency over the past several years in Grade 4 reading. New Jersey and Connecticut have done slightly less well.

FIGURE 1

New Jersey's Fourth Grade Reading Scores Have Been Below MA, Similar to CT

Figure 2 shows that for Grade 4 Math, Massachusetts achieves PARCC proficiency levels on average for a few years before falling off, while New Jersey achieves marginally lower levels.

FIGURE 2

New Jersey's Fourth Grade Math Scores Have Been Below MA's and Above CT's

Figure 3 shows that, for Grade 8 reading, all three states have approached PARCC proficiency levels in recent years. For Grade 8 math (Figure 4), New Jersey has consistently scored between Massachusetts and Connecticut.

FIGURE 3

New Jersey, MA, and CT's Eighth Grade Reading Scores Have Approached PARCC Proficiency in Recent Years

FIGURE 4

New Jersey has Consistently Been Between MA and CT in Eighth Grade Math

These comparisons suggest that while New Jersey is a high-performing state, there is room for improvement towards proficiency. Note: the figures above are averages; by definition, many students score below the scores shown, which means a large share of children are still not achieving proficiency.

Setting an ambitious yet reasonable outcome goal is necessary if New Jersey is to determine the costs of an adequate education. For purposes of this report’s analysis, the authors use Massachusetts’ current outcomes, on average, as an aspirational goal. This target, which is challenging but attainable, is the basis for the following estimation of the costs of providing equal and adequate educational opportunities for New Jersey children.

Determining Costs: Flaws in the Development in SFRA

In 2007, the New Jersey Department of Education (NJDOE) outlined the SFRA framework in A Formula For Success: All Children, All Communities.[xviii] The NJDOE intended for the SFRA formula to be based on real-world evidence: It would establish a statewide approach to financing New Jersey’s public schools, determining how much it would cost districts to ensure that their students would have equal and adequate opportunity to achieve common state standards.

NJDOE approached the cost analysis in two major ways. First, it hired consultants to look at average spending of a subset of school districts meeting specific outcome standards.[xix] This approach, known as “Successful Schools” analysis, is not a cost analysis, but a summary of average spending of districts serving relatively advantaged student populations who are more likely to meet these standards. This approach does not account for the different costs that districts in under-resourced communities will have in providing equal educational opportunity. As such, it offers little insight into how to set the student “weights” in the SFRA formula.

Second, the consultants convened panels of practitioners and experts from around the state to determine the resources needed to achieve the standards, while complying with the state’s curricular requirements.[xx] This approach, called Professional Judgment Panels (PJP), is of limited value for estimating costs associated with specific outcome goals, and even less so for estimating needs in high-poverty settings.[xxi] The flaws in this approach included:

  • Panel recommendations drew largely on the experiences of panel members, many of whom never worked in high-poverty school districts. Of those who did, few had ever worked in schools with resources sufficient for disadvantaged students to achieve the desired outcomes.[xxii] As such, these panelists tended to request marginally more — not sufficiently more — than what they had experienced in their own jobs, underestimating actual costs.[xxiii]
  • The PJP approach provided no external validation as to whether the proposed resources, and resulting expenditure levels, are statistically associated with the desired outcomes.[xxiv]
  • During the translation from the cost study analysis to the SFRA framework, several adjustments were made, further compromising the link between cost analysis and formula design.[xxv] An example: the combined low-income and ELL weights for children who qualified for both was changed in the final law to be less than the sum of the independent LEP and low-income weights. This resulted in less funding for districts that had many low-income students who were not native English speakers.

 

Finally, the consultants and the NJDOE rejected a more comprehensive approach to estimating educational costs, called the “cost function” approach. They reasoned that there was insufficient data available to inform the formula and that the procedure involved complex statistical techniques that would not be understood by the parties whom the results would directly impact.[xxvi] Whether a cost function is too sophisticated for stakeholders to understand is a matter of debate. But over the past decade, more and better data has become available, and researchers have refined and improved their approaches to this type of analysis. In recent years, more states, such as New Hampshire,[xxvii] Vermont,[xxviii] and Kansas,[xxix] have engaged in more rigorous and relevant analyses, modeling statistical relationships between school spending, student outcomes, and various school and student characteristics to better understand and estimate costs of providing all children with equal educational opportunity.

Estimating Educational Costs

Using several years of detailed historical data is the most appropriate approach for understanding just how much it costs to provide equal educational opportunity to the wide variety of students in different settings.[xxx] This section applies a “cost function” approach to provide preliminary guidance for the recalibration of SFRA by using the National Education Cost Model (NECM), a part of the School Finance Indicators Database.[xxxi] The NECM uses actual fiscal and test score data to make reasonable, empirical estimates of education costs. Specifically, this section presents the per-pupil cost predictions from the NECM, set to Massachusetts average outcomes as the aspirational goal. Based on student characteristics, labor-market conditions, and district characteristics, the model produces a predicted per-pupil cost for each district to achieve Massachusetts’ average outcomes (see the insert below for a description).

Importantly, this is the only method of cost analysis that provides insights — and specific estimates — as to how much more it may cost to achieve higher or broader outcomes than narrower or lower ones. Put simply, the higher the goals, the higher the costs.[xxxii] With this method, legislators can better relate budgetary decisions to outcome expectations and consider those outcome expectations in the context of budget constraints.[xxxiii]

The National Education Cost Model

A large and growing body of research shows adequate school funding leads to better educational outcomes. But determining how much is needed to reach a specific educational goal is a difficult task. The National Education Cost Model (NECM), developed by Dr. Bruce D. Baker of Rutgers University, uses student, school district, and testing data to estimate how much a district needs to spend to reach a specific educational goal. The basic procedure is to:

  • Identify a target level of average student performance–in the case of this report, average Massachusetts test scores.
  • Analyze student and district data to estimate the effects of student poverty and other factors on student outcomes.
  • Use federal school spending data to estimate how much it will cost a district to achieve the target outcome level, given its regional cost differences and other characteristics.

 

The NECM uses econometric methods to find a causal relationship between spending and outcomes. The model yields imprecise but useful estimates; they stand as guideposts that can aid policymakers in developing and improving school funding systems. Details about the NECM can be found in a peer-reviewed article published this past year.*

Source: * Baker, B.D., Weber, M., & Srikanth, A (2021). Informing Federal School Finance Policy with Empirical Evidence. Journal of Education Finance, 47(1), pp 1-25.

Overall, the estimates derived from this method show that most districts spend either more or less than what the model says is needed. For instance, Figure 5 plots Massachusetts, Connecticut, and New Jersey school districts, along with all other districts nationally, on two dimensions.[xxxiv] On the horizontal axis are estimates of the extent to which districts spend more or less than needed to achieve Massachusetts average outcomes. On the vertical axis are average outcomes (reading and math grades 3 to 8), relative to Massachusetts average outcomes.[xxxv]

Importantly, Figure 5 reveals that more adequate spending (relative to cost) is unmistakably associated with better student outcomes. When spending is above what the model estimates, student outcomes are higher. In contrast, when spending is below what the model predicts, student outcomes are lower, as shown in the lower-left quadrant for New Jersey. This raises an important question: Which students are most disadvantaged simply because they reside in these districts?

FIGURE 5

When Schools Receive Adequate Funding, Their Students Have Better Outcomes

Next, Figure 6 highlights large districts with significant levels of poverty that are enrolling many of the state’s low-income students. It shows the districts within each state that enroll over 10,000 pupils in the 20 percent of districts with the highest level of child poverty. Each of the three states has a handful of districts in this category, and large, high-poverty districts invariably fall in the lower left quadrant. Connecticut districts in particular (squares) appear to be lower performing and, on average, less adequately funded. While New Jersey has more districts in this group, fewer of them are as poorly funded or poorly performing.

FIGURE 6

Large, High-Poverty School Districts Don't Spend What They Need for Students to Reach Higher Standards

Table 2 summarizes the large, high-poverty, underfunded New Jersey districts identified in the model. While two of the districts have sizable Black populations — Newark and Trenton — the most notable feature is their large Hispanic/Latinx populations. Nine of 11 districts have more than 50 percent Hispanic/Latinx share, including four districts with more than 90 percent. This finding is consistent with prior reports that find systemic underfunding of Hispanic/Latinx districts in New Jersey.[xxxvi]

TABLE 2 

New Jersey Underfunds Large, High-Poverty School Districts with High Black and/or Latinx Student Populations

Recalibrating SFRA for Current Educational Goals

This report’s analysis makes clear that schools that teach New Jersey’s most underserved students need more resources for an adequate education. The question before lawmakers is: How much more? The NECM produces estimates of educational costs that provide guidance for changing the base costs and weights in the SFRA so the state can drive resources where they are needed most.

The SFRA now allocates somewhat more funding to districts with higher levels of poverty. But the degree of additional funding for higher-poverty districts in the SFRA is inadequate. While it estimates costs for low-poverty, wealthier districts fairly accurately, the SFRA fails to appropriately account for the cost of educating children in higher-needs districts. For instance, Figure 7 shows that the current SFRA adequacy budget (the thin blue line) rises slightly as poverty increases, meaning that more revenue should flow to districts with more students who are underserved. Unfortunately, current spending (the thick blue line) doesn’t match the SFRA budget, a consequence of not fully funding the SFRA formula.

However, even if the SFRA was fully funded, the amount spent still wouldn’t be enough for high-poverty districts to reach rigorous standards (again, Massachusetts average outcomes), according to the NECM estimates (the dashed grey line). The students in these districts suffer from two gaps: one created by the underfunding of the current SFRA formula, and the other from setting that formula’s base costs and weights too low.

FIGURE 7

New Jersey's School Funding Formula Doesn't Provide Enough Funding for High-Poverty Districts to Meet Higher Standards

These results are not surprising, considering that the original SFRA costs study was based largely on the needs of more affluent districts. Overall, the formula isn’t progressive enough to provide equal educational opportunity. And the situation is even worse because the state fails to appropriately fund SFRA targets that are already inadequate.

Finally, Figure 8 offers a handful of modifications that would move the formula closer to national cost-model targets for Massachusetts outcomes. Currently, a student from a low-income family who is an English language learner (ELL) would not receive the sum of the two separate weights, but instead would receive the poverty weight and one-quarter of the ELL weight. This combination weight approach is unhelpful because it underestimates the true cost of adequately educating English language learners living in poverty. For instance, the poverty weighting addresses a general population condition (social/economic context) of school districts, not a specific programming cost for a child from a low-income family. In contrast, ELL weighting intends to address specific costs of support services and personnel to meet individual students’ needs.

Therefore, Figure 8 eliminates the combination weight, providing the full sum of weights for students who are both ELL and low-income. It also raises the low-income and ELL weights to a full 1.0 (double the cost per non-low income or non-ELL child), consistent with published empirical work, but marginally less than the national cost model here.[xxxvii] While changing the weights does not close the entire gap, it does substantially move the cost estimates toward the target set by a model based on actual data.

FIGURE 8

High-Poverty Districts Need more Funding to Meet Higher Education Standards

Recommendations

This report makes clear that the original SFRA cost estimates are insufficient to reach even the older, outdated outcomes goals enacted in 2008 and fails low-income students of color by giving their schools too few resources to reach the state’s learning goals. But, even if those analyses were sufficient, even if the formula largely aligned with the findings, and even if the state had fully funded the formula for the past decade (which it has not), that formula would still be outdated and insufficient to support today’s standards and student outcome expectations. The result is that the state must:

  • Fully fund the SFRA. As a first step, the Governor and Legislature should fully fund the current formula. As this report shows, the SFRA does not provide nearly enough funding to schools enrolling large numbers of students in poverty; however, the formula does drive at least some additional revenue to these schools, where it is needed. Fully funding the SFRA does not require any changes in statute; all the state needs to do is follow its own law, and the adequacy gap will begin to shrink.
  • Update the SFRA formula. Next, the base spending and student weights in the funding formula need to be adjusted to better reflect current school and student needs. The state should use modern, data-based analysis to set both spending and outcome targets.

 

New Jersey cannot afford to get it wrong again. Students in these high-needs districts cannot get back a decade of underfunding. The state has left a generation of low-income and children of color behind. The bar for student achievement has been raised, and so, too, has the cost of achieving that bar equally for all New Jersey children — even as the SFRA remains unchanged and underfunded. Now is the time to recalibrate and reinvest in the future of New Jersey and its students.

Appendix: National Trends in Standards and Assessments

Determining the costs of providing an adequate education requires setting a standard for student outcomes. For purposes of cost estimation, that standard must be sufficiently precise and based on existing measures for which there are available data. During the past decade, federal initiatives and numerous states have converged on a framing of standards for elementary and secondary schools focused on “college and career readiness.”[xxxviii] This policy emphasis arises from studies in years prior that stressed the lack of preparedness of U.S. high school graduates for college-level work, leading to excessive numbers of students placed in remedial college coursework. The need for remediation has also been accompanied by a marked drop in our nation’s global competitiveness with respect to college completion rates. Thus, to a large extent, college and career readiness standards have been developed with a focus on mitigating this particular problem, ensuring that high school graduates can succeed in college-level coursework and achieve timely completion of postsecondary degrees.[xxxix]

Standard setting for college and career readiness has two key components: curricular frameworks and assessments. Developing curricular frameworks involves identifying what high school graduates should know and be able to do to succeed in college-level coursework, as laid out in the Common Core State Standards, and then working backward to develop grade-level standards that define the knowledge and skills students should gain throughout their elementary and secondary school experience.[xl] These standards should then guide the development of assessments of student proficiency.[xli] Both curricular frameworks and assessments are designed to be predictive of college and career readiness; that is, students who have successfully completed these curricular requirements, as evidenced on the assessments, should be more likely to succeed in college-level coursework, persist in postsecondary education, and complete postsecondary degrees. New Jersey, like many other states, has adopted “College and Career Ready Standards.”[xlii]

On the assessment side of this puzzle—measuring student preparedness—two separate consortium assessments emerged to test whether students were proficient in areas identified in the Common Core State Standards: the Partnership for the Assessment of Readiness for College and Careers (PARCC) and the Smarter Balanced Assessment Consortium (SBAC).

Again, much of the interest in college and career readiness and the Common Core State Standards arose from concerns that students were graduating from high school and achieving “proficiency” on state assessments but were unable to succeed in entry-level coursework in public colleges and universities such as the City University of New York system.[xliii] Research by the College Board showed that students scoring 1150 or higher on the SAT were more likely to succeed in first-year college coursework.[xliv] Building on this work, several researchers have proposed a statistical definition of college readiness using standardized test scores and other measures to predict college success.[xlv] For example, Wiley et al. (2011) defined college readiness as having at least a 65% probability of achieving a college grade point average of B- or higher, based on measures of high school students’ SAT scores, high school grade point average, and an index of the academic rigor of courses taken.[xlvi]

Statistical definitions of college readiness have had a key influence on the design of modern state assessments as well as the assignment of cut scores intended to denote proficiency for these assessments. Therefore, the equating of student achievement on test scores to college and career readiness can also guide how outcome measures are set for the purpose of modeling the costs of achieving desired levels of educational outcomes. Prior to the Common Core State Standards and the emergence of college and career readiness standards, most states never assessed the validity of chosen cut scores when developing their state assessments; that is, they never asked the following: Does making the cut lead to greater likelihood of some bigger goal, like succeeding in college level coursework?

Prior to switching to PARCC, New York State engaged Daniel Koretz, PhD, of the Harvard Graduate School of Education to conduct an analysis of their state assessments, including the identification of cut scores that would better reflect college readiness. Dr. Koretz took an approach similar to that of researchers at the College Board, assessing what scores on state assessments were associated with achieving 1150 or higher on the SAT and eventually succeeding in college-level coursework.[xlvii] The consortium assessments SBAC and PARCC established their cut scores on similar bases, with the intent that students scoring proficient or higher would have a significantly higher likelihood of successfully completing college-level coursework.[xlviii]

State assessments can also be measured against the National Assessment of Educational Progress (NAEP), which establishes cut scores for “basic” and “proficient” achievement levels (National Center for Education Statistics [NCES], 2019). The NAEP standards tend to be quite high relative to most state cut scores and even relative to the new SBAC and PARCC assessments.[xlix] SBAC standards also differ from PARCC standards. For example, statistical analysis by the American Institutes for Research (Phillips, 2016) found:

  1. Smarter Balanced college-ready standards (Level 3) are comparable in difficulty to the NAEP basic levels.
  2. Smarter Balanced college-ready standards (Level 3) are significantly below PARCC college-ready standards (Level 4) by about one quarter of a standard deviation.[l]

 

However, the NAEP standards were not set statistically to represent “college readiness.” As noted by Phillips (2016), NAEP’s proficiency standards are high, at least with respect to SBAC. Alternatively, it may be that SBAC standards are too low, given that SBAC college readiness standards are also lower than PARCC standards.

 


End Notes

[i] Bruce Baker and Mark Weber (2020). School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective; Trenton, NJ.  https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[ii] Jackson, C. K. (2018). Does School Spending Matter? The New Literature on an Old Question. National Bureau of Economic Research. https://www.nber.org/papers/w25368.pdf

[iii] Baker, B.D., Weber, M., & Srikanth, A (2021). Informing Federal School Finance Policy with Empirical Evidence. Journal of Education Finance, 47(1), pp 1-25.

[iv] Baker and Weber (2021). [Previous report] New Jersey Policy Perspective; Trenton, NJ. [link TBD]

[v] Duncombe, W. D., & Yinger, J. (2005). How much more does a disadvantaged student cost? Economics of Education Review, 24(5), 513–532.

[vi] By law, the Commissioner of Education releases an Education Adequacy Report every three years that adjusts both the base costs and the weights. These changes are not recalibrations of the formula as much as they are adjustments to the original cost estimates.

[vii] Educational Adequacy Report, New Jersey, 2020. (2019). New Jersey Department of Education. https://www.nj.gov/education/stateaid/1920/EARFY20.pdf

[viii] Catherine Gewertz (September 30, 2015). “The Common Core Explained.” Education Week. https://www.edweek.org/teaching-learning/the-common-core-explained/2015/09

[ix] Dana Goldstein (December 6, 2019). “After 10 Years of Hopes and Setbacks, What Happened to the Common Core?” The New York Times. https://www.nytimes.com/2019/12/06/us/common-core.html

[x] As the New Jersey State Board of Education President at the time explained: “It won’t be substantially different… there were some changes, but there were not major changes.” See: Adam Clark (May 4, 2016). “N.J. revises, renames Common Core academic standards.” NJ.com  https://www.nj.com/education/2016/05/nj_common_core_standards_christie.html

[xi] Common Core State Standards Initiative; What Parents Should Know. http://www.corestandards.org/what-parents-should-know/

[xii] New Jersey Core Curriculum Content Standards for Mathematics  (2008) https://www.state.nj.us/education/cccs/2004/s4_math.pdf

[xiii] New Jersey Student Learning Standards For Mathematics (2016) https://www.nj.gov/education/cccs/2016/math/standards.pdf

[xiv] The NJASK is the New Jersey Assessment of Skills and Knowledge; see: https://www.nj.gov/education/assessment/history.shtml The PARCC is the Partnership for the Assessment of Readiness for College and Career: see: https://www.state.nj.us/education/archive/sca/parcc/

[xv] For a discussion of standardized testing and “college readiness,” see the Appendix.

[xvi] Grade 8 math standards for the PARCC/NJSLA are not included for 2019 as the PARCC/NJSLA provides a separate exam for Grade 8 students who are enrolled in algebra courses; the student populations between the earlier and later tests are, therefore, not equivalent.

[xvii] The Nation’s Report Card; State Profiles, 2019. https://www.nationsreportcard.gov/profiles/stateprofile?chort=2&sub=RED&sj=AL&sfj=NP&st=MN&year=2019R3

[xviii] A Formula for Success: All Children, All Communities. (December, 2007) New Jersey Department of Education. https://www.nj.gov/education/sff/reports/AllChildrenAllCommunities.pdf

[xix] The consultants, Augenblick, Palaich and Associates, used these outcome standards:

75% Proficiency on grade 3 and 4 NJASK Language Arts in 2004-05

62% Proficiency on grade 3 and 4 NJASK Math in 2004-05

66% Proficiency on the Grade 8 Language Arts assessment in 2004-05

49% Proficiency on the Grade 8 Math Assessment in 2004-05

79% Proficiency on the High School Proficiency Assessment in Language Arts in 2004-05

64% Proficiency on the High School Proficiency Assessment in Math in 2004-05 (Table 1, APA)

[xx] Typically, these focus groups are provided a blank slate as a starting point, creating their recommendations from scratch. New Jersey Department of Education (NJDOE) officials, however, decided instead to pre-populate the templates with their own recommendations and permit the focus groups to adjust their recommendations if they saw fit. The panels, therefore, were working from a baseline that may have been wholly inadequate, and may have consequently underestimated what they would otherwise have found was the cost for providing an adequate education.

[xxi] Baker, B. D., Taylor, L. L., & Vedlitz, A. (2008). Adequacy estimates and the implications of common standards for the cost of instruction. National Research Council, 9(2), 24-38.

[xxii] Baker, B. D. (2006). Evaluating the reliability, validity, and usefulness of education cost studies. Journal of Education Finance, 32(2), 170-201.

[xxiii] Baker, B. D. (2009). Evaluating the “Concrete Link” between Professional Judgment Analysis, New Jersey’s School Finance Reform Act and the Costs of Meeting State Standards in Abbott Districts. https://schoolfinance101.files.wordpress.com/2011/10/baker-pjp-sfra-report-web.pdf; Baker, B. D. (2006). Evaluating the reliability, validity, and usefulness of education cost studies. Journal of Education Finance, 32(2), 170-201.

[xxiv] Baker, B. D., Taylor, L. L., & Vedlitz, A. (2008). Adequacy estimates and the implications of common standards for the cost of instruction. National Research Council, 9(2), 24-38.

[xxv] Baker, B.D., Atchison, D., Levin, J., Kearns, C. (2020). “State finance reform vignette: New Jersey.” New Hampshire Commission to Study School Funding https://carsey.unh.edu/sites/default/files/media/2020/06/20-11882_5._primer_statevignettes_new_jersey_air_formatted_v3.pdf

[xxvi] Dupree, A., & Silverstein, J. (2006). Report on the Cost of Education. https://dspace.njstatelib.org/xmlui/bitstream/handle/10929/22618/e242006f.pdf?sequence=1&isAllowed=y

[xxvii] Atchison, D., Levin, J., Baker, B. D., Kearns, C. (2020) New Hampshire Commission to Study School Funding: Final Report. https://carsey.unh.edu/sites/default/files/media/2020/09/20-12685_nh_final_report_version_v5_draft_1.pdf

[xxviii] Kolbe, T., Baker, B. D., Atchison, D., Levin, J., & Harris, P. (2021). The additional cost of operating rural schools: Evidence from Vermont. AERA Open, 7, 2332858420988868.

Kolbe, T., Baker, B.D., Atchison, D., & Levin, J. (2019). Pupil Weighting Factors Report. State of Vermont, House and Senate Committees on Education. https://legislature.vermont.gov/assets/Legislative-Reports/edu-legislative-report-pupil-weighting-factors-2019.pdf

[xxix] Taylor, L., Willis, J., Berg-Jacobson, Jaquet, K., & A., Capras, R. (2018). Estimating the Costs Associated with Reaching Student Achievement Expectations for Kansas Public Education Students: A Cost Function Approach. San Francisco, CA: WestEd.

Duncombe, W., & Yinger, J. (2005). Estimating the cost of meeting student performance outcomes adopted by the Kansas State Board of Education. A study prepared for the Kansas Division of Legislative Post Audit.

[xxx] Duncombe, W., & Yinger, J. (2005). How much more does a disadvantaged student cost? Economics of Education Review, 24(5), 513-532.

Duncombe, W., & Yinger, J. (1999). Performance standards and educational cost indexes: you can’t have one without the other. Equity and adequacy in education finance: Issues and perspectives, 260, 261.

[xxxi] Baker, B.D., Di Carlo, M., Weber, M. (2021) The Adequacy of School District Spending in the U.S. Albert Shanker Institute. https://www.schoolfinancedata.org/wp-content/uploads/2021/03/SFID_DCDbrief_Mar2021.pdf

See also: Baker, B.D., Weber, M., Srikanth, A. (2021) Informing Federal School Finance Policy with Empirical Evidence. Journal of Education Finance, 47(1)

[xxxii] As an example: Both the 2006 and 2018 legislatively sponsored studies of outcome-based costs in Kansas revealed significant sensitivity of costs to outcome goals. Baker, B.D., Atchison, D., Levin, J., Kearns, C. (2020) State finance reform vignette: Kansas. New Hampshire Commission to Study School Funding https://carsey.unh.edu/sites/default/files/media/2020/06/20-11882_5._primer_statevignettes_kansas_air_formatted_v5.pdf

[xxxiii]Baker, B.D., Atchison, D., Levin, J., Kearns, C. (2020) Setting outcome goals and standards – from a formal to a functional definition of adequacy. New Hampshire Commission to Study School Funding https://carsey.unh.edu/sites/default/files/media/2020/06/20-11882_4._primer_adequacystandard_air_formatted_v5.pdf

[xxxiv] The statistical model used here is “race-sensitive,” meaning it takes into account the racial profile of the school districts in the dataset used. In previous work we discussed the importance of race and ethnicity in modeling educational costs, with an understanding that systemic racism has played a large role in creating conditions where students in majority-Black or majority-Hispanic school districts suffer from structure inequities. See: [reference to previous report]

[xxxv] The outcomes are “standardized” around 0, meaning test outcomes in different states are translated to a common scale where 0 represents the average.

[xxxvi] Bruce Baker and Mark Weber (2020). School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective; Trenton, NJ.  https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[xxxvii] Duncombe, W., & Yinger, J. (2005). How much more does a disadvantaged student cost? Economics of Education Review, 24(5), 513-532.

[xxxviii] U.S. Department of Education. (n.d.). College- and career-ready standards. Washington, DC: US Department of Education. https://www.ed.gov/k-12reforms/standards

[xxxix] National Research Council. (2008). Common standards for K–12 education?: Considering the evidence: Summary of a workshop series. Washington, DC: National Academies Press.

[xl] See the Common Core State Standards Initiative: http://www.corestandards.org/.

[xli] Polikoff, M. S., Porter, A. C., & Smithson, J. (2011). How well aligned are state assessments of student achievement with state content standards? American Educational Research Journal, 48(4), 965–995.

[xlii] Common Core State Standards Initiative. (2020). Standards in your state. http://www.corestandards.org/standards-in-your-state/

[xliii] Cooper, B. S., Cilo, M. R., & Baker, B. D. (1999). Making the transition from school to college: The case of New York City Public Education. In M. Alampi & P. M. Comeau (Eds.), American education annual: Trends and issues in the educational community (1998-1999). New York, NY: Gale Research

[xliv] Kobrin, J. (2007). Determining SAT benchmarks for college readiness (Research Notes RN-30). New York, NY: College Board, Office of Research and Analysis. https://files.eric.ed.gov/fulltext/ED562605.pdf

[xlv] Fina, A. D., Dunbar, S. B., & Welch, C. J. (2018). Establishing empirical links between high school assessments and college outcomes: An essential requirement for college readiness interpretations. Educational Assessment, 23(3), 157–172.

[xlvi] Wiley, A., Wyatt, J., & Camara, W. J. (2011). The development of a multidimensional college readiness index (Research Report 2010-3). New York, NY: College Board.

[xlvii] New York State Education Department. (2010). Statement on research related to proficiency on state assessments. http://usny.nysed.gov/scoring_changes/

[xlviii] Smarter Balanced Assessment Consortium. (2017). Smarter Balanced cut score validation: Final report. Santa Clara, CA: Author. https://portal.smarterbalanced.org/library/en/smarter-balanced-cut-score-validation-final-report.pdf

[xlix] Rahman, T., Bandeira de Mello, V., Fox, M. A., & Ji, C. S. (2019). Mapping state proficiency standards onto the NAEP scales: Results from the 2017 NAEP reading and mathematics assessments (NCES 2019-040). Washington, DC: National Center for Education Statistics.

[l] Phillips, G. (2016). National benchmarks for state achievement standards. Washington, DC: American Institutes for Research. https://www.air.org/sites/default/files/downloads/report/National-Benchmarks-State-Achievement-Standards-February-2016_rev.pdf

 

Recovery for All: Excluded New Jerseyans Fund Falls Short of Need

For all New Jersey residents to recover from the COVID-19 pandemic and resulting economic crisis, more financial relief needs to flow to people excluded from most public programs and federal relief efforts.

New Jersey is strongest when all residents have the resources they need to thrive, regardless of where they were born. Yet, New Jersey is failing to provide support that matches the scale of challenges that deepen financial hardship across the state — particularly for undocumented immigrant families who help fund the same public programs they are excluded from through state and local taxes.[i] Even before the pandemic, immigrants faced barriers to many critical programs designed to support individuals’ well-being and economic security. Now they are being pushed farther behind.

As a state with one of the nation’s largest immigrant populations, supporting immigrant communities is critical to New Jersey’s recovery and future prosperity. Though the state has taken some steps to address serious inequities in economic well-being throughout the pandemic, more action is needed.

New Jersey’s Investment in Excluded Workers Falls Short of Need

Responding to advocacy and organizing led by immigrant community members and organizations, and in the absence of legislative action, Governor Murphy in May 2021 established the Excluded New Jerseyans Fund, which was to use $40 million in federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funds for one-time payments to New Jersey residents ineligible for unemployment insurance and federal stimulus payments.[ii] Eligibility is limited to households that suffered economic hardship due to COVID-19 and have annual income less than $55,000.[iii]

The state had until December 31, 2021 to distribute the $40 million in federal money before it expired. But with only $6 million in aid distributed by that deadline, the state reallocated $34 million to other expenses allowed under the CARES Act, including state government payroll and departmental costs. While it is unknown whether the state will add more federal funding to the program, the governor did add $10 million from a different pot of federal aid in December, and the Department of Human Services, who are administering the fund, promised that people already approved for funds would still receive benefits.[iv] The fund is set to end on January 31, 2022.

Even if the Excluded New Jerseyans Fund were kept at its original funding level, it does not match the aid provided to others facing financial hardship due to COVID-19. For perspective, if the state were to more equitably provide relief for excluded workers by matching the minimum amount of unemployment insurance received by other New Jersey residents who lost income since the onset of the pandemic, the Excluded New Jerseyans Fund would require $1.4 billion, plus additional funding for outreach and program administration. Further, matching the average amount of unemployment assistance received by New Jersey residents would require $2.7 billion.[v]

Funding for Excluded New Jerseyans Falls Short of Pandemic Relief Available to Unemployed Citizens

The benefit amount for the Excluded New Jerseyans Fund, set at a maximum of $2,000 per individual and $4,000 per household, is insufficient to meet the needs of most households for even one month, let alone the duration of the pandemic. The monthly cost of living in Mercer County, for example, is $3,300 for a single adult, $5,500 for a household with one adult and one child, and $7,900 for a household with two adults and two children, according to the Economic Policy Institute’s Family Budget Calculator.[vi] And, while the cost of living varies substantially according to household size, the Excluded New Jerseyans Fund does not account for household size — both the benefit amount and the income cap are the same for any household with two or more people.

Assistance offered through the Excluded New Jerseyans Fund pales in comparison to the relief available to unemployed citizens. The average state unemployment benefit for New Jersey residents ranged from $395 to $485 per week during the past two years.[vii] In addition to state unemployment insurance, a federal supplement of $300 to $600 through the Federal Unemployment Compensation Program (FPUC) was given to unemployment insurance recipients during certain periods.[viii] Beyond unemployment insurance, New Jersey residents with a Social Security number were also eligible to receive up to $3,200 per adult and $2,500 per child in direct stimulus payments if they met the income thresholds established under the federal CARES Act and American Rescue Plan (ARP).

An unemployed New Jersey resident who is eligible for unemployment insurance and is unemployed for the average (mean) duration of unemployment (currently 29 weeks) would be eligible for a minimum of $12,380 and average of $21,738 in unemployment insurance.[ix]

How Much Unemployed New Jerseyans Received in Unemployment Insurance (State and Federal)

Not only do payments from the Excluded New Jerseyans Fund fall far short of the cost of living in New Jersey, but the size of the fund is also too small to reach all excluded workers. New Jersey is home to nearly half a million undocumented residents, over 300,000 of whom are in the labor force.[x] Under the $50 million promised in December, however, only 25,000 individuals or 12,500 households could benefit. Now that a majority of the fund was reallocated to other expenses, exponentially fewer workers will have access to relief.

Further, many other New Jersey residents will lose access to pandemic relief without a more robust Excluded New Jerseyans Fund, including people recently released from incarceration as well as those working in the cash economy who face barriers to accessing benefits like unemployment insurance due to work history documentation requirements. A larger investment in excluded workers would not only improve the economic security of those excluded from economic opportunity and public programs, but also help workers better afford necessities crucial to their families’ and communities’ health and well-being.

How State Lawmakers Can Support Excluded Workers and Families

Several states have made greater use of federal fiscal recovery funds to support workers left behind by existing supports. For example, Washington allocated over $300 million for financial support to immigrants whose economic security was threatened by the pandemic.[xi] This aligns with guidance from the United States Department of the Treasury, which has encouraged states to use federal relief funds to aid unemployed workers and families and those facing financial insecurity.[xii]

Many states have also used state dollars to invest in workers and families excluded from federal programs. New York, for example, created a $2.3 billion fund to support immigrants excluded from relief.[xiii] New Jersey lawmaker can learn from these states’ initiatives and do a better job of making public investments to support recovery for all New Jersey residents.

 


End Notes

[i] Kapahi, Vineeta. “Unemployment Insurance Taxes Paid by Undocumented Workers Tops $1 Billion.” New Jersey Policy Perspective. https://www.njpp.org/publications/report/unemployment-insurance-taxes-paid-by-undocumented-workers-top-1-billion/

[ii] State of New Jersey, Governor Phil Murphy. May 2021. “Governor Murphy Announces $275 Million in Relief for Small Businesses and Individuals Impacted by COVID-19 Public Health Crisis.” https://www.nj.gov/governor/news/news/562021/20210507a.shtml

[iii] New Jersey Department of Human Services. October 2021. Excluded New Jerseyans Fund – Eligibility Criteria. https://www.nj.gov/humanservices/excludednjfund/apply/eligibility/

[iv] Nieto-Munoz, Sophie. December 17, 2021. “Another 10m added to N.J. excluded worker fund, extending deadline into 2022.” New Jersey Monitor. https://newjerseymonitor.com/2021/12/17/another-10m-added-to-n-j-excluded-worker-fund-extending-deadline-into-2022/; Yi, Karen. January 19, 2022. “Outrage After NJ Diverts $34M From Immigrant Worker Fund.” Gothamist. https://gothamist.com/news/outrage-after-nj-diverts-34m-immigrant-worker-fund

[v] NJPP analysis based on U.S. Department of Labor Weekly Unemployment Claims Data and Center for Migration Studies Population Estimates. This estimate assumes a benefit amount and duration that matches the average for New Jersey residents who lost employment and were eligible for unemployment insurance. The methodology for these estimates is adapted from the Fiscal Policy Institute’s brief, “Unemployment Compensation for Excluded Workers: $3.5 Billion Needed for 2020 and 2021,” available here: https://fiscalpolicy.org/wp-content/uploads/2021/03/FPI-Excluded-Workers-March-FINAL.pdf

[vi] Economic Policy Institute. “Family Budget Calculator.” https://www.epi.org/resources/budget/

[vii] United States Department of Labor, Employment and Training Administration. Monthly Program and Financial Data: Summary Data for State Programs. https://oui.doleta.gov/unemploy/claimssum.asp

[viii] New Jersey Department of Labor. “Federal and State Extended Benefits.” https://www.myunemployment.nj.gov/apply/extensions/

[ix] United States Bureau of Labor Statistics. “Table A-12. Unemployment persons by duration of employment.” https://www.bls.gov/news.release/empsit.t12.htm

[x] Center for Migration Studies. “State-Level Unauthorized Population and Eligible-to-Naturalize Estimates.” http://data.cmsny.org/state.html

[xi] Lazere, Ed. “How States Can Best Use Federal Fiscal Recovery Funds: Lessons From State Choices So Far.” Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/how-states-can-best-use-federal-fiscal-recovery-funds-lessons-from

[xii] United States Department of Treasury. “FACT SHEET: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver $350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the COVID-19 Emergency and Bring Back Jobs.” https://home.treasury.gov/system/files/136/SLFRP-Fact-Sheet-FINAL1-508A.pdf

[xiii] New York State Senate. “Excluded Workers Fund to Pass Bringing $2.1B in Relief for Those Left Out of Federal Stimulus and Unemployment Insurance.”

New Jersey’s Uninsured: Getting the Garden State Covered

Open enrollment for the New Jersey health insurance marketplace, GetCoveredNJ, officially began on November 1st for the 2022 coverage year.[i] With expanded financial aid through state subsidies and the Affordable Care Act’s Medicaid Expansion, health insurance affordability continues to improve for the Garden State’s low- and middle-income residents.[ii] Yet, for many, challenges to getting and maintaining coverage persist. On top of pre-pandemic disparities in health coverage and the unequal impact of the pandemic, the looming end of federal public health emergency (PHE) assistance could exacerbate health coverage disparities.[iii]

This report looks at data from the past year to examine trends in who remains uninsured and who would benefit or be harmed by changes in public health insurance policies. The findings show that health coverage rates differ across racial, age, income, education, and geographic lines. Structural inequalities — such as limited access to affordable coverage through jobs, difficulties saving due to low wages, and transportation challenges — reduce access to coverage options and perpetuate health insurance inequities. The report ends with recommendations to bridge coverage barriers through improved outreach, communication, and affordability.

Hispanic/Latinx and Black Residents Continue to Face Barriers to Coverage

Since the introduction of the Affordable Care Act (ACA), uninsured rates for families of color have improved significantly.[iv] Even during the COVID-19 pandemic, federal and state efforts have helped get and keep people enrolled in health care coverage through policies like continuous coverage in Medicaid and increased premium subsidies for Marketplace plans.[v] However, as federal relief policies end, the increased risk of coverage loss disproportionately harms Hispanic/Latinx and Black residents, many of whom were already at greater risk of being uninsured before the pandemic.

In New Jersey, Hispanic/Latinx and Black residents remain most vulnerable to changes in federal and state coverage policy due to eligibility restrictions and disparities in access to employer-based insurance. Rooted in a history of systemic racism and structural inequalities in access to coverage, families of color face disproportionate barriers to health care. For instance, Hispanic/Latinx and Black residents are more likely to be employed in part-time jobs that lack benefits and affordable coverage or have their hours cut below benefit thresholds.[vi] Additionally, Black residents are most likely to get their coverage through public programs because of limitations on access to employer-based coverage.

Undocumented immigrants have also been left behind throughout the pandemic, as they remain ineligible for Medicaid or Marketplace coverage — the very programs that have helped so many families keep their coverage.

Residents with Limited Access to Employer-Based Coverage are More Likely to Lack Health Insurance Coverage

Employers who pay low wages rarely provide robust health insurance benefits. For instance, just 24 percent of U.S. workers in the lowest wage jobs had access to medical benefits through their employer in 2019.[vii] Consequently, if low-paid workers don’t qualify for Medicaid, they must make tough choices about costly health insurance options.

If a worker’s employer-based plan remains within the ACA’s affordability threshold (9.83 percent of household income for 2021), additional family coverage often costs significantly more.[viii] This is due to what is called a “family glitch,” when a workers’ individual insurance option qualifies as “affordable,” and, as a result, their family members are not eligible for subsidies on the Marketplace. Currently, around 55,000 New Jerseyans are stuck in this “family glitch,” with no access to affordable family coverage.[ix]

Structural inequities exist not only in access to employer-based coverage but also with public coverage options. Due to less flexible or unpredictable work hours, limited access to transportation, and fewer resources for information, those most in need of public coverage also have the most obstacles to obtain that coverage.[x]

For low-income residents making less than $25,000 per year, the harms caused by these obstacles to coverage are stark. Low-income residents are three times more likely to be uninsured than someone making between $50,000 and $74,999, and six times more likely than someone making between $100,000 and $149,999.

Additionally, residents with less than a high school diploma are eight times more likely to be uninsured than someone with at least a Bachelor’s degree. The same patterns follow for public health coverage: residents with less than a high school diploma are twice as likely to be enrolled in public coverage than those with a Bachelor’s degree or higher. In contrast, those making less than $25,000 are three times more likely to be enrolled in public coverage than those who make between $100,000 and $149,999.

Young Adults Remain Most Uninsured Age Group, Despite Pandemic Efforts

In addition to income and education playing an outsized role in health insurance coverage, age is also a determining factor. Young adults in New Jersey are more likely to be uninsured and less likely than other age groups to participate in a public insurance program. There are several reasons why young people are more likely to struggle to get covered: lack of access to employer-based coverage, less stable employment as they first enter the workforce, a lack of knowledge about affordable options after losing coverage through their parents’ insurance at 26, and fewer savings and a greater need for help from family with regular bills.[xi]

Coverage Rates Vary Widely Across Counties

While Household Pulse Survey data from this past year only provides state-level estimates, pre-pandemic coverage rates showed significant differences in coverage across counties. Counties that have more families with lower incomes, limited access to employer coverage, or restrictions on coverage due to immigration status were more likely to see higher numbers of uninsured residents, especially for their working-age adults. Uninsured rates for this group range from a low of 3.6 percent in Sussex County to a high of 19.8 percent in Passaic County.

Recommendations: Outreach and Enrollment Efforts Should Boost Health Coverage

Barriers to health coverage keep thousands of New Jerseyans uninsured, leaving residents unable to access or afford needed care. To address coverage gaps and get people access to the care they need, state leaders should take several proactive steps:

Plan Diverse Communications and Outreach Initiatives

As state officials and Navigator organizations begin to help participants research and understand their coverage options, they should plan to actively address existing disparities in coverage. Taking into account who is uninsured and the specific channels of communication they may turn to for information — such as community, family, medical leaders, social media, or information sessions with bilingual options — will help connect New Jerseyans with coverage in a way that meets their needs.

Simplify Enrollment Processes

Many New Jerseyans who are eligible for public insurance programs, like Medicaid and the Children’s Health Insurance Program (CHIP), face obstacles to enrollment through onerous documentation requirements, difficulty reaching a live person for questions about the process, and language barriers. The time required to overcome these challenges, particularly when many families may be applying to other programs such as Temporary Assistance for Needy Families (TANF) or the Supplemental Nutrition Assistance Program (SNAP), prohibits many New Jerseyans from enrolling, even when they are eligible. Creating an Easy Enrollment system can help to connect more New Jerseyans with affordable coverage. This system can provide residents with their health coverage options if they check a box on their tax forms, ensure automatic enrollment for those who are eligible for Medicaid, and share information about coverage options whenever a change in circumstances, like unemployment, occurs. Additionally, streamlining data-sharing across public programs can help to lessen the time required for applicants by reducing duplication of documentation efforts.

Expand Eligibility to Medicaid and CHIP

Only when all New Jerseyans are eligible for affordable health insurance will we be able to achieve universal coverage. By fully implementing the Cover All Kids initiative passed in June 2021, expanding Medicaid coverage to all residents, providing GetCoveredNJ plan options for undocumented immigrants, and restructuring the plan system to ensure that no segregation in the options or quality of care exists, state leaders can ensure that New Jersey fully embodies the value of health care as a human right.

 


End Notes

[i] GetCoveredNJ. Official website. https://www.nj.gov/getcoverednj/

[ii] GetCoveredNJ. “Get Financial Help.” https://nj.gov/getcoverednj/financialhelp/gethelp/

[iii] New Jersey Policy Perspective (2021). “Maintaining Continuous Medicaid Coverage After the Pandemic Would Advance Health Equity.” https://www.njpp.org/publications/blog-category/maintaining-continuous-medicaid-coverage-after-the-pandemic-would-advance-health-equity/

[iv] NJ Spotlight (2020). “Affordable Care Act Has Upped Racial Equity in NJ’s Health Care Coverage, Access.”. https://www.njspotlightnews.org/2020/01/boosting-racial-equity-in-njs-health-care-coverage-access/

[v] Ibid.

[vi] New Jersey Policy Perspective (2021). “Labor Day Snapshot: New Jersey’s Uneven Recovery.” https://www.njpp.org/publications/report/labor-day-snapshot-new-jerseys-uneven-recovery/

[vii] U.S. Bureau of Labor Statistics (2020). “Lower-wage workers less likely than other workers to have medical care benefits.” Data examines private Industry employment in 2019. https://www.bls.gov/opub/ted/2020/lower-wage-workers-less-likely-than-other-workers-to-have-medical-care-benefits-in-2019.htm

[viii] Healthinsurance.org (2021). “How Millions were Left Behind by ACA’s ‘Family Glitch’.” https://www.healthinsurance.org/obamacare/no-family-left-behind-by-obamacare/

[ix] Urban Institute (2021). “Changing the “Family Glitch” Would Make Health Coverage More Affordable for Many Families.” https://www.urban.org/sites/default/files/publication/104223/changing-the-family-glitch-would-make-health-coverage-more-affordable-for-many-families.pdf

[x] Brookings Institute (2020). “Unpredictable work hours and volatile incomes are long-term risks for American workers.” https://www.brookings.edu/blog/up-front/2020/08/18/unpredictable-work-hours-and-volatile-incomes-are-long-term-risks-for-american-workers/; Urban Institute (2020). “Access to Opportunity through Equitable Transportation.” https://www.urban.org/sites/default/files/publication/102992/access-to-opportunity-through-equitable-transportation_0.pdf; Federal Reserve Bank of Philadelphia (2018). “Accessing Economic Opportunity: Public Transit, Job Access, and Equitable Economic Development in Three Medium-Sized Regions.” https://www.philadelphiafed.org/-/media/frbp/assets/community-development/reports/accessing-economic-opportunity/1218-accessing-economic-opportunity.pdf

[xi] Urban Institute (2021). “Impacts of the ACA’s Medicaid Expansion on Health Insurance Coverage and Health Care Access among Young Adults.” https://www.urban.org/research/publication/impacts-acas-medicaid-expansion-health-insurance-coverage-and-health-care-access-among-young-adults; Pew Research Center (2019). “Majority of Americans Say Parents Are Doing Too Much for Their Young Adult Children.” https://www.pewresearch.org/social-trends/2019/10/23/majority-of-americans-say-parents-are-doing-too-much-for-their-young-adult-children/

To Protect and Serve: Investing in Public Safety Beyond Policing

Introduction

After the murder of George Floyd, millions of people across all 50 states protested against police brutality and racial injustice.[i] Floyd’s death followed a long history of police violence against Black people and was heavily covered in the national media along with the police murders of Breonna Taylor, Elijah McClain, and Tony McDade.

Models of public safety that center police are premised on punishment and have far-reaching consequences, especially for young Black men.[ii] Beyond police brutality, which is the most life-threatening and visible failure of the current criminal justice system, frequent police interactions are linked to adverse mental health outcomes, including anxiety, depression, and posttraumatic stress disorder.[iii] These outcomes are exacerbated in communities of color. Due in part to a history of racial profiling, Black men in particular experience high levels of depression and anxiety over the very possibility of encounters with police.[iv] Taken together, these harms have prompted a widespread examination of the actions of law enforcement and a close evaluation of the role that budgets, which are a measure of municipalities’ values and priorities, play in funding ineffective and deadly practices that disproportionately target Black residents.

This report examines how New Jersey can create a safer, healthier, and more equitable state for all by reimagining public safety and exploring crisis response models that are not led by police. The first sections of this report provide important historical context on how policing evolved into the system seen today. In short, the racialized history of criminal justice policies and practices, such as “broken windows” policing and the War on Drugs, encouraged aggressive policing tactics, skyrocketing incarceration rates, and larger police budgets.

Next, this report examines police budgets in two distinct geographical areas — the City of Elizabeth and Gloucester County — to highlight how, regardless of the geographic region, local governments invest vast resources on law enforcement while essential health and human service programs are underfunded. Elizabeth is a diverse, vibrant city in Northern New Jersey. Its police budget makes up 19 percent of the total municipal budget and has increased by an average of $1.8 million each year since 2018. In comparison, Gloucester County is a more rural area in Southern New Jersey that, while not lacking in racial and ethnic diversity, has a more segregated population than Elizabeth.[v] Across the county, local police budgets vary from about 14 percent to 25 percent of the total municipal budget, with an average of 20 percent. In total, local governments in Gloucester County appropriated over $77 million to police departments in Fiscal Year (FY) 2020 alone.[vi] The report then puts police budgets in context by comparing them to local investments in health and human service programs, which promote public safety more broadly by addressing the structural root causes of crime.

Finally, this report proposes alternative models to public safety that are centered on harm reduction and a broader vision for a safer and more just New Jersey. This includes a range of public health policies designed to minimize negative social, emotional, and physical outcomes for all residents. The policy recommendations included in this report were crafted with input from residents directly harmed by police violence, as well as faith and community leaders.

Policing in the United States: A Primer

Policing and race have always intersected in the United States. From the horrors of slavery, to the terror of Jim Crow, to the modern era of mass incarceration, the U.S. has systematically used public policy and the criminal legal system to disempower and subjugate Black residents. Policies that define criminal behavior or “crime” have changed over the years and, as demonstrated below, are often racialized and used to maintain social control rather than to promote public safety. Whether expressly or implicitly, police departments are the enforcement arm of these public policies. The following section examines the link between racism and law enforcement and the role policing plays in creating and maintaining racial inequities.

Slave Patrols (1700s–1800s)

Most modern police departments can trace their roots directly to slave patrols, which were organized, government-sanctioned groups of armed men who monitored and, by use of violence, regulated the activity of people who were enslaved. Indeed, historians describe slave patrols as the first publicly funded police departments in the South.[vii]

Slave patrols were first established in the early 1700s to enforce slave codes, or laws that defined enslaved people as property.[viii] The patrols served three main functions: chase down those who had escaped, “provide a form of organized terror to deter slave revolts,” and punish any enslaved worker who was alleged to have violated the rules of a plantation.[ix]

Historical evidence suggests the beating and terrorizing of enslaved people by patrollers was officially justified as a civic duty.[x] In many states, serving on these patrols was required of all able-bodied white men.[xi]

After the end of the Civil War, slave patrols evolved into police departments, carrying over many aspects of the patrol, including the systematic surveillance of Black communities.[xii] In the years that followed slavery, the primary role of police departments was to enforce Black Codes, an extension of the slave codes, and Jim Crow segregation laws, both of which were designed to deny Black residents equal rights and maintain the de facto structure of slavery.[xiii] 

The Great Migration and Segregation (1900s–1970s)

Due, in part, to the brutal enforcement of segregation laws in the South, millions of Black residents moved from Southern states to Northern states between 1916 and 1970, a population shift known as the Great Migration.[xiv] People who migrated, however, would come to find that segregation and systemic racial violence were also woven into the fabric of Northern states. Contrary to popular belief, segregation began in Northern abolitionist states with the country’s first racially separate railcar operating in 1838.[xv]

In Northern states, police departments did not develop as a response to crime but, rather, “disorder.”[xvi] Governments tasked police with the surveillance and control of disenfranchised people: poor workers, immigrants, and Black people.[xvii] Again, police were encouraged to use force against these disenfranchised communities, and police violence was commonplace in the early 1900s.[xviii]

At this time, police were required to enforce segregation and keep order by squashing any unrest, or perceived unrest, among Black communities. By the 1940s, police in Northern states had earned a reputation for protecting whites at the expense of the Black population.

“[Police] used ‘persuasion’ rather than firm action with white rioters, while against Negroes they used the ultimate in force: nightsticks, revolvers, riot guns, sub-machine guns, and deer guns.”

-Thurgood Marshall, describing the experience of protests that erupted in Detroit over police brutality and racial animus due to the increasing Black population, “The Gestapo in Detroit,” The Crisis, 1943

New Jersey, now known as one of the most progressive states in the nation, also played a role in the systemic subjugation of Black residents. Black New Jerseyans could not enjoy summers at the shore, lived in segregated neighborhoods, and were barred from most entertainment and social venues until the passage of federal civil rights legislation in 1965.[xix] De facto segregation and hostility towards Black people, however, continued.

In the summer of 1967, residents of Newark rebelled after witnessing white police officers brutally attack John Smith, a Black cab driver.[xx] While this instance of racial violence was a breaking point for many, the rebellion emerged also in response to rising tensions over “urban renewal” policies that sought to raze and redevelop neighborhoods without input from Black residents as well as and the ongoing abuse and killing of Black people by police.[xxi] After several days, 700 people were injured and 26 died, most of whom were Black.[xxii]

The rebellion lasted less than a week, but its legacy still looms large today, where the relationship between police and the general public remains strained by decades of violence.

“There are still some emotional trauma and other things we haven’t recovered from and social conditions that led to the rebellion itself. And it hasn’t been fully addressed.”

-Newark Mayor Ras Baraka, in response to whether or not the city of Newark had recovered from the 1967 riots, The New York Times, 2017

The War on Drugs and Mass Incarceration (1970s–2000s)

The Civil Rights movement brought inequities faced by Black and brown people to the forefront of public consciousness and won major legislative battles in the 1960s, namely the Civil Rights Act of 1964 and the Voting Rights Act of 1965. However, these wins did not prevent policymaking that criminalized and otherwise harmed Black and brown communities. The War on Drugs, 1990s-era crime bills, and the expansion of police powers in recent decades have arguably become an extension of Jim Crow-era policies criminalizing Black people.[xxiii]

The War on Drugs officially began in 1971 when President Richard Nixon introduced a wave of drug enforcement policies, declaring a “full-scale attack” on drug use.[xxiv] Since then, the drug war has led to a slew of federal, state, and local anti-drug policies that militarized police departments, expanded police powers, and ordered aggressive enforcement.[xxv] Nationwide, state and local police spending doubled from $131 per capita to $260 per capita between 1992 and 2008 to support the drug war, even as crime rates decreased.[xxvi] War on Drugs policing strategies also increased rates of police brutality with tactics like “stop and frisk” that encouraged the targeting of people of color.[xxvii]

The War on Drugs also resulted in mass incarceration. The number of people imprisoned in the U.S. increased roughly 6 to 8 percent per year from 1972 to 2000,[xxviii] drug arrests more than doubled between 1980 and 1989, and incarceration rates grew sharply in the 1980s even as violent crime rates fell.[xxix] In 2020, the 2.3 million people incarcerated in the U.S.[xxx] was seven times the number of people incarcerated in 1972.[xxxi]

Moreover, racial disparities in arrest and prosecution after 1972 produced high incarceration rates for Black people but not white people.[xxxii] From 1980 to 1990, Black people were imprisoned at a rate of 6.5 to 6.8 times that of white people,[xxxiii] despite white people both using and selling drugs at similar or higher rates.[xxxiv] By 2021, despite being 13 percent of the U.S. population,[xxxv] Black residents accounted for about 38 percent of all inmates.[xxxvi]

“We knew we couldn’t make it illegal to be either against the war or blacks, but by getting the public to associate the hippies with marijuana and blacks with heroin and then criminalizing them both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night in the evening news. Did we know we were lying about the drugs? Of course we did.”

-John Ehrlichman, Nixon’s domestic policy advisor in a 1994 interview in response to what the drug war was “really about.”[xxxvii]

The Legacy Continues Today

Now that the history of policing in the United States has been outlined, we can better understand the present state of affairs. This section reviews current Black arrest and incarceration rates, deadly and non-deadly use of police force on Black residents, and how the system of policing, beyond the actions of individual officers, reinforces the rates of racial disparities and violence seen today.

Arrest and Incarceration

The U.S. is home to nearly 20 percent of the world’s prison population despite making up a mere four percent of the global population.[xxxviii] This high rate of incarceration does not indicate that U.S. residents are committing more crimes than their international peers; rather, it points to, in part, the overly harsh consequences of drug convictions. And despite an increased recognition from Democratic and Republican lawmakers alike that we cannot arrest ourselves out of drug use, enforcement of the drug war continues: in 2019 alone, approximately 1.6 million people in the U.S. were arrested, prosecuted, incarcerated, and placed under supervision and/or deported on a drug law violation.[xxxix]

Like the rest of the nation, New Jersey excessively enforces the drug war. Drug violations account for a large portion of arrests across the state, totaling approximately 21 percent of all arrests in 2019.[xl] Drug war arrests have also increased over the past 30 years. In 1986, New Jersey made 398 drug war arrests per 100,000 residents; in 2019, New Jersey made 626 drug war arrests per 100,000 residents — an increase of 57 percent.[xli] To learn more about drug war arrests and the associated social and economic costs, see NJPP’s report, A War on Us: How Much New Jersey Spends Enforcing the War on Drugs.

Of those arrested in 2019 in New Jersey for drug violations, 43 percent were Black[xlii] despite Black residents making up 15 percent of New Jersey’s population and national survey data showing that Black residents are no more likely to use or sell drugs than white residents.[xliii]

Black New Jerseyans are Arrested For Drug Violations at Disproportionate Rates - Graph

As of January 2021, Black New Jerseyans represent about 61 percent of the state’s correctional population,[xliv] even though they make up about 15 percent of the state population.[xlv] In contrast, white New Jerseyans account for 20 percent of the correction population, while representing 64 percent of the state population.[xlvi]

Black New Jerseyans Are Incarcerated at Disproportionate Rates - Graph

Use of Force

The Movement for Black Lives (M4BL), arguably the largest social movement in recent U.S. history, brought increased attention to the murders of Black residents at the hands of the police and the role that the drug war plays in militarizing police forces, providing pretexts for police brutality.[xlvii]

What M4BL amplifies and what the data show are that police officers are more likely to use force on people of color than other populations. Broadly, use of force is contact that goes beyond what is usually required to make an arrest, including physical force such as striking, kicking, or tackling, and mechanical force, meaning the use of a weapon.[xlviii] Use of force is permitted under specific circumstances, such as in self-defense or in defense of another individual or group.[xlix] But here is where the problem lies: police officers do not receive uniform guidance about when situations necessitate use of force or how much force is appropriate.[l] This is true across the country and in the Garden State, making it difficult to determine police fault in excessive use of force incidents that result in injury or death.

As a result of this ambiguity, use of force has become routine and unchecked. In fact, the following data likely underestimate the magnitude of law enforcement violence given that comprehensive information on deaths, physical injuries, and frequency of encounters is limited and underreported.[li] Based on available New Jersey data, between October 2020 and February 2021, there have been over 5,000 documented incidents of police force across the state, or roughly 37 incidents per day.[lii] Of these incidents, at least 44 percent involved Black individuals, and 63.5 percent involved individuals that were documented as showing signs of being under the influence or having a mental illness.[liii]

Far too often, police encounters result in not only injury but in death. Since 2015, police in the U.S. have shot and killed more than 5,000 people.[liv] Black people were killed at more than twice the rate of white people.[lv] In New Jersey, there have been 86 known deaths at the hands of police since 2015, with 14 of the people killed documented as showing symptoms of mental illness at the time of their death.[lvi] Almost half, 48 percent, of those killed were Black.[lvii] Consequently, New Jersey has one of the highest racial disparities among victims of police violence in the country: Black New Jerseyans are killed at a rate 8.3 times higher than white residents as compared to the national rate of three times higher.[lviii]

Almost Half of All New Jerseyans Killed By Police since 2015 are Black - Graph

Civilians are not the only ones that can be harmed by the current system of policing. These same policies put police officers into situations for which they are not sufficiently trained or trained at all. For instance, police are often the first responders to calls for mental health emergencies, even though they are not trained mental health professionals. Because of this, there is increased risk of escalation and tragic results, contributing to the stigma, shame, fear, and criminalization of mental illness.[lix] Looking at training more broadly, police in New Jersey can work for 18 months before receiving even full basic police training.[lx]

Many instances of police violence stem from calls where an armed police response may not be the most appropriate. Roughly 58 percent of all police killings escalated from nonviolent situations, such as traffic stops, mental health checks, and domestic disputes.[lxi] One-fourth of all fatal police encounters involve individuals who have a mental illness, making those with mental illness more likely to be killed by a police officer.[lxii]

Despite the high stakes of police encounters, there is little oversight. Police oversight and accountability mechanisms are internal, with investigations often conducted by close colleagues, leaving room for bias. In other words, officers “police” themselves, and based on how police departments are structured historically, there is little guidance, a lack of external oversight, and few consequences.[lxiii] Of the 86 total killings by police in New Jersey between 2015 and 2021, only four officers have been charged with wrongdoing.[lxiv] Of those killed, 14 percent were documented as having no weapon whatsoever, and fewer than half were recorded as having a gun.[lxv]

Further, internal investigations rarely rule in favor of people who file civilian complaints, showing a lack of accountability for police violence more broadly. For example, from 2016 to 2018, the Elizabeth police department received 47 complaints accusing officers of excessive force, wrongful arrest, or other crimes.[lxvi] The internal investigations did not substantiate a single claim despite Elizabeth police officers’ using force at a rate that is 90 percent higher than other departments in New Jersey, including those in larger cities.[lxvii]

In sum, the history of policing in the United States shows a system conceived to surveil and control Black people, and one that has continued to do so well beyond the Civil Rights era of the 1960s. The result has been, at best, ineffectual policing for specific and delicate individual and communal crises and, at worst, active harm against the communities being policed, particularly communities of color. This system is fed by budgetary appropriations at multiple levels.

The Budget

Municipal budgets are much more than line items of revenues and expenses. Where investments are made — and where they are not — highlights what leaders value most. To better inform the ongoing and future debates about police budgets in New Jersey, this section analyzes the police budgets for the urban City of Elizabeth and the more rural Gloucester County. These case studies highlight the similarities and differences between two distinct areas, creating the opportunity to explore flexible recommendations that will not be one-size-fits-all. It also shows that investments in police departments are significant across the state, not just in densely populated areas. Please note that, from here on out, references to Gloucester County or Gloucester refer to the combined police budgets and departments of all of the municipalities within the county, as well as the Gloucester County Sheriff’s Office.

The budgetary analysis that follows shows both Gloucester County and Elizabeth spend more on policing than other vital municipal departments, such as health and human services. In Elizabeth, the police budget is over five times that of the Department of Health and Human Services. In Gloucester County, the combined county and municipal police budgets are more than two and a half times that of all the funding for health and human services departments in the county. Gloucester County allocates an average of 20 percent of their total municipal budgets to police, and Elizabeth allocates 19 percent. This is likely an underestimate, as it does not include pension payments, health benefits, and dollars that flow to police departments from other sources such as state and federal grant programs and other departments for police services.

Police Budgets 101

Police budgets in New Jersey vary from municipality to municipality, but they all have basic line-items. A New Jersey police budget typically includes funding for:

  • Salaries and wages, including a set amount for anticipated overtime compensation
  • Non-personnel costs including equipment maintenance, office supplies, travel, and training

 

The following are not included in police budgets, but account for significant expenses:

  • Overtime compensation funded through grant programs[lxviii]
  • Pension payments made by a municipality
  • Health benefits and insurance costs paid by a municipality
  • Most equipment upgrades or acquisitions, often found in capital improvements sections of municipal budgets
  • Compensated absences, like unused paid time off that can be cashed out upon departure from the department, paid from a special reserve fund
  • Additional funding and equipment to police departments from other sources, such as state and federal grant programs

 

City of Elizabeth

The City of Elizabeth is New Jersey’s fourth most populous municipality with more than 137,000 residents.[lxix] Roughly 20 percent of Elizabeth’s residents identify as Black, higher than the state’s 15 percent average.[lxx] The city also has almost double New Jersey’s poverty rate at nearly 18 percent, with a median household income of about $48,331 a year.[lxxi] As of 2021, the Elizabeth Police Department employs 365 law enforcement officers.[lxxii]

Police Appropriations

Elizabeth’s municipal police budget, which largely is allocated to base wages, is about $52 million, or about 19 percent of the city’s total budget, for Fiscal Year (FY) 2021.[lxxiii] The total budget includes $1.75 million for police overtime pay,[lxxiv] roughly $5,000 per officer.[lxxv] Over the last three years, Elizabeth’s police budget has increased by an average of 9.2 percent, or $1.8 million, each year.[lxxvi]

However, with pensions, health benefits, employment taxes, and other benefits included, Elizabeth’s police appropriations are about $69.7 million.[lxxvii] This is $507 per capita, and 25 percent of Elizabeth’s total budget.

The City of Elizabeth Spends $70 Million on Police Annually

In addition to pensions and health benefits, the municipality added additional funding for Elizabeth’s police department in FY 2021, such as:

  • Compensated Absences: The city added $1.0 million to a fund that pays for compensated absences, or sick days, for all qualified municipal employees.[lxxviii] The current liability, or what the municipality potentially owes, for police officers is $9.8 million.[lxxix] Moreover, if a police officer takes no sick days for an entire year, they get a bonus of $1,500 with an additional $1,000 the following year if they can keep it up.[lxxx] These bonuses may have to be taken from elsewhere in the budget or bonded if a large number of officers qualify at the same time.
  • Capital Improvements: Elizabeth also authorized $4.4 million in capital improvements amidst the global pandemic to upgrade the Elizabeth Police Department’s gym, showers, bathrooms, and conference room.[lxxxi] $200,000 of this will be taken from the capital improvement fund and the remaining $3.8 million will be taken on as debt. Capital improvement funding generally comes from a broader municipal fund to support large infrastructure projects that are expected to be paid for over multiple years. Examples include acquisition, construction, improvement and/or renovation of buildings, roads, utilities, or structures and acquisition or development of land.[lxxxii] Capital projects can also include acquisitions of major equipment, which is how many police departments receive funding for new technology.

Additional Revenue

In addition to local revenue, New Jersey police departments receive funds from federal, state, and private grants. For example, Elizabeth received about $260,300 in state and federal grants for programs and resources in FY 2020, per the latest available data.[lxxxiii] The bulk of the grants — 84 percent — went to police enforcement of the drug war.

The Elizabeth Police Department received $218,200 from the Byrne Grant (also known as JAG) in FY 2020. JAG is a drug war-era federal program that provides grants for police resources to be used at the discretion of the police department. JAG is linked to increased arrest rates and racial disparities in policing, despite attempts to rectify such disparities.[lxxxiv] For every $100 increase in Byrne Grant funding since 1987, drug-related arrests increased by roughly 22 per 100,000 white residents and by 101 arrests per 100,000 Black residents.[lxxxv]

The remaining grant funds, roughly 19 percent, went to body armor purchases for police officers and Drunk Driving Enforcement, which consists of overtime pay for increased numbers of police in certain locations and incentives for ticket writing. Additionally, police departments are entitled to $95 of the $100 surcharge resulting from a drunk driving conviction in their community, per New Jersey State Statute 39:4-50.8.[lxxxvi]

Most Grants to the Elizabeth Police in 2020 Went to Drug War Enforcement

In addition to the funding listed above, the Elizabeth police department can also receive funding from Municipal Alliances, which are local organizations composed of various stakeholders, including teachers, school staff, social service agency representatives, government officials, and police. Funding is collected from fines and fees from drug offenses to be used to fund programs at the discretion of the Alliance.[lxxxvii] Union County’s Municipal Alliances, the county in which Elizabeth is located, typically uses some of these funds for programs run by police, such as Drug Abuse Resistance Education (D.A.R.E.), Law Enforcement Against Drugs (L.E.A.D.), and Cops in Schools, all of which provide dollars to police departments.[lxxxviii] In FY 2020, Elizabeth’s Municipal Alliance received about $57,000 dollars.[lxxxix]

Municipal Alliances are also responsible for the passage of over 1,000 local private property ordinances across the state that add new punishments related to drug and alcohol use, indirectly funneling money to police departments by increasing arrest rates and police activity.[xc] Moreover, programs like D.A.R.E. that promote abstinence have not curbed drug use.[xci]

Police Budget in Context

Elizabeth’s municipal police budget of $52 million, about $379 per capita, is 5.7 times greater than the city’s Department of Health and Human Services’ (DHS) $9.1 million budget.[xcii] The appropriations for the entire DHS equate to a mere $66 per capita.[xciii]

As of FY 2021, DHS employs 96 full-time and 44 part-time employees in numerous divisions and offices.[xciv] The city’s DHS provides various programs and services, including opportunities for rental assistance, help with prescription drug payments for struggling residents, and burial assistance for those who cannot afford funerals for their loved ones.[xcv] They also provide free health clinics, vaccines, and screenings for the under- or uninsured through the Public Health Nurses Division.[xcvi] Between FY 2020 and FY 2021, the police budget increased by $2.8 million (or 5.8 percent), while the funding for DHS decreased by $401,000 (or 4.2 percent).[xcvii] This is an increase of approximately $20 per capita for police.

Despite increased police funding, Elizabeth has not seen a significant increase in police performance or public safety. A standard measure of police performance is the clearance rate, which is the percentage of crimes that result in police locating and bringing charges against a likely suspect. In 2020, the latest available data states that the Elizabeth Police Department had a clearance rate of 13.2 percent,[xcviii] a rate that has remained stable since at least 2017, despite increases in funding.[xcix]

Gloucester County

Gloucester County is a predominately white, more-rural county that is home to roughly 300,000 people.[c] The county is comprised of 24 municipalities which vary tremendously in population size, density, demographic diversity, and income levels. These municipalities have a total of 19 local police departments, as well as a county-level sheriff’s office.[ci]

Police Appropriations

In FY 2020, the 19 local police departments and county-level sheriff’s office in Gloucester County received more than $77 million in funding, according to the most recent data available.[cii] This averages $257 per capita,[ciii] with the average municipal police budget at about 20 percent of its respective municipal budget, ranging from about 14 percent to 25 percent across municipalities. Please note that the police budget totals below do not include payments made for pensions and other benefits for police officers.

Police Budgets in Gloucester County, by Municipality

Additional Revenue

In addition to local revenue, law enforcement agencies in Gloucester County received revenue through a variety of grant programs in FY 2019. Notably, the “Click It or Ticket” (CIOT) and the “Drive Sober or Get Pulled Over” (DSOGPO) programs provide grant funding for an increased, “highly-visible” police presence.[cv] Specifically, the programs fund overtime enforcement to improve the “threat of a traffic ticket.”[cvi] In addition to the unavoidable time spent on court appearances or paperwork, overtime is used to make police more visible by putting additional officers in certain targeted areas, especially during holidays. Each campaign spans approximately two weeks per year, during which police track how many citations they were able to issue.

In FY 2019, Gloucester County’s police departments received over $79,000 and issued 4,163 citations in a total of just over four weeks through these programs.[cvii] All of the county’s police departments participated except Franklin.[cviii]

Programs like these engage in a strategy known as “proactive policing,” specifically “hot spots” policing,[cix] which involves preemptively sending officers to targeted areas to deter and reduce crime.[cx] However, the increased volume of police results in more ticketing and traffic stops, and a higher frequency of interactions between police and civilians in targeted locations, which are typically areas with higher rates of Black and brown people and poverty.[cxi] Increased police stops and ticketing also significantly increases the possibility of escalation. In 2020, nearly 11 percent of all U.S. police killings began with a routine traffic stop.[cxii]

Other sources of police funding in Gloucester County include:

  • School boards using education-dedicated dollars to pay for police presence at schools, School Resource Officers (SROs), which provided about $1 million to Gloucester County police departments in FY 2019
  • Grants from private companies or institutions: In FY 2020, Walmart gave Monroe’s police department and community affairs $6,073 in the form of a “Community Grant.”[cxiii]
  • State and federal programs that pay for or provide police resources: For example, in FY 2019, municipalities in Gloucester County received about $100,000 in state and federal grants for bulletproof vests and body armor alone.[cxiv]

 

The chart below shows the dollars Gloucester County received in FY 2019, the most recent comprehensive data, that were authorized to fund policing.[cxv] These funds, totaling over $5.4 million, are outside of the dedicated funds in the police budgets.[cxvi]

Additional Police Revenue in Gloucester County in FY 2019

Additionally, various Municipal Alliances in Gloucester County received a total of $247,428 in funding in FY 2019.

As noted in the analysis of Elizabeth’s budget, police departments also have access to new technology or equipment through capital improvement funding. Capital improvement funds are set aside to be used for parks, municipal buildings, and other community improvements. Typically, these projects take years to implement and, as such, are funded over a number of years. Some notable projects for police departments in Gloucester County include:

  • $70,860 for tasers, long guns, and new radar for police vehicles for Monroe, in FY 2020.[cxvii] $3,543 will be taken from the capital improvement fund while the remaining $67,317 is authorized to be taken on as debt.
  • $133,622 for police equipment for Mantua in FY 2020.”[cxviii] $6,681 will be taken from the capital improvement fund while the remaining $126,941 is authorized debt.
  • $956,996 for various police projects in Washington Township, including body cameras, ballistic shields, vehicles, and other expenses noted in the budget as “technology” in FY 2019.[cxix] $47,850 was taken from the capital improvement fund while the remaining $909,147 was authorized debt.

 

Police Budget in Context

Gloucester County invests a high proportion of its budgets for policing, and the opportunity costs of this investment are significant. In FY 2020, total police appropriations were more than two and a half times that of total health and human services (HHS) budgets across the county, with police appropriations averaging about $257 per capita and HHS averaging $99 per capita.[cxx]

Police Appropriations Per Capita are over Tow and Half Times That of Health and Human Services

As the table below shows, Gloucester County municipalities with the largest share of their budgets going to police departments tend to increase funding for police while funding for health and human services remains stagnant or decreases.[cxxi]

Gloucester County Municipalities with Largest Police Budgets Did Not Invest Comparable Funding to Health and Human Services in FY 2020

Despite increased funding and resources, Gloucester County police departments reported a clearance rate of 25 percent on average in 2020,[cxxii] meaning that of the crimes reported, only 25 percent of them resulted in police locating and charging likely suspects. In 2017, the rate was just over 37 percent, since then it has remained stagnant with an average of 25 percent.[cxxiii]

A Way Forward: Policy Recommendations

The current system of public safety relies on a model of justice that disproportionately funds and prioritizes policing, rather than communities. This model continues to target Black residents through racial profiling, aggressive policing, and mass incarceration.[cxxiv] This also forces police officers to handle issues for which they often are not trained, such as in mental health, domestic violence, and substance use disorder.[cxxv]

This section offers two main strategies that must be taken together to provide safer and healthier communities.

Invest in Communities

Although local governments have historically used policing and incarceration as primary crime reduction strategies, methods to strengthen communities and address the structural roots of crime that have proved more effective do exist. One major way to promote safe and healthy communities and get to the root cause of crime is to invest in health and human services. Broader investments in communities will also be required. Some examples include investments in:

Health care
There is a strong correlation between health care access and involvement in the criminal justice system. Research from the City of Camden demonstrates a significant relationship between high use of hospital emergency departments and frequent arrests, suggesting that a holistic approach to health care may reduce arrest rates.[cxxvi] Moreover, broader access to health care, especially substance use disorder treatment, is consistently linked to crime reduction.[cxxvii] Across the U.S., increased health care access reduced violent crime by 5.8 percent and property crime by 3 percent, with an estimated savings of $13 billion to taxpayers due to crime reduction.[cxxviii]

Neighborhood restoration
With community support and input, investments in parks, green spaces, and the restoration of blighted or vacant land can have positive outcomes on public safety. Increasing access to green spaces is shown to reduce violent crime[cxxix] and improve health outcomes for residents.[cxxx] Restoring vacant lots is also shown to reduce violence in urban areas.[cxxxi] Maintenance of the physical environment in a community also strengthens the social environment, fostering a sense of connectedness that creates a willingness to intervene and social contracts that have been shown to prevent crime.[cxxxii]

Quality early childhood education
Early childhood education is shown to have positive outcomes for children and parents by providing stable child care and increasing access to other opportunities. Access to early childhood education correlates with increased academic achievement, stronger parent-child relationships, and a significant reduction in the likelihood of being charged with a crime.[cxxxiii]

Community centers and nonprofits
An increased number of local organizations actively working to reduce violence and strengthen communities have demonstrated positive outcomes, including crime reduction. For example, drawing on a panel of 264 cities spanning more than 20 years, every ten additional organizations focusing on crime and community life leads to a 9 percent reduction in the murder rate, a 6 percent reduction in the violent crime rate, and a 4 percent reduction in the property crime rate, a 2017 study found.[cxxxiv]

Community-based violence interruption programs
Informal and formal social networks are effective crime prevention tools. That’s because building strong community relationships and mutual trust among residents has been shown to reduce crime.[cxxxv] Community-based violence interruption programs incorporate this knowledge by having trusted neighbors and community members partnered with trained staff, and some programs have proven effective in preventing violence.[cxxxvi] The Newark Community Street Team (NCST) can serve as a model for this kind of program in New Jersey.[cxxxvii]

Invest In Alternative Response Teams

Police are first responders to situations for which they don’t have sufficient training, such as in areas of domestic violence, mental health, substance use disorders, and housing insecurity. These encounters between the police and people in crisis too often end in arrest, violence, or emergency room transport, and without needed referral to long-term support.

Thankfully, there are alternative models to support people in crisis that do not center policing.

Some of these models include teams of health care professionals and social workers that respond to calls for service instead of police. Other models include a social worker and a police officer responding in tandem.

These models are not new. Beginning at least 40 years ago, research has consistently shown the effectiveness of alternative response teams.[cxxxviii] For instance, a three-year study from 1974 looked at an alternative service model involving a team of police and social workers whose objective was crisis intervention, not arrest. There was a marked reduction in referrals to court and lowered recidivism rates.[cxxxix] It was also noted in these studies that there was a need for community services among the recipients of interventions, such as access to stable housing, employment service, and an emergency petty cash fund.[cxl]

Today, many localities are exploring alternative models based on successful models (see box below). Ithaca, New York is considering replacing the city’s entire 63-officer, $12.5 million-per-year department with a “Department of Community Solutions and Public Safety.”[cxli] This department would include armed “public safety workers” and unarmed “community solution workers,” all of whom will report to a civilian director instead of a police chief.[cxlii] Further, California is considering the C.R.I.S.E.S. Act, which would provide funding to community-based emergency response teams to serve as alternatives to police for a wide range of issues, including domestic disputes and mental health crises.[cxliii]

There is also evidence that police departments are open to alternative models so they can be more effective and increase community trust. In Minnesota, 69 percent of police chiefs surveyed across 40 different departments reported that collaboration with social workers or other mental health service providers would reduce avoidable casualties and build or increase police-community trust.[cxliv]

Examples of Successful Programs

Communities around the country have successfully implemented crisis response teams that serve as an alternative to and work in tandem with the police. These programs can serve as examples of how to reimagine public safety through person-centered responses.

CAHOOTS

The Crisis Assistance Helping Out on the Streets (CAHOOTS) program, serving Eugene, Oregon since 1989, provides an innovative community-based public safety system that deploys crisis response teams. Each team consists of a medical professional and a crisis worker with training in mental health interventions.[cxlv]

According to the most recent program evaluation, CAHOOTS diverted 5 to 8 percent of 911 calls from the Eugene Police Department between January 1, 2019 and December 31, 2019.[cxlvi] This means that up to 8 percent of the calls placed to dispatch that would normally involve police being sent to the scene result in no police or police resources arriving on the scene at all.[cxlvii] If calls for service directly to CAHOOTS are taken into account rather than just 911 calls, the diversion rate could be as high as 20 percent.[cxlviii]

The CAHOOTS program saved the City of Eugene an estimated average of $8.5 million in annual public safety spending between 2014 and 2017.[cxlix]

STAR

In 2020, Denver launched the Support Team Assisted Response (STAR) pilot program closely modeled on CAHOOTS, where specific kinds of 911 calls were approved for an alternative, non-police response. Calls that involved injuries, weapons, threats, or any other types of violence were excluded.

Data gathered during the pilot period revealed that the STAR program could reduce Denver police calls by almost 3 percent.[cl] Of the calls the STAR team responded to, 61 percent of individuals served were identified as having a mental health condition, and 41 percent of individuals served were transported to other support sites such as shelters or mental health crisis centers.[cli] These individuals were able to receive specialized care or transportation to needed service providers through STAR. Due to the positive response, the City of Denver plans to expand the STAR program in 2021.[clii]

Newark Community Street Team

The Newark Community Street Team (NCST) is a trauma-informed approach to public safety that centers health and prevention in Newark, New Jersey. The program began in 2015 with the support of Mayor Ras Baraka. NCST provides Safe Passage at schools, operates a Trauma Recovery Center, and has a robust victim services program, including a partnership with University Hospital’s Hospital-Based Violence Intervention Program. NCST also engages in High Risk Intervention (HRI) in Newark.[cliii] NCST is also currently leading efforts to create a harm reduction centered alternative emergency response to overdose in Newark, building off its community-based model of care and intervention.

The HRI team responds to reports of violence from the community or law enforcement.[cliv] HRI connects those involved to supportive counseling, crisis intervention assessment and mediation, and referrals to outside resources to restore peace and avoid arrest and incarceration.[clv] From 2016 to 2020, there have been record-low homicide rates in Newark.[clvi] This trend correlates with the existence of the NCST.[clvii] In 2018, Mayor Baraka credited NCST with not only the reduction of crime but also increased economic development.[clviii] The NCST offers a model for what decreased police intervention could look like in New Jersey.

Conclusion

New Jersey’s local governments, from counties to urban centers to small municipalities,  spend a large share of their budgets on policing in the name of public safety. However, evidence shows that many policing policies and outcomes harm civilians, especially Black residents.

New Jersey has the opportunity to be a leader in the fight for equity and justice. But to do so, the state must respond to and invest in the unique needs of historically marginalized communities by exploring alternative models to policing. These models, like police departments, may look a little different in every community. Elizabeth would likely need their own response team, while municipalities across Gloucester County could share services. Yet, whatever the model, the throughline remains a directive to invest in resources like mental health counseling, affordable housing, and employment opportunities, to build and restore communities and center harm reduction while developing real police accountability measures.


End Notes

[i] USA Today. (2020). Tracking protests across the USA in the wake of George Floyd’s death. https://www.usatoday.com/in-depth/graphics/2020/06/03/map-protests-wake-george-floyds-death/5310149002/

[ii] Geller, A., Fagan, J., Tyler, T., & Link, B. G. (2014). Aggressive policing and the mental health of young urban men. American Journal of Public Health, 104(12), 2321–2327. https://doi.org/10.2105/AJPH.2014.302046

[iii] American Public Health Association  (APHA). (2018). Addressing Law Enforcement Violence As A Public Health Issue. https://www.apha.org/policies-and-advocacy/public-health-policy-statements/policy-database/2019/01/29/law-enforcement-violence

[iv] American Public Health Association (APHA). (2020). Mass Incarceration Supplement. https://www.apha.org/news-and-media/news-releases/ajph-news-releases/2020/mass-incarceration-supplement

[v] Data obtained from Washington Post Segregation Database found: Williams & Emamdjomeh. (2018). America is more diverse than ever — but still segregated. Washington Post. https://www.washingtonpost.com/graphics/2018/national/segregation-us-cities/

[vi] All appropriations in this report have been adjusted to 2021 dollars.

[vii] Walker, S. (1980) Popular Justice: A History of American Criminal Justice. Pg. 20. New York, NY: Oxford University Press.

[viii] Hasset-Walker. (2021). How Your Start is How You Finish? The Slave Patrol and Jim Crow Origins of Policing. Human Rights Magazine, The American Bar Association. https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/civil-rights-reimagining-policing/how-you-start-is-how-you-finish/

[ix] Potter. (2003). The History of Policing in the United States. EKU School of Justice Studies. Pg. 3. https://plsonline.eku.edu/sites/plsonline.eku.edu/files/the-history-of-policing-in-us.pdf

[x] Hansen. (2019). Slave Patrols: An Early Form of American Policing. National Law Enforcement Museum. https://nleomf.org/slave-patrols-an-early-form-of-american-policing/ /

[xi] Lepore. (2020). The Invention of Police. The New Yorker.  https://www.newyorker.com/magazine/2020/07/20/the-invention-of-the-police

[xii] Ibid.

[xiii] Hasset-Walker. (2021). How Your Start is How You Finish? The Slave Patrol and Jim Crow Origins of Policing. Human Rights Magazine, The American Bar Association. https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/civil-rights-reimagining-policing/how-you-start-is-how-you-finish/

[xiv] Walker, S. (1980) Popular Justice: A History of American Criminal Justice. Pg. 20. New York, NY: Oxford University Press.

[xv] Luxenberg, S. (2019) The Jim Crow Car: The North, the South and the forgotten origins of racial separation. The Washington Post. https://www.washingtonpost.com/news/magazine/wp/2019/02/20/feature/the-forgotten-northern-pre-civil-war-origins-of-jim-crow/. There is also a book on this subject: https://wwnorton.com/books/separate/

[xvi] Potter. (2003). The History of Policing in the United States. EKU School of Justice Studies. Pg. 3. https://plsonline.eku.edu/sites/plsonline.eku.edu/files/the-history-of-policing-in-us.pdf

[xvii] Ibid. Pg. 3-5

[xviii] Robinson, M. (2017). From the Slave Codes to Mike Brown: the brutal history of African Americans and law enforcement. USAPP– American Politics and Policy. Pg. 1-2. http://eprints.lse.ac.uk/85472/1/usappblog-2017-10-05-from-the-slave-codes-to-mike-brown-the-brutal.pdf

[xix] Goldberg, D. (2016) The Retreats of Reconstruction: Race, Leisure, and the Politics of Segregation at the New Jersey Shore. Fordham University Press.

[xx] Rojas & Atkinson. (2017). Five Days of Unrest that Shaped and Haunted Newark. New York Times. https://www.nytimes.com/2017/07/11/nyregion/newark-riots-50-years.html

[xxi] Ibid.

[xxii] Ibid.

[xxiii] Alexander. (2010). The New Jim Crow: Mass Incarceration in the Age of Colorblindness. The New Press.

[xxiv] Nixon. (1971). Special Message to the Congress on Drug Abuse Prevention and Control. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. https://www.presidency.ucsb.edu/documents/special-message-the-congress-drug-abuse-prevention-and-control

[xxv] Cooper. (2015). War on Drugs Policing and Police Brutality. Substance use & misuse, 50(8-9), 1188–1194. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4800748/#R27

[xxvi] Lynch, M. (2012). Theorizing the role of the “war on drugs” in US punishment. Theoretical Criminology. Pg. 16. https://socialecology.uci.edu/sites/socialecology.uci.edu/files/users/lynchm/tc_war_on_drugs_final.pdf ; Urban Institute. (2020). Criminal Justice Expenditures: Police, Corrections, and Courts. https://www.urban.org/policy-centers/cross-center-initiatives/state-and-local-finance-initiative/state-and-local-backgrounders/criminal-justice-police-corrections-courts-expenditures#Question3Police

[xxvii] Cooper. (2015). War on Drugs Policing and Police Brutality. Substance use & misuse, 50(8-9), 1188–1194. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4800748/#R27

[xxviii] National Research Council. (2014). The Growth of Incarceration in the United States: Exploring Causes and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/18613. Pg. 34-36. https://www.nap.edu/read/18613/chapter/4#34

[xxix] Ibid. Pg. 46-47.

[xxx] Wagner & Bertram. (2020) “What percent of the U.S. is incarcerated?” (And other ways to measure mass incarceration). Prison Policy Initiative. https://www.prisonpolicy.org/blog/2020/01/16/percent-incarcerated/

[xxxi] National Research Council. (2014). The Growth of Incarceration in the United States: Exploring Causes and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/18613. Pg. 34-36. https://www.nap.edu/read/18613/chapter/4#34

[xxxii] National Research Council. (2014). The Growth of Incarceration in the United States: Exploring Causes and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/18613. Pg. 58. https://www.nap.edu/read/18613/chapter/4#34

[xxxiii] Ibid.

[xxxiv] Borden, T. (2016)  Every 25 Seconds: The Human Toll of Criminalizing Drug Use in the United States. Human Rights Watch. Pg. 4. https://www.hrw.org/report/2016/10/12/every-25-seconds/human-toll-criminalizing-drug-use-united-states

[xxxv] U.S. Census Bureau. (2019). https://www.census.gov/quickfacts/fact/table/US/RHI225219

[xxxvi] Federal Bureau of Prisons. (2021) Inmate Statistics. https://www.bop.gov/about/statistics/statistics_inmate_race.jsp

[xxxvii] Baum. (2016). Legalize It All. Harper’s Magazine. https://harpers.org/archive/2016/04/legalize-it-all/

[xxxviii] Walmsley, R. (2018) World Prison Population List: Twelfth Edition. Institute for Criminal Policy Research. Pg. 6. https://www.prisonstudies.org/sites/default/files/resources/downloads/wppl_12.pdf. Note that some countries may not report complete prison/detention lists.

[xxxix] FBI: UCR Crime in the United States 2019 data table. https://ucr.fbi.gov/crime-in-the-u.s/2019/crime-in-the-u.s.-2019/tables/table-29

[xl] NJPP calculation using FBI UCR data for all non-traffic arrests and arrests for “Drug Abuse Violations — Grand Total” reported by participating New Jersey law enforcement agencies, 1986 and 2019. Available at https://crime-data-explorer.app.cloud.gov/pages/home.

[xli] Mellor. (2021). A War on Us: How Much New Jersey Spends Enforcing the War on Drugs. New Jersey Policy Perspective. https://www.njpp.org/publications/report/a-war-on-us-how-much-new-jersey-spends-enforcing-the-war-on-drugs/ ; NJPP calculation using FBI UCR data for all non-traffic arrests and arrests for “Drug Abuse Violations — Grand Total” reported by participating New Jersey law enforcement agencies, 1986 and 2019. Available at https://crime-data-explorer.app.cloud.gov/pages/home.

[xlii] NJPP calculation using FBI UCR data for all non-traffic arrests and arrests for “Drug Abuse Violations — Grand Total” reported by participating New Jersey law enforcement agencies, 1986 and 2019. Available at https://crime-data-explorer.app.cloud.gov/pages/home.

[xliii] Substance Abuse and Mental Health Services Administration. (2018). National Survey on Drug Use and Health. https://www.samhsa.gov/data/sites/default/files/cbhsq-reports/NSDUHDetailedTabs2018R2/NSDUHDetailedTabs2018.pdf

[xliv] State of New Jersey Department of Corrections. (2021) Offender Statistics. p.36. https://www.state.nj.us/corrections/pdf/offender_statistics/2021/Entire%20Offender%20Characteristics%202021.pdf

[xlv] Data for New Jerseyans that identify as “Black or African American alone or in combination,” (2020). Census Bureau.  https://www.census.gov/library/visualizations/interactive/race-and-ethnicity-in-the-united-state-2010-and-2020-census.html Note that Census data for Black or African American alone or in combination includes Black/African American residents identifying as Hispanic, whereas the corrections data splits Hispanic out as a separate category.

[xlvi] Ibid. This includes white New Jerseyans that identify as more than one race or ethnicity.

[xlvii] Mellor. (2021). A War on Us: How Much New Jersey Spends Enforcing the War on Drugs. New Jersey Policy Perspective. Pg. 4. https://www.njpp.org/publications/report/a-war-on-us-how-much-new-jersey-spends-enforcing-the-war-on-drugs/ ;

Movement for Black Lives. “End the War on Drugs.” Policy Platform. https://m4bl.org/policy-platforms/end-the-war-on-drugs/

[xlviii] Office of the Attorney General. (2020). Use of Force Policy. The State of New Jersey. Pg. 6. https://www.nj.gov/oag/force/docs/UOF-2020-1221-Use-of-Force-Policy.pdf

[xlix] National Institute of Justice. Overview of Police Use of Force. (2020). https://nij.ojp.gov/topics/articles/overview-police-use-force

[l] University of Chicago Law School – Global Human Rights Clinic. (2020). Deadly Discretion: The Failure of Police Use of Force Policies to Meet Fundamental International Human Rights Law and Standards. Global Human Rights Clinic. Pg. 2 https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1014&context=ihrc ;

US Commission on Civil Rights (2018). Police Use of Force: An Examination of Modern Policing Practices. Pg. 15. https://www.usccr.gov/files/pubs/2018/11-15-Police-Force.pdf

[li] American Public Health Association  (APHA). (2018). Addressing Law Enforcement Violence As A Public Health Issue. https://www.apha.org/policies-and-advocacy/public-health-policy-statements/policy-database/2019/01/29/law-enforcement-violence

[lii] NJPP analysis of AG’s Use of Force Database.

[liii] Ibid.

[liv] The Washington Post. Fatal Force Database (2021). https://www.washingtonpost.com/graphics/investigations/police-shootings-database/?nid

[lv] The Washington Post. Fatal Force Database (2021). https://www.washingtonpost.com/graphics/investigations/police-shootings-database/?nid

[lvi] NJPP analysis of The Washington Post. Fatal Force Database (2021). https://www.washingtonpost.com/graphics/investigations/police-shootings-database/?nid  & Mapping Police Violence Database (2021). https://mappingpoliceviolence.org/

[lvii] Ibid.

[lviii] Data from Mapping Police Violence: https://public.tableau.com/profile/ssinyangwe#!/vizhome/PoliceViolenceperPD/PoliceKillingsbyState

[lix] Gur, O. (2010). Persons with mental illness in the criminal justice system: Police interventions to prevent violence and criminalization. Journal of Police Crisis Negotiations. Pg. 3. 17-18. https://doi.org/10.1080/15332581003799752

[lx] The Institute for Criminal Justice Training Reform. (2021).

https://www.trainingreform.org/state-police-training-requirements

[lxi] Graph from an analysis of The Washington Post. Fatal Force Database (2021). https://www.washingtonpost.com/graphics/investigations/police-shootings-database/?nid & Mapping Police Violence Database (2021). https://mappingpoliceviolence.org/ – data is between 1/2015 and 4/2021. Note that there may be variation across the reporting of domestic disputes that could classify some involving assault as nonviolent.

[lxii] Fuller, Lamb, Biasatti, & Snook. (2015). Overlooked in the Undercounted: The Role Of Mental Illness In Fatal Law Enforcement Encounters. Pg. 1. Treatment Advocacy Center. https://www.treatmentadvocacycenter.org/storage/documents/overlooked-in-the-undercounted.pdf

[lxiii] ACLU of New Jersey. (2013). The Crisis Continues Inside Internal Affairs. https://www.aclu-nj.org/files/3413/6059/3876/ACLU_NJ_Internal_Affairs.pdf ;

Reilly. (2015). Here’s What Happens When You Complain to Cops About Cops. Huffpost. https://www.huffpost.com/entry/internal-affairs-police-misconduct_n_5613ea2fe4b022a4ce5f87ce

[lxiv] NJPP analysis of The Washington Post. Fatal Force Database (2021). https://www.washingtonpost.com/graphics/investigations/police-shootings-database/?nid & Mapping Police Violence Database (2021). https://mappingpoliceviolence.org/ – data is between 1/2015 and 4/2021.

[lxv] Ibid.

[lxvi] Sullivan & Everett. (May 2019). Residents say this troubled N.J. police department ignores excessive force complaints. Records reveal it hasnʼt upheld a case in years. NJ.com. https://www.nj.com/politics/2019/05/residents-say-this-troubled-nj-police-department-ignores-excessive-force-complaints-records-show-it-hasnt-upheld-a-case-in-years.html

[lxvii] Ibid.

[lxviii] Police get additional overtime compensation from private citizens and companies for a variety of reasons, including monitoring the street during construction projects or during special events. These dollars would not be accounted for in the municipal budget.

[lxix] New Jersey Demographics, data linked to US Census. https://www.newjersey-demographics.com/cities_by_population

[lxx] U.S. Census Bureau. (2021). New Jersey. https://www.census.gov/quickfacts/fact/table/elizabethcitynewjersey,NJ/PST045219

[lxxi] Ibid. All dollars taken from the census data are 2021 dollars and have been adjusted from 2019 dollars.

[lxxii] Elizabeth Municipal Ordinance. 2.56.110 – Police Department Administration and Personnel. (2021). https://library.municode.com/nj/elizabeth/codes/code_of_ordinances?nodeId=TIT2ADPE_CH2.56PODE_ARTIIADPE_2.56.110ADPE

[lxxiii] NJPP analysis of FY2021 Adopted Budget

[lxxiv] NJPP analysis of Elizabeth’s FY 2021 User Friendly Budget personnel costs

[lxxv] Ibid. This calculation is based on the number of officers employed at the time, which was

[lxxvi] NJPP analysis of FY2018 – FY2021 Adopted Budgets. All dollars used in analysis are in 2021 dollars.

[lxxvii] NJPP analysis of total police personnel costs in Elizabeth’s FY2021 User Friendly Budget

[lxxviii] NJPP analysis of FY 2021 User Friendly Budget.

[lxxix] Ibid.

[lxxx] Contract Between City of Elizabeth and PBA4. Pg. 23. https://assets.documentcloud.org/documents/20472639/elizabeth-and-pba-loc-4-2018.pdf

[lxxxi] NJPP analysis of FY 2021 Adopted Budget – capital improvements

[lxxxii] Local Finance Board – Capital Budgets And Capital Improvement Programs. https://www.nj.gov/dca/divisions/dlgs/resources/rules_docs/5_30/njac_5304.pdf

[lxxxiii] NJPP analysis of FY 2021 Adopted Budget. In 2021 dollars. Note that these grants are not listed as “anticipated” for FY 2021.

[lxxxiv] Cox & Cunningham. (August 2017). Financing the War on Drugs: The Impact of Law Enforcement Grants on Racial Disparities in Drug Arrests. Pg. 26-27. http://dx.doi.org/10.2139/ssrn.3035640

[lxxxv] Ibid.

[lxxxvi] NJ Department of Law and Public Safety. (2021). Drunk Driving Enforcement Fund. https://www.nj.gov/oag/hts/grants/index.html

[lxxxvii] Governor’s Council on Alcoholism and Drug Abuse. https://gcada.nj.gov/alliance/

[lxxxviii] Union County, New Jersey. Municipal Alliance Programs. https://ucnj.org/departments/human-services/alliance-to-prevent-alcoholism-and-drug-abuse/municipal-alliances/municipal-alliance-programs/

[lxxxix] NJPP analysis of FY 2021 Elizabeth Adopted Budget.

[xc] Mellor. (2021). A War on Us: How Much New Jersey Spends Enforcing the War on Drugs. New Jersey Policy Perspective. https://www.njpp.org/publications/report/a-war-on-us-how-much-new-jersey-spends-enforcing-the-war-on-drugs/

[xci] West, S. L., & O’Neal, K. K. (2004). Project D.A.R.E. outcome effectiveness revisited. American Journal Of Public Health. https://doi.org/10.2105/ajph.94.6.1027

[xcii] NJPP analysis of FY 2021 Adopted Budget, In order to make an apples-to-apples comparison, this section compares the municipal police budget itself, without additional police revenue.

[xciii] This does not include federal or state dollars for programs like TANF or SSI. This comparison is salaries and wages and day-to-day operating expenses of the departments.

[xciv] NJPP analysis of FY 2021 Adopted Budget. Pg. 129. https://www.elizabethnj.org/ArchiveCenter/ViewFile/Item/75

[xcv] Department of Health and Human Services. City of Elizabeth. https://www.elizabethnj.org/323/Human-Services

[xcvi] Public Health Nursing. City of Elizabeth. https://www.elizabethnj.org/328/Public-Health-Nursing

[xcvii] NJPP analysis of FY 2021 Adopted Budget for Elizabeth

[xcviii] 2020 Uniform Crime Report. https://www.njsp.org/ucr/uniform-crime-reports.shtml

[xcix] NJPP analysis of 2017-2020 Uniform Crime Reports. Note clearance rates do not track important information like if the person who was arrested was the person who committed the crime, drug and other nonviolent crime, and many police initiated encounters.

[c] U.S. Census Bureau. (2019) Gloucester County, New Jersey. https://www.census.gov/quickfacts/fact/table/gloucestercountynewjersey,US/RHI225219

[ci] NJPP analysis of municipal documents. This does not include the Prosecutor’s Office, Department of Corrections, or Rowan University’s police department in Glassboro.

[cii] NJPP analysis of FY 2020 municipal budgets. This number does not include the budgets for the Department of Corrections or the County Prosecutor’s Office.

[ciii] This is an underestimate given that the dollars for shared service agreements are not included.

[civ] Newfield, Wenonah, South Harrison, Swedesboro, and National Park do not have their own police departments and pay a fixed sum to another department to share services. They are difficult to compare to the 19 individual departments. Thus, their absence from the chart.

[cv] New Jersey Department of Public Safety, Division of Traffic Safety. (2019). Drive Sober or Get Pulled Over. https://www.nj.gov/oag/hts/youlose.html

[cvi] New Jersey Department of Public Safety, Division of Traffic Safety. (2019). Click It Or Ticket. https://www.state.nj.us/oag/hts/clickitorticket.html

[cvii] “Click it or Ticket,” p. 12: https://www.state.nj.us/oag/hts/downloads/CIOT_2019_Final_Report.pdf; “Drive Sober or Get Pulled Over,” p. 11: https://www.nj.gov/oag/hts/downloads/2019_DSOGPO_Report-WEB.pdf

[cviii] Ibid.

[cix] National, A. O. S. E. A., Division, O. B. A. S. S., Committee, O. L. A. J., & Committee, O. P. P. E. O. (2018). Proactive policing : Effects on crime and communities. Pages 1-3. ProQuest Ebook Central

[cx] Ibid.

[cxi] American Public Health Association  (APHA). (2018). Addressing Law Enforcement Violence As A Public Health Issue. https://www.apha.org/policies-and-advocacy/public-health-policy-statements/policy-database/2019/01/29/law-enforcement-violence

[cxii] Mapping Police Violence Database (2021). https://public.tableau.com/app/profile/ssinyangwe/viz/PoliceViolenceperPD/KillingsbyEncounterType

[cxiii] NJPP analysis of municipal budget. More information for Walmart’s community grant program: https://walmart.org/how-we-give/local-community-grants. In 2021 dollars.

[cxiv] NJPP analysis of Gloucester County municipal budgets. In 2021 dollars.

[cxv] Dollars from the MAADA grants are eligible to be used in other ways aside from policing and not all these dollars go to police departments, but there is no explicit breakdown in the municipal budgets to illustrate what share of these dollars go to programs outside of police departments.

[cxvi] This includes dollars given to police departments from municipalities that do not have their own police department as a contribution for the shared service.

[cxvii] NJPP analysis of FY2020 Adopted Budget for Monroe, Gloucester County. In 2021 dollars. Total estimated costs are over $200,000, but the remainder is to be funded in future years.

[cxviii] NJPP analysis of FY2020 Adopted Budget for Mantua, Gloucester County. In 2021 dollars. Total estimated costs are over $640,000, but the remainder is to be funded in future years.

[cxix] NJPP analysis of FY2019 Adopted Budget for Washington Township, Gloucester County. In 2021 dollars.

[cxx] NJPP analysis of various FY2020 municipal and county budget documents for Gloucester County.

[cxxi] NJPP Analysis of FY 2019 and FY 2020 Adopted Budgets. All adjusted for 2021 dollars.

[cxxii] 2020 Uniform Crime Report. https://www.njsp.org/ucr/uniform-crime-reports.shtml

[cxxiii] NJPP analysis of 2017-2020 Uniform Crime Reports. Note clearance rates do not track important information like if the person who was arrested was the person who committed the crime, drug and other nonviolent crime, and many police initiated encounters.

[cxxiv] Sawyer, W. (2020). Ten key facts about policing: Highlights from our work. Prison Policy Initiative. https://www.prisonpolicy.org/blog/2020/06/05/policingfacts/

[cxxv] Stemen. (2017). The Prison Paradox: More Incarceration Will Not Make Us Safer. The Vera Institute. https://storage.googleapis.com/vera-web-assets/downloads/Publications/for-the-record-prison-paradox-incarceration-not-safer/legacy_downloads/for-the-record-prison-paradox_02.pdf

[cxxvi] Milgram, A., et al. (2018). Integrated Health Care and Criminal Justice Data — Viewing the Intersection of Public Safety, Public Health, and Public Policy Through a New Lens: Lessons from Camden, New Jersey. Harvard Kennedy School. https://www.hks.harvard.edu/sites/default/files/centers/wiener/programs/pcj/files/integrated_healthcare_criminaljustice_data.pdf

[cxxvii] Wen, H. (2017). The effect of Medicaid expansion on crime reduction: Evidence from HIFA-waiver expansions. Journal of Public Economics, 154, 67–94. https://doi.org/10.1016/j.jpubeco.2017.09.001;

Volger, J. (2017) Access to Health Care and Criminal Behavior: Short-Run Evidence from the ACA Medicaid Expansions. SSRN. https://onlinelibrary.wiley.com/doi/abs/10.1002/pam.22239

[cxxviii] Volger, J. (2017) Access to Health Care and Criminal Behavior: Short-Run Evidence from the ACA Medicaid Expansions. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3042267

[cxxix] Shepley, M., et al. (2019). The Impact of Green Space on Violent Crime in Urban Environments: An Evidence Synthesis. International Journal of Environmental Research and Public Health. https://doi.org/10.3390/ijerph16245119; Hoffman, A. (2020). Community service activities reducing hate crimes and extremism: A “green intervention” approach. Journal of Prevention & Intervention in the Community, 48(3), 207–209. https://doi.org/10.1080/10852352.2019.1625606

[cxxx] Kondo, M., Fluehr, J., McKeon, T., & Branas, C. (2018). Urban Green Space and Its Impact on Human Health. International Journal of Environmental Research and Public Health, 15(3), 445–. https://doi.org/10.3390/ijerph15030445

[cxxxi] Moyer, R., MacDonald, J., Ridgeway, G., & Branas, C. (2019). Effect of Remediating Blighted Vacant Land on Shootings: A Citywide Cluster Randomized Trial. American Journal of Public Health (1971), 109(1), 140–144. https://doi.org/10.2105/AJPH.2018.304752

[cxxxii] David-Ferdon, C. et al. (2016). A comprehensive technical package for the prevention of youth violence and associated risk behaviors. CDC. Pg. 31. https://www.cdc.gov/violenceprevention/pdf/yv-technicalpackage.pdf

[cxxxiii] Giovanelli, A., Hayakawa, M., Englund, M., Reynolds, A. (2018). African-American Males in Chicago: Pathways From Early Childhood Intervention to Reduced Violence, Journal of Adolescent Health, Pg. 80-86,

https://doi.org/10.1016/j.jadohealth.2017.08.012 ;

National Bureau of Economic Research. (2001). Favorable Long Term Effects of Head Start. NBER.  https://www.nber.org/digest/aug01/favorable-long-term-effects-head-start

[cxxxiv] Sharkey, P., Torrats-Espinosa, G., & Takyar, D. (2017). Community and the Crime Decline: The Causal Effect of Local Nonprofits on Violent Crime. American Sociological Review, 82(6), 1214–1240. https://doi.org/10.1177/0003122417736289

[cxxxv] Weisburd, D., White, C., Wire, S., & Wilson, D. (2021). Enhancing Informal Social Controls to Reduce Crime: Evidence from a Study of Crime Hot Spots. Prevention Science, 22(4), 509–522. https://doi.org/10.1007/s11121-020-01194-4

[cxxxvi] David-Ferdon, C. et al. (2016). A comprehensive technical package for the prevention of youth violence and associated risk behaviors. CDC. Pg. 33. https://www.cdc.gov/violenceprevention/pdf/yv-technicalpackage.pdf

[cxxxvii] To learn more about NCST see the box contained examples of successful programs and visit them at https://www.newarkcommunitystreetteam.org/

[cxxxviii] Watson, A., et al. (2019). Crisis Response Services for People with Mental Illnesses or Intellectual and Developmental Disabilities: A Review of the Literature on Police-based and Other First Response Models. Vera Institute. https://www.vera.org/downloads/publications/crisis-response-services-for-people-with-mental-illnesses-or-intellectual-and-developmental-disabilities.pdf ;

Batko, S., et al. (2020) Alternatives to Arrests and Police Responses to Homelessness: Evidence-Based Models and Promising Practices. Urban Institute. Pg. 22-25. https://www.urban.org/sites/default/files/publication/103158/alternatives-to-arrests-and-police-responses-to-homelessness.pdf

[cxxxix] Treger, T. (1974). A Police-Social Work Team Model: Some Preliminary Findings and Implications for System Change. Crime and Delinquency. https://doi.org/10.1177/001112877402000308

[cxl] Ibid.

[cxli] Lowery, W. (2021). The Most Ambitious Effort Yet to Reform Policing May Be Happening In Ithaca, New York. GQ. https://www.gq.com/story/ithaca-mayor-svante-myrick-police-reform

[cxlii] Ibid.

[cxliii] French, P. (2021). California Bill That Promotes Alternatives To Policing Is Back Despite Governor’s Veto. The Appeal. https://theappeal.org/politicalreport/california-crises-act-2021/

[cxliv] Lamin, T. (2016). Police social work and community policing. Cogent Social Sciences, 2(1). https://doi.org/10.1080/23311886.2016.1212636

[cxlv] White Bird Clinic. (2020) CAHOOTS. https://whitebirdclinic.org/category/programs/cahoots/

[cxlvi] CAHOOTS Program Analysis. (2019). Pg. 8. https://www.eugene-or.gov/DocumentCenter/View/56717/CAHOOTS-Program-Analysis

[cxlvii] Ibid.

[cxlviii] Ibid.

[cxlix] White Bird Clinic. (2020) CAHOOTS. https://whitebirdclinic.org/what-is-cahoots/

[cl] STAR Program Evaluation. (2020). https://wp-denverite.s3.amazonaws.com/wp-content/uploads/sites/4/2021/02/STAR_Pilot_6_Month_Evaluation_FINAL-REPORT.pdf

[cli] Ibid.

[clii] McRae, J. (2021). STAR Program In Denver Expands To Respond To Calls Seven Days A Week. CBS Denver.  https://denver.cbslocal.com/2021/08/31/star-program-mental-health-denver-police/

[cliii] Newark Community Street Team. (2021). What We Do. https://www.newarkcommunitystreetteam.org/what-we-do/ Note that homicide rates increased in 2021.

[cliv] Ibid.

[clv] Ibid.

[clvi] Newark Community Street Team Narrative Evaluation. (2020). Pg. 58 – 60.  https://www.newarkcommunitystreetteam.org/wp-content/uploads/2021/02/NCST-Evaluation_FINAL.pdf

[clvii] Ibid.

[clviii] Ibid.

Separate and Unequal: Racial and Ethnic Segregation and the Case for School Funding Reparations in New Jersey

Reinforced by racial segregation and income inequality, the U.S. public schooling system is one of the most unequal in the industrialized world – and New Jersey is no exception. Earlier NJPP reports on education find that the state makes a relatively strong effort to fund its schools, leading to many districts exceeding national averages on test scores.[1] Yet, too many students aren’t given the resources they need to ensure equal educational opportunity.[2] Overwhelmingly, these are Black and Hispanic/Latinx children, living in communities with lower property values and, consequently, lower local capacity to raise revenues to fund schools.

It is no accident that New Jersey’s Black and Hispanic/Latinx students are enrolled in school districts with lower tax capacity: racist practices such as “redlining” and “block busting” have created segregated communities with artificially lower property values.[3] These practices cannot be simply dismissed as sins of the past: the generational wealth taken from the residents of these communities has profound effects on school funding today.

The COVID-19 pandemic further exposes these patterns of institutionalized racism that have resulted in poverty-related education disparities and substantial racial inequities in school resources. For example, NJPP reported last year that children of color were much less likely to have access to a school that offered in-person instruction during the pandemic.[4] Unquestionably, this inequity was due, in part, to disparities in school funding: the better-funded a school district, the more likely it was to have school buildings open to students. But it would be a mistake to suggest school funding capacity, by itself, accounts for all of New Jersey’s chronic inequities in educational resources.

This report examines the history, policies, and practices that negatively affect Black and Hispanic/Latinx students in New Jersey. Included in the following analysis is discussion of the plight of Hispanic/Latinx populations both because many of the mechanisms of discrimination used to disadvantage Black students and families in the past were similarly applied to Hispanic/Latinx populations, and because our own recent work reveals even more substantial school funding disparities affecting Hispanic/Latinx communities.[5]

The report concludes by making a case for school funding reform as a reparation for the racist housing practices that have negative effects on taxpayers and students of color even today. New Jersey should recalibrate its school funding law to account for the additional costs of educating students in racially isolated schools, both to improve outcomes for those students and to provide tax relief to property owners in communities that have suffered the loss of wealth and resources due to systemic racism.

Examining Race and Racism in Educational Opportunity

Racial inequity in education does not happen in a vacuum. In fact, race, poverty, school funding, and educational inequality share substantial intersections. Yet, race on its own is a powerful and independent influence on educational resources and outcomes. A major contributing factor to racial inequity is structural racism: a system in which public policies and other norms, like those that determine funding and tax liabilities, privilege “whiteness” and disadvantage people of color, creating inequities that endure and adapt over time.[6]

Of course, racism that causes these disparities is often implicit. Unfortunately, white and elderly individuals often fail to support adequate resources and funding for public services directed toward Black and brown communities, even while supporting such funding for their own communities.[7] But racism in this area may also be explicit, such as historical racial restrictions on homeownership imposed less than a generation ago by local homeowners’ associations, as well as the downgrading of property values in predominantly Black neighborhoods in the mid-1900s, causing segregation.

Many of New Jersey’s school districts are still segregated today, with varying degrees of racial isolation[8] and capacity to raise local revenues for schools. And while there are funding disparities within-district, the most egregious school funding disparities in New Jersey are between districts.[9] Residential racial isolation is, therefore, an important concern when addressing school funding inequity.

It may be tempting to dismiss New Jersey’s history of segregation, which greatly affects its current racial disparities in school funding, as less pernicious and less relevant than those in other states – particularly Southern states whose school funding systems are even less equitable than New Jersey’s.[10] But examining both the historical record and current data shows New Jersey can’t ignore how structural racism has hurt – and continues to hurt – its children of color. If every child is to receive the education they deserve, the state must confront the underlying, racially-driven forces that prevent too many children from attending well-resourced schools.

Racial Isolation in New Jersey and School Funding: Three Examples

To illustrate the various ways structural racism has created both racial segregation and school funding inequity, this report highlights three examples of majority-Black school districts: East Orange, Willingboro, and Lawnside.

The table below compares each district to a majority-white district close by. “Income per pupil” refers to the total amount of personal taxable income reported in the district divided by the number of resident students enrolled in the school district. “Equalized Value per Pupil” is the total equalized property value[11] of the district divided by enrolled students. Each is a way to evaluate the relative wealth of a district; both are used in the state’s funding formula to determine a community’s ability to raise local revenues for schools.

In all three of our examples, majority-Black districts have far less local capacity to raise revenues for their schools than nearby majority-white districts. How these disparities came to be, however, is different in each community.

East Orange

The history of segregation efforts through “redlining” – the racist practice that denied mortgages to Black residents, preventing them from buying homes in certain neighborhoods – is well established in the U.S. In New Jersey, redlining practices by the Homeowners Loan Corporation (HOLC) in the late 1930s have had lasting effects, particularly in northern counties such as Essex, Hudson, Union, and Bergen. The HOLC classified “risk criteria” for issuing insured loans: homes in non-immigrant white neighborhoods were deemed the lowest risk, while homes in Black neighborhoods were deemed high-risk and often ineligible for insured loans. As a result, the expansion of access to homeownership, through both Federal Housing Authority (FHA) and Veterans Administration (VA) backed loans, became a primary path to building family wealth in the post-WWII period; however, due to restrictions in access to these loans, Black residents were largely excluded from this opportunity.

The effects of the racist practice of redlining on school segregation and funding in New Jersey are evident even today. The map below shows the 1939 HOLC grading for Essex and portions of Hudson, Union, and Bergen County. Blue areas were A-graded; red areas were D-graded. Among the considerations in assigning grades were shares of Black residents and immigrants (usually with reference to Italian immigrants), both of which led to rating downgrades.[12] On top of these gradings, the map is overlaid by the current (2018) school district boundaries with proportions of enrollments that are Black (red, left slash) or Hispanic/Latinx (green right slash).

East Orange is typical of the majority-Black school districts in this part of the state: many of its neighborhoods were redlined and deemed high-risk, leading to an inevitable decrease in property values. Other formerly redlined areas in Irvington, Orange, and Newark remain predominantly Black. Other areas, including those where neighborhoods were mostly A-graded, were and remain mostly white.

Willingboro

William Levitt (of Levittown fame) first established Willingboro in Burlington County as a post-WWII suburb of Camden and Philadelphia. His intention was to create a new community as lily-white as other Levitt communities around the country.[13] Levitt was not shy about his intentions, proclaiming in 1958 that he would not sell houses in Willingboro to Black residents.[14] Shortly after, the Reverend Willie James, a Black civil rights activist, who was turned away at Levitt’s developer’s sales office, sued to racially integrate the neighborhood. The matter eventually reached the New Jersey Supreme Court, which ruled in favor of the Reverend.[15] In 1967, the community was fully opened to Black homeowners. However, realtors quickly engaged in a classic behavior known as “block busting”: invoking fear in white families of declining property values and quality of life. Concurrently, predominantly white developments in neighboring communities expanded, using zoning restrictions (opposing multi-family units and constraining affordability) to maintain racial restrictions. The town attempted, unsuccessfully, to stop the racial turnover with a prohibition on “for sale” signs.[16] Soon after, the town’s demographics shifted, eventually becoming the majority Black community it is today.[17] As shown in the table above, Willingboro’s per pupil property values are lower than nearby majority-white school districts, a consequence of block busting that occurred only a few decades before.

Lawnside

Lawnside is among the few towns across the nation that was established as an African American community. This “free haven” was founded with the assistance of abolitionists and Quakers (who opposed slavery), eventually becoming a location along the Underground Railroad.[18] In 1926, Lawnside became an official borough of New Jersey and soon developed community institutions required for self-governance, after fighting to remain an autonomous Black community.[19] For all its successes at establishing itself as a self-governing Black community, remaining more middle-class than other Black communities near Camden or Philadelphia, Lawnside was also subject to racist forces of urban planning, such as being bifurcated by the eventual development of major interstates (I-295) and the New Jersey Turnpike.

Willingboro and Lawnside are often cited as examples of thriving Black middle-class communities. But even these communities stand in stark contrast with their more affluent majority-white neighbors on measures of wealth and income. Moorestown has approximately 2.5x the taxable wealth and income of Willingboro. Haddonfield has more than triple the income level and about 78 percent higher taxable property wealth than Lawnside. These disparities put Lawnside and Willingboro at a distinct disadvantage when funding their schools – a disadvantage that, again, is borne out of systemic, historic racism.

The Growth of Hispanic/Latinx Isolation in New Jersey

No discussion of school funding and racial/ethnic isolation in New Jersey would be complete without noting the rise of majority Hispanic/Latinx communities in the state. New Jersey’s Hispanic/Latinx population has grown dramatically in recent decades, becoming more complex in terms of race and national origin. New Jersey has long been home to a significant Puerto Rican population, concentrated primarily in larger cities like Paterson, Newark, Camden, and Trenton. In the past two decades, the state’s Dominican, Mexican, Columbian, Ecuadorian, and Cuban populations have grown, often concentrating by national origin in specific communities and school districts across the state.

By 2018, 47 New Jersey school districts were majority Hispanic/Latinx, enrolling nearly 20 percent of the state’s students. Six of those districts were nearly entirely Hispanic/Latinx (over 90 percent) in their enrollments. These districts have high child poverty rates and many English Language Learners (ELLs).

Many majority-Hispanic/Latinx school districts are small, densely populated boroughs in the New York metropolitan area. Those tracts were redlined and over time became increasingly Black and, eventually, majority Hispanic/Latinx. Other outlying towns like Dover, Freehold Borough, and Bound Brook have also become majority Hispanic/Latinx over time with an influx of Peruvian and Ecuadorian immigrants. Along with locally governed zoning, the real estate industry has continued to play a role in steering Hispanic/Latinx immigrants toward specific communities and properties in New Jersey and away from others. In still other cases, secessions and school district reorganizations reinforced racial divides among districts.[20]

Racial/Ethnic Segregation and School Revenues: Comparing New Jersey to Other States

In statewide comparisons of school quality and educational outcomes, New Jersey often shares the top positions with Massachusetts and Connecticut. All three states are politically progressive but racially and economically segregated: New Jersey ranks 34th in racial educational integration, Connecticut 36th, and Massachusetts 42nd.[21] Despite their similarities, there are significant differences regarding racial segregation and school funding. Therefore, a comparison is instructive in helping to develop policies that equalize educational opportunities for New Jersey’s children.

The table below shows the shares of student enrollments currently attending public school districts that are majority Black or majority Hispanic/Latinx, compared to 1988, the earliest data available. While the share of New Jersey students attending majority Black districts has declined, it has remained larger than in Massachusetts or Connecticut. Connecticut presently has only one majority Black school district, Bloomfield, while the state’s larger cities have become increasingly Hispanic/Latinx over time.[22] In all three states, the share of children attending majority Hispanic/Latinx districts has increased dramatically over the past 30 years.

 

Race/Ethnicity and Disparities in Wealth and Tax Rates

The table below shows the racial disparities in incomes, housing values, and effective tax rates in all three states – New Jersey, Connecticut, and Massachusetts – using U.S. Census Bureau data. Although politically liberal states, they remain highly segregated by race and have vast income inequality. The table summarizes the average household income and average housing values for Black, Hispanic/Latinx, and “other” homeowners (largely white) in each state. Across all three states, housing value gaps are largest for Blacks. Yet, the gap in Massachusetts is relatively small, while the largest gap by far is in Connecticut (for both Black and Hispanic/Latinx homeowners). New Jersey is positioned somewhere in the middle: better than it could be, but not as good as it should be.

The value-to-income ratio characterizes how much value homeowners acquire through their homes relative to their income levels; higher values indicate that a homeowner has gained more wealth, relative to their income, through the value of their home. In Massachusetts, Black homeowners do not face this deficit: the housing wealth they have acquired, relative to their income, is similar to “other” (non-Black and non-Hispanic/Latinx) residents. But in both Connecticut and New Jersey, Black homeowners suffer from a deficit in property wealth; in other words, Black homeowners in these states have not been able to transfer the same amount of their income into the value of their homes as white homeowners. Hispanic/Latinx homeowners face a household value/income deficit in Massachusetts and New Jersey, but not in Connecticut.

It’s important to note that the estimated “value gaps” here are for homes with the same number of bedrooms in the same metropolitan area and year. Yet, the gaps are still large, suggesting that racial isolation is driving the differences in property wealth and, consequently, a community’s capacity to raise revenues for its schools. These disparities in home values lead directly to disparities in taxation because a district with lower property values must levy a higher tax rate to raise the same amount of revenue as a town with higher values. The table below shows the differences in effective property tax rates by race & ethnicity for each state. In both Connecticut and New Jersey, Black and Hispanic/ Latinx homeowners are paying what is, in effect, a discrimination tax, with Black homeowners paying the highest effective rate.

Race/Ethnicity and Disparities in School Revenues

Statewide school funding systems can take multiple approaches to ameliorate these disparities in tax rates. One approach is to invest more school and municipal aid from the state to low-income communities. Because this aid is paid for with revenues from all of the state’s taxpayers, the burden to raise local school revenues lessens in low-income school districts and towns, which have lower property values and, therefore, less capacity to raise funds locally. State aid to schools, however, must be targeted appropriately and robust enough to address the racial and ethnic disparities in property wealth.

New Jersey’s state aid to schools helps to drive more total revenues to schools enrolling Black students. Unlike Connecticut, where Black students attend schools that receive $2,370 less per pupil in state and local revenue than white students, New Jersey’s Black students receive $2,939 more per pupil than white students. In contrast, New Jersey’s Hispanic/Latinx students receive $178 less per pupil than its white students; however, that gap is much smaller than the $2,370 gap suffered by Connecticut’s Hispanic/Latinx students.

Note, however, that New Jersey’s Black and Hispanic/Latinx homeowners still pay a higher tax rate, and a higher percentage of their income in property taxes, than what the state’s white homeowners pay. This is not the case in Massachusetts – and yet that state manages to drive more total revenue per pupil to Hispanic/Latinx students than white students. Further, Massachusetts’s Black students enjoy an even greater funding advantage, relative to whites, than New Jersey’s Black students.

The Cost of Equal Educational Opportunity

 Comparisons of school spending raise an important question: how much should be spent to provide students with an equal opportunity to achieve educational success? To answer this question, Bruce Baker developed the National Educational Cost Model (NECM).[23] This model uses actual school spending, test outcomes, and student characteristic data to estimate the cost of students achieving a particular level of education outcomes (measured by test scores), given their different needs and in costs in different regions.

While the NECM has limitations, it does accomplish two important tasks: first, it provides evidence that schools with varying student bodies need varying amounts of funding to provide an adequate education; second, it provides guidance for policymakers in setting spending targets for different school districts. For example, in previous work, NECM derived estimates have been used to suggest ways that New Jersey could recalibrate its system of school aid distribution to better meet the needs of schools that enroll differing student bodies.[24]

The table below shows the NECM’s predicted average cost of achieving current Massachusetts average outcomes in reading and math average for Connecticut, Massachusetts, and New Jersey, as well as how much each state actually spends. The figures are broken down by race and ethnicity, showing the differences in spending and estimated costs for white, Black, and Hispanic/Latinx students. Finally, the table shows the gap between the NECM estimated cost and the amount spent.[25]

The model shows all three states follow a similar pattern, although there are significant differences in the spending/cost gaps between the different states. In Massachusetts, for example, the average white student attends a district that spends approximately what is needed to achieve average outcomes. By contrast, the average Black student attends a district with a significant deficit toward providing equal opportunity; the average Hispanic/Latinx student faces the largest funding deficit. The patterns are similar in New Jersey, but the spending/cost gaps are smaller; again, Hispanic/Latinx students face the largest gaps. In Connecticut, both Black and Hispanic/Latinx students face similarly large funding gaps to achieve common outcome goals. The outcome goals set here – the average test scores for Massachusetts, one of the highest-performing states in the nation –are high ones.[26] But whether higher or lower goals, the relative positions of white, Black, or Hispanic/Latinx students stay the same.

Accounting for Racial Isolation in Educational Costs

NECM cost estimates differ by the variables it uses to describe students enrolled in different school districts. Poverty, for example, has a powerful effect on student outcomes; including a measure of poverty, therefore, provides a more precise estimate of the spending needed to achieve a desired outcome. The estimates above, however, come from a model that does not include student race; therefore, these gaps do not address any additional costs that may be associated with racial isolation of Black or Hispanic/Latinx communities.[27]

One signal that the cost projections are incomplete without accounting for racial inequities can be seen in the figures below. When we estimate a typical cost model but don’t include race (percentage of Black students) as a factor that might influence costs of equal opportunity, we tend to find that majority Black districts look relatively inefficient. That is, when racial isolation isn’t accounted for, majority-Black districts look like their funding is more adequate than it may be, and yet their performance lags (they invariably fall below the diagonal line).

However, before coming to this conclusion, one should remember that through historical discrimination and segregation, these districts have had additional costs imposed on them. Perhaps it’s not that these districts are less efficient; rather, systemic racism imposed additional costs on them to achieve common outcomes. When race is considered among the cost factors – in other words, when student race is added to the model that predicts educational costs – these districts no longer appear to be inefficient. It no longer looks, for example, like Willingboro has more than enough to achieve the desired outcomes but doesn’t because the district’s schools are inefficient; instead, Willingboro likely needs more resources, in part, because of its racial isolation.

We note here that we have not found the same effect for Hispanic/Latinx communities, perhaps because of the greater heterogeneity among predominantly Hispanic/Latinx communities. However, the models do already address differences in costs associated with English language proficiency; it may be that this variable captures the additional costs of educating students in ethnically isolated schools.

The following table provides alternative estimates of the per-pupil costs to achieve common (Massachusetts average) outcomes in reading and math using both a race-neutral cost model and a model that accounts for the percentage of Black students enrolled in a school district. Estimates are provided for New Jersey’s majority Black districts. East Orange, for example, spent just under $23,000 per pupil in 2018 and was estimated by the race-neutral model to require $26,755 to achieve Massachusetts mean outcomes. But, when taking race into account, that figure jumps to nearly $40,000 per pupil.

The margins of difference in the cost estimate when taking race into account are substantial; however, this is what our model, based on actual data, estimates is required to bring those districts into line with expected outcomes. The state should strive to achieve these spending targets, with consideration for race, through a school funding policy that ensures these targets can be reached at equitable taxation.

School Finance Reform: The Case for Reparations

Some might argue the approach of this report imposes a deficit orientation on Blackness and Black communities: that the assumption is that because a community or its schools have more Black students, they need additional resources. However, the deficit that exists today is the result of systemic and well-documented patterns of discrimination and segregation, which led to racial isolation, lost wealth, and opportunity denied through generations. This deficit is not simply an evil of the past: it continues to have profound effects on Black and Hispanic/Latinx students and communities right now. Providing aid to counter these multi-generational effects is a correction to a deficit imposed through racism; in effect, it is a reparation.

The term “reparation” is often used to describe payments specifically to Black family descendants of enslaved people, calculated in an amount to represent their financial losses resulting from enslavement. This report, however, presents a broader use of the term in response to the systemic racism of the recent past and present. The segregation and discrimination which has plagued New Jersey’s and our nation’s schools and communities has significant financial and educational consequences for Black and Hispanic/Latinx taxpayers and schoolchildren. Allocating funds to remove the funding gaps between school districts is one way to correct the educational disparities that have arisen due to systemic racism.

New Jersey remains highly segregated by race and income: the state has larger shares of students enrolled in majority Hispanic/Latinx and majority Black school districts than Connecticut or Massachusetts. While New Jersey has succeeded more than the other two states at progressively allocating state aid to reduce funding gaps, New Jersey’s current state aid to schools remains insufficient to fully close gaps in educational opportunity or fully mitigate racial inequities in property taxation.

Given this reality, this report presents four recommendations for New Jersey:

  1. New Jersey should develop measures to monitor wealth gaps by race and inequitable taxation on that wealth and consider developing a reparations package to provide tax relief to overtaxed Black and Hispanic/Latinx homeowners.
  2. New Jersey must commit to fully funding its state school funding formula, the School Funding Reform Act (SFRA). For over a decade, the state has refused to fund its own school funding law. Any meaningful reform of school funding must begin with the state meeting the obligations it has set for itself.
  3. New Jersey should recalibrate that formula to address current student needs and costs with respect to updated outcome goals. Only then will we know the extent to which SFRA is sufficient to offset racial disparities in taxation and equal opportunity to achieve common outcomes, such as the average test scores of Massachusetts.
  4. The recalibration of SFRA should include consideration of the additional costs associated with providing equal opportunity to achieve common outcome goals in the state’s racially isolated neighborhoods and schools. These costs may be identified through cost modeling methods like those cited herein and are consistent with recent studies of education costs and cost variation nationally[28] as well as in Kansas,[29] Vermont,[30] and New Hampshire.[31]

In addition, recent reporting finds that New Jersey faces an unexpected and substantial budget surplus.[32] The state should take this opportunity to address historic and system racism in school funding, to provide equitable educational opportunities for all students.

 


End Notes

[1] Weber, M., & Baker, B. D. (2020, November 17). School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[2] Weber, M., & Baker, B. D. (2020, November 17). School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[3] Andre M. PerryJonathan Rothwell, and David Harshbarger (2018). The devaluation of assets in Black neighborhoods. Brookings Institute. https://www.brookings.edu/research/devaluation-of-assets-in-black-neighborhoods/

[4] Weber, M. (2020, October 7). New Jersey’s School Re-openings Are Racially Unequal. New Jersey Policy Perspective. https://www.njpp.org/publications/blog-category/new-jerseys-school-re-openings-are-racially-unequal/

[5] Baker, B., & Cotto Jr, R. (2020). The under-funding of Hispanic/Latinx-serving school districts. Phi Delta Kappan, 101(6), 40-46. https://kappanonline.org/underfunding-Hispanic/Latinx-serving-school-districts-baker-cotto/

Baker, B. D., Srikanth, A., Green III, P. C., & Cotto, R. (2020). School funding disparities and the plight of Hispanic/Latinx children. Education Policy Analysis Archives, 28, 135. https://doi.org/10.14507/epaa.28.5282

[6] Aspen Institute. Glossary for Understanding the Dismantling Structural Racism/Promoting Racial Equity Analysis. Roundtable on Community Change. https://www.aspeninstitute.org/wp-content/uploads/files/content/docs/rcc/RCC-Structural-Racism-Glossary.pdf

[7] Oberfield, Z., Baker, B.D. (2021) Redistributing opportunity: The politics of progressive school spending (working paper); Chow, Kat. (June 8, 2018) Why More White Americans Are Opposing Government Welfare Programs. NPR. https://www.npr.org/sections/codeswitch/2018/06/08/616684259/why-more-white-americans-are-opposing-government-welfare-programs; Blake, J. (March 6, 2021). A drained swimming pool shows how racism harms White people, too. CNN. https://edition.cnn.com/2021/03/05/us/heather-mcghee-racism-white-people-blake/index.html

[8] Orfield, G., Ee, J., & Coughlan, R. (2017). New Jersey’s Segregated Schools (p. 43). The Civil Rights Project. https://www.civilrightsproject.ucla.edu/research/k-12-education/integration-and-diversity/new-jerseys-segregated-schools-trends-and-paths-forward/New-Jersey-report-final-110917.pdf

[9] Weber, M., & Baker, B. D. (2020, November 17). School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[10] Baker, B. D., Weber, M. A., Srikanth, A., Kim, R., & Atzbi, M. (2018). The real shame of the nation: The causes and consequences of interstate inequity in public school investments. Rutgers, The State University of New Jersey. http://www.schoolfundingfairness.org

[11] New Jersey “equalizes” property values when calculating state aid to schools as a way to account for differences between communities in how they assess their property values. Cities and towns may choose to assess property values below, at, or above going market prices; equalization allows for more valid comparisons by comparing assessed values to listed selling prices in each community and adjusting property values accordingly.

[12] Robert K. Nelson, LaDale Winling, Richard Marciano, Nathan Connolly, et al., “Mapping Inequality,” American Panorama, ed. Robert K. Nelson and Edward L. Ayers, accessed June 12, 2021, https://dsl.richmond.edu/panorama/redlining/#loc=12/40.78/-74.295&mapview=graded&city=essex-co.-nj&area=D4

[13] Gans, H. J. (1982). The Levittowners: Ways of life and politics in a new suburban community. Columbia University Press.

[14] Patterson, M.J. (2012) On the Frontlines of Freedom: A Chronicle of the First 50 Years of the American Civil Liberties Union of New Jersey. Excerpt retrieved from: https://www.aclu-nj.org/about/50thanniversary/on-the-frontlines-of-freedom/on-the-frontlines-of-freedom-chapter-one-1

[15] Levitt & Sons, Inc. v. Div. Against Discrimination, Etc., 31 N.J. 514 (1960), 158 A.2d 177.

[16] Linmark Associates, Inc. v. Willingboro, 431 U.S. 85, 97 S. Ct. 1614, 52 L. Ed. 2d 155 (1977).

[17] Guliano, B. D. (1977). Banning of For Sale Signs and Its Effect on Fair Housing: Linmark Associates v. Township of Willingboro. Conn. L. Rev., 10, 980. “The percentage of nonwhites included in the population of Willingboro rose from 0.5% in 1960 to 11.7% in 1970 and to 18.2% in 1973. At the same time the white population showed a numerical decline from 38,326 in 1970 to 36,485 in 1973.” (p. 985)

[18] Rose, H. M. (1965). The all-Negro town: Its evolution and function. Geographical Review, 55(3), 362-381.

[19] Romisher, J. E. (2018). Youth Activism and the Black Freedom Struggle in Lawnside, New Jersey (Doctoral dissertation, Arts & Social Sciences: Department of History).

[20] Rasmussen, C. (2017). Creating segregation in the era of integration: School consolidation and local control in New Brunswick, New Jersey, 1965–1976. History of Education Quarterly, 57(4), 480-514.

[21] McCann, Adam (Jan 12, 2021). “States with the Most Racial Progress.” https://wallethub.com/edu/states-with-the-most-and-least-racial-progress/18428

[22] Putterman, Alex (February 19, 2021) “West Hartford is mostly white, while Bloomfield is largely Black; how that came to be tells the story of racism and segregation in American suburbs.” Hartford Courant. https://www.courant.com/news/connecticut/hc-news-west-hartford-bloomfield-housing-segregation-discrimination-20210214-eoobsguoybguznkoa4n2ravwli-story.html

[23]Baker, B.D., Di Carlo, M., Weber, M. (2021) The Adequacy of School District Spending in the U.S. Albert Shanker Institute. https://www.schoolfinancedata.org/wp-content/uploads/2021/03/SFID_DCDbrief_Mar2021.pdf

[24] Weber, M., & Baker, B. D. (2020, November 17). School Funding in New Jersey: A Fair Future for All. New Jersey Policy Perspective. https://www.njpp.org/publications/report/school-funding-in-new-jersey-a-fair-future-for-all/

[25] Note that the “Current Spending” figure is inclusive of the spending of federal and other revenues, and will therefore differ from the figures in the previous table.

[26] “The Nation’s Report Card,” National Assessment of Educational Progress. National Center for Education Statistics. https://www.nationsreportcard.gov/profiles/stateprofile?chort=1&sub=MAT&sj=&sfj=NP&st=MN&year=2019R3

[27] Baker, B. D. (2011). Exploring the sensitivity of education costs to racial composition of schools and race-neutral alternative measures: A cost function application to Missouri. Peabody Journal of Education, 86(1), 58-83.

Baker, B. D., & Green III, P. C. (2009). Equal educational opportunity and the distribution of state aid to schools: Can or should school racial composition be a factor? Journal of Education Finance, 34(3), 289-323.

Green, P., Baker, B., & Oluwole, J. (2008). Achieving racial equal educational opportunity through school finance litigation. Stanford Journal for Civil Rights and Civil Liberties, 4, 283-338.

[28] Baker, B.D., Di Carlo, M., Weber, M. (2021) The Adequacy of School District Spending in the U.S. Albert Shanker Institute. https://www.schoolfinancedata.org/wp-content/uploads/2021/03/SFID_DCDbrief_Mar2021.pdf

[29] Taylor, L.L., Jason  Willis, Alex Berg-Jacobsen, Karina Jaquet, and Ruthie Caparas. (2018) Costs Associated with Reaching Student Achievement Expectations for Kansas Public Education Students: A Cost Function Approach. San Francisco: WestEd.

[30]Kolbe, T., Baker, B.D., Atchison, D., Levin, J. (2019) Pupil Weighting Factors Report. State of Vermont, House and Senate Committees on Education. https://legislature.vermont.gov/assets/Legislative-Reports/edu-legislative-report-pupil-weighting-factors-2019.pdf

[31] Baker, B.D., Atchison, D., Levin, J., Kearns, C. (2020) New Hampshire Commission to Study School Funding: Final Report. https://carsey.unh.edu/sites/default/files/media/2020/09/20-12685_nh_final_report_version_v5_draft_1.pdf

[32] Reitmeyer, John (June 10, 2021). “NJ has an extra $10 billion. The question is what to do with it.” NJ Spotlight News. https://www.njspotlight.com/2021/06/nj-has-an-extra-10-billion-the-question-is-what-to-do-with-it/