This email is going to all 200 public school parents – about 40% Charter School Parents / 60% District Parents - who sent me an email about the PILOT payment that the City is considering allocating to the public schools.
Thank you for reaching out. I 100% believe that more voices are always better. I’m writing you back as a group because I just want to provide some additional context to all of you that you may find informative and that seems to have been missing from the alarming “Defunding Public Schools Petition” and the “Charters Will Lose Out on Millions” emails that were sent to you. There is a lot I want to say on this, but to keep your attention, I am just providing a few key points below.
- Order of Magnitude: Did you know the amount being questioned, the amount that has created this division within our community, is about $50,000? This is 22% of the total amount that the City is considering allocating to all the Public Schools of $243,000. By comparison, the HBOE total budget is $83 million for 2020-21 and of this, the amount paid to Charter Schools this year is $10.1M. As an FYI, the biggest line item in the HBOE budget is the PreK program costs – these totaled $16.3M and are not fully covered by state funding.
- You are paying for this. Did you also know that this $243,000 is coming from the municipal tax levy? So of the 7.5% increase in the municipal tax rate this year, .4% of this is because this amount is being considered for allocation to the public schools. The intent of the PILOT is to reduce the tax burden but all that is being contemplated is shifting it from one part of the tax rate (schools) to another (city). This is why I was one of two “No” votes in 2016 (on this as well as the entire PILOT agreement structure which is terrible for the City).
- The Funding Formula is f’ed Up. That we know. But did you know that if the City Council were to send the entire $243,000 to the District Schools, the Charter Schools would receive about $55,000 less in funding as a direct result due to the Funding Formula? Do you think that was the intent of the Council in 2016? I assure you that it was not.
The District Schools have built in funding for Enrollment Growth. So many I have spoken to do not realize this, including some of our education leaders, but the Funding Formula works in a way that as the District Schools expand, their share of the overall funding expands with the Charter Schools share reducing. Also enrollment growth can also always be funded by an increase in the tax levy. You can see the effect of the recent District Schools expansion growth in the following calculations of Charter School Aid in the HBOE Budget and its % of prior year Tax Levy:
- 2020-2021 - $10.3M / 21.3%
- 2019-2020 - $10.4M / 22.7%
- 2018-2019 - $10.1M / 23.0%
- 2017-2018 - $9.9M / 23.3%
Below is the email I sent to all public school leaders this morning. It has a very specific focus which is the Funding Formula, how it works (see attachment), and how these proposed additional revenues would flow through the HBOE budget and the Funding Formula. It is clear from all of my discussions that most in Hoboken do not know how the formula works. IMPORTANTLY, AT THE VERY END OF THAT EMAIL ARE SOME CHARTER SCHOOL STATISTICS. PLEASE TAKE A MINUTE TO READ THESE. I FOUND THEM TO BE VERY HELPFUL OF MY UNDERSTANDING OF THE RELATIVE COSTS OF OUR CHARTER SCHOOLS. Please note that I do not have an opinion about whether the Charter School funding is too high or too low. I have actively campaigned and helped elect most of the current HBOE board members and generally believe we should be doing what we can to expand enrollment in our district schools in the future and not our charter schools. But right now we need to be looking out for the interests of all of our public schools.
Feel free to reach out with any questions you have. My only hope is that instead of fomenting this continued, awful divisiveness in our community, we find follow the math and find an informed way to bring everyone together.
Tiffanie
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Email to Public School Leaders:
Dear friends,
Good morning. This email is going to all the public school leaders I have emails for. Please accept my apologies if I have left anyone off. I have also cc'd our City Council President Jen Giattino and Vice President Vanessa Falco, as well as Mayor Bhalla. The main purpose of this email is I wanted to make sure I have a clear understanding of how the HBOE Budget and Charter School Funding Formula's work in terms of the actual mechanics. Because I think they have a direct impact on the matter at hand - transferring $243K of what would otherwise be Municipal Tax revenue to the Hoboken Public Schools. So if any of our public school leaders believe I have misrepresented anything below, please let me know. One observation: transparency on this subject matter is low. But, after a lot of searching and asking, most of the information sources can be traced to actual documents. Only in some instances do I make assumptions or round for illustrative purposes, which I indicate.
OVERVIEW
HBOE BUDGET
Because the Charter School Aid calculation begins with the HBOE Levy (see below), with the DOE taking it directly from the HBOE's approved final budget, I wanted to understand better how the school tax levy is calculated. What I found is no different than how the city's municipal tax levy is calculated - the tax levy is the plug to balance the budget. And education accounting is similar to municipal accounting where the levy can be reduced by various revenues sources like using more of the surplus, one time fees, or other miscellaneous and unrestricted local revenues as examples. I think we can all agree that the goal of the Mayor/City Council as with the goals of the BOE I imagine are the same - to keep this levy as low as reasonably possible. And for clarity, the $243,000 that is at the heart of the current discussion is a reduction of revenue for the City resulting in a higher Municipal Tax levy, roughly .4% of the 7.5% municipal tax increase this year.
FUNDING FORMULA
It took me a while, but I received (and I've attached) a copy of the DOE, Division of Finance for the FY 2019-2020 Charter School Aid calculation. This was the detail necessary to fully understand the statute statute (NJSA 18A:36A-12) which as you know is brief in its description. At the core, Funding Formula only uses the HBOE Tax Levy as the source of Charter School Aid, and no other state or federal aid sources. I get the sense that most people do not know how this formula works. I didn't before, but now after reviewing the attached I actually found it fairly straightforward. It clearly does not work perfectly, which is what all parties have said. For purposes of this discussion, I am using the 2019-2020 year from the attached schedule, not the current 2020-2021 year, as the example.
MY TAKEAWAYS
A PILOT payment allocation to the HBOE will be accounted for in the HBOE budget as Local Revenues that in all cases, reduces the amount of the Tax Levy that would have been used to fund and balance the budget. This is consistent with the purpose of the PILOT payment which is to reduce taxpayer burden. Because the starting point of the Charter School Aid calculation is the Tax Levy, when it is reduced, naturally the end result is reduced. When I ran the $243K through the Funding Formula it resulted in reduced funding to the Charters by $55K. I don't think this was contemplated when the resolution was drafted in 2016.
This is the summary; a more detailed version is further down.
MORE DETAIL BEHIND THE FUNDING FORMULA
IN NUMBERS, HOW THE FUNDING FORMULA WORKS:
IN WORDS, HOW THE FUNDING FORMULA WORKS:
- Begins with the State Adequacy Budget for K-12 prepared by the DOE and used only for the sole purpose of determining the % for each Special Ed, Speech Only, and Regular Education categories ("Adequacy Ratios"). In this year, the total State Adequacy Budget was $49.2M and the category ratios were 11.6%, .1%, and 88.3% respectively.
- The Charter School Aid Funding Formula itself starts with the HBOE's Tax Levy using the prior year levy taken directly from the HBOE Budget and then increases it by the CPI to have a proxy for the current year Tax Levy. In this year the Tax Levy happens to be 94.5% of the State Adequacy Budget.
- The Adequacy Ratios from above are then applied to this adjusted Tax Levy to determine the beginning amounts for each Special Education, Speech Only, and Regular Education categories.
- And then it takes these allocations and applies the Charter 90% Haircut. The total of all three categories after the haircut is $41.8M with regular education accounting for $36.9M. These figures represent 85% and 75% of the State Adequacy Budget, respectively.
- A Per Pupil figure is then calculated off these reduced numbers based upon a Weighted Enrollment determined by the state. This enrollment calculation assigns greater weighting to students they feel have higher potential per pupil costs like older, at-risk, LEP and Special Education students.
- The total Weighted Enrollment in this year for K-12 students (including Charters) is 3566. This compares to the actual K-12 enrollment of approximately 3100 (here I took the figures from page 1 of the 2020-21 HBOE User Friendly Budget and rounded up). Charter Schools represent 32% or 985 of this number. Special Education Students represent 13% of this number.
- The overall weighting multiple used is about 1.15x (3566/3100). A reasonable guess is that the Charter multiple is closer to 1.0 and the District multiple is closer to 1.25 given the district schools have a greater number of older, at risk and those students requiring special education services. Why this matters is that because of this weighting, the district schools get a greater proportion of the funding to cover the increased costs of supporting students with greater needs/costs.
- As enrollment changes, the proportionate share of the enrollment changes. So assuming Charter School enrollment is now static, as the District School enrollment increases, all else being equal, the District School % share increases and the Charter School % share will decrease.
- The per pupil amounts are applied then to the Weighted Enrollment of the Charter Schools.
- Regular education per pupil amount is applied to all students.
- Special Education and Speech Only is applied to only those students who are characterized this way.
- In 2019-2020 this Funding Formula calculated the Charter School aid to be $10.4M.
RATIOS AND INFORMATION I FOUND HELPFUL TO
BETTER UNDERSTAND THE COST OF OUR THREE CHARTER SCHOOLS
For clarity, I am not forming any opinion on whether the funding is too much or not. I know every dollar matters to each district which is at the crux of the matter before us. There just doesn't seem to be a single source for seeing this information so I found these ratios that I calculated off the information I sourced to be informative.
- 68/32% split of actual K-12 enrollment (District/Charters)
- 72/28% approximate split of weighted K-12 enrollment per the state's weighting (District/Charters)
-
Charter School Aid equals
- 12% of the total BOE budget (including PreK) is the
- 15% of the total BOE budget (excluding PreK)
- 21% of the total State Adequacy Budget
- 25% of the State Adequacy Budget for Regular Education
- 22% of the estimated current year Tax Levy
- 23% of the prior year Tax Levy
-
On a per pupil basis, based upon Weighted Enrollment, Charter School Aid equates to
- 85% of the Per Pupil Adequacy Budget for Regular Education
- 90% of the Per Pupil Tax Levy for Regular Education
- 87% of the District's Per Pupil Tax Levy for Regular Education - due to the 10% the Charters do not receive that stays with the District.
-
Charter School Aid in the HBOE Budget and its % of prior year Tax Levy (which has decreased each probably due to increased District enrollment) is as follows:
- 2020-2021 - $10.3M / 21.3%
- 2019-2020 - $10.4M / 22.7%
- 2018-2019 - $10.1M / 23.0%
- 2017-2018 - $9.9M / 23.3%
Thank you for taking the time to review this. Again, please let me know if I have materially misstated or misrepresented anything herein. My concern, which is obvious, is that a City Council action to give a portion of the City's PILOT payment to the public schools, if given solely to the HBOE, has the unintended impact of doing harm to the three other districts.
Tiffanie
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TiffanieFisher
Hoboken City Council, 2nd Ward
Engage. Inform. Advocate.
“More Voices are Better”
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