I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Saturday, March 30, 2019

Jersey Jazzman: Year 9

I keep of list of stuff I'm supposed to blog about, and right now that list is long. I've yet to give my thoughts on Bruce Baker's excellent report on New Jersey school funding, which you really need to read. There's also the tax incentive nonsense happening here in Jersey, which is a cautionary tale for the rest of the country. There are the great reports about charter school abuses in New Jersey and California we need to examine.

I still haven't discussed my own work on how charter school growth negatively affects the finances of public school districts. I want to talk about my field trip to Kansas City to party/parry with labor economists. And it's time to go back and look again at all the problems with measuring student growth and attributing that growth to teachers and schools.

But before I get to all that, let me take a minute and talk about this blog on its ninth anniversary.

When I told Mrs. Jazzman last night I've been at this for nine years, she didn't believe it. But in my mind, it makes perfect sense: I started this thing in response to the nonsense coming from the Chris Christie administration way back in the spring of 2010. Now Christie's gone, after wreaking havoc on the state for two terms. Nine years seems just right.

At the time, Christie was running around the state demanding teachers take a pay freeze and pay more toward their health care. He claimed this would make up for a $800 million shortfall, which was largely caused because he refused to renew a millionaire's tax that had been in place for years. Of course, his claim wasn't true, and he forgot that freezing teacher pay would bring down income tax revenues for the state.

What frustrated me at the time was that no one in the press appeared interested in asking about the specifics of Christie's plan -- and yet the specifics were what made the plan viable or not. If there's a running theme for this blog over the last nine years, it's exactly that: In public policy, the details matter, because that's how we determine whether policies will be effective and whether they will have unintended consequences.

Take merit pay for teachers, which is getting a new look thanks to Kamala Harris's recent proposal to increase educator's pay. It sounds like a good idea... until you get to the details. How are you going to determine who gets merit pay? Through biased, noisy "growth" measures? What about the majority of teachers who don't teach tested subjects? Will you assess their availability for merit pay based on observation rubrics that have scant evidence to support them and are used in innumerate ways? Or will you use measures of growth not linked to tests -- measures for which we have absolutely no evidence of validity or reliability?

How will you distribute the teachers who do get merit pay? Will you force them to take more "difficult" assignments? What will you say to the parents of students who don't get a merit pay teacher? Will you be taking away money for merit pay from less "meritorious" teachers (the answer is inevitably: "Yes")? What happens to the pool of teacher candidates when you do that?

Or take school choice. It sounds like a good idea... but as we've seen, there are all kinds of unintended consequences that come from injecting market forces into public institutions. Same with high-stakes testing, or implementing new standards, or changing how school revenues are allocated, or any number of other education policies.

Questioning policies like these isn't nit-picking; it's doing the work. And if this little blog has helped inform the discussion, and put bad policies under the microscope, it's been worth the effort.

One of the nicest outcomes of writing this blog has been meeting so many dedicated stakeholders: parents, students, teachers, policymakers, analysts, and others who care enough about education to enter the conversation and defend their positions publicly. My blogroll on the left (which I try to keep current, but isn't always) has links to many of these folks. If you care about education, get to know them -- it'll be worth your time.

If you'll indulge me, a few more personal notes:

- I just finished a PhD in Education Theory, Organization, and Policy this fall. This has led me to become involved in several different education policy projects, even as I continue teaching in the classroom. I do think it's important to have working teachers -- or, at least, people who have significant prior experience working in schools -- involved in the education policy world.

But I still intend to keep this blog active, no matter what else I have going on. Sometimes education policy issues are best addressed through an objective policy brief or academic paper; other times, however, call for a little snark.

- The laziest critique of any analyst is to claim that they are not "objective." I'm all for being clear about positionality, but if the best you can lob at someone is where they get their funding or who they hang with, you're not doing the work.

A good analyst comes at an issue with an open mind, but not an empty one. I arrive at my positions based on study and practice. I'll have a good-faith debate with anyone, and I'll change my mind if you've got a good point -- I've done it plenty of times before. But I've largely given up sparring with the indolent. Life is short.

- Over the years, I've spent a lot of time writing blog posts. I don't know if my family considers that a sacrifice -- it has kept me out of their hair -- but Mrs. Jazzman and the Jazzboys have been very patient and supportive. Thanks, guys.

And so on to Year 10...

The Merit Pay Fairy says: "After nine years, dat Jazzman still ain't objective!"

Thursday, March 14, 2019

Only You Can Prevent Bad Tax Policy Discussions

When I started this blog up again earlier this year, I told myself I wasn't going to waste a lot of time debunking nonsense in the local media. Life is short and there's a lot to write about.

But some stuff I come across is so bad, I just can't let it go:
Q. Gov. Phil Murphy wants to raise the tax on incomes over $1 million, but Legislative leaders say they oppose that. Polls show overwhelming support among voters, so what gives on the politics? 
DuHaime: New Jersey families are overtaxed, and everyone knows if Trenton is talking about higher taxes, they’re eventually coming for you, too. Our elected leaders are supposed to do what’s right, not just what works in class warfare polling. From a policy perspective, New Jersey is too heavily reliant on our top earners. 1% of the taxpayers pay nearly 40% of the income taxes; 10% of the taxpayers pay nearly 70% of the income taxes. Look what happened when the financial markets nosedived a decade ago. The treasury of New Jersey took a huge hit because we rely so heavily on the highest earners. Finally, those with means can and do move to states, and they take their jobs, their spending, their philanthropy and their families with them. [emphasis mine]
We'll leave aside the myth of wealth migration and focus instead on the claim that the state is too reliant on the wealthy for tax revenue. There are at least three major problems with the statement above:

1) You must account for local taxes as well as state taxes in any meaningful analysis of tax burdens.

States vary significantly in what revenues for governmental services are provided by the state or by localities. That's why nearly every credible analysis of tax burdens by state combines local and state taxes.

2) Income taxes are only one source of revenue for the state.

States and localities have a variety of ways to collect revenues: income taxes, sales taxes, property taxes, gas taxes, fees, tolls, etc. Isolating income taxes, which tend to be less regressive, will give a false picture of the overall tax burden in a state. (Having a broad mix of taxes, by the way, is a strategy to address the issue of revenue instability due to economic changes.)

The good folks at the Institute on Taxation and Economic Policy have what I believe is the most credible way of comparing total tax burdens across income distributions. Here's their analysis of New Jersey:

The top 1 percent actually have a lower overall tax burden than middle income taxpayers.

3) The top 1 percent pay a big slice of the total income tax revenues because they earn a big slice of the total income!

This one really drives me bananas. According to the Economic Policy Institute, the top 1 percent of earners in New Jersey took 19.7 percent of the total income in 2015. Of course they paid more in taxes -- they made more of the money!

And again: it isn't meaningful to compare the 1-percenters' tax rate on one state tax to taxpayers at other income levels. You have to compare the total state and local tax burden to get to an analysis that's useful.

Here's a crazy idea: instead of giving valuable media space to "political insiders," why don't media outlets instead give the space to people who actually study this stuff carefully and can help citizens understand public policy issues?

Crazy thought, I know...

Jersey Jazzman (artist's conception)

ADDING: Sweet mercy, just make it stop:
Fewer still mention that the top 20 percent of households will pay 87 percent of the 2018 taxes — up from 84 percent in 2017. The bottom 60 percent of households will also pay no net federal income tax for 2018.
Say it with me: the wealthy pay more in income taxes because they make more of the money! And again, income tax is just one part of the total tax burden for an individual.

Sunday, March 10, 2019

The Case For Stable, Adequate, and Predictable School Funding

Here in New Jersey, we're entering budget season -- and that means the beginning of the annual ritual of declaring "winners and losers" in state aid to school districts. Governor Phil Murphy just released his budgetary plan for schools, showing which districts will get more or less aid from the state this year.

In a $38.6 billion budget, PreK-12 school aid in all its forms totals $15.5 billion -- that's 40 percent of the total budget (and includes payments into the school staff pensions). But in the past several years, the total amount of aid has not been as controversial as where the aid goes.

A particular sore spot has been adjustment aid, a category of state aid that has kept some districts' total aid higher than it would otherwise be, even as those districts have seen declines in enrollment or rises in the ability to collect local taxes.

There will, undoubtedly, be plenty of analysis about whether the winners and losers are being treated fairly. I'm sure I'll have a few things to say in the coming weeks and months.

But right now, I want to take a step back and see the larger picture, both here in New Jersey and in other states. Because focusing on winners and losers can keep us from thinking about why we have state school aid programs, what we want from them, and how we can make them better.

That's not to say the effects of particular policies on individual districts isn't important, and isn't worthy of our time. But if we don't have a clear vision of what we want in a school funding system, we can get caught up in who's up and who's down, rather than whether the entire system is being served well.

So, in no particular order, here are some principles I believe should be applied to any analysis of a statewide school funding plan:

- State funding programs should pursue (at least) two major goals: getting more funding to the students who need it, and making taxes more fair for local residents.

In the wonky world of school finance research, we've started to establish a new normal: money does matter. Taking the opposite position has become akin to being a climate change denier: you are simply no longer credible if you insist that more funding can't improve student outcomes (even if how to apply those funds is still subject to debate).

Further, nearly everyone now understands that students with special needs require more revenues to equalize their educational opportunities. Even Chris Christie, when pushing his insane "Fairness Formula," acknowledged that special education students, for example, need more funding so their learning disabilities can be addressed.

So a state aid system should drive more funding toward districts with greater numbers of students in economic disadvantage, or who don't speak English as their first language, or who have special education needs.* But the system also needs to acknowledge that communities with different levels of wealth have different abilities to raise revenues locally.

As I've explained previously, towns and cities that have low property values must tax themselves at higher rates just to raise equivalent revenues. In other words: if Newark wanted to raise the same amount of property tax revenue per house on average as Chatham, its tax rate would have to be much higher, because its houses are worth much less. School aid funding formulas should acknowledge this and drive aid toward districts whose capacity to tax themselves is lower than others.

To the extent that state aid programs meet both of these goals -- getting more funds to students who need them, and making local taxes more fair -- we should consider them successful.

- School leaders can't be expected to make effective plans if their districts' revenues are always subject to political winds.

District superintendents and their staffs should be able to set goals and make plans in a reasonably long time frame. But that's impossible when budgets depend on state aid that is determined year-to-year, with little time between the announcement of the aid and the start of school.

One of the responses I hear to school districts that have lost aid is: "Well, you should have made plans." That's simply not reasonable: you can't go to your community and make a case to raise more local taxes, or make cuts in your own budget, without having at least some idea of how state aid to your district will change in the future.

State revenues are subject to larger economic forces, so there are times when aid may be less than expected because of a serious economic downturn. But aid formulas ought to be stable, and districts should have time to respond to concrete changes. That's just good public policy.

- "Stealth inequities" in school funding should be avoided.

A few years ago, Bruce Baker and Sean Corcoran wrote a weighty policy brief about the school funding systems in several different states. One of their key points is that these states often put provisions into their school aid formulas that undermine the goal of making funding more equitable. In New York, for example, the state gives every district $500 per pupil in state aid, no matter that district's level of student need or ability to raise its own revenues locally. That diverts money away from districts who need it more, but have less capacity to raise it.

In New Jersey, adjustment aid is, arguably, a stealth inequity: it privileges some districts over others arbitrarily. Tax abatements** are another: they can artificially decrease the calculation of how much a district can raise locally for its schools.

I don't necessarily have a problem with localities using tax incentives in some -- some -- cases to spur investment and growth, although the ensuing race to the bottom remains a big problem. But rewarding a city or town that doesn't tax itself properly with increased state aid at another town's expense isn't right. Again: state aid is supposed to help those districts that don't have the capacity to raise more funds, not the districts that have the capacity but just won't do it.

- School funding policy should acknowledge that building and maintaining a high-quality teaching corps is a worthy goal that requires adequate funding.

No one has done more to cast doubt on the relationship between school funding and student achievement than economist Eric Hanushek. But even he has provided evidence that building a high-quality teacher workforce requires paying teachers competitive wages.

Back in the Great Recession, there was plenty of resentment toward teachers, who supposedly had stable jobs and better benefits than other workers. But even then, it was clear teachers are paid considerably less than other comparably educated workers. There's no evidence this "wage penalty" has gone away -- quite the opposite, in fact.

If we want good candidates to consider becoming teachers, we need to make sure school districts have enough money to pay them well and give them decent working conditions -- which, fortunately, just happen to be the same as student learning conditions. Paying teachers well is a good policy choice, and state aid formulas should be set up to support that choice.

- The calculations and data used in any plan that distributes state aid to school districts should be completely transparent and easily accessible to the public.

One of the complaints about the recent Murphy plan from "loser" districts is that they have no way of knowing why their state aid is being cut. Here, for example, is the superintendent of Freehold Regional High School on Twitter:
Unbelievable state will not release multipliers so can see how aid determined. equalized value up 4% income down.5% BUT ability to pay up 8.3%?? Public deserves transparency. Formula flawed.
It's a fair point: if a district is going to take a hit, it should at least know why. And yet getting the particulars of state aid plans in New Jersey requires putting in Open Public Records Act requests to get even the most basic information, such as property tax valuations. And this state is actually better than many others in releasing school finance data.

Of course, it's not just the governor who needs to be held accountable. In the past, NJ legislators have put out their own proposals -- but often without any explanation as to how they arrived at their aid distributions to districts.

When aid plans aren't transparent, stakeholders will inevitably assume decisions are being driven solely by politics. Better to release a plan with all the details spelled out.

- States have an obligation to look carefully at the costs of school "choice."

Charter schools in New Jersey are solely approved by the state -- yet hosting districts are required to raise revenues to support them. It's increasingly clear that this places a fiscal burden on districts, because charters are redundant systems of school organization that cannot access the same economies of scale as public school districts. In addition, school districts are restricted in how they can respond to enrollment decline.

If you believe that there is an inherent value in school "choice," that's fine. But it makes little sense to insist on district consolidation as a way to save money, yet also promote charter school growth, which is the exact opposite of consolidation.

New Jersey has done little to assess the additional costs imposed by charters on school districts, and the state is not alone. We need to be much more clear about how "choice" is affecting the entire school funding system.

As I said, in the coming weeks I'm sure I'll have more to say about this years round of New Jersey school funding aid. Plus, there's some major work coming soon on the state's funding formula -- stand by...

* Aid formulas should also make reasonable attempts to correct for differences in population density, labor market pressures, district size (so far as that is not under the control of the district), and so on. These are the wonky, technical details that can make a big difference in how the program works.

** Let's save the details on this for another day, as it's a big, complex topic. I'm just trying to get to some overall principles here.