Long Beach Island School Tax Initiative
It is important to note that the purpose of this backgrounder is solely to provide help in understanding the LBI school tax initiative by the HCTA. The backgrounder explains how the school tax burden is distributed among the towns in the Southern Regional School District based on the information known to the HCTA. Please keep in mind that it is not a definitive document by any standards and does not completely define the issue or possible solution.
Download this article in .pdf format: Long Beach Island School Tax Initiative
The school tax that LBI taxpayers send to help finance the Southern Regional School District1 (SRSD) is based solely on property values, based on a 1950’s agreement that apparently can’t be located at the district or state level today. In 2015 LBI’s real estate was valued by the state at approximately $15.3 Bil and Stafford’s was at approx. $3.9 Bil. So, LBI ratables made up almost 80% of the total property valuations for the combination of LBI-Stafford Twp. For the school year 2015 – 2016 LBI will place ~263 students in the Southern Regional School District (SRSD) and Stafford will place ~2263. So, LBI students (middle and HS) will make up about 10% and Stafford about 90% of the combined LBI-Stafford student population. LBI’s portion of the school tax is $37.0 Mil while Stafford will pay $8.5 Mil.
The bottom line – LBI towns will account for 10% of the students and will be responsible for about 80% of the tax.
The HCTA is doing what we can to help address what we think is an inequitable apportionment of the school tax burden on LBI towns – HCs in particular. For example, this year HC will send 16 children to the SRSD. The 16 we send to SRSD will cost $3.6 mil, or about $225.7K/student. On the other hand, Stafford Twp will send 2263.5 children, and pay a total of $8.5 mil, or approximately $3.8K/student. If you do the arithmetic, HC’s per student cost amounts to just about 60 times the Stafford Twp per student rate. The average per student cost for all towns on LBI for children in the SRSD is about $141.0K / student.
It is also important to note that Waretown belongs to the SRSD as a ‘sending’ district. As a sending district, Waretown pays the SRSD what amounts to tuition, at approx. $19K per student. In effect, LBI subsidizes the Waretown students who attend the SRSD middle and high school.
No one is advocating that we withdraw from the district – that ship sailed in the 1950s. It is also practically impossible to do based on current law. Neither are we trying to bankrupt the district, nor create undue hardship on Stafford Twp residents. We understand that each town and each individual has an obligation to all the students in the district. However, we think there should be criteria for budget apportionment that more fairly distributes the tax burden. Currently, there are 3 methods of distribution of the tax burden allowed by NJ law2:
On the basis of equalized valuation
On the proportional number of pupils enrolled from each municipality on the 15th day of October in the prior school year.
On the proportional number of pupils enrolled from each municipality and on the basis of equalized valuation.
One possible, more equitable solution for us (LBI), the state and the district to consider is to use the third bulleted method (above), i.e., a combination of the first and the second methods. This, of course, is easier said (or read) than done – the law requires navigating around and through any number of obstacles before achieving that goal.
The HCTA started helping with an LBI-wide initiative about a year ago. Following our annual meeting, we met with our Mayor and Commissioners to discuss if the towns had any plans to move forward with any tax initiative and any options we had. Mayor Oldham was (and remains) in favor of going forward – just not alone – mainly because of costs. The support of other LBI towns would defray costs. Subsequent to meeting with Mayor Oldham, we met with the LBI Joint Taxpayers Assoc. members and asked them to speak with their respective mayors. Fortunately, most island Mayors are supportive of an effort to change the existing method of school tax apportionment.
The HCTA continues to support all LBI-wide efforts to move this issue along. In addition, we are currently monitoring initiatives of other towns in similar tax binds.
Copies of a data table3 that illustrate how the budget affects each town are also available below:
Status of Cape May initiative:
Lower Cape May Twp., Cape May City, and West Cape May comprise the towns with school tax responsibility. Cape May Point is a sending community.
A referendum to allow Cape May City to withdraw, held on Dec 9, 2014, was defeated – as expected. The numbers of voters in Lower Cape May Twp. far exceeds Cape May City – similar to the numbers of voters in Stafford Twp., vs LBI.
In general the next step would be to present their case to an administrative law judge for review and decision. A decision is expected by year end.
A decision usually results in the judge recommending a funding or allocation formula to be reviewed and approved by the Commissioner of Education in Trenton. The Commissioner can accept, deny, or change the recommendation. This is generally not a quick process. For example, North Haledon has been in the fray for more than 10 years. The legal battle has included a NJ Supreme Court decision and 2 iterations of a funding formula. In the end, the Commissioner of Education changed the funding formula to one based on 50 percent pupil enrollment and 50 percent property valuation. Not the 2/3rds, 1/3rd split that was recommended and that North Haledon was suing to get. As of September 2013, North Haledon had spent approximately $400,000 in legal fees4. All towns are expected to challenge the current decision.
In a recent interesting development, the Deputy Mayor of Cape May City has suggested negotiation over litigation. He has proposed that his administration, Lower Twp and the school board all sit down and try to hammer out a settlement, especially given the significant costs and ill will a lengthy legal battle would no doubt produce. The probability of moving ahead with this tactic is in the neighborhood of zero to none – but, we live in hope.
Perspective: Cape May City has about 5% enrollment in their district and pays approximately 33% of tax. In comparison to Cape May, LBI has about 10% of the total combined enrollment of LBI and Stafford and pays slightly more than 80% of the tax. Stafford Twp. will experience a 1.4% DECREASE in their municipal tax next year, this according to an April 23rd 2015 APP news article – compare that with our own approximately 4.6% INCREASE in municipal taxes. Average property taxes in Stafford Twp. for 2014 equaled about $5.5k; HC’s equaled $9.5k. If the average school tax is about 30% of the property tax then Stafford would have an average school tax of about $1,600.00 and HC almost $3,000.00. Currently LBI on average pays about 37 times the per student cost paid by Stafford Twp.
1. The SRSD comprises the 6 towns on LBI, i.e., Bch Haven, Barnegat Light, HC, Long Bch Twp., Ship Bottom and Surf City, plus Stafford Twp. Waretown is part of the SRSD as a sending district and does not participate in the tax allocation.
2. N.J.S.A.18A:13-23, 18A:13-34
2015-16 SFRA ALLOCATION OF EQUALIZED VALUATION 2/25/14; COUNTY=29-OCEAN DISTRICT=4950-SOUTHERN REGIONAL (obtained from the SRSD)
4. Ruling is issued on funding formula for Manchester Regional High School, 12Sep2013 by Tom Nobile – The Gazette (Hawthorne Edition)