Regionalization A Question (or 2)

While there is a lot of opposing information out there regarding the upcoming School Regionalization vote this coming Tuesday, one thing that is not in dispute is that the Attorneys of Porzio,Bromberg, & Newman are the leading experts on School Regionalization in New Jersey.

In fact, Matt Giacobbi Esq., the Regionalization Attorney for Atlantic Highlands stated publicly that Vito Gagliardi and Kerri Wright of PBN Law were the most knowledgeable experts on the subject.  In an effort to provide voters with the facts, PBN Law has provided the following Q&A ‘s”

It is important to vote Tuesday, September 26 between noon and 8 p.m. in the regular polling places in Highlands and Atlantic Highlands.

Question:  What cost allocation method is being voted on at the upcoming election?

100% equalized valuation for a PK-12 all purposes school district.

Question: Is this the only method that is allowed?

No. While rumors have circulated that 100% equalized valuation is the only method the   Department of Education would approve, this rumor is false.  The Department of Education never made such a representation or recommendation.

Instead, there are three ways under the law that the costs can be divided between Highland and Atlantic Highlands: (1) the per pupil method; (2) the equalized valuation method; or (3) a combination of per pupil and equalized valuation.  For example, in the Tri-District’s study, the Tri-District’s expert recommended that Sea Bright be included as part of the new regional school district and that the cost allocation use the third option to combine both per pupil and equalized valuation.

Question:  How do the three methods to divide the educational costs between Highland and Atlantic Highlands differ?

As mentioned above, the three ways the costs can be divided between Highland and Atlantic Highlands are: (1) the per pupil method; (2) the equalized valuation method; or (3) a combination of per pupil and equalized valuation.

Per Pupil Method

The per pupil method is based on the principle that each municipality should pay a percentage of the costs based on the percentage of students it sends.  Therefore, if one municipality sent 20% of the students that make up the school, it would be responsible for 20% of the school’s costs required to be collected through taxes.

Equalized Valuation Method

Each year the Division of Taxation in the New Jersey Department of the Treasury releases its table of equalized valuations, which provides the “equalized value” of property in each municipality in the State.

Equalized valuation is an attempt by the State to calculate the total market value of all taxable property within a municipality.

Under the equalized valuation, each community’s contribution to the school’s expenses is based on the percentage of the total market value.  Therefore, if one municipality’s total market value represents 60% of the combined total market value of both municipalities, that municipality would be responsible for 60% of the school’s costs required to be collected through taxes.

By way of example, if Community A has an equalized value of $60 million and Community B has an equalized value of $40 million, Community A would be responsible for 60% of the costs ($60 million out of $100 million = 60%)  and Community B would be responsible for 40% of the costs ($40 million out of $100 million = 40%).  The number of students each community sends is not relevant for this calculation.

Combination

The law allows the apportionment of costs in a regional school district to be based on a combination of the per pupil method and the equalized valuation method.

Question: Will the apportionment of costs between Highland and Atlantic Highlands remain the same?

No. While there are rumors circulating that this will remain the same, there will be differences if the referendum passes.

While the method may appear to be the same, there is an important difference that may result in one community receiving a greater share of the cost.

Presently, Highlands and Atlantic Highlands use a 100% equalized valuation method for a limited purpose 9-12 school district  (a “limited purpose” regional school district means that the school does not serve all grades).

The upcoming vote would modify the apportionment method to be 100% equalized valuation for an all-purpose PK-12 regional school district (an “all purpose” regional school district means it serves all grades).

100% equalized valuation for a limited purpose 9-12 regional school district

Communities that are part of a limited purpose regional school district means that they send their students to two separate school districts.

The tax dollars collected therefore must be divided between each school district.  Under the 100% equalized valuation method, to calculate how much a community contributes, an initial calculation is done to determine the percentage of students that community sends to each school district (i.e. the elementary/middle school and the high school).

Once that calculation is completed, the percentage of students who attend the limited purpose is used to calculate the amount of equalized property value that goes into the equalized valuation calculation for the limited purpose regional school district.  By way of example, Community A sends 55% of its students to PK-8 School and 45% of its students to 9-12 High School.  It has an equalized valuation of $100.

For purpose of calculating the 100% equalized valuation for the 9-12 High School, only $45 is used ($100 x 45%), rather than the full $100.  Comparatively, Community B may send 45% of its students to PK-8 School and 55% of its students to 9-12 High School.  Assuming it also has an equalized valuation of $100, for purposes of calculating the 100% equalized valuation for the 9-12 High School, $55 is used ($100 x 55%).

Therefore, under this example, to calculate the 9-12 High School equalized valuation, Community A’s equalized valuation would be $45 and Community B’s equalized valuation would be $55, for a total of $100.  As a result, Community A would be responsible for 45% of the costs to be collected through taxes ($45 out of $100 = 45%) and Community B would be responsible for 55% of the costs to be collected through taxes ($55 out of $100 = 55%)

100% equalized valuation for an all-purpose PK-12 regional school district

Once a district becomes an all-purpose district, the total amount of each community’s equalized valuation is included in the calculation.  Under the previous example, both Community A and B had an equalized valuation of $100.  Therefore each would be responsible for 50% of the total costs to be collected through taxes ($100 out of $200 = 50%).

Question: Is Sea Bright part of the upcoming vote?

No. The vote only includes Highlands and Atlantic Highlands forming a PK-12 regional school district.

Question: Will Highlands and Atlantic Highlands continue to receive substantial savings with Sea Bright not included?

No, since Sea Bright is not part of this vote, the substantial annual savings that the experts calculated (collectively, over a million dollars annually) would not occur due to Sea Bright not being included as part of this regionalization.

Question: Will Highlands and Atlantic Highlands both continue to receive tax savings if the upcoming vote passes?

No, since Sea Bright is not part of this vote both Highlands and Atlantic Highlands will not receive a tax reduction. Instead, according to the tax analysis performed by the Tri-Districts, residents in Atlantic Highlands would expect to receive a tax increase due to the regionalization.

Question: Does this vote need to pass for Sea Bright to join?

No. If the vote does not pass, Sea Bright, Atlantic Highlands, and Highlands can still move to create a new all-purpose PK-12 regional school district.

Question: Does the vote passing make it easier for Sea Bright to join?

No. If the vote passes, Sea Bright could join at a later date regardless.  If the vote does not pass, Sea Bright, Atlantic Highlands, and Highlands can still move to create a new all-purpose PK-12 regional school district.  However, the vote passing does not make it easier for Sea Bright to join Highlands and Atlantic Highlands.

Question: Is Sea Bright required to join a PK-12 School District?

No. We understand that recent news articles included statements that Highlands and Atlantic Highlands must first become a PK-12 regional and only then could the voters be asked to vote on Sea Bright joining.

That is not correct.

Under the law, with the Commissioner’s approval, Sea Bright is allowed to withdraw from the schools where its students currently attend in order to “form or enlarge a limited purpose or all purpose regional district.”

This means that the law allows Sea Bright to: (1) form a K-12 all-purpose regional school district with Highlands and Atlantic Highlands at the same time in one single vote; or (2) enlarge a currently existing K-12 all-purpose regional school district (if Highlands and Atlantic Highlands form such an arrangement before Sea Bright joins).

While not as relevant to our current situation, Sea Bright also is allowed under the law to join Highlands School District or Atlantic Highlands School District by becoming a regional K-8 school district (with one of them), or enlarge Henry Hudson Regional by seeking to join the currently existing regional high school district. All of these options are allowed under the law.