Hurricane Sandy’s toll on school funding may be a new disaster on the horizon

This is part of a series from education blogger Laura Waters of NJ Left Behind.

Last week I suggested that Hurricane Sandy might prompt New Jerseyans to consider the benefits of school consolidation. Here’s another reason why we might want to reimagine our current infrastructure of 600 school districts, more per mile than any other state in the country:

New Jersey is just coming to terms with the damage inflicted by Hurricane Sandy. Gov. Christie announced this week that costs for rebuilding damaged properties, infrastructure, and shore lines will come in somewhere around the neighborhood of nearly $37 billion, much of that funded, hopefully, through FEMA.

But that price tag doesn’t account for the long-term sustainability of storm-ravaged towns, particularly the potential reduction in ratables, or the assessment of the value of real estate. During a conference call among Monmouth County officials, Monmouth Beach Mayor Susan Howard, according to the Star-Ledger, “expressed concern about how this loss of ratables would impact the ability of municipalities to function.’ This is going to be devastating to running our town,’ Howard said to the officials.”

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And that brings us to schools, which in New Jersey are mostly funded, like municipalities, through property taxes. In fact, more than 50% of an average N.J. homeowner’s annual property tax bill is allotted to schools. The rest of the money for school funding comes from the State, which picks up about 34% of the tab (one of the lowest contributions in the country) and 3% comes from the federal government. The bulk of the state contribution goes to low-income communities that lack the tax base to adequately fund their public school districts.

But what happens when a natural disaster threatens that tax base? While we’re all eager to immediately rebuild, maybe it’s wise to pause for a moment and consider Sandy’s impact on three issues that potentially affect school funding, particularly in wealthier towns: the strength of local economies in the wake of the storm, changes in school enrollment, and variables affecting the available tax base to fund local school districts.

Let’s go back to Monmouth Beach, which Wikipedia describes as a small enclave “known for its beautiful Victorian houses and new multi-million dollar homes.” Like many shore towns, damage was grave: 100 homes were destroyed and thirty homes completely washed away. The one school in town, Monmouth Beach School, was so badly damaged that administrators there project that its 310 K-8 students won’t be back in their home school for another six to eight months. (The kids are attending schools in neighboring regional districts.)

The challenges facing schools in towns like Monmouth Beach go well beyond repairing boilers and replacing water-logged drywall. There’s also the potential toll on the local economy. A 2008 study by Eric Strobl called “The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties” (recently cited in the New York Times) quantified the decrease in annual economic growth at about 0.6%, which he calls “no small hit” because growth usually averages about 1.68%.

In other words, it’s likely that shore towns will see a decrease in economic growth and an attendant reduction in ratables derived from local businesses.

We have more information about the impact of a Hurricane Sandy-like catastrophe on public school enrollment. A 2010 study published by Tulane University, “The State of Public Education in New Orleans: Five Years after Hurricane Katrina,” analyzes student population trends in New Orleans, which have stabilized at 58% of pre-Katrina enrollment:

“In the 2004-2005 school year before Hurricane Katrina, there were approximately 65,000 students enrolled in the city’s public schools. In the first full school year after the storm, there were less than 26,000 students. Since then, student enrollment in New Orleans has grown each year, though the rate of growth continues to slow. By February 2010, public school enrollment in New Orleans had risen to 38,100 students. “

If Hurricane Katrina is any indication, some people may choose not to reestablish their families in shore town.

Now, Monmouth Beach is no New Orleans. The local district’s annual operating budget — $4.8 million –mostly comes from local ratables. Some homeowners may relocate. Some may have their damaged property reassessed at a lower rate and, thus, pay a smaller annual tax levy. What impact will that have on local school operations?

Other shore towns rely more on the State for operating costs. In towns like Buena Regional, Hammonton, Mullica, and Long Branch, ratables provide about a third of school costs. Our poorest districts rely almost entirely on the state. Keansburg tax payers pick up about $4 million of the town’s $34 million in school costs. In Asbury Park, ratables fund about $6 million out of a $66 million budget. Will the State need to pick up more of the tab in poor districts? What impact will that have on the state budget?

Maybe we’ll rebuild everything and local economies will prosper. Maybe no one will relocate inland and school enrollments will remain stable. Maybe there will be no change in ratables: property values will prove immune to Sandy, tax assessments will stay the same, and school funding will be unaffected.But, in our thirst to recreate NJ’s pre-Sandy landscape, it might be worth a moment to take a deep breath and think strategically about how best to preserve our investments in our public education system.

Laura Waters is president of the Lawrence Township School Board in Mercer County. She also writes about New Jersey’s public education on her blog NJ Left Behind. Follow her on Twitter @NJLeftbehind.

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