NJ Considers Tax Credits

Published January 1, 2007

This year, the New Jersey General Assembly will consider a bill that would enable children living in troubled school districts to attend a private school. Defenders of the measure say it would ease financial pressure on several local school districts.

The Urban Schools Scholarship Act was introduced in 2006 but has yet to receive a committee hearing. Proponents both within and outside the legislature hope to move the bill in 2007. Versions have been introduced into the House (A. 257) and the Senate (S. 1332).

Funding Scholarships

The bill would establish a tax credit for businesses paying the state corporate income tax. Corporations that donate to a nonprofit scholarship organization or an educational improvement organization would receive a credit for 100 percent of the donation. Corporations would not be exempt from the minimum tax permitted by state law.

The Urban Schools Scholarship Act, if passed, would resemble the corporate tax credit programs in Arizona and Pennsylvania, although scholarships there can be used for students statewide. New Jersey’s program would focus on seven cities with large minority populations: Camden, Elizabeth, Lakewood, Newark, Orange, Paterson, and Trenton, which together serve approximately 102,000 of the state’s 1.4 million students.

Those cities all contain “Abbott Districts”–31 school districts with limited local property tax funding due to a small local tax base, for which the state has been ordered by its Supreme Court to match the per-pupil funding of wealthier districts.

In 2006, the state spent $500 million in special grants to Abbott Districts to provide parity funding.

“Right now there’s nothing in the legislation about how the scholarships are distributed, but we’re hoping that there will be something added to the legislation that will proportionately distribute the scholarships based on the population of the districts,” said Derrell Bradford, deputy director of Excellent Education for Everyone (E3), a school choice advocacy group with offices in Camden and Newark.

Legislative Benefits

“We’re looking to get kids into functioning schools and, as a result, bring some competitive pressures to bear on the existing public schools,” Bradford explained. “The targeted districts spend some of the highest amounts of money in the state [on education] and get the worst results.

“We also have to stop local private school closings [in the targeted areas] because we’ll pay a lot more for it later,” Bradford continued. Between 1999 and 2003, Bradford said, one Catholic school in Trenton closed each year, sending the majority of their students into the Trenton public school district and leading to larger Abbott grants from the state.

Bradford said two Catholic schools in Camden are “teetering” and may have to shut down if they don’t receive an infusion of new students soon. If those schools close, the Trenton schools would get as many as 500 new students, forcing the state’s taxpayers to pay even more to help subsidize their education.

“From the standpoint of kids, it’s the right thing, [and] from the standpoint of property taxpayers,” Bradford said.

Political Support

The measure has attracted some significant sponsors, including six in the Senate and eight in the Assembly. Bradford is pleased not only with the number of sponsors, but also who they are.

Sponsors include Assemblywoman Nilsa Cruz-Perez (D-Camden) and Assemblyman John McKeon (D-Essex), who are, respectively, the Assistant Majority Leader and Assistant Majority Whip in the General Assembly. McKeon is also the mayor of Orange, one of the communities that will benefit from the proposal.

Other sponsors include Assemblyman Joseph Cryan (D-Union) and state Sens. Raymond Lesniak (D-Union) and Joseph Doria (D-Bayonne).

Other elected officials from affected communities support the proposal as well. On October 18, the Newark City Council adopted a unanimous resolution supporting it, as has Camden’s.

Newark Mayor Cory Booker (D) wrote a public letter to all legislators in favor of the measure on October 2, saying improving education for minorities is an “urgent civil rights challenge” and that the bill would “empower children trapped in failing public schools” by relieving overcrowding, thus giving “teachers the opportunity to focus on fewer students for better results.”

Gov. Jon Corzine (D) has not yet stated a public position on the measure.

Michael Coulter ([email protected]) teaches political science at Grove City College in Pennsylvania.

For more information …

Assembly Bill 257, http://www.njleg.state.nj.us/bills/BillView.asp

“Trenton funding proposal riles Abbott districts,” by Elisa Ung and Melanie Burney, Philadelphia Inquirer, November 19, 2006, http://www.philly.com/mld/philly/news/16046805.htm