New Jersey 2018 GASB-77 Data

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NEW JERSEY 2018 GASB-77 DATA:

School districts struggled to find the numbers

GASB-77, or Statement No. 77 of the generally accepted accounting principles, requires governments to disclose the amount of foregone tax revenue due to tax abatement programs.

 

Updated: September 17, 2019

 

COMPLIANCE

308 of the 597 public school districts surveyed acknowledged GASB 77 and included a dedicated section entitled Tax Abatements in their CAFR notes. The other 289 districts made no mention of tax abatements.

 

All 308 districts that provided a note on tax abatements cited statutes N.J.S.A. 54:4-75 and N.J.S.A. 54:4-76 in a standardized statement, pasted here:

If the county or municipality entered into tax abatement agreements, those agreements will not directly affect the school district’s local tax revenue because N.J.S.A. 54: 4-75 and N.J.S.A. 54:4-76 require that amounts so forgiven must effectively be recouped from other taxpayers and remitted to the school district.

This implies that tax abatements entered into by non-education governmental bodies create no passive revenue losses for such school districts.

278 of these 308 school districts with Statement 77 notes also cite statute N.J.S.A. 18A: 7F-5(b) – which specifies the provisions for raising a minimum tax levy – in the following standardized statement:

For a local school district board of education or board of school estimate that has elected to raise their minimum tax levy, the loss of revenue from the municipality or county having entered into a tax abatement agreement is indeterminate due to the complex nature of the calculation of required local share performed by the New Jersey Department of Education based upon district property value and wealth.

 

REVENUE LOSS

118 school districts, or roughly 20% of all school districts, provided a dollar figure for the foregone tax revenue as a result of tax abatement agreements. These reported revenue losses totaled $93.7 million in fiscal year 2018.

72 school districts calculated and disclosed the amount of foregone revenue for the district itself. Some districts declared that district levy was not affected because of offsetting remittances from the municipality; others reported that revenue from PILOT agreements partially or wholly offset any tax breaks.

Some school districts claimed to not have foregone tax revenue because 1) there were no tax abatement agreements or 2) the impact on school district revenue of tax abatement agreements is immaterial.

A few school districts mentioned the amount of revenue abated by the county or municipality, but then fail to provide the amount of foregone tax revenue that was lost to the district. Regarding tax abatement agreements entered into by the municipality, some school districts referenced information provided in the “User-Friendly Budget,” which every New Jersey municipality is required to provide.

A few CAFRs contained “but-for” statements along the following lines:

It could be presumed that if these abatement agreements were not entered into, that the businesses would either have not retained their businesses within the municipality or have not moved their businesses into the municipality. (example taken from the 2018 CAFR of Magnolia Board of Education)

In reality, however, it is very difficult, if not impossible, to support such an assertion.

Financial reports are also available for 86 charter schools in New Jersey. Twelve acknowledge GASB 77 and include a section on tax abatements with one or more standardized statements like those cited above. None, however, provides any details about the programs or dollar amounts of lost revenue.

 

BREAKDOWN BY COUNTY

In terms of gross revenue losses – i.e. not including reimbursements or PILOT offsets, Hudson County and Middlesex County top the list at $15.9 and $14.1 million (see table below), respectively.

Middlesex county has the highest GASB 77 compliance rate in the state: 12 out of 25 school districts disclosed the dollar amount of abated taxes. Camden County has the second highest compliance rate: 16 out of 39 school districts reported a total of $7.4 million in forgone revenue. In Hudson County, by contrast, only 2 out of 13 school districts reported this information. Counties of Passaic, Sussex, Hunterdon, Atlantic, and Warren have the next-lowest disclosure rates.

A special mention goes to Glassboro Board of Education in Gloucester County for providing extremely detailed disclosures that go above and beyond the GASB 77 requirements. The three abatement programs are given two whole pages listing every single agreement with clearly stated amount and purpose, such as:

A 64.05% effective abatement (no ground lease) to a developer for construction and operation of a 129 Room Courtyard by Marriott Hotel and Conference Area. The abatement amounted to $376,830.

The same level of detail is provided for 14 other agreements.

 

SCHOOL DISTRICT DISCLOSURE BY COUNTY

Key to Chart Headers:

POPUL. – county population according to the 2010 census

#SD – total number of school districts (public schools only)

GROSS LOSS – amount of forgone tax revenue, not incl. reimbursements or PILOT offsets

DQ 1 – “disclosure quotient 1”: the percentage of school districts that disclosed $ amount

DQ 2 – “disclosure quotient 2”: the percentage of school districts that mentioned GASB 77

ESTIMATED – a crude estimate of all revenue losses = gross revenue loss divided by DQ 1 (i.e. Divide the reported amount by the number of reporting districts to get the average, then assume each of the non-reporting districts abated this much.)

 

COUNTY

POPUL.

# SD

GROSS LOSS

DQ 1

DQ 2

ESTIMATED

Hudson

634,266

13

$15,913,938

15.4%

69.2%

$103,440,597

Middlesex

809,858

25

$14,109,606

48.0%

80.0%

$29,395,013

Mercer

366,513

11

$10,131,368

27.3%

45.5%

$37,148,349

Essex

783,969

23

$9,104,264

26.1%

60.9%

$34,899,679

Gloucester

288,288

28

$8,953,913

39.3%

71.4%

$22,791,779

Camden

513,657

39

$7,432,430

41.0%

59.0%

$18,116,548

Union

536,499

23

$6,829,579

17.4%

43.5%

$39,270,079

Monmouth

630,380

57

$4,859,251

12.3%

52.6%

$39,568,187

Morris

492,276

40

$3,405,949

27.5%

35.0%

$12,385,269

Passaic

501,226

21

$3,262,561

9.5%

19.0%

$34,256,891

Burlington

448,734

41

$2,646,856

29.3%

82.9%

$9,043,425

Sussex

149,265

25

$1,675,420

4.0%

32.0%

$41,885,500

Bergen

905,116

77

$1,280,844

10.4%

41.6%

$12,328,124

Hunterdon

128,349

26

$919,675

7.7%

23.1%

$11,955,775

Somerset

323,444

19

$780,559

10.5%

21.1%

$7,415,311

Ocean

576,567

29

$749,507

10.3%

72.4%

$7,245,234

Atlantic

274,549

26

$429,314

7.7%

19.2%

$5,581,082

Salem

66,083

16

$411,271

31.3%

93.8%

$1,316,067

Cumberland

156,898

15

$394,731

13.3%

53.3%

$2,960,483

Cape May

97,265

19

$223,479

26.3%

36.8%

$849,220

Warren

108,692

24

$206,508

8.3%

79.2%

$2,478,096

TOTAL

8,791,894

597

$93,721,023

19.8%

51.6%

$492,904,880

Source: School district CAFRs as collected by the New Jersey Department of Education.

 

See also:

New Jersey GASB-77 ROADMAP (institutional schematic for enforcing GASB-77 compliance)

New Jersey ACCOUNTABILITY PROFILE (transparency rankings, major subsidy deals, database entries, publications, and much more)

 

 

Want to know about GASB-77 disclosure in your state? Contact Christine Wen chris@goodjobsfirst.org.

 

 

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