Current Issues in Economics and Finance
Second District Highlights
New Jersey’s Abbott Districts: Education Finances during the Great Recession
2014   Volume 19, Number 4    2013
JEL classification: H40, I21, I28

Authors: Rajashri Chakrabarti and  Sarah Sutherland

Funding for New Jersey’s low-income school districts tumbled in the most recent recession, and the Abbott districts—a group of poor urban districts that for almost two decades received special appropriations from the state—were hit especially hard. A comparison with the state’s other low-income districts reveals that the Abbott districts faced markedly sharper declines in aid, relative to trend. Consequently, while all of the low-income districts responded to the drop in state aid by scaling back spending on support services and utilities, only the Abbott group also made significant cuts in instructional spending. Moreover, the fiscal strains of recession appear to have led to layoffs of untenured teachers in the Abbott districts, but not in the state’s other low-income districts.

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