New Jersey School Choice Alliance

Urban Enterprise Zone Jobs Scholarship Act Q&A–UEZJSA Formerly the Urban Schools Scholarship Act

What is the UEZJSA?
The Urban Enterprise Zone Jobs Scholarship Act (UEZJSA) is a pilot corporate tax credit scholarship bill that will fund scholarships for low-income students in eight school districts. The scholarships would enable them to attend participating public schools out of district, or private schools anywhere in the state. Both public and private schools would have to agree to participate in the program.

How is the UEZJSA funded?
Corporations that pay corporate income taxes in New Jersey would be allowed to take a 100% credit against their state income tax obligation for donations made to the UEZJSA scholarship fund.

Who is eligible to receive a scholarship?
Low-income students residing in the pilot districts. Low-income is defined as no more than 2.5 times the federal poverty level, based on family size. For a family of four to be eligible to participate, their income could not exceed $50,000 annually.

Does the UEZJSA take money from public schools?
No. The UEZJSA does not affect public school funding, and in no way takes money from the pilot public school districts. The program is funded by a completely separate revenue streamÑtax credits given to contributing businesses. In effect, the scholarships are fueled by the State’s treasury, not removed from the pilot public school districts.

Additionally, Governor Corzine’s recently passed school funding formula includes a hold harmless clause ensuring that no school district in New Jersey will receive less money for at least the next three school years. Assertions that the UEZJSA will take money from public schools are completely unfounded.

Are there programs like the UEZJSA in other states?
The UEZJSA is modeled on Pennsylvania’s highly successful Educational Improvement Tax Credit program. The program is oversubscribed by businesses annually, with over 2,300 companies contributing $260 million to date, allowing 33,000 Pennsylvania children over the life of the program to attend participating schools of their parent’s choosing. Other states with such programs are Arizona, Rhode Island, and Florida.

Are there other programs like it in New Jersey?
Both in New Jersey and nationally, there is a well-established history of government funding for students to attend public or private schools of their own choosing. In New Jersey, children can attend preschools, special education providers, and colleges chosen by their families and paid for by the state.

What are the pilot districts?
The participating districts under the UEZJSA are Newark, Paterson, Jersey City, Orange, Trenton, Elizabeth, Camden, and Lakewood. These districts have all been designated as New Jersey Urban Enterprise Zones

How are the public schools in the target districts performing?
The pilot districts are characterized by high dropout rates, and academic achievement well below state averages. All but one are described as Districts in Need of Improvement by the State Department of Education for overwhelmingly failing to meet state-defined academic progress targets. Indeed, a recent Department of Education report on overuse of the State’s alternate route assessment, The SRA, identified all of the target districts as using the SRA at excessive levels.

The Star-Ledger went on to assert that “The fact that so many students need the SRA is evidence that they never got the foundation required to master what they were taught in high school. Every aspect of the problem, not just the end result, must be addressed.”

Is government aid to private and religious schools constitutional?
Yes. Indirect aid to private schools, such as under the UEZJSA, is perfectly legal and does not violate the “establishment clause” of the United State’s Constitution. Programs such as the UEZJSA were upheld by the U.S. Supreme Court in the landmark Zelman v. Simmons-Harris decision which analyzed the City of Cleveland, Ohio’s school choice program.

It is worth noting that the State already funds private and religious schools through aid programs for transportation, textbooks, and technology. Additionally, the State’s widely lauded preschool program, out-of-district placements for special needs students in private schools under I.D.E.A., and numerous college scholarship programs also allow students to select private and religious schools with public funding.

How is the program managed locally?
The UEZJSA provides for the creation of a Scholarship Organization, or S.O. There will be one S.O. for each county in which a pilot district is located, chosen by The New Jersey Urban Enterprise Zone Authority. The S.O. will be responsible for a variety of tasks related to the implementation of the UEZJSA program including:

1. managing the scholarship application process for the pilot school district;
2. reviewing and verifying the residence and income of a scholarship applicant;
3. compiling an inventory of vacancies in participating schools available for potential scholarship recipients;
4. conducting necessary student selection lotteries;
5. monitoring the enrollment of scholarship students in eligible schools and allocating scholarship funds to those schools.

What assurances are in the UEZJSA to guarantee equal access and student civil rights?
The UEZJSA specifically prohibits any discrimination on the basis or race, academic ability, disability, or athletic ability during the admissions process. In fact, participating private schools are held to the same standards as traditional public schools in this regard.

What if more students apply for scholarships than there are spaces in their grade levels available at a participating school?
In the event that more children apply for admission under the pilot program than there are openings at a participating school, a lottery will be used to determine which children are selected for admission, except that preference for enrollment may be given to siblings of students who are already enrolled in the participating school.

How much will the UEZJSA pilot cost?
The UEZJSA Scholarship Fund is up to $24 million in Year I, increasing by that amount for each of the next five years to a maximum of $120 million in Year V of the pilot. This would provide scholarships to a maximum of approximately 20,000 students in the pilot districts in the fifth year of the program.

Approximately $20 billion is spent locally and at the state level on public education in New Jersey annually. The $24 million in tax credits in Year I represents just .0012% of what is spent on public education in New Jersey, and the $120 million in Year V is just .006% of state spending on education. This fraction of 1% of school spending, funded by corporate tax credits, will increase academic opportunities for students in some of the State’s costliest, lowest performing school districts. This miniscule investment will pay dividends to New Jersey for many years to come.

How much are each of the scholarships worth?
Scholarships are a fixed percentage of pilot district’s per-pupil costs, amounting to approximately $6,000 for students in grades k-8, and $9,000, for high school students, both significantly less than pilot district spending and the New Jersey average of nearly $18,000 a student. Total scholarship dollars cannot exceed the maximum amount of corporate tax credits allowed in a given year of the pilot program.

What if the actual tuition is more than the amount of the scholarship?
Participating public and private schools must accept the scholarship as payment in full. The UEZJSA expressly forbids the school from charging participating families any more for tuition than it receives from the program’s scholarships.

Can students already enrolled in private schools participate?
No more than 25% of scholarship dollars can be used by students currently attending private schools. The remaining 75% will provide scholarships for students currently attending public schools in the pilot districts. The UEZJSA recognizes that there are low-income families both in public and private schools struggling to provide safe, quality academic opportunities for their children.

Will there be a study or report done on the effectiveness of the UEZJSA pilot program?
Yes. The UEZJSA provides for a study to be performed by researchers with expertise in urban education, exploring such topics as:
the academic achievement of scholarship recipients based on test results and other educational indicators;

1. the impact of the pilot program on achieving savings for State taxpayers;
2. the impact of the program on student enrollment patterns; and
3. parental satisfaction with the pilot program.

Are there any admissions tests required at participating private schools?
No. Participating private schools are forbidden from using entrance exams to determine school admission. However, these schools may assess students at their time of entry to determine their educational levels so they may be better served academically.

Will the participating private schools have to give standardized tests like the public schools?
Yes. Under the UEZJSA, any participating, non-public school must administer an annual test to scholarship recipients that is aligned with the New Jersey Department of Education’s Core Curriculum Content Standards.

What will happen if the UEZJSA is not passed?
In the past 10 years, 100 non-public schools have closed in the state of New Jersey. Due to severe fiscal crises, the rate of closure has only continued to accelerate. When one of these schools closes, many of these students, who currently cost New Jersey taxpayers little to nothing, are returned to their local public school districts. The result: much higher taxes and overcrowding in schools that are, already, underperforming for needy students. Without the UEZJSA, these schools, many of which are anchors in their local communities with long histories of educating minority and low-income students, will continue to close until there are none remaining.