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Federal Reserve Board of New York: Recession Hits New Jersey’s Abbott Districts Disproportionately Hard

“Funding for New Jersey’s low-income school districts declined sharply during the Great Recession, according to a recent New York Fed study. Moreover, the Abbott districts—a group of poor urban districts that once received special appropriations from the state—were hit especially hard. The recent recession, the passage of the federal stimulus bill, and the decision to eliminate special Abbott district funding all converged to reshape education finance during the 2008-09 and 2009-10 school years.  In their study New Jersey’s Abbott Districts: Education Finances during the Great Recession, economists Rajashri Chakrabarti and Sarah Sutherland examine how these developments affected the level of school funding in New Jersey’s low-income districts and how these districts adjusted their instructional and non-instructional expenditures in response.  The authors pay particular attention to the Abbott districts, noting that they represent 20 percent of all students enrolled in public schools but receive 50 percent of the state’s funds. For context, they use two benchmark groups: the rural, low-income “Bacon districts” and districts from across the state whose income profile almost exactly matches that of the Abbott districts.”

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