USNews Rankings Revisited: NJ #1 in Education but #49 in Fiscal Stability

Last week, Sunlight posted a blog entitled “USNews Eduction Rankings: Good News for NJ but Still Not Accounting for NJ’s Excessively High Spending.”  Sunlight’s point was that NJ does have a very good education system but that NJ also spends an excessively large amount on education, which USNews did not factor into its education rankings.

But Sunlight then realized that USNews does indeed account for a state’s education spending in a separate ranking called “Fiscal Stability.”  Here, NJ comes in #49 – mainly because NJ’s state budget is in deep deficit.  NJ’s total revenues to total spending ratio is 0.899 (in other words, NJ spends more than 10% more than it takes in).  The national average is 1.042 – that is, the average state runs a small surplus.  This is the flip-side of NJ’s top education ranking: education is by far the largest expenditure in the state budget and thus is the largest contributor to NJ’s perennial budget deficit and its #49 ranking in fiscal stability.

Rather than view education in isolation, NJ citizens should consider the fiscal implications of all the education spending.  Yes, NJ is #1 in education, but it is also #49 in fiscal stability.  And there are other negative consequences beyond the budget deficit:  According to the Tax Foundation, NJ ranks dead last in the tax climate for businesses; and NJ has one of the nation’s worst outmigrations of people, businesses and wealth.  NJ does not benefit as much from its education system if its graduates leave the state.

The bottom line for the USNews rankings: Excessively high education spending has both positive and negative consequences for NJ.