New Jersey’s Freehold Borough is a classic example of an educational “island district,” where the property tax base and thus available school funding is sharply different from that of a surrounding town. While 32 percent of the borough’s residents have incomes putting them below the poverty line, only 5 percent of those in Freehold Township do.
Aby nonprofit EdBuild, a think tank specializing in school finance, found 180 similar districts around the country. New Jersey has several because of a 19th century law allowing town centers to incorporate as boroughs.
When Freehold Borough did that, it was a commercial center, while the area around it was mostly farmland. Now, the borough has county offices and other institutions not subject to property tax, an influx of immigrants, including many young families, and little land open for development that might increase the tax base. The borough even has to pay its richer neighbors to bus some of its children to their schools.
“Island districts” are not necessarily the impoverished ones, although many are in Freehold Borough’s situation. EdBuild pointed to Piedmont, CA, a high-income enclave that remained separate in the 1920s when much of the area was merged into Oakland. Piedmont, nicknamed “City of Millionaires” at the time, remains prosperous, with a poverty rate of 2.2 percent, less than one-tenth of Oakland’s 24 percent.
on the National Public Radio website.