Kiryas Joel is a community of Hasidic Jews that was established in the early 1970’s in an area that was originally part of the village of Monroe, New York. Their move into the area had great impact on the existing residents of Monroe, especially those residents in the nearby area. This paper discusses the effects on both the residents of Kiryas Joel and Monroe of different institutional structures. These structures relate to three different economic goods – special education provided to Kiryas Joel children, the establishment or changing of political boundaries, and the use of land. Hypothesized effects or performance results are discussed for each structure identified.

In the early 1970’s, the Satmar Hasidic Jews purchased an undeveloped subdivision in the town of Monroe, New York. The Hasidic Jews are an ultra-orthodox Jewish sect, which follows very strict religious doctrines. The Hasidic Jews prefer segregation from the surrounding community so that they can maintain their religious beliefs without pressure from the external environment. Their dress is very different from that of the "average" American, requiring, for instance, males to wear long side curls, head coverings and special garments. Yiddish is the accepted language within the community, and there are no American television, radio or English-language publications allowed within the community. Their religious doctrines require different education for males and females, and almost all of their children are educated in their own established religious schools.

There have been significant confrontations between the Hasidic community (called Kiryas Joel [KJ]) and the surrounding town of Monroe originating from when the property was first purchased. Issues have included zoning laws, water usage, busing, and the education of the special needs children within KJ, with this final issue being brought all the way to the United States Supreme Court. This paper will deal with the issues related to the education of KJ’s special needs children and the zoning laws, and how both these issues affected KJ and the surrounding town of Monroe.

New York State laws require school districts to provide equal educational opportunities for all children within their district. Although parents may choose to send their children to a private school, the district within which the children reside is required to provide busing and all educational needs to those children who are not sent to private schools. Most children in the KJ community are educated in the KJ religious schools. However, there are children with special needs in KJ that cannot be mainstreamed into their regular religious school, and require additional learning opportunities. Originally, the Monroe-Woodbury (MW) school district provided the necessary special education in trailers that were located within the KJ community, but not actually in the KJ religious schools themselves. As required by New York State law, the schools were secular and the education was provided by non-religious teachers.

In 1984, MW stopped providing the education in the trailers, and offered to bus the special education children to MW schools where similar education was being provided. The KJ community was unhappy with this change because of their desire to remain segregated from the outside community. The KJ community decided to establish its own school district and provide the appropriate education to their special needs children. If KJ could establish itself as its own school district, it would receive funding from New York State just as any district receives funding for special education. The funds would, in fact, help pay for new facilities in addition to paying for materials and teachers. The establishment of a new school district, however, required the passing of a New York State law. A series of laws were passed from 1989 to 1997, with each law being ruled unconstitutional by various courts, including a final unconstitutional ruling in 1994 on the 1989 laws by the United States Supreme Court.

During the time that the laws were being contested in the courts, New York State was providing significant amounts of funding to KJ in order to educate their special education children. After the final ruling on the unconstitutionality of the 1997 laws, MW was again required to provide education services to the KJ special needs children. Currently, this education is being provided in those facilities that were paid for with New York State funds from 1989 to 1997.

The provision of education is an economies of scale good. To provide education to one child, a school district must provide a school building, teachers, classroom materials, administrative services (i.e., a principal, secretaries, etc.), and buses. As the number of children educated increases, the same administrative services, buildings, buses and classroom materials can be used, with additional costs incurred for some additional materials and perhaps more teachers. Therefore, the average cost per child decreases as more children are educated within the same school district. This provides an incentive for school districts to be larger and educate as many children as possible under one administrative body.

As with any economies of scale good, issues related to the determination of quality and funding of costs are important. The provision of special education to the KJ children results in interdependencies among four different groups of people as these issues are addressed. The KJ community and its children will be affected by who provides the special education and where it is provided as well as what the quality of that education is. KJ would prefer to have control over the quality of education and ensure it is provided within its own community. The MW school district will be affected most significantly in the decision of whether or not they are required to provide the special education (if KJ is established as its own school district, MW would not have to provide any services). The State of New York and all of its taxpayers will be affected by the allocation of tax dollars to special education and other education needs – less taxes will need to be spent on special education if MW provides the education to the KJ children. In addition, all school districts in New York State will be affected by the districting decision. Although taxes could be increased to support a new school district, more than likely the current level of taxes will just be allocated across an increasing number of school districts.

Three different institutional structures were in effect at some point during this special education debate. I will discuss these three structures and one additional possible institutional structure, and the hypothesized resulting performance levels related to each below. The general hypothesis related to each of these structures is: Costs of providing special education to both MW and KJ children will be significantly higher if KJ is established as its own school district.

Structure 1 is the least expensive option to New York State. Under this structure, the KJ special needs children will be educated within the MW schools using MW teachers, administered by the current MW administration. The KJ children will be bused to a local MW school which will be at a minimal cost since the KJ community is very close to many MW schools. New York State taxpayers and other New York State school districts will generally not be affected at all because costs will not substantially increase. The MW school district will not be greatly affected as it will provide education to the KJ children that is equivalent to any special needs child within the MW school district. The KJ community, however, will have no control over the content or quality of the education. In addition, the KJ special needs children will be exposed to children and culture outside their own community which could be very difficult for them, and which goes against the religious ideals of the Hasidic Jews. Therefore, it is highly possible that the parents of special needs KJ children will decide not to send their children to the MW schools, and therefore the children will go without formal education.

Under Structure 2, New York State pays for additional costs to establish a trailer (a new, but relatively inexpensive, school building) within the KJ community, while MW provides the special education under its current administration and uses its own teachers and classroom materials. This increases New York State’s costs, but not substantially. Once the trailer is actually purchased and established, few additional costs will be needed to maintain it. Therefore, similar to Structure 1, New York State taxpayers and other New York State school districts will not be greatly affected by this structure. MW also will not be greatly affected as they will still be providing the same educational services that they would normally provide, and the current administration will oversee the program. In addition, the parents of the special needs KJ children will be more likely to send their children to this school as their children will still be isolated from the outside community. Under this structure, the children are more likely to be educated, and there will not be significant extra costs to MW or New York State.

Structure 3 requires KJ to be established as its own school district, which requires the passing of a new state law. This structure will result in significant additional costs to New York State as it will need to provide funding to KJ to establish a new school building, administration, classroom materials, and teachers. Most of these costs will be borne by New York State, so the taxpayers and other school districts will be greatly affected. The MW school district will be affected to the extent that all New York State school districts are affected – through less funds available for their current special education programs.

Under this structure, however, KJ has complete control over the quality and content of the education. The children will continue to be segregated from the outside community, and therefore most parents of the KJ special needs children will feel comfortable with this education arrangement. By allowing KJ to be its own school district, a more homogenous group will determine the quality of the education provided; the KJ and MW communities are very different in their education needs, and therefore, the KJ community will be better served by smaller districts. A. Schmid notes in Chapter 12 of Property, Power and Public Choice (PPPC-12) that satisfaction generally increases with the homogeneity of the group making the choices, thereby supporting the hypothesis that KJ will be the most satisfied with this structure.

The fourth structure is one that was never actually in effect. This structure would have KJ providing the special education to its own children using community funds. A sufficient amount of funds would need to be collected within the community in order to pay for the necessary buildings, materials, administration, and teachers. These funds could be collected using a market system, an administrative system within the community, or a status grant system. Under this structure, New York State taxpayers and all school districts would generally not be affected; the same amount of funds would still be available to their special education programs. However, I suspect that given the large amount of funding that would need to be generated to establish this type of education, the KJ children would not actually receive any formal education.

Structures 1 through 3 require the education to be provided with public sources, while Structure 4 will have the education funded with private funding. If Structure 4 was ever instituted, an empirical study could be performed to compare different performance measures such as test scores, number of children educated, cost per child of education, and satisfaction of the community with the education under both public and private funding of education. Schmid references a series of papers which have studied the differences in various performance variables in publicly versus privately owned firms. The results of these studies do not provide a consistent conclusion on whether public or private ownership is better, mainly because the performance variables used are different across studies. However, I hypothesize that the number of children educated will decrease, the total costs per child will decrease and the satisfaction level will decrease under privately funded education as compared to publicly funded education.

Similar to other villages, the village of Monroe has specific zoning laws which restrict the number of families that can live within a single housing structure and how small land parcels can be. The property that the Hasidic Jews purchased was in the village of Monroe, and was restricted to one-family homes of reasonable sized land plots. Under these zoning laws, the Hasidic Jews would have to purchase significant amounts of land to house all of its local members, and those members would be very spread out and far from the temple. As stated earlier, the Hasidic Jews prefer to remain a tight-knit community with little distractions from the outside world. Therefore, they would prefer to have all of their members as close together as possible. In addition, the distance to the temple is a significant issue for the Hasidic Jews, as the men are required to spend the Sabbath in temple, and are not allowed to use any electricity or motorized vehicle during the Sabbath. The farther the men are from the temple, the more difficult this rule is to maintain.

The residents of areas surrounding the Hasidic Jews will be greatly affected by the final zoning laws established for this area. As discussed below, the beauty of the area would be greatly affected by a change in zoning laws, and therefore the lives of people living close to KJ would be affected.

In order for the Hasidic Jews to be able to build more than one-family homes, and to build them closer together than the village of Monroe zoning laws allowed, they would have to establish new zoning laws. Two different institutions or structures would have very different results for KJ, and they are discussed below. Hypothesis: Laws applicable to smaller groups of people will result in more people being satisfied with those laws. Hypothesis: The status quo will be maintained more often when a majority vote is necessary to change a set of laws.

Structure 5 will have the KJ community maintained as a part of the village of Monroe and require them to lobby the appropriate village authorities to authorize a vote on a change in the zoning laws. As discussed below in "Public Eyesore," the effect on existing property owners of a change in zoning laws will be a decrease in property value and quality of life; these property owners would most likely not vote to pass the change. Although the KJ community has many members, they are not a majority in the area, and therefore, the law will most likely not pass.

The members of the KJ community could pay the surrounding property owners an amount that would convince them to vote to pass the new zoning laws. However, the KJ community would need to have almost all members of the nearby surrounding community agree to a payment and these property owners may place very different values on their potential loss. This will make it difficult, if not impossible, for KJ to get enough votes to pass the new zoning laws. In addition, even if KJ could get enough property owners to agree to "sell" their vote, it will be even more difficult to monitor the property owners’ actions.

Under Structure 6, KJ will establish itself as its own village and set its own zoning rules. By establishing its own village, the Hasidic Jews then become the majority within their voting boundaries and can pass any village laws they wish. This will result in KJ re-zoning its property to build multi-family homes on smaller plots of land. The property owners in the surrounding area will not be compensated for any loses they incur from a reduction in property value or a reduction in the quality of life (see discussion of "Public Eyesore" below).

The three articles discussed above and included in Schmid’s PPPC-12 - Ostrom, et al. (1973), McDowell (1975), and Toma (1979) – which address people’s satisfaction with police services are also relevant to the political boundaries issue for KJ and Monroe. As these studies indicate, people are more satisfied with police service when they are split into smaller areas. In this case however, the satisfaction level will be different depending on the people you study. I believe that the members of the village of Monroe will be happier if KJ is included within the village of Monroe so they would have more control over how KJ uses the land, while KJ will be more satisfied if there are smaller political boundaries.

The final issue related to the confrontation between the town of Monroe and KJ is that of the eyesore that is the KJ community itself. As discussed above, prior to the purchase of the land by the Hasidic Jews in the 1970’s, the land was zoned for one family homes, with relatively large plots of land. In addition, much of the land had not been developed at all and was generally forest-land. Currently, almost every square inch of the property which makes up the village of KJ is built on with large duplexes and apartment complexes. The KJ community as a whole is not generally concerned with maintaining a pretty or clean area in which to live; little care is given to their cars, homes or property, and as a result, the area is quite ugly and very dirty.

The use of property is an incompatible use good; only one group of people can choose how the land will be used. If KJ is given the right to do with the land as it pleases, the surrounding property owners will have little or no ability to affect how that land is used. In addition, any reduction in their property values or in their quality of their life as a result of the KJ village being nearby will not be compensated. If KJ is required to live by the zoning laws established in the village of Monroe, they will not be able to live in a smaller, more concentrated area, and will be forced to live more spread out, or find a new area in which to live.

There are a number of different structures that could be put in place related to this incompatible use good, three of which I discuss below. Each of the structures will affect which zoning laws will be in effect and how existing property owners will be compensated.

Structure 7 is similar to the 1964 emissions regulation structure in the Florida air rights case studied by Crocker (1971) as cited by Schmid (PPPC-12). In the Florida case, local manufacturers were required to reduce their pollutant emissions. This regulation helped the surrounding farmers by reducing the negative effects of the pollution on their crops. In addition, it also helped non-property owners like visitors to the area that would now have clean air to breath. Under Structure 7, KJ will remain part of the village of Monroe and will be required to adhere to the existing zoning laws (similar to the emissions standards in the Florida case). As a result, the KJ community will be less densely populated or the Hasidic Jews will choose a new place to live. If the KJ community is more spread out, it is still possible for property values of non-KJ land to decrease, but not to the extent that it would if KJ was allowed to rezone the land. Their homes would be similar to all the surrounding homes, there would be little change in the amount of trees and parks, and given the less concentrated living arrangements, the area will be generally as clean as it was prior to the KJ community moving in. If the Hasidic Jews choose a different place to live, there will be no effect on the existing property owners. Under this structure, both current property owners of surrounding land and visitors to the area will have a beautiful, clean place to look at.

Structure 8 will allow KJ to establish itself as a village and rezone the property, or change the zoning laws in the village of Monroe to allow for multi-family homes on smaller plots of land. In addition, KJ would be given all rights to the area and existing property owners would not receive any compensation for the loss of property value or quality of life. The KJ community would most likely expand as current property owners sell out at the lower property values to KJ in order to move to a prettier and less concentrated area.

Structure 9 is similar to Structure 8 in that KJ is able to rezone the property through either a change in the village of Monroe zoning laws or the establishment of its own village. However, under this structure, before being allowed to start construction in the village, KJ would be required to buy out the surrounding property owners that would be affected by the KJ community. This is similar to the 1958 law in the Florida air rights case noted above. Under this structure, the existing owners of property surrounding the KJ community will have great bargaining power; KJ could be forced to pay very high amounts for the surrounding property if they want to live in the conditions they prefer. It is also possible that one or more existing property owners will hold out for even higher amounts, and force KJ to find another place to live.

Under Structures 8 and 9, KJ will buy out some or all of the existing property owners (at lower or higher rates, respectively). Even if market value is paid to all the property owners, and/or they are compensated for their loss of quality of life, the problem is not solved in a manner similar to the Florida air rights case. As the KJ community buys more property, it builds more duplexes and expands further out, thereby affecting more and different people. Hypothesis: Requiring a new community to buy out property owners affected by the new community’s "waste" will not reduce the problems of "waste"; it will result in sprawl of the new community.

The disagreements between KJ and the village of Monroe are vast, and still continue today. The structures that are put in place greatly affect who bears the costs associated with their purchase of property in this area. The three issues discussed above all deal with whether or not KJ is considered a separate political entity which is allowed to make its own rules and allowed to provide its people with the resources they need (i.e., education). In general, by allowing KJ to become its own legal and political entity, the existing property owners in the surrounding areas have to bear the major costs of KJ’s rules through a reduction in their property values and quality of life. If Kj was required to live within the established laws of the village of Monroe, or compensate the existing property owners, the costs of their move would be borne by KJ.

Supreme Court of the United States:

Supreme Court of New York, Albany County:

Supreme Court of New York, Appellate Division, Second Department:

Supreme Court of New York, Appellate Division, Third Department:

Court of Appeals of New York:

Supreme Court of New York, Orange County:

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Crocker, Thomas D. 1971. "Externalities, Property Rights, and Transactions Costs: An Empirical Study." Journal of Law and Economics 14: 451-64,

Davies, David G. 1971. "The Efficiency of Public versus Private Firms, The Case of Australia's Two Airlines." Journal of Law and Economics 14: 149-65.

DeAlessi, Louis. 1974. "An Economics Analysis of Government Ownership and Regulation: Theory and the Evidence from the Electric Power Industry." Public Choice 19: 1-42.

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McDowell, George R. 1975. Whose Preferences Count? A Study of the Effects of Community Size and Characteristics on the Distribution of the Benefits of Schooling Ph.D. dissertation, Michigan State University.

Ostrom, Eleanor, et al. 1973. Community Organization and the Provision of Police Services. Beverly Hills, CA: Sage Publications.

Schmid, A. Allan, 1999, Property, Power, and Public Choice

Toma, Mark. 1979. "The Impact of Institutional Structures on City-Council Consolidation Outcomes." Public Choice 34: 117-22.

Situation, Structure, Performance Outline