NJ releases K-12 state aid numbers
Most school districts will see increases
By: Mary Ann Koruth
NorthJersey.com
USA Today Network - New Jersey
..... As the New Jersey budget season ramps up, school districts now know how much funding they will receive from the state for the 2025-2026 academic year.
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The state Department of Education release totals for its nearly 600 school districts, amounting to $386 million in the K-12 budget for the 2025-2026 school year, which make sup one-third of the state budget, the Murphy administration said on Thursday. [02/27/2025]
..... Preschool funding will see a $34.6 million increase from last year. [2024] The additional allocation will fully fund existing programs as well as those started in 2025. It will include $10 million to expand programs into new districts.
..... Nearly 68% or 392 of the state's school districts, will see increases in aid, and 41% will see decreases. These numbers are also a result of the phasing out a law called S2, which previously cut aid packages in large amounts to hundreds of districts and redistributed it to others to rebalanced school funding over seven years.
..... The fiscal year 2026 total budget allocation for public schools also marked a milestone, as the second year that districts received full funding under the state's funding formula.
..... School budgets depend on local fair share - which is raised from the school tax portion of local property taxes - and government funding, which includes state and federal aid. State aid is calculated based on a formula that takes into account several factors, including a district's aggregate income, school enrollment, the number of special education students and transportation costs.
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The Murphy administration has also made key changes to how it calculates state aid, reasoning to calls from school superintendents asking for more predictable aid calculations to bring stability into school budget forecasts, a move welcomed by education watchers and advocates.
..... The state's improvements to the formula were" across the board" and likely "more significant" than the increase in aid. Education Commissioner Kevin Dehmer said Thursday. [02/27/2025]
"the basic parameters of the formula were updated to reflect new costs ... we updated for actual teachers' salaries, and looked at changes to health benefits costs," he said.
..... The state budget "makes critical improvements that are necessary to ensure stability and predictability for New Jersey's students, educators and school,districts," said Danielle Farris, of the Education Law Center, an advocacy organization for low-income districts.
..... School superintendents were invited to regional public hearings organized by the department last year , [2024] after Murphy nominated Dehmer, a career officer and school funding expert in the education department, to take its reins in 2024.
..... "Stakeholders asked to hear aid package earlier in the year for budget planing," he said. They also asked for "changes to special education funding and tax levy cap flexibility updates," he said. The stat has been working to "improve the formula's predictability and alignment to district needs. Work stated in 2019, when S2 kicked in - we were clear we would continue," he said.
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The mover to let districts tax above 2% cap will depend on lawmakers approving Murphy's budget proposal. "The details of the program are not built out yet. The first step is to get the governor's budget ... across the finish line," Dehmer said.
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"The basic idea is that districts that are taxing below the local fair share of 2% be allowed to increase their taxes to above 2%. In doing so, they will gain access to some additional state aid which the governor proposed in his budget proposal. Those details will reworked out as we go along. Districts will have to demonstrate that they're eligible for that additional aid," Dehmer said.
Changes made to New Jersey's school funding formula
* This year's [2025] aid package use actual numbers, instead of statewide averages, to calculate special education costs for students who receive Individual Education Plans or IEPs.
* Another change used a three-year average, instead of a single year, to estimate a district's wealth and property valuation, which is factored into the formula.
* The state formula was also updated to increase mental health and up-to-date school security needs.
* Communities that have been asking for flexibility in the 2% tax levy cap for school taxes can expect the state to work with them in coming weeks to potentially receive additional aid, and work out a flexible cap that will allow for property taxes to go up. The move comes after districts and taxpaying residents have testified to lawmakers in recent years that they need an increase in tax levy cap in order to raise funds for everything from teachers recruitment to building repairs.
* The state also put a 3% limit on how much a district could expect to lose in state aid for fiscal year 2026.
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Other than making good on its promise to fully fund public schools, this K-12 allocation marks "the largest school aid contribution in New Jersey history,' the administration said. School aid will have increase by 48% to a total of $12.1 billion since Murphy took the rein in 2016.
..... Some aid categories remain flat since last year. [2024]
Spending on school buildings and repairs in the Schools Development Authority, an agency dedicated to the state's highest poverty districts, stayed the same at $50 million. Extraordinary aid or funding that schools use to pay for out-of-district student placements stayed the same at $420 million, at a time when districts complain about skyrocketing out-of-district and special education costs.
..... Mu0prhy;s proposal for school constitution is "a fraction of what is needed to prioritize school construction funding, said the Healthy School Now Coalition, a group of 135 parent and community groups calling for mines to pay for infrastructural improvements to school buildings.
..... The $50 million did not come close to the $7 billion projected by the SDA for 8,000 seats to address overcrowding in schools, and the group said more than 50 buildings need to be renovated or replaced due to age and condition, just in the SDA districts.
..... About 68%, or 392 school districts, will see aid increases. But how much of a difference the increases will make depends on inflationary pressures that have been hitting district budgets in recent years. Dehmer said the state "absolutely" took inflation into account while calculating district funding totals.
..... "We absolutely included inflationary factors," he said. "In additions to using actual data wherever we can to update costs, we also used a state calculation to up the costs," hes aid. The state estimates inflation to be about 3.57%, he said.
..... Schools were also being asked to estimate lower federal funding, both in line with previous years' budgetary guidance form the state, and as a precaution against current uncertainty around the role of the federal Education Department in the Trump administration.