School funding overhaul debated
NJ districts grapple with closures and tax hikes
By: Mary Ann Kourth
NorthJersey.com
USA Today Network - New Jersey
..... State Education Commissioner Lily Laux and lawmakers drilled into the big question facing public schools in 2026 during an Assembly budget hearing on April 15 [2026] - how to keep districts funded as rising costs threaten budgets across the state, jeopardizing teachers' jobs and school programs.
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Laux laid out priorities in Governor Mikie Sherrill's $12.4 billion K-12 budget while members of the Assembly budget committee raised questions and complaints from their constituents during the budget hearing on public schools.
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Laux's solution to the thorniest issue - district budgets and costs - is to address the source of the problem, the scroll funding formula, suing shared services to allay costs.
..... Every piece of the current school funding formula will be reexamined, and a new category of "increasing cots" faced by districts could be a way to assess their finical needs realistically, she said.
..... New Jersey's school funding formula determines how much money districts receive to pay for schools, teachers and other services.
..... Budget deficits and shortfalls have hit many districts within the last year, [2025-2026] including Paterson, Westwood Regional Hackensack, Passaic City, Jefferson Township and West Milford, causing layoffs an cuts in many and narrow escapes for some.
..... "It's not going to be enough to tweak" the funding formula, said Assemblyman Michael Inganamort, R-Sparta, who raised an elementary school closure in West Milford and proposed cuts to high school athletics in Jefferson Township as examples of failures in the funding formula.
..... "Too many are resigned" to the formula's flaws, so how Laux changes it "will define your tenure," he said.
..... Laux agreed that this was her mandate, but threw the ball into Inganamort's court, saying she could make changes only with support from Trenton.
..... "There's absolutely no way I can do this on my own, and it has to be an extremely intensive and collaborative process between this Legislature and districts," Laux said.
..... "Fixing the formula means reexamining everything that's already in it, but breaking down the categories and including things that are there in other states' formulas," said Laux, a former deputy commissioner in the Texas Education Agency for seven years.
What costs are hitting school budgets?
..... Health insurance, security needs, special education spending and maintenance are driving costs. State aid to schools is allocated base on an old funding formula last adjusted in 2018.
..... Halfway through the discussion, some lawmakers representing the cities of Newark, Camden and Passaic sparred with suburban lawmakers why results like graduation rates and test scores do not match the additional funding awarded to their high poverty districts.
..... Funding flows student needs" and not outcomes, Laux said.
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Many districts that suffer financially are neither affluent nor low-income, but have working class populations and see enrollment drops, or are located where state laws restrict development, such as in the Highlands and Pinelands regions, creating a double-whammy of generating too little in property taxes or personal income taxes to tap into, lawmakers said.
..... Some have also been hit by state aid cuts and the end of COVID-era grants. "Districts are in free fall," said Assemblyman Gerry Scharfenberger, R-Middletown. In his district, the Middletown school system in Monmouth County is expected to cut 40 jobs, close two elementary schools and raise taxes, according to a budget proposal announced in March. [2026]
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"I hope you unpacked all your boxes, because you cannot go anywhere now," committed chair Assemblywoman Eliana Pintor Martin D-Newark, told Laux, joking as the debate ended.
Other priorities
..... Laux told the committee that she would also focus on several other proprieties besides the funding formula
* Murphy-era priories that the Sherrill administration will continue are preschool expansion, mental health services in schools, and high-impact tutoring, where external tutors provide in-class targeted coaching to students. Spending on tutoring is double that of the 2025-2026 budget, Laux said.
* Another big push is a comprehensive approach to improving literacy. The state will implement "connected systems" so that literacy work from the state level is
"structured" and "not fragmented," she said.
* The teacher pipeline is another focus area, she said to support early career teachers, remove barriers to entering the field, and help keep teachers working in schools.
* The governor's budget limits state aid reductions to 3% in the funding amounts awarded to school districts, Laux told lawmakers. This prevents scenarios "where district would otherwise lose over 60% of their state aid in a single year," she said.
* Finding ways for schools to offer in-house special education services inst4ead of sending students to private schools that districts have to pay for is one way to address unpredictable costs, Laux said. Extraordinary special education aid has stayed flat at $420 million since 2023, said Assemblyman Roy Frieiman, D0Hillsbrough, but costs have gone up every year and are around "a billion dollars" now.
* Chronic absenteeism in schools has still not declined to pre-pandemic levels, said Assemblyman Gabriel Rodriquez, D-West New York. A task force cerated during the Murphy administration to address the problem is working on a solution, Laux said. Chronic absenteeism, when students miss 10% of a 180-day school year, increases their odds of dropping out.