School Funding In FY24 NJ State Budget: Progress Continues But Faults Exposed

Budget puts school districts within reach of full state funding, but unexpected state aid cuts in some districts require a legislative fix for FY25

This is the first in a three-part series. Part II proposes school funding fixes to prevent catastrophic cuts to programs and services in districts facing the final year of S2 state aid reductions in FY25. Part III underscores the need for an in-depth review of the school funding formula in the next Educational Adequacy Report to ensure funding aligns with current curricular standards and educational best practices.

New Jersey’s Fiscal Year 2024 State Budget keeps the state on a path to fulfill the promise of full state funding under the School Funding Reform Act (SFRA) for all school districts by FY25, and that’s great news for students, educators and communities.

The current budget increases K-12 state aid in over 400 underfunded districts by nearly $1 billion, eliminating 76% of the outstanding gap in state funding. Over three-quarters of New Jersey’s students reside in districts receiving a state aid increase, and those increases are heavily targeted to the state’s high poverty and racially segregated districts. The budget also provides inflation-based increases to preschool funding and includes $40 million earmarked for preschool expansion.

But the FY24 budget also leaves many districts with less state aid than they received in FY23, though the impact of the proposed cuts was tempered by interim legislation. In 2018, Senate Bill 2 (S2) amended the SFRA to include a multi-year phase-out of state aid in districts receiving more state funding than the formula requires. Under S2, over 150 districts should have lost more than $150 million in state aid in FY24. A number of economic factors left many districts with cuts that were magnitudes larger than what they had projected. With no advance notice, districts were left scrambling to revise budgets to address these unexpected state aid cuts.

The Legislature quickly passed a bill in March that included over $100 million in Supplemental Stabilization Aid to offset the cuts and prevent major disruptions to staffing and programs. A second bill provided $3.5 million to the Freehold Regional School District to prevent the elimination of courtesy busing in response to state aid cuts.

While the Legislature did not reduce any of Governor Phil Murphy’s proposed FY24 spending initiatives, lawmakers did increase appropriations in the Department of Education’s (DOE) budget for several new line items, including:

  • $67 million for infrastructure and capital improvement grants in nine school districts;
  • $2 million for mental health program grants in nine school districts;
  • $1.5 million for the New Jersey Teaching Corps to provide high impact tutoring;
  • $1 million for new STEM curriculum;
  • $300,000 for a mental health pilot program;
  • $300,000 for Advanced Placement African American Studies course expansion grants.

The Legislature also increased the Governor’s proposed appropriations in a number of areas, including:

  • +$15 million for Charter School Facilities Improvements;
  • +$5 million in nonpublic school aid for Technology, Nursing, and Auxiliary Services;
  • +$300,000 for Teach for America New Jersey;
  • +$250,000 for Jobs for America’s Graduates;
  • +$250,000 for the Governor’s Literacy Initiative;
  • +$100,000 Advanced Placement Exam Fee Waiver.

Lawmakers did not include any funding for the Schools Development Authority (SDA) to support major capital construction and left the appropriation for emergent projects and capital maintenance at an inadequate $80 million. With the state acknowledging at least $7 billion in outstanding need in the SDA districts, the Legislature’s failure to provide funding for new projects is unacceptable.

While the FY24 budget finally brings the state in reach of a fully funded SFRA, the last-minute scramble to supplement funding for the S2 districts makes it painfully clear that the school funding formula needs key updates and revisions. In the short-term, the Legislature must take immediate steps to revise the S2 formula amendment so that districts do not face the same untenable and unpredictable state aid cuts next year. And longer-term, the Legislature must insist that the DOE evaluate and revise the SFRA so that it reflects the current costs of delivering an adequate education for today’s students. The DOE has the opportunity to revise the formula every three years through the statutorily required Educational Adequacy Report (EAR), though previous EARs have failed to provide more than a cursory update.

“With an EAR due in less than two years, the DOE must engage school finance experts and key stakeholders in an in-depth analysis of the formula to identify key areas where it falls short,” said Danielle Farrie, Education Law Center Research Director. “We are committed to ensuring this process is thorough, transparent, and responsive to the needs of all New Jersey students, but especially those who have been disadvantaged by decades of inadequate resources.”

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Press Contact:
Sharon Krengel
Director of Policy, Strategic Partnerships and Communications
973-624-1815, x240