New Jersey’s FY23 State Budget continues the recent trend of increasing K-12 state aid with the goal of reaching full funding of the state’s weighted student formula, the School Funding Reform Act (SFRA), by 2025. With additional investments for preschool, special education, and school construction, the FY23 Budget takes important steps to reestablish New Jersey’s historic commitment to a fair and equitable system of financing the state’s public schools.

An Education Law Center analysis of the FY23 Budget shows that:

  • In accordance with 2018’s Senate Bill 2
    (S2), which amended the SFRA, about two-thirds of school districts in the state will see an increase in K-12 state aid, and one-third will see state aid cuts.
  • The $1.5 billion K-12 state aid gap is cut in half, with a $645 million statewide increase, along with another $191 million redistributed from districts receiving S2 cuts.
  • New Jersey’s high poverty and majority Black and Latino districts will see the largest per-pupil increases in the coming school year, helping to close persistent state aid gaps that have eroded New Jersey’s school funding equity.
  • The FY23 Budget also continues the investment in preschool expansion with the goal of serving all three- and four-year-olds from low-income families or who live in low-income communities. Preschool Education Aid increased by $68 million, bringing New Jersey’s total preschool funding to just under $1 billion. About $28 million of that will go to increasing support for existing programs, and $40 million will be used to expand the state’s high-quality preschool program to new districts.
  • The Budget also increased funding above the amounts initially proposed by Governor Murphy for Extraordinary Special Education Aid and Stabilization Aid. Extraordinary Aid, which reimburses districts for high-cost special education programs, was increased by $20 million to a total of $420 million. Stabilization Aid, funds that districts receiving state aid cuts under S2 can apply for, increased by $10 million to a total of $30 million.

Amid ongoing litigation in the landmark Abbott v. Burke school funding case, lawmakers introduced and passed new legislation during budget negotiations to appropriate nearly $2 billion for school facilities funding, with $1.55 billion of the new funding expressly earmarked to help fulfill New Jersey’s constitutional obligation to fund school construction and renovation in high poverty, urban districts. Yet, even with this investment, the appropriated funding falls far short of what’s needed to address both aging infrastructure and capacity needs in over 300 existing school buildings currently in use in the urban districts.

Overall, the FY23 State Budget makes a positive contribution, showing renewed commitment by Governor Phil Murphy’s Administration and the Legislature. But these serious concerns were not addressed:

  • S2 does not account for the most important criterion in the SFRA: districts’ adequacy budgets. Districts that are under adequacy according to the formula are experiencing state aid cuts. Stabilization Aid helps to some degree but does not come close to filling the hole for all under-adequacy districts. ELC has repeatedly stated that until under-adequacy districts raise the local revenue necessary to achieve adequacy, they should not receive state aid cuts.
  • Manuel DaSilva, the Chief Operating Officer of the Schools Development Authority (SDA), testified to legislative budget committees that approximately $6 billion is needed to meet the school facilities’ needs of the 31 poor, urban SDA districts. Because the State is constitutionally obligated to fully pay for facilities renovations and construction in these districts, additional funding will be required going forward beyond FY23. Neither the Murphy Administration nor the Legislature has committed to a stable source of funding in future years.
  • The NJ Department of Education remains hamstrung in its capacity to provide guidance and support for school districts because of a lack of staff. Shoring up the Department is crucial if programs such as preschool expansion are to be successful, and if students and staff are to fully overcome the challenges brought on by the pandemic.

“Given the enormous challenges school districts have faced over the last two years due to Covid, we are pleased that the Legislature has prioritized school funding and is following through on promises to fully fund the SFRA, expand preschool, and begin to address the facilities needs of high-poverty districts across the state,” said Danielle Farrie, ELC Research Director. “These investments benefit all public school students but are especially crucial to improving opportunities for New Jersey’s Black and Latino students and students from low-income backgrounds.

“But there’s no resting on laurels after passage of the FY2023 budget,” Dr. Farrie added. “Longstanding issues, including in-depth evaluation of the SFRA required by law, desegregating our schools, and providing adequate support for districts, continue to require the attention of all of us working to improve public education in New Jersey.”


Press Contact:

Sharon Krengel
Policy and Outreach Director
973-624-1815, x 240

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