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There’s a consensus among New Jersey lawmakers, Democratic Gov. Mikie Sherrill, school leaders, and advocates: New Jersey’s progressive school funding formula is outdated.
That doesn’t mean change is imminent. But behind the scenes, school funding experts are working to influence a process that could radically remake how New Jersey funds its schools.
Funding changes for Newark Public Schools, the state’s largest school district, could be on the table. But before officials make any significant changes, they must answer a question that seems basic but which has huge consequences attached: How much should it cost to educate a child in New Jersey?
To help answer that, the state education department is holding community forums and convening a steering committee as part of what Department of Education Commissioner Lily Laux has called “a year of honest, statewide engagement to strengthen New Jersey’s school funding system.”
That won’t change the fact that New Jersey’s funding formula is a political lightning rod. Republican lawmakers that represent districts that have lost state aid in recent years are targeting Newark schools as the poster child for reform and even additional state oversight.
Calls to reexamine Newark’s funding reached a fever pitch recently after state auditors found millions of dollars in excess state aid and questionable spending by district officials.
“Newark deserves better, and taxpayers across this state deserve a refund for this nonsense,” GOP Assemblymember Dawn Fantasia posted on social media in response to the audit.
Despite the audit’s findings, and the fact that auditors flagged the state’s Criminal Justice division due to “certain matters” uncovered in the audit, Newark school officials maintain that they are spending “wisely and strategically.”
“We agree that New Jersey’s school funding formula needs reform,” Paul Brubaker, a spokesperson for Newark Public Schools, said in an email this week. But he added “the state audit has no bearing on New Jersey’s school funding formula. Any suggestion that it will solve the financial challenges facing other communities sells those constituents short.”
Danielle Farrie, the research director at the Newark-based Education Law Center, said Newark’s audit results say something about state policy. It’s “the state’s responsibility to make sure that public education dollars are used effectively and efficiently” she said. Farrie said New Jersey should follow the lead of states like California and Maryland, which have incorporated accountability plans to their school funding systems that hold districts responsible for outlining how they will use funding to improve student outcomes.
According to Farrie, the state did a “good job of costing out education” a quarter-century ago, when it adopted the School Funding Reform Act of 2008 that established the current formula. But she said it’s time to revisit that math.
Farrie said the state needs to look closely at the formula to “figure out what schools need.” And as health care, construction, and transportation costs rise, the state should also reevaluate how much districts should be spending.
Then comes an especially difficult question, Farrie said: “How are we going to pay for it?”
Experts eye special education, local aid for funding changes
New Jersey funds schools by calculating how much it should cost to educate a district’s students to state standards — known as its “adequacy budget.” That budget factors in weights for students who typically require more resources, including students from low-income families and English learners.
Then, the formula estimates how much a local community should be able to contribute based on its property wealth and income, or its “local fair share.” The state is supposed to fill in any gap between the adequacy budget and the local fair share to pay for things like special education, transportation, and other costs.
In the 2026-27 school year, Newark schools received about $1.4 billion in state aid. But its enrollment is falling, and the value of taxable property in the city has grown to a record $35 billion for fiscal 2027, well above the $26 billion just a year before.
Under the current formula, that could mean less state aid to the district under the assumption that it could bring in more from Newark taxpayers. Last year’s school budget included a $39.94 tax increase for the average city homeowner.
Jeffrey Bennett, a school funding expert who writes a blog about the subject, said state decisionmakers should stop using taxpayers’ aggregate income to calculate a town’s local fair share. Bennett is a South Orange Maplewood school board member, but he spoke in his personal capacity as an education funding analyst and not on behalf of the board.
Bennett said that approach ultimately means just a handful of high-income tax filers can distort how wealthy a community actually is, and that two people earning the same income but living in two different places can pay very different tax rates, creating “inherent inequality.”
“It’s nuts,” he said. He suggested the formula should instead rely entirely on a district’s taxable property, much like how county taxes work. Other experts have suggested replacing aggregate income with a measure of median income, or having the state Treasury Department exclude those high-income outliers.
Another area experts say is ripe for reform: special education funding. New Jersey currently bases special education aid off of a census-derived estimate rather than the actual number of students with disabilities in a district with.
Senate Education Committee Chair Vin Gopal, a Democrat, recently introduced a bill to change that. But people like Bennett say he should go deeper. Special education aid should be tiered, sending more aid to schools that enroll students with higher-cost needs.
Gopal said he’s already considering taking that advice. “I think you have to,” he told Chalkbeat.
Gopal is also looking beyond the formula for cost savings. He said merging some of New Jersey’s smallest districts so they would share sports programs, extracurriculars, and staffing should reduce administrative costs, he said.
Whatever the final product of funding reform looks like, Gopal and others say New Jersey is overdue to start creating it.
He added that he and others tried but failed to get Gov. Phil Murphy’s administration to take up the cause. The fact that the Sherrill administration is “being aggressive, knowing that this could be really rough at the end, I’m really happy to see that,” Gopal said.
Carly Sitrin is the bureau chief for Chalkbeat Philadelphia. Contact Carly at csitrin@chalkbeat.org.
