Governor Murphy signs law intended to help school districts seeing state aid cuts

Gov. Phil Murphy signed a bill extending $44.7 million in grants to school districts and allowing them to seek property tax increases above the state’s 2% cap on such hikes, a bid to offset school aid cuts in the 2024-2025 school year.

Under the new law, 140 schools facing nearly $106 million in combined cuts can seek grants through the Department of Education to cover up to 45% of the formulaic school aid they’re losing.

“We are giving local school districts critical support during trying times, as difficult financial realities muddy the already complex process of adopting a balanced budget,” Murphy said in a statement.

The schools affected by the cuts are set to lose varying levels of aid in the coming school year, ranging from a $989 reduction in West Wildwood to a $10.4 million cut in Long Branch.

Other provisions of the bill allow any district that is receiving less state school aid than it did during the 2020-2021 school year to raise property taxes above the state’s 2% cap on levy hikes without taking the matter to voters. 

Such districts could raise taxes to entirely offset aid reductions they’ve seen since the 2020-2021 school year or up to 9.9%, whichever is less. They can only do so for the upcoming school year.

“We have heard testimony from teachers, students, and parents of these cuts’ devastating impact on their districts for months,” said Sen. Vin Gopal (D-Monmouth), a sponsor and the Senate education chairman. “This move will give additional support and sustain our standard of delivering high-quality public education.”

The legislation is meant to help districts meet funding needs as the state completes the final year of a school-funding phase-in launched by a 2018 bill that was meant to shift aid from historically overfunded districts to underfunded ones.

But the pandemic, inflation, and a hot housing market have pushed up property values in some districts, leading to outsized and unexpected cuts.

Acting Education Commissioner Kevin Dehmer last month said steep swings in school aid should abate after the coming school year, though lawmakers have expressed skepticism and are exploring broader changes to the state’s school funding formula.

“Our public schools are the best in the nation. We cannot let them fall into disarray by asking districts to scale back spending year after year,” said bill sponsor Sen. Andrew Zwicker (D-Middlesex). “This program is a stopgap that will provide relief to districts for the upcoming school year as we continue to work to find a stable long-term school funding solution.”

A second bill signed Thursday allows districts facing budget cuts that outstrip their ability to raise taxes to submit their budgets up to five days after the state budget is signed.

School officials have told legislators the regular school budget timeline — school districts adopt their budgets in the spring, while the state finalizes its budget at the end of June — leaves too little time to account for outsized aid cuts.

“This measure will give tools to districts that are struggling with funding, helping them to retain critical teachers and staff,” said bill sponsor Assemblywoman Pamela Lampitt (D-Camden), the chamber’s education chair.