New Jersey's anticipation of only modest income tax growth in FY2027 is producing a disappointing state aid distribution that will leave many districts frustrated and angry and causes the second year in a row when New Jersey cannot fully fund the School Funding Reform Act.
I do not blame Governor Mikie Sherrill for this at all. It is a fiscal reality any governor would have to deal with. I support Mikie Sherrill in continuing the 3% limits on state aid losses that Phil Murphy implemented in 2025-26, although I do wish there were an acknowledgement that those floors on losses necessitate ceilings on gains, and begin to re-create the state aid inequalities that plagued New Jersey in the 2000s-2010s.
Where I do fault the DOE, governor, and legislature is that they set their ceilings as a percentage of the prebudget year's state aid, and not a dollars-per-student amount.
My analysis of state aid data is below, but, as usual, I've put all the data online. As always, the original source for the data is the DOE, but the analysis of deficits, deficits per student, and Local Fair Share disparities is by me.
Also, I am writing solely on my own behalf. Most readers do not know who I am, but if you do know, nothing I say represents any organization I'm affiliated with.
2026-27 State Aid Disparities
For 2026-27, there will be
- 290 districts with a total deficit of $325 million. This is actually slightly less than 2025-26, when the total deficit was $382 million.
- 157 districts who are getting their exact SFRA aid target (with the multi-year averaging of LFS and special ed reform factored in)
- 142 districts who are overaided, with a total surplus of $277 million.
The most underaided districts are several small districts. I admit I do not know the reason these districts have gotten so off-formula and determining that would take a district-by-district analysis that I do not have the time for.
Hackensack has the largest deficit in dollars-per-student of any district with more than 1,000 students, $14.6 million, or -$2,743 per student. This is related to Hackensack's severe budget deficit.
Trenton has the largest deficit in total dollars, $40.3 million, or $2,289 per student.
32% of total excess aid is going to Jersey City, which is the most overaided district in total dollars is Jersey City in total dollars and dollars-per-student, at $73 million or $2,570 per student.
Local Fair Share Disparities
2026-27's Local Fair Share formula is
(Equalized Valuation x 0.13677750 + Aggregate Income x 0.055930804)/2
The decrease is due to the increases in NJ's Equalized Valuation and Aggregate Income. It means there's a slightly lower expected rate, but an increase in total expected local payment. In 2025-26, Equalization Aid eligible districts were expected to pay $8.9 billion in local taxes, but in 2026-27 that rises to $9.8 billion.
There are 278 districts who are eligible for Equalization Aid, which is down two from 2025-26, when 280 districts were eligible, and a recent peak in 2022-23 when 311 districts were eligible, and the commencement of SFRA when two-thirds of districts were eligible.
The median Local Fair Share of Equalization Aid-eligible districts is 1.44%. The weighted average is 1.37%.
The lowest Local Fair Share is 0.99% for Ocean Gate and the highest is 1.89% for Hampton Boro.
The districts with the highest Local Fair Shares are, as usual, concentrated in Camden County:
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See Also:
- 2025-26 NJ State Aid
- 2024-25 State Aid: Full Funding is Here!
- 2023-24 NJ State Aid
- New Jersey's 2022-23 State Aid
- 2021-22 Brings $1.7 Billion to Education, More State Aid Equity
- 2020-21 State Aid Closer to Equality
- 2019-20 State Aid Gets Fairer, but the Deficit Grows
- 2018-19 Disparities Narrow, but Remain Stark
- Updated State Aid Disparities for 2017-18
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