2024-25 NJ State Aid: Full Funding is Here!

NOTE: THIS WAS UP-TO-DATE WHEN IT WAS WRITTEN, BUT THE RESTORATION OF $45 MILLION IN ADJUSTMENT AID (WHICH I SUPPORT) CHANGES WHAT I WROTE ABOUT OVERAIDED DISTRICTS

 

For 2024-25 Phil Murphy, with assistance from the New Jersey legislature, a growing economy and slightly shrinking enrollment, has done what no other governor has: the full funding of New Jersey's state aid law.

For 2024-25, Phil Murphy's budget proposes a $901 million net increase in K-12 formula aid.  The addition of the $901 million plus $106 million in redistribution (more below) is +$1.01 billion for 423 districts and sufficient to bring every district up to a 100% minimum.

All state aid data is available at: 2024-25 State Aid.

The Big Picture

Overall, NJ's $11.4 billion in formula aid for 1,314,974 students is $8,811 per pupil, however, state aid is concentrated in a small number of districts, with only 18 districts (with 22% of the students) getting half the formula aid.  The median district only gets $2,752 per student.

The highest aided districts are Bridgeton, $24,577 per pupil, Plainfield at $23,351 pp, and Camden at $23,343, which, combined with federal aid, their own tax levies, and indirect state aid like TPAF, construction aid, and teachers Social Security brings their spending to about $30,000 per student.  Those amounts are important to keep in mind in the context of arguments that will occur in the next few years that SFRA does not send enough state aid to high-FRL districts.

At the other extreme, the lowest aided operating districts get about $1,200+ per student, with Beach Haven, at the bottom with $1,158 per student.  Overall, 250 districts get less than $2,000 per student.

The increase in K-12 operating aid is part of an overall billion spending increase for PreK-12 education, from $20.6 billion to $21.6 billion, out of a $55.9 billion Total Operating Budget.  Education spending ~38% of the total state budget, is high compared to the 1990s-2000s, but lower than the 40% when Phil Murphy came into office.  Education spending actually is more than 100% of $19.34 billion NJ expects to bring in from income taxes, due to how education is also funded by a half-cent of the sales tax and lottery transfers  (See page 66)

In terms of increases for education spending categories, the picture is as follows:

Category	Net Amount of Increase (in Millions)
Formula Aid	$908.00
PreK	$124.00
Post Retirement Medical	$81.30
TPAF	$21.00
Teachers Social Security	$14.50
School Construction Debt Service	$8.40
Debt Service Aid	$2.50
Extraordinary Aid	$0.00
Debt Service on POBs	$0.00
School Building Aid	-$1.70
Other Aid	-$97.70

There are No Underaided Districts:

In previous annual reports on the state aid distribution, I've had a section on the underaided districts that included information on how many were underaided, what the total deficit was, and whose deficits were the largest, but there are no underaided districts in 2024-25.  For most of the period I've had this blog, there were ~370 underaided districts, and their total deficit was as high as $2 billion in 2016-17, 2017-18 and then the Covid year of 2020-21.  The biggest deficit in per pupil terms was Bound Brook's, which was underaided by $9,546 per student at its 2017-18 nadir, and in percentage terms, it was Chesterfield, which got as little as 9.5% of its Uncapped Aid.

For 2024-25, there is nothing for me to write about underaided districts.  All districts are at a minimum of 100%.  The S2 timeline for full funding has been met.

The $1 billion increase is going to 423 districts, although the increase is concentrated in a small number of districts.  Only seventeen districts -- Newark, Paterson, Elizabeth, Trenton, Irvington, Plainfield, Hamilton Township, Woodbridge, Edison, Bayonne, Perth Amboy, Orange, Union City, Camden, Pennsauken, New Brunswick, and Rahway -- are getting half of the money.  For context, these districts have 260,196 students, or 19.8% of NJ's total of 1,314,973 K-12 students.

Incidentally, the Abbotts get $5,966,176,212 out of $11,586,333,299, or 51.5% of New Jersey's state aid.  They have 312,583 students out of the 1,314,973, or 24%.

Aid Losses and The Overaided

The number of districts losing state aid is smaller than the ~200 districts per year of recent past because many districts in 2023-24 were only slightly overaided and large increase in Equalization Aid (plus $599 million) slightly lowers the Local Fair Share.  Therefore a few dozen districts tipped from being overaided to underaided status and gained state aid.  The $105 million of aid cuts is also smaller than years past, it was a $165 million loss for 2023-24 (before re-appropriation) and $186 million loss for 2022-23.

	Net Amount Redistributed
2024-25	$106 million (before +$45 million legislative appropriation)
2023-24	$165 million (before legislative appropriation)
2022-23	$186 million
2021-22	$193 million
2020-21	$155 million
2019-20	$90 million
2018-19	$32 million
2017-18	$31 million

The elimination of Adjustment Aid has been badly done because non-Abbotts were not given the tax cap liberalization to tap their tax bases to make up for the losses.  However, without the nearly $1 billion in redistribution, NJ's underaided districts would still be nowhere nearly fully funded, and/or NJ would not have been able to expand PreK.

Source

There are twenty-two districts receiving more than 100% of their state aid because of provisions in S2 that protect high tax rate districts with extra protection for Abbotts) and vo-techs.   Monmouth County Vo-Tech has the biggest surplus, at $5,521,235, or $2,691 per student.  Passaic City has the largest surplus of non-vo-techs, $32,174,770, or $2,639 per student.  Passaic City's $32 million surplus is also the largest in absolute terms.

Asbury Park, which in the past was notorious for receiving over $55 million, which was $23,569 per student  is no longer a high-aid district.  Asbury Park for 2024-25 is only getting $16.5 million, which is $8,963 per student, and is exactly the amount that SFRA's core formulas call for.  It is also only slightly above NJ's weighted average for state aid.

Update:  Asbury Park received $1.9 million in extra Stabilization Aid.  Its surplus is now $1,013 per student.

As an aside, Asbury Park's aid loss has also been so large because it's enrollment has continued to plummet.  Its 2024-25 enrollment is only 1,846, compared to 2,350 back in 2015-16.

Six other districts would be overaided if I included Military Impact Aid.

Military Impact Aid is only $9.4 million and goes to six districts, but it's a substantial amount per student.  For instance Cape May City gets $1.2 million in Military Impact aid for only 123 students, which is $9,756 per student.   However, I do not consider this "excess aid" because Military Impact Aid is governed by a different law (P.L.2021, c.283,) and has a different purpose.  

Over 100 districts would be overaided if I included Choice Aid in my calculations.  At an extreme, Deal gets $2.3 million in Choice Aid for 159 resident students, a surplus of $14,821 per student.  Hoboken would also be substantially overaided if I included its $2.9 million in Choice Aid.  However, I've also elected not to include Choice Aid since Interdistrict Choice is governed by a separate state aid law ( P.L.2010, c.65) and districts receiving it are doing something to merit that aid.  

Local Fair Share and Equalization Aid-eligibility

For 2024-25 New Jersey's Local Fair Share formula is 

(Aggregate Income x 0.050601493  + Equalized Valuation x 0.012707978) / 2

Which is a slight decrease for each multiplier from 2023-24's Local Fair Share formula, which was:

(Aggregate Income x 0.051068829 + Equalized Valuation x 0.012805233) / 2

In 2024-25, the median Equalization Aid-eligible district will have a tax rate of 1.33%, with 1.29% as the weighted average, this is a continuation of the fall in Local Fair Share since Local Fair Share peaked at 1.53% in 2020-21.  Last year's median Local Fair Share was a 1.36% tax rate, although the weighted average was trivially lower, at 1.28%.  (please see this about Brick & Toms River for a history of how Local Fair Share increased until 2021-22)

2024-25 is a landmark year for state aid fairness, but it should be noted that there's at least a five year low for the number of districts eligible for Equalization Aid, with now only 291 (51%) eligible and 279 ineligible (49%).  

Local "Fair" Share Disparities

As always, there is a extreme inequality in Local "Fair" Share.  

The highest Local Fair Shares are Philly suburbs again, with Runnemede being an outlier at 2.46% (more below).  Woodlynne and Merchantville are in second place, but only at 1.79%.  

At the other extreme of low Local "Fair" Shares, some districts are expected to pay less than 1%.  Most of the lowest-Local Fair Share districts are at the Shore, but there are other ratable-rich districts from other parts of NJ.

Injustice for Runnemede, and How it Illustrates the Lunacy of Using Aggregate Income to Calculation Local Fair Share

Runnemede, a K-8 district in Camden County with 741 students, is one of the largest aid loses for 2024-25, whose $4,150,077 aid loss is $5,600 per student.

How Runnemede got to this loss exposes the lunacy of using Aggregate Income to calculate Local Fair Share.

Runnemede
	Aggregate Income	Equalized Valuation	Local Fair Share	Local Fair Share as a Tax Rate	Adequacy Budget (for Eq Aid)	Equalization Aid Eligibility
2021-22	$141,516,803	$387,264,729	$6,332,716	1.60%	$12,410,434	$6,077,718
2022-23	$152,634,381	$402,114,095	$6,112,593	1.50%	$11,764,963	$5,652,370
2023-24	$144,106,439	$440,949,193	$6,502,903	1.50%	$12,763,657	$6,260,754
2024-25	$356,315,480	$494,924,806	$12,159,795	2.50%	$13,887,713	$1,727,918

Please notice that Runnemede's Equalized Valuation grew by 12%, but the Aggregate Income grew by  huge increase in Runnemede's Aggregate Income grew by 147%!!  

Palmyra's situation is similar:

Palmyra
	Aggregate Income	Equalized Valuation	Local Fair Share	Local Fair Share as a Tax Rate	Adequacy Budget (for Eq Aid)	Equalization Aid Eligibility
2024-25	$356,315,480	$494,924,806	$12,159,795	2.46%	$13,887,713	$1,727,918
2023-24	$144,106,439	$440,949,193	$6,502,903	1.47%	$12,763,657	$6,260,754
2022-23	$217,109,243	$559,016,774	$8,609,845	1.54%	$14,930,450	$6,320,605
2021-22	$141,516,803	$387,264,729	$6,332,716	1.64%	$12,410,434	$6,077,718
2020-21	$142,535,963	$375,727,265	$6,482,064	1.73%	$12,522,186	$6,040,122

Either there is a mistake in the Department of Treasury's Aggregate Income data for Runnemede, or a random high-income outlier in Runnemede had a windfall year or moved in, but whatever the cause, Runnemede's 2.5% Local Fair Share tax rate is now the highest in NJ (not counting Winfield) and it lost $4.15 million.  

Although the magnitude of Runnemede's loss shocks me, I knew that this could happen as the result of the arrival of a high-income outlier or a rich person having a windfall year.  

Conclusion:

2024-25 will be a landmark year in the history of NJ state aid.  It exceeds my expectation back in 2017, when I thought that Phil Murphy would only allow $200-$300 million in redistribution.  Phil Murphy cannot receive all the credit though.  Steve Sweeney was the primary champion of S2, and all the legislators who voted for it deserve credit.  Even Chris Christie should get some credit for signing Chapter 78 which freed up billions for operating aid, although that bill also has had downsides.  

Unfortunately there have been losers in the redistribution.  Some Adjustment Aid districts were high-spending and their cuts are things we need to accept lest they have an unfair spending advantage over other districts, but other Adjustment Aid districts, like Brick and Toms River, had to make cuts from a position of low spending.  Although it was a mistake of S2's authors not to provide tax cap relief to non-Abbotts, it was also a mistake of Brick and Toms River not to vocally ask them to.

The FY2025 budget also continues the neglect of municipal aid in NJ, which will be but by $134 million (see page 10), so education's gain has come at the expense of other vital services.  

The FY2025 budget is good for state aid, but let's look forward to FY2026 as a year when almost all districts can gain state aid and when municipal aid can also see a long-overdue boost.

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• 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

2023-24 New Jersey State Aid

PLEASE NOTE: This post was written prior to the April 2023 restoration of 66% of state aid ($102 million) to aid-losing districts.  The sections of this post about the overaided districts are no longer accurate.  A post based on Updated Information is here.

 The 2023-24 state aid numbers are available.  Although there are some losers in state aid this year who are in budget stress or crisis due to the rigidity of the tax cap, this is the best year for state aid fairness we've had since the start of the SFRA era in 2008-09, perhaps since the inception of major state aid in 1976.

For 2023-24 Phil Murphy proposes to increase overall K-12 formula aid by $832 million and redistribute $157 million from overaided districts.  This means +$991 million for underaided districts and enormously greater state aid equality than even 2022-23, when underaided districts still had a deficit of $618 million.

The most important numbers are the following:

1. There are 192 overaided districts (including vo-techs and non-operating districts) with a $165 million surplus.  This is a huge drop in total state aid excess in the mid-2010s, when the state aid excess was $618 million.  
   
   
2. There are 401 underaided districts (including vo-techs and non-operating districts) with a $277 million deficit. This is also a huge decrease from a few years ago, when the deficit against Uncapped Aid was $2 billion.

As usual, I've put all the 2023-24 State Aid Disparities and Local Fair Share disparities online.

The Underaided

Former "poster children" for underaiding are now doing well.

1. Chesterfield, which only got 9% (-$4798 pp) of its uncapped aid in 2016-17 ($420k for 801 students) is now slightly overaided, at $3.5 million for only 684 students (101%, or +$44 per student).  
   
   
2. Red Bank Boro, whose deficit was -$4973 per student in 2016-17, also became overaided and actually lost -$545,705 in state aid (-5.9%, or -$431 pp).  Like many overaided districts, Red Bank Boro's excess is due to enrollment loss.  For 2023-24 Red Bank Boro is only projected to have 1,267 students, compared to 1,371 in 2022-23 and over 1,400 a few years ago.
   
   
3. Freehold Boro, which was underaided by $14 million for 1,700 students (-$8,243 per student) and "where students were packed on top of each other"  now only has a deficit of -$991,388 for 1,557 students (-$637 per student).  
   
   
4. Bound Brook, whose deficit was the largest in per student terms -$17,154,750 for 1,744 students (-$9,836 pp), now only has a deficit of -$1,740,085 for 1,839 students (-$946 per student).
   
   
5. Newark's state aid deficit has long been the largest in total dollars in NJ, at -$133.5 million in 2016-17 (-$2635 pp).  Since 2016-17 Newark has gained $408 million, but since its Adequacy Budget has grown, it still has a deficit of $36 million (-$660 per student).  
   
   Newark has continued to gain students.  Its 2023-24 enrollment will be 54,555.

There are only 64 districts with deficits over $500 per student.  The most underaided district in dollars-per-student is now Lindenwold, with a deficit of -$3,356,389, or -$1,096 per student, which is only tenth of what Bound Brook's deficit was in its worst year.

The most underaided district in percentage terms is Woodland Park, but it still gets $2,747,157 out of $3,099,440, or 89%, which is only a ninth of what Chesterfield's was in its worst year.  All other districts get at least 90%.

The Overaided

The Update is Here.

The districts I highlighted as examples of Adjustment Aid excess no longer have large surpluses anymore, and in the case of non-Abbotts which are constrained by the 2% tax cap, I am worried about them budgetarily.

• Jersey City is losing $51 million (-$1,730 pp), bringing its state aid surplus down from $1,903 pp in 2022-23 to $552 pp in 2023-24.  Factoring in the tax increase necessary to compensate for inflation and to compensate for the lost $51 million, Jersey City should have to raise taxes by $70 million, bringing their levy up to $500 million.  However, on an Equalized Valuation of $49.4 billion, we need not be concerned about Jersey City being overtaxed.  A $500 million levy is still a 1% school tax rate.
  
  Jersey City's Equalization Aid is still $68 million and its state aid excess is $16.3 million.  It should lose a few tens of millions in state aid for 2024-25, but thereafter gain state aids through growth in the categorical aids.

• For years, Asbury Park was NJ's highest spending district, exceeding $30,000 per student (not even counting pensions), over which as much as $24,000 per student came from state aid.  It was even the highest spending district in the United States.  Since Asbury Park was one of its lowest performing districts in NJ, it was used frequently as an example of Abbott vs Burke excess and the ineffectiveness of megaspending.
  
  Asbury Park's academic performance is still very low, but in 2023-24, Asbury won't work as an example of excessive spending anymore. Asbury Park's state aid will be $20,702,767 for 1,926 students, or $10,749 pp.
  
  Asbury Park's state aid excess is now only $2,711,765, or $1,408 pp.  That's still the seventh most in New Jersey, but nothing compared to when Asbury Park's state aid excess was $11,000 per student.
  
  
• Hoboken's state aid surplus was never as large as Jersey City or Asbury Park's, but since Hoboken was NJ's richest K-12 district by far, any aid surplus was unacceptable.  Now, however, Hoboken is only overaided by $68,045 total, or $21 per student.  (not counting Hoboken's $2.7 million in Interdistrict Choice Aid)
  

The most overaided district in 2023-24 will be East Orange, getting $175,087,372 when SFRA's core formulas say it only should have $144,910,078, which is a $30.2 million surplus for 9,522 students, or +$3,169 per student.

East Orange's Adjustment Aid is protected by East Orange having exceptionally high taxes, with an effective all-in tax rate of 3.449.  The protection comes from S2.

 (1) An SDA district that is located in a municipality in which the equalized total tax rate is greater than the Statewide average equalized total tax rate for the most recent available calendar year and is spending below adequacy as calculated pursuant to section 1 of P.L.    , c.   (C. ) shall not be subject to a reduction in State aid pursuant to subsection b. of this section.

Toms River, Lakewood and Others Show the Clear Need for Tax Cap Liberalization

As some aid-losing districts fall deeper under Adequacy, the more undeniable their mistake was to not ask for tax cap relief, and Phil Murphy's veto of a 2020 bill that would have done exactly that.

• Toms River is losing $14.4 million ($1,121 per student), which is much larger than their $3.5 million surplus it had in 2022-23.  The reason Toms River lost much more than anticipated is that their Local Fair Share grew, from $219 million to $251 million (+20%), while Toms River's Adequacy Budget only grew from $238 million to $252 million, meaning that Toms River is nearly ineligible for Equalization Aid.  
  
  Toms River's Local Fair Share grew so much because of 20% growth in its Equalized Valuation (compared to +11% statewide), although Aggregate Income fell by 2% (which is a statewide effect presumably due to the Covid disruption of 2020).
  
  

  	Equalized Valuation (2022)	Aggregate Income (2020)	Local Fair Share
  Toms River 2022-23	$19,518,711,982	$4,007,942,878	$219,146,610
  Toms River 2023-24	$23,423,170,202	$3,951,760,462	$250,875,466

  
  Most of TR's aid loss comes from the growing Equalized Valuation, but 2023-24 will mark another year in its long trend of enrollment loss.  In 2003-04 Toms River had 18,192 students.  Next year's enrollment is projected at 14,000 exactly, down from 14,095 in 2022-23.
  
  
• Freehold Regional has also been a prominent opponent of Adjustment Aid redistribution but said very little about liberalizing the tax cap.
  
  Freehold Regional taxes were $22 million below LFS for 2022-23. IE, despite having a LFS of $168,740,593 for 2022-23, the local tax levy is only $146,050,632.  
  
  In 2023-24 Freehold Regional's Local Fair Share will be $184,622,567 and it will lose $6.8 million in state aid.  Even a full 2% tax increase will only be +$2.8 million, which is far inadequate to compensate for its $6.8 million state aid loss.
  
  
• Lakewood is a very complex district budgetarily due to its high OOD and transportation spending.  I agree that the SFRA formula does not work for Lakewood, but Lakewood's budget is also badly hurt by the rigidity of the tax cap.
  
  For 2023-24 Lakewood's Local Fair Share will rise from $137 million to $160 million, but due to how the tax cap is just 2% and is based on the 2022-23 tax levy of $109.5 million, the tax levy can only rise +2%, or $2.1 million.
  
  

In 2016, when Lakewood was nearly at its full Local Fair Share, I wrote about how SFRA didn't work for Lakewood, but if it were to update that article I would have to write equally much about the tax cap.  

These districts would probably say that the real problem is state aid loss at all, 

Equalization Aid Eligibility Increases; Local Fair Share Rate Decreases

There will be 309 districts eligible for Equalization Aid, which is an increase from a few years ago, when as few as 270 districts were eligible.  Their Local Fair Share works out to a 1.36% median tax rate, which is slightly lower than 1.38% in 2022-23, but significantly lower than 2018-19 when it was as high as 1.52%.  

The reason Local Fair Share decreased is the big increase in Equalization Aid, which lowers the Local Fair Share multipliers relative to tax base growth (which was +11% for this year due to the real estate boom.)

The 2023-24 Local Fair Share formula is 

(Equalized Valuation x 0.012805233) + (Aggregate Income x 0.051068829) / 2

which is a reduction in the Equalized Valuation multiplier and an increase in the Aggregate Income multiplier.  NJ's Equalized Valuation had been way up in 2021-22, while in 2021 there were Covid-related reductions in income (about -2%)

Despite the decrease in Local Fair Share rate, since NJ's Equalized Valuation grew so much, the total, statewide Local Fair Share for Equalization Aid eligible districts grew from $8.7 billion to $9.4 billion.  That effect is part of the reason the state aid deficit fell, as well as increased education spending.

Local Fair Share Disparities

Very few people recognize how unequal New Jersey's Local Fair Share is.  Although the state median is 1.36%, Local Fair Share ranges from only 0.94% for Long Branch City up to 1.81% for Woodlynne. This actually a narrower gap than a few years ago, when Local Fair Share range went from 0.8% for Wildwood City to 2.1% for Woodlynne.

The reason New Jersey's Local "Fair" Share varies so much is that New Jersey uses Aggregate Income as well as Equalized Valuation to calculate it.  This means that the lower the ratio of Aggregate Income to taxable property there is, the lower the tax rate and the higher the ratio of Aggregate Income to taxable property there is, the higher the tax rate.

The logic "make higher earning people pay more" breaks down because NJ uses Aggregate Income, not median income, so that ultra high-income outliers and residents living in PILOTed or tax exempt property have their incomes added to Aggregate Income, even though high-income outliers pay little property taxes relative to income and residents of PILOTed and tax exempt property pay no regular property taxes at all.

Furthermore, the use of Aggregate Income introduces a bias in favor of non-residential property and vacation homes, since neither non-residential property nor vacation homes has any income attached to it.

Using Aggregate Income also penalizes people who have chosen to live within their means, in houses that are inexpensive relative to their income.

The following districts have the highest Local Fair Shares:

WOODLYNNE BORO	1.81%
LAUREL SPRINGS BORO	1.79%
LINDENWOLD BORO	1.72%
HARRISON TWP	1.72%
STRATFORD BORO	1.71%
BRIDGETON CITY	1.70%
LINWOOD CITY	1.70%
PITMAN BORO	1.70%
HADDON HEIGHTS BORO	1.69%
PITTSGROVE TWP	1.69%
HI NELLA	1.65%
MERCHANTVILLE BORO	1.64%
DEERFIELD TWP	1.63%

It's not a coincidence that the highest LFSs are in South Jersey, particularly the Philly suburbs, since it was the original intention of the law back in 1990.  NJ's LFS formula penalizes districts where people live within their means. 

Although there are some districts in northeastern New Jersey that also have high Local Fair Shares 2023-24 also continues the anti-rural, anti-South Jersey bias of the Local Fair Share formula.  The northeastern NJ district with the highest Local Fair Share is West Orange, but it is only 1.55%, which is #38 in the state.

Some wealthy districts in northern NJ have theoretically high Local Fair Shares, including Mendham Township at 2.13%, but for a district like Mendham the official LFS has no meaning since it's far in excess of what the district would ever need.

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• 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