New Jersey Education Aid

Thursday, March 20, 2025

2025-26 New Jersey State Aid

The opinions herein belong solely to the author and not to any group or other individual. He writes this solely as a private citizen.

On February 27th the New Jersey Department of Education released state aid amounts for each school district in the state.

Here are some highlights:

Overaiding and Underaiding are back. The overaided districts have a surplus of
$395,912,037 and the underaided districts have a deficit of -$382,529,105.
New Jersey's finances were tighter than in the last few years, so the total K-12 formula aid increase was only $386 million, as opposed to as much as $900 million, as in 2023-24 and 2024-25. The small increase in Equalization Aid caused Local Fair Share to jump from 1.29% to 1.49%.
Like previous governors, the Murphy administration unilaterally changed SFRA's funding mechanisms without waiting for the NJ Legislature to make the changes.

The Whole Enchilada of NJ Education Spending ($22.2 billion!)

When superintendents, legislators, education activists, the Boards of Education talk about "state aid," they almost always mean what's only just K-12 formula aid, aka "opex aid." IE, state money going directly to districts that they control and can spend on various educational operations.

K-12 formula aid is critically important, but it's actually only 54% ($12 billion) of New Jersey's $22.2 billion all-in education spending. As you see below, the State of New Jersey spends $22.2 billion on other items that are essential to public education, from the Teachers Pension and Annuity Fund, teachers Social Security, post-retirement medical, and multiple forms of debt servicing ($6.5 billion). New Jersey school districts also receive large amounts in Extraordinary Aid and PreK aid ($1.7 billion), although those are semantically not defined as "formula aid."

Other state aid sources, like Extraordinary Aid and Debt Servicing Aid, are funded below statutory targets, but writing about that would be a separate blog post.

In a huge contrast to the Christie-era, when debt-related education spending got the largest increases, K-12 formula aid has gotten the biggest increases under Murphy, with the $386 million net gain making up 85% of new education spending.

The $386 million increase is the smallest increase since 2017-18 (excluding Covid) and many districts are losing state aid, but at least it's better than the cuts municipal governments are seeing.

Note: this is the fifth straight year that NJ has made the full actuarially recommended contribution to TPAF. (Post-Retirement Medical is PAYGO)

The 2025-26 Formula Aid Distribution

The total K-12 formula aid increase was $387 million, but 144 districts lost $67 million in state aid and seven vo-techs had no change. Because of that limited redistribution, the 391 aid-gaining districts gained $454 million in state aid. (see my 2025-26 State Aid spreadsheet for more detailed information)

The $386 million net increase (+3%) is the smallest increase since the middle-Christie years, which is because NJ's income taxes are only expected to increase by $845 million. (See page 53 of the Budget in Brief)

As happens every year, half of the aid gain (+$227 million) was concentrated in only a handful of districts. For 2025-26, only ELEVEN districts, Newark, Paterson, Trenton, Camden, Elizabeth, New Brunswick, Plainfield, Irvington, East Orange, Vineland, and Orange, will get half the new money.

Note, those eleven districts educate 208,984 K-12 students, which is 16% of NJ's total of 1,318,781 K-12 students.

State Aid Disparities

2024-25 was the first year in the history of NJ state aid where all districts were at least 100% funded, but New Jersey fiscally could not sustain that for 2025-26.

The reemergence of state aid deficits is due to the state's fiscal difficulties, which hinder our ability to increase K-12 formula aid at the same rate as inflation. Deficits are also fiscally due to a preference to cap aid losses at -3% of the prebudget year's state aid. Hence, state aid deficits (and surpluses) are back.

For 2025-26, there will be

191 overaided districts, with a total excess of $395,912,037 (not counting Choice Aid and Military Impact Aid).
114 districts who are funded at exactly 100%.
282 underaided districts with a total deficit of -$382,529,105.

The largest state aid surplus is Jersey City's, with $77.7 million, or $2,704 per student. Elizabeth has the second largest surplus in total dollars, with $28 million.

These amounts are nothing compared to Asbury Park's surpluses, which were over $11,000 per student, but they are quite large.

The largest deficit in total dollars is Newark, with $37 million, or -$652 per student. The largest deficit in dollars per student is Netcong, with -$4,147 per student, or $1.3 million total for 308 students.

If NJ did not use a 3% maximum aid loss*, another $395.9 million would be available for underaided districts and the 100% funding floor would be intact for another year, but that would have caused pain for aid-losing districts, so the Murphy administration heeded the appeals of overaided districts, legislators like Sen. Vin Gopal, and outside groups like the New Jersey School Boards Association, and preserved more of their state aid. Although a more subtle and better process would have been one that allowed larger cuts for districts with low tax rates.

*Aid losing districts would argue that their aid losses were greater than 3%, since the 3% maximum was cut from the original 2024-25 state aid proposal, and so did not include the $45 million in Stabilization Aid that was restored late in the FY2025 budget cycle)

Local Fair Share Increase and Local Fair Share Disparities

From 2024-25 to 2025-26, NJ's statewide Adequacy Budget jumped from $27,153,664,048 to $29,912,221,002, which is +$2.75 billion or +10%. Since NJ only could put in another +$386 million (+3%) into K-12 formula aid, Local Fair Share soared.

The reason for such a huge jump in the statewide Adequacy Budget is not enrollment growth, which is estimated to be only +4,000, but rapid inflation itself, plus a technical problem with the 2023 Education Adequacy Report in that it had stopped tracking inflation in mid-2021 (see page 14), before inflation accelerated. The 2026 Education Adequacy Report did include that rapid period of inflation, and hence made a bigger increase in the statewide Adequacy budget than current inflation.

Local Fair Share inequality comes from New Jersey's highly unusual method of calculating a district's local share. Whereas in most states, the equivalent of Local Fair Share is based solely on tax base, in New Jersey it is a hybrid of Equalized Valuation and Aggregate Income, where each Equalized Valuation and Aggregate Income each comprises 50% of the weight.

This is an illustration of a rarely made point that, on a statewide basis, Local Fair Share depends on the amount of Equalization Aid available, so the real statewide formula is:

(Statewide) Adequacy Budget - (Available) Equalization Aid = Local Fair Share

The formula for Equalization Aid you often see:

Adequacy Budget - Local Fair Share = Equalization Aid

is only true for individual districts, after the Local Fair Share multipliers have already been determined.

To further expound on how insufficient Equalization Aid raises Local Fair Share, this is the provision of SFRA which governs Local Fair Share:

In the event that these [LFS] rates, when used in accordance with the provisions of this section and assuming that each district's general fund levy is equal to its local share, do not result in equalization aid for all districts equal to the Statewide available equalization aid, the commissioner shall adjust these rates appropriately, giving equal weight to each. (see pages 14-16)

It is the 2025-26 increase in Local Fair Share that accounts for the much larger number of districts who lost state aid.

For 2025-26, the Local Fair Share formula is

(Equalized Valuation x 0.014949314 + Aggregate Income x 0.059963161)/2

which is an increase from 2024-25's

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

Hence, New Jersey's average Local Fair Share ROSE again, after four years of decline. For 2025-26, the median Equalization Aid-eligible district will pay a LFS that is a 1.58% tax rate, with 1.49% as the weighted average and 1.58% as the unweighted average.

Includes the 14 Vo-Techs who are eligible for Equalization Aid, but not their LFS tax rates, since LFS tax rates do not exist for vo-techs

As usual, there is a stark bias against the Philly suburbs and rural areas, however, this is the first time I've seen Hunterdon districts with the highest expected tax rates.

Conclusion:

The 2025-26 state aid distribution should remind state aid activists that changing the state aid formulas like for special education or multiyear averaging of Local Fair Share do nothing if the state's overall budget picture is difficult and/or the governor has other budget priorities. NJ's expected income tax growth in FY2026 is simply not as robust as it was for the previous few years, but Adequacy Budget soared, hence Local Fair Share soared with it, and the 2025-26 state aid distribution comes as a disappointment or shock to many.

Thus, while the Murphy administration did use multi-year averaging for Local Fair Share, it did not have a large impact in stabilizing state aid compared to the 3% aid-loss floor.

The 10% increase in the Adequacy Budget also did not mean 10% more school aid. The effect of raising the Adequacy Budget was to raise Local Fair Shares and cut Equalization Aid for even more districts.

In many ways, the most honest ways to demand higher state education aid are

1) call to raise income taxes. (this has been happening gradually since NJ's income tax brackets are not indexed to inflation.)
2) call to cut spending on other state services paid for by the Property Tax Relief Fund, eg, municipal aid and tax rebates. (this has also been occurring very gradually, as non-education spending has not seen the increases education spending has received).

Both have drawbacks, but they, along with natural revenue growth, are what would definitely increase and stabilize state aid for NJ's school districts.

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Friday, November 15, 2024

Update on Taxpayer Guide to Education Spending

I'm glad that NJSpotlight has covered the release of the new Taxpayer Guide to District Spending, but I wish it had done a better job of explaining the difference between Budgetary Cost Per Pupil and Total Spending Per Pupil.

Budgetary Cost Per Pupil includes all the spending a district has under its direct control.

The NJDOE does helpfully explain this in its introduction:

The Budgetary Per Pupil Costs Indicators (1 through 15) have historically excluded certain expenditures, some of which are funded by entities other than the school district and/or taxpayers. The Budgetary Cost measures are considered to be more comparable across districts for local budgetary considerations because they generally measure annual recurring costs incurred for students educated within district schools, using local taxes and state aid. In contrast, “Total Spending” includes the omitted categories to represent all costs. These categories include transportation, special revenues (including federal funding), pension and benefits paid by the state, facilities (including debt service), equipment, total food services, judgments against the school district, and tuition/costs for students sent out of district (except payments to Charter schools). Consistent with the decision to include tuition payments for students sent out of district for preschool, special education, or other programs, the number of students sent out of district is added to the district’s enrollment denominator for the calculation of Total Spending Per Pupil.
In addition to the all-inclusive total spending measure, the Budgetary Per Pupil Cost Indicators continue to be included to allow districts to review and compare various components of a school district's annual budget data with other districts in the state. The Budgetary Per Pupil Cost and its subcomponents match the amounts districts publish in their User-Friendly Budgets prior to the school election. Unless otherwise noted in the indicator descriptions, districts are ranked from lowest to highest costs. Districts that did not report any values (N.R.) and those that moved from a different enrollment group (N.A.) are excluded from the rankings.

Total Spending Per Pupil is the more inclusive measure and includes payments the state makes on behalf of districts:

Total Spending Per Pupil was first developed in 2010-11 to provide a more comprehensive representation of school district expenditures, since the budgetary per pupil measures excluded some significant cost categories. This variable also uses a larger enrollment number, including all students for which the district is financially responsible. The Total Spending measure adds the following items to the costs already included in the Budgetary Cost (Indicator 1): 1) state payments on behalf of districts for pension, social security, and post-retirement medical; 2) transportation costs (including students transported to nonpublic and charter schools); 3) judgments against the school district; 4) all food service expenditures (including those funded by school lunch fees); 5) capital outlay budgeted in the general fund (facilities and equipment); 6) special revenues supported by local, state, and federal revenues (i.e. preschool, IDEA, Title I); 7) tuition payments by the district to other private and public school districts for the provision of regular, special, and preschool education services (charter school students and their associated costs are only included in the charter school in which they are being educated). 8) debt service for school debt; and 9) an estimate of the district’s share of the debt service the state is paying for school construction bonds issued for school construction grants and School Development Authority projects.

I disagree with this commentary by Colleen O'Dea, "A better measure for comparing district spending is the report’s 'budgetary cost per pupil,' which excludes those extraordinary costs, officials said."

Total Spending Per Pupil and Budgetary Cost Per Pupil are equally valid. Total Spending Per Pupil reveals what New Jersey is really spending on education and is what you should use for discussions of the total New Jersey budget and in interstate comparisons. Since TPAF, Social Security, debt servicing, and post-retirement healthcare are essential education spending, they should be included in our measurements of education spending. Budgetary Cost Per Pupil reveals what districts are spending.

Since NJ school districts are funded by taxpayers, in their local, state, and even federal capacities, the Total Spending Per Pupil is appropriate and necessary.

Monday, October 28, 2024

Changes in Equalized Valuation for 2025-26

It's time for my annual look at changes in Equalized Valuation across New Jersey to get a partial estimate of changes in Equalization Aid for 2025-26 and to get a one-year snapshot data point on changes in NJ's real estate market and overall geography of wealth.

any questions, please contact stateaidguy@gmail.com

As mentioned in previous posts about this subject, Equalized Valuation is the market value of all the taxable property in a town. It is determined by a comparison of official assessments of properties to their sales prices. It is used to apportion county taxes, to apportion taxes within most regional school districts, and is half of the determination of Local Fair Share, which in turn is part of the calculation of Equalization Aid.

First, the big picture is that New Jersey's total Equalized Valuation grew healthily, from $1,744,722,902,678 to $1,906,359,422,846, a 9.3% gain that is nearly the same percentage as from 2023 to 2024, and only slightly less than the record from 2022 to 2023, when we gained over 11%.

Second, let's look at annual changes for our twenty-one counties:

Year to year fluctuations are only data points, aka statistical noise. A five year look yields a more meaningful picture.

Please notice that Atlantic County has been a large gainer. This is a huge contrast to the early 2010s when Atlantic City's Equalized Valuation collapsed in the wake of the casino meltdown there, when the Equalized Valuation fell from $55 million in 2010 to only $31 billion in 2019. However, Atlantic County's Equalized Valuation is still only $51 billion, which below what it was prior to the Great Recession and casino meltdown.

For Ocean County, it would be wrong to assume that it is all Lakewood, although Lakewood has reached $19.8 billion from $11.7 billion in 2020 (+69%). Toms River is actually up dramatically too, from $16.3 billion in 2020 to $25.5 billion for 2025 (+56%).

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Jersey City Flatlines, Newark Soars

For all of my previous reports on changes in Equalized Valuation, the big takeaway was the extraordinary growth of Jersey City, which was so rapid that in 2019 I was sure that Jersey City would become ineligible for Equalization Aid in five years, which would have been 2024.

Well, I was right that Jersey City's tax base would increase, from a Local Fair Share of $414 million to to $615 million in 2024-25, but that was not sufficient to bring Jersey City's Equalization Aid to zero, although JC's Equalization Aid fall from $149 million in 2019-20 to $60 million in 2024-25.

What I am more surprised by is that Jersey City's growth has leveled off and actually dipped, by $999 million. In theory, that would qualify Jersey City for an additional $6.3 million in Equalization Aid.

By contrast, Newark's Equalized Valuation has soared recently, from $15 billion for 2020 to $28 billion for 2024. Elizabeth and Paterson have had pretty strong growth lately.

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Estimated ("Guesstimated"? )Implications for Equalization Aid

For Equalization Aid, recall that the formula for an individual school district is:

Adequacy Budget - Local Fair Share = Equalization Aid

And the 2024-25 formula for Local Fair Share is:

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

I have no idea what the relevant Aggregate Income will be for the 2025-26 Local Fair Shares (does anybody know that?) and we do not know what Adequacy Budgets will be for 2025-26, but if Equalization Aid were solely calculated on Equalized Valuation we can guestimate changes in Equalization Aid for 2025-26 by applying growth (or loss) and plugging that into the 2024-25 formula.

District	Equalized Valuation, 2023	Equalized Valuation, 2024	Change in Equalized Valuation	Change in Equalization Aid (from change in EV only)
NEWARK	$22,710,007,385	$28,414,031,530	$5,704,024,145	-$36,243,307
PATERSON	$11,851,947,539	$13,277,933,697	$1,425,986,158	-$9,060,700
ELIZABETH	$13,382,797,043	$15,044,621,888	$1,661,824,845	-$10,559,217
TRENTON	$3,385,353,431	$3,682,304,826	$296,951,395	-$1,886,826
CAMDEN	$2,284,733,800	$2,620,624,707	$335,890,907	-$2,134,247
PLAINFIELD	$4,049,010,425	$4,386,601,357	$337,590,932	-$2,145,049
UNION CITY	$5,561,264,516	$6,682,004,990	$1,120,740,474	-$7,121,173
PASSAIC	$5,358,933,638	$5,836,982,457	$478,048,819	-$3,037,517
PERTH AMBOY	$4,423,414,951	$4,772,616,612	$349,201,661	-$2,218,824
NEW BRUNSWICK	$4,302,931,120	$4,580,496,648	$277,565,528	-$1,763,648
EAST ORANGE	$5,125,252,931	$5,516,845,850	$391,592,919	-$2,488,177
IRVINGTON	$3,524,558,975	$4,288,256,844	$763,697,869	-$4,852,528
VINELAND	$5,253,029,186	$5,874,802,288	$621,773,102	-$3,950,739
BRIDGETON	$701,489,262	$771,072,132	$69,582,870	-$442,129

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Saturday, October 26, 2024

East Orange's Budget Crisis 2024-25

Sadly, East Orange residents, students, and teachers have gone through a shock this year as the East Orange Public Schools have announced a grievous error in their budgeting and must make mid-year cuts of 93 positions, including 73 teachers in order to prevent a $25 million deficit from developing by the end of the year. Although many of the teachers will apparently be hired by Paterson and other districts, that's still a painful transition for them and a gigantic problem for East Orange's students.

The cause of this budget disaster has been underexplained, but the superintendent admitted, “We did not do our due diligence in, quite frankly, understanding what the financial reality was as soon as we started the school year.”

The closest thing Superintendent Christopher Irving has given for an explanation is that East Orange didn't get as large state aid increases as Newark and Orange:

“Around us, Newark received $100 million, and our colleagues in Irvington and Orange received almost $15-30 million respectively. And we got $200,000. And for us, we know that’s unfair.”

As I'll explain, it actually isn't unfair. East Orange students are less-poor than in the other former Abbotts and its tax base is stronger. Also, evaluating fairness by year-to-year changes is not appropriate. East Orange was overaided in 2023-24 and the other Abbotts were slightly underaided.

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The point of this post is to unpack East Orange's fiscal situation. East Orange should have known and understood why it was getting only a small state aid increase because East Orange began the S2 era (post 2018-19) overaided and only recently, for 2024-25, tipped into being slightly underaided and hence got only a small increase. The fault is on East Orange's administration and Board of Education, but the New Jersey Department of Education made a disaster like this more likely by not publicly releasing state aid target data which journalists could have picked up on.

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I don't think it is significant at all that East Orange's 2024-25 aid increase is smaller, since East Orange was well over its state aid target in 2023-24 and the S2 era:

The reason East Orange, in contrast to nearly all other overaided districts, did not lose state aid was a provision in S2 that protected districts with high-municipal taxes from losing state aid.

By contrast, Newark and Irvington were underaided at the beginning of the S2 era and into 2023-24. For 2023-24, Newark had a $36 million state aid deficit and Irvington had a $2.4 million deficit. Orange had a $4.6 million surplus in 2023-24, although it gained over 200 students for 2024-25, hence it got an increase for 2024-25.

It is true that East Orange's state aid is somewhat smaller than its local peers:

But there is a logical reason for this, since East Orange's students are actually less-poor than students are in Newark or Orange:

And East Orange has, by far, the lowest percentage of Multilingual Learners:

Hence, its Adequacy Budget Per Student is the lowest

East Orange's tax base per student is the strongest too, which means it is due less Equalization Aid.

East Orange's Local Fair Share is only a 1.24% tax rate, which is slightly below the state average too, so it does not have that ground for complaint.

There is a problem with SFRA/S2 for East Orange in that SFRA does not take into account a district's municipal tax rate and East Orange genuinely experiences municipal overburden, with a crushing 1.774% municipal tax rate.

However, municipal overburden would be a separate problem and I have not read about East Orange complaining about that in its context to improperly prepare its 2024-25 budget.

East Orange, which is not subject to the tax cap due to its Abbott status (like Jersey City) has almost doubled its taxes, although it is still $24 million ($2500 pp) below its Local Fair Share.

	Local Fair Share	School Tax Levy
2024-25	$63,367,875	$39,291,159
2023-24	$61,744,880	$27,791,159
2022-23	$53,572,634	$22,791,159
2021-22	$50,876,307	$22,791,159
2020-21	$50,698,745	$22,791,159
2019-20	$47,928,246	$22,344,274
2018-19	$44,253,072	$21,908,798
2017-18	$41,816,219	$21,479,212

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In conclusion, East Orange's budget mess is largely due to its own failure to evaluate the State Aid Summaries to see that it was only gaining $200,000 and budget for that, but culpability is also on the state Department of Education's because the NJ DOE does not publicly release "state aid targets" with the annual State Aid Summaries, so that East Orange would have been more likely to understand that it was technically overaided through 2023-24 and therefore no large increase was coming.

Monday, March 18, 2024

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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