Governor Phil Murphy’s S-2 Funding Formula Leaves Schools Closed, Unexpected Mergers, Teachers Without Jobs, Overcrowded Classrooms and No Money in its Wake
As the school bells ring across New Jersey this fall of 2025, for thousands of students in districts like Middletown, Jackson, and Neptune, the return to classrooms is anything but normal.
Instead of excitement over new teachers and fresh supplies, families are grappling with the fallout from Governor Phil Murphy’s school funding formula—a policy that has gutted budgets in suburban and rural districts, forcing draconian cuts, teacher layoffs, school closures, mergers, and skyrocketing property taxes.
While Murphy touts his “record investments” in education, the reality on the ground tells a different story: a redistribution scheme that prioritizes certain underfunded urban areas at the expense of others, leaving students in once-stable districts to pay the price with diminished opportunities and overcrowded classrooms.
The School Funding Reform Act, fully phased in under Murphy’s watch, was meant to create equity by shifting aid from “overfunded” districts to those in need.
But in practice, it has created winners and losers, with 75 districts facing aid reductions in the governor’s 2025-2026 budget proposal, even as overall state aid increases by a net $387 million.
Critics argue this formula, combined with expiring federal COVID aid and a rigid 2% tax cap that’s now being temporarily lifted, has pushed many districts to the brink. Inflation has soared beyond that cap, leaving schools unable to cover rising costs for salaries, healthcare, and special education without slashing services. The result? A cascade of negative impacts that hit students hardest: larger class sizes, fewer extracurriculars, reduced support staff, and in some cases, the shuttering of beloved neighborhood schools.
One school district is even considering declaring bankruptcy.
Neptune Township’s school district is dealing with a significant funding shortfall that threatens staffing levels, student programming, and overall operations. As one of the 281 districts flagged by the state for not contributing their “fair share” locally, Neptune is eyeing tax hikes above the 2% cap, which could strain residents further. This comes amid broader cuts that could mean fewer teachers, larger classes, and diminished support for at-risk students—exacerbating inequalities the formula was supposed to fix.
These aren’t isolated cases. Across the state, over 120 districts are seeing aid cuts for 2025-2026, including 27 in South Jersey alone. Districts like Lakewood are seeking massive state loans and considering closures, while Evesham eyes cutting 83 staff positions—nearly 10% of its workforce. Property taxes, already sky-high in New Jersey, are set to rise dramatically in places like Plainfield (up to 36%) and Keyport (12.5%), hitting fixed-income families and renters hardest. Critics like Timothy Purnell of the New Jersey School Boards Association call for modernizing the formula to make it more equitable and predictable, arguing it fails to account for inflation and local growth.
Governor Murphy’s administration defends the changes, capping aid drops at 3% and increases at 6% to promote stability, and offering incentives for tax hikes. But this feels like a band-aid on a gaping wound.
By favoring aid shifts to urban districts—often Democratic strongholds—while suburban areas bear the brunt, the formula perpetuates a partisan divide that prioritizes political equity over student needs. It’s no wonder residents in Toms River and Middletown feel abandoned; their high taxes fund a system that now demands even more while delivering less.
Take Toms River Regional Schools, one of the hardest-hit districts.
Over the past six years, it has lost a staggering 60% of its state aid—totaling $137 million—leading to a $22 million budget shortfall for the upcoming year despite a modest $1.69 million aid bump.
Many districts are unwilling to make the tough financial districts and refusing to cut the high costs of school administrators, instead, making the cuts in the classrooms, in bizarre one-time money grabs.
Selling trees, selling land, selling buildings, even selling schools. So far, in Jackson, the district has been forced to sell two schools, including a blue-ribbon school, Christa McAuliffe Middle School this year.
The Toms River district has chosen instead to consider bankruptcy, reject a state-imposed budget with a 12.9% tax hike, and plan the sale of its administration building on Hooper Avenue, which doubles as an early learning center. Superintendent Michael Citta has called the funding cuts “legislative child abuse and neglect,” and the district has sued the state. For its 14,500 students, this means potential program reductions and higher taxes burdening families already paying some of the nation’s highest property rates.
Toms River, a district once swimming in discretionary funds under convicted felon, former Superintendent Michael Ritacco, is now facing bankruptcy.
In Middletown, the story is equally grim. The district, serving about 8,500 students, has lost $3.5 million in aid over recent years due to the formula’s redistribution. Now, it’s proposing to close Navesink and Leonardo Elementary Schools and convert a middle school into an elementary one, citing aid cuts and declining enrollment.
Superintendent Jessica Alfone blames the lack of “full funding” promised by the state, while the community reels from the disruption to students’ routines and the erosion of local education quality. With a 6% aid increase to $14.8 million, it’s still not enough to stave off these closures, forcing families to adapt to longer commutes and fractured school communities.
Jackson Township Schools have suffered a 53% aid decline—$22.4 million over seven years—prompting the closure of Christa McAuliffe Middle School and the earlier shuttering of Sylvia Rosenauer Elementary, which was sold for $13.1 million. Enrollment has dropped from 8,189 to 6,914, but the funding formula’s rigid calculations haven’t kept pace, leading to plans for merging its two high schools.
Students face uncertainty, with reduced access to specialized programs and the emotional toll of losing familiar learning environments.
As New Jersey students head back to school amid this chaos, it’s time for lawmakers to rethink this flawed formula. Without real reform, the “Garden State’s” education system risks withering, leaving a generation of kids to suffer the consequences of bureaucratic missteps. Democrats in Trenton, including Murphy, must answer: Is this the equity they promised, or just another tax-and-cut fiasco?