Trenton, NJ – Mikie Sherrill’s victory in the November gubernatorial election set the stage for a familiar battle over New Jersey’s school funding system.
Her incoming administration is signaling that major changes to the state’s controversial S-2 formula are unlikely.
That position places Sherrill firmly in line with Democratic leaders who argue the current system is functioning as designed.
The debate centers on Senate Bill 2, the 2018 law that reworked how state aid flows to public schools by phasing out adjustment aid and redistributing funding to districts deemed under-resourced.
S-2 was created to shift dollars toward schools with higher concentrations of poverty, English language learners, and special education needs, while allowing districts losing aid to adjust their tax levies over a seven-year period.
In the end, S-2’s endurance isn’t about ignoring problems—it’s about whose problems matter most. For New Jersey Democrats, the formula’s redistribution aligns with their values and voter base. As Sherrill takes the helm, expect tweaks, not transformation. Suburban families may grumble, but in Trenton’s blue wave, their voices are unlikely to sway the tide. If real change is desired, it might require a shift at the ballot box—something that didn’t happen this cycle.
Impact of aid cuts on suburban districts
As S-2 rolled out, many suburban and rural districts in Monmouth, Ocean, and Burlington counties experienced steep reductions, prompting program cuts, increases in class sizes, staff reductions, and higher local taxes.
Examples include Toms River Regional Schools, which absorbed multi-million-dollar cuts across successive budgets.
Statewide, 393 districts saw increases under Governor Phil Murphy’s final budget, while 75 sustained losses tied to S-2’s final phase-in.
These reductions created volatility that critics say complicates long-term planning and pressures local taxpayers to bridge gaps.
Why Democrats are holding firm
The law passed with strong Democratic support and reflects a long-standing policy objective to direct more resources to historically underfunded urban districts such as Newark and Camden.
Repealing or scaling back the formula would undo these gains and risk alienating core Democratic voters who have benefited from the shift.
Leaders in the legislature continue to argue that S-2 represents an equitable approach, even as districts absorbing losses push back.
Sherrill signals continuity, not overhaul
Sherrill has stated she sees no fundamental issues with the structure of the funding formula and instead backs targeted changes intended to stabilize implementation.
Her proposals include capping annual aid losses, adjusting how special education costs are calculated, and providing earlier notice of district allocations.
These positions differ sharply from former Republican candidate Jack Ciattarelli, who advocated for a full reset of the funding formula to protect districts facing reductions.
Sherrill’s approach aligns with the broader Democratic strategy of maintaining the redistribution model while softening its most abrupt impacts.
Ongoing political divide over school funding
New Jersey continues to grapple with structural budget pressures, including pension obligations and long-term liabilities that limit fiscal flexibility.
Republican lawmakers have introduced proposals for supplemental appropriations to offset cuts, including measures aimed at helping districts most affected by S-2.
Democrats, however, expanded their majorities in the recent election, strengthening the likelihood that the existing formula will remain in place.
For districts seeking sweeping changes, the political landscape suggests that meaningful shifts may come only through future electoral outcomes.
First, a quick primer on S-2 for those not steeped in Trenton minutiae. Enacted in 2018 under Governor Phil Murphy, S-2 modified the School Funding Reform Act (SFRA) of 2008 by phasing out “adjustment aid”—extra funding that had been propping up certain districts beyond what the formula deemed necessary.
The bill aimed to eliminate this holdover aid over seven years (from 2019-2020 through 2024-2025), redirecting resources to underfunded schools and allowing districts losing aid to adjust their tax levies. Proponents hailed it as a step toward equity, ensuring that state aid aligns more closely with student needs, such as poverty levels, English language learners, and special education requirements.But while S-2 has been a boon for many urban and high-need districts—often in Democratic-voting areas—it has wreaked havoc on suburban and rural schools. These “overfunded” districts, many in GOP-leaning parts of the state like Monmouth, Ocean, and Burlington counties, have seen steep aid cuts.
For instance, Toms River Regional Schools faced millions in reductions, leading to program cuts, larger class sizes, and property tax hikes. Statewide, the fallout has included teacher layoffs, slashed extracurriculars, and budget shortfalls that force local taxpayers to pick up the slack. In Governor Murphy’s final budget for fiscal year 2025, fully funding the SFRA meant aid increases for 393 districts but decreases for 75 others, exacerbating the divide. Critics argue this volatility disrupts planning and harms students, with suburban schools bearing the brunt as enrollment shifts and costs rise without corresponding aid.Yet, despite these problems, Democrats aren’t budging—and here’s why.
Contrary to the narrative pinning S-2 solely on Murphy, this was a party-wide effort. The bill passed with overwhelming support from the Democratic-majority Senate and Assembly, reflecting a deliberate policy choice to prioritize equity over stability for certain communities. It’s not a bug; it’s a feature. By design, S-2 shifts money from wealthier, often Republican districts to poorer, Democratic ones, aligning with progressive goals of addressing historical underfunding in cities like Newark and Camden.
A repeal would undo these gains, alienating core Democratic constituencies and inviting accusations of backsliding on social justice.Enter Governor-elect Mikie Sherrill, whose campaign rhetoric underscores this reluctance to overhaul.
While acknowledging the formula’s flaws, Sherrill has expressed belief that there’s nothing fundamentally wrong with the current system. Instead, she advocates for “modernizing and stabilizing” it—proposing caps on year-to-year aid losses, better accounting for special education costs, and ensuring timely funding announcements to prevent last-minute crises. In debates and policy outlines, she clashed with Ciattarelli, who called for a full reset to protect cut districts, but Sherrill’s stance is clear: build on S-2, don’t scrap it.
As a former federal prosecutor and Congresswoman from the 11th District, Sherrill’s approach appeals to moderates, but it signals continuity for Democrats who see S-2 as a success story in progressive governance.
Of course, this partisan calculus isn’t without risks. With New Jersey’s structural budget deficit looming and long-term liabilities like pensions straining resources, ignoring the pain in Republican districts could fuel resentment and electoral backlash. Proposals from GOP lawmakers, like Assemblyman Alex Sauickie’s “S2 Appropriations Rescue Act” to provide supplemental aid, highlight the ongoing divide. But with Democrats expanding their legislative majority in the election, the political math favors the status quo.