Senate Bill 4544 would remove New Jersey’s 6% cap on school aid increases, a change that could especially matter in Ocean County districts carrying heavy transportation and special education costs.

TRENTON, N.J. — A newly introduced bill could provide substantial additional state funding to school districts including Toms River, Lakewood and Jackson by eliminating New Jersey’s 6% cap on year-over-year increases in major categories of school aid.

Senate Bill 4544, introduced Monday by Sen. Michael Testa, R-Cape May, would require the state to pay districts the full amount generated by the school funding formula for the 2026-27 school year rather than limiting increases in equalization, transportation, special education and security aid to 6%.

The proposal comes with a $332.6 million appropriation from the Property Tax Relief Fund to cover the additional aid statewide.

For Ocean County, the effect could be significant because districts including Toms River, Lakewood and Jackson face unusually large costs tied to transportation, special education and, in some cases, nonpublic-school students.

Toms River Says the Cap Is Already Costing It Millions

Toms River provides one of the clearest examples of what S4544 is designed to change.

The district’s own 2026-27 budget presentation says its state aid increased by about $1.8 million this year, but the funding formula would have produced an increase of approximately $5.7 million without the cap.

That leaves a gap of roughly $3.9 million between what the formula calculated and what the district was permitted to receive.

The same budget shows Toms River receiving about $19.1 million in special education aid and $8.7 million in transportation aid for 2026-27.

Toms River officials have also said the district remains about $81 million below its calculated adequacy budget.

If S4544 becomes law as written, the district would receive its uncapped formula entitlement rather than having the increase stopped at 6%.

That would not eliminate Toms River’s larger structural funding problems, but it could restore several million dollars that district officials say the formula already recognizes it needs.

Special Education Is a Major Cost Driver

Special education expenses are particularly important because they are not easily reduced when a district runs into a budget problem.

Districts must provide services required under students’ individualized education programs, including specialized instruction, aides, therapies and, in some cases, transportation to programs outside the district.

Toms River’s special education categorical aid rose from about $18 million to $19.1 million this year, while transportation aid increased from about $8.1 million to $8.7 million.

S4544 would not create a new special education program. It would instead allow the existing school funding formula to deliver the full increase it calculates for those categories.

Lakewood’s Transportation Problem Is on a Different Scale

Lakewood presents an even more unusual situation.

The district has only several thousand students enrolled in its public schools but taxpayers are responsible for transportation and other mandated services involving tens of thousands of children daily.

A state-commissioned review of the Lakewood Public School District estimated roughly 50,000 school-age children living in Lakewood, with about 4,600 attending public schools and more than 45,000 attending nonpublic schools.

As of October 2023, the district was financially supporting transportation for more than 36,000 nonpublic students in addition to thousands of public and charter school students.

That creates a school-finance structure and problem unlike almost anywhere else in New Jersey, except for maybe neighboring Jackson, which is fast approaching Lakewood levels.

New Jersey law requires public school districts to provide transportation or aid in lieu of transportation for eligible students attending qualifying nonpublic schools.

For the 2026-27 school year, the New Jersey Department of Education lists the aid-in-lieu amount at $1,177 per eligible student.

But transportation frequently costs more than the state reimbursement structure covers.

The Lakewood review specifically found that districts can face transportation expenses above the state maximum, with the excess falling on the local district.

In Lakewood, that difference is multiplied across tens of thousands of students.

Removing the 6% cap would therefore matter because transportation aid is one of the four categories S4544 specifically protects from being reduced below the uncapped formula amount.

It would not solve Lakewood’s entire transportation deficit or rewrite the state’s nonpublic busing rules, but it could prevent the state from calculating a larger transportation entitlement and then withholding part of the increase because of the 6% ceiling.

Lakewood Also Faces Significant Special Education Obligations

Lakewood’s financial pressures are not limited to buses.

The state’s intervention plan for the district includes direct oversight of special education, transportation and services provided to nonpublic students.

Those obligations can overlap.

Students with disabilities may require specialized transportation under their IEPs, while eligible children attending nonpublic schools can also receive state-funded special education and remedial services.

That means growth in Lakewood’s student population can increase costs across several categories at the same time.

S4544 would potentially help on two fronts because both transportation aid and special education categorical aid are included in the funding covered by the bill.

Jackson Has Been Hit by the Same Funding Mechanics

Jackson Township is not dealing with Lakewood’s scale of nonpublic enrollment, but it has faced its own severe school-budget pressures in recent years.

The district’s financial records show substantial dependence on transportation and special education aid.

In the 2025-26 budget, Jackson reported approximately $10.5 million in transportation aid and $9.6 million in special education aid.

Those two categories alone represented more than $20 million in state support.

Jackson also has a sizable nonpublic-school transportation obligation. The district explains on its nonpublic transportation page that it must arrange transportation or provide aid in lieu for eligible private-school students who meet state distance requirements.

As Jackson’s population and nonpublic-school enrollment grow, that responsibility adds another fixed transportation cost that cannot simply be eliminated during a budget crunch.

Why the 6% Cap Can Hurt Fast-Growing Cost Categories

The issue with the cap is not that transportation or special education aid cannot increase.

They can.

The problem is that the combined increase in equalization aid, transportation aid, special education aid and security aid cannot currently exceed 6% of the prior year’s allocation.

That creates a situation where the state funding formula can calculate that a district should receive substantially more money because its enrollment, demographics, transportation requirements or special education needs have changed — but the annual budget law can still prevent the district from receiving the full amount.

Toms River’s current budget illustrates that problem directly.

Its transportation aid alone increased by more than 7%, while special education aid rose by exactly 6%. Once all four categories were combined, however, the district’s total formula aid increase landed at the statutory 6% ceiling.

What S4544 Would Change

Testa’s bill is straightforward.

For the 2026-27 school year, the education commissioner would be prohibited from applying a limitation that reduces a district’s uncapped state school aid.

The legislation defines that aid as the combination of:

• Equalization aid
• Transportation aid
• Special education categorical aid
• Security categorical aid

The state would appropriate $332,570,597 to pay districts the difference.

The bill would take effect immediately if enacted.

What It Would Not Fix

For Lakewood, Toms River and Jackson, S4544 could deliver more money, but it would not resolve every underlying problem.

Lakewood would still face the extraordinary expense of transporting a huge nonpublic-school population and providing mandated services to eligible students.

Toms River would still face a large gap between its budget and the state’s calculated adequacy level, along with rising employee, insurance and special education costs.

Jackson would still have to manage transportation, special education and enrollment pressures within its local tax and spending constraints.

The bill instead addresses a narrower problem: the state formula may calculate that these districts deserve a larger increase, while the budget law prevents them from receiving all of it.

Why Ocean County Districts Could Benefit

That distinction is important for districts with rapidly changing or unusually expensive student populations.

Transportation and special education are not discretionary programs that can easily be trimmed when state aid falls short.

Lakewood must transport enormous numbers of eligible nonpublic-school students. Toms River spends tens of millions on special education and transportation while operating below adequacy. Jackson carries substantial costs in both categories while also providing legally required transportation for qualifying private-school students.

S4544 would not change those obligations.

It would change how much of the state-calculated cost Trenton is willing to help pay.

For districts already arguing that mandated expenses are growing faster than their revenue, removing the 6% ceiling could mean millions of dollars that otherwise would have to come from local taxpayers, reserves, cuts elsewhere in the budget or some combination of all three.