New Jersey’s Constitution requires the state to provide every student with a “thorough and efficient” system of public education. For decades, courts and policymakers have wrestled with what that means and how the cost should be divided between the state and local communities. In 2008, New Jersey adopted the School Funding Reform Act (SFRA), a statewide formula designed to provide adequate funding for students while accounting for differences in student needs and communities’ ability to pay.
How does SFRA work?
SFRA starts with two basic questions:
- How much should it cost to provide students in a district with an adequate education?
- How much can the local community reasonably be expected to contribute?
The formula begins with a base amount for educating an elementary school student without additional needs. That amount is adjusted for grade level, with additional “weights” for students who are low-income or English language learners. Together, these calculations help determine each district’s Adequacy Budget, the formula’s estimate of what it should cost to adequately educate its students.
The state also calculates each district’s Local Fair Share, based primarily on local property wealth and residents’ income. Local Fair Share is not what a district actually raises in property taxes. It is the state’s estimate of what the community has the capacity to contribute.
Those calculations are used to determine Equalization Aid, the state’s contribution toward the Adequacy Budget. Generally, districts with greater needs and less ability to fund their schools locally receive more aid. The state also provides other categories of aid, including for special education, security and transportation.
How does the formula keep up with changing costs?
Every three years, SFRA requires an Educational Adequacy Report (EAR) that recommends updates to key parts of the formula, including the base amount, student weights and other factors related to special education, security and transportation. Those regular reviews are intended to help keep the formula connected to what it actually costs to educate students.
Where are the problems?
The formula does not always reflect what is happening on the ground in every community. Changes in property values can increase the state’s estimate of what a community has the capacity to contribute, even when local taxpayers do not feel better able to support additional school costs. That can affect a district’s state aid even if its costs and local budget pressures have not declined.
There are also important questions about whether the formula reflects today’s student needs and the actual costs districts face, including special education and transportation, while providing enough stability for districts to plan responsibly from year to year. A formula can calculate what a district should need and what its community should be able to contribute, but those calculations do not always match the fiscal reality school employees and communities experience.
What happens next?
New Jersey is taking a fresh look at how it funds public schools. In August 2026, the New Jersey Department of Education, under Gov. Mikie Sherrill and Commissioner Lily Laux, launched a statewide process to review the current system and consider changes.
NJEA supports a thoughtful review and insists that school employees need a meaningful voice in that work. Every day we see what adequate funding means for class sizes, staffing, student services, programs and opportunities. Any changes to the formula must ensure that every district has the resources it needs to give every student a great public education.
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