With a set amount of revenue and a growing list of expenses, school budgeting has become one of the most complicated public issues of the season. Last month, Governor Sherrill announced a record $12.4 billion investment in public K-12 education, but is that enough? Towns like Princeton, which approved its latest referendum and is expecting an increase in state aid, are finding it tough to make ends meet. The challenges become even more complicated in places like Robbinsville, where a March referendum failed, and which is expecting a decrease in state aid.
STATE AID
For most schools, revenue comes primarily through a local tax levy, combined with funding provided from the state. With taxes usually rising from year to year, it raises the question of why that does not keep up with the schools’ needs. The answer is that expenses beyond the district’s control, such as rising health care premiums, combined with controls on the amount that can be brought in, makes budgeting difficult.
Simply put, the school funding formula was created in 2008, under Gov. Corzine. Then in 2011, Gov. Christie instituted a tax levy cap of 2% for all NJ school districts. Together these policies worked well for most districts for about 10 years – but post-COVID, many are hitting a brick wall. Federal pandemic grants are no longer masking the additional needs, and the difference between costs and what can be collected is becoming glaringly real.
Though the state will be contributing $372 million more to school districts than it did last year, every district across the state is working to create realistic budgets without negatively impacting students.
We’ll examine how this challenge is being tackled in two districts: Princeton and Robbinsville.
PRINCETON BREAKDOWN
Princeton Public Schools (PPS) is in a strong position compared to many. It is expecting a 3% increase in state aid for 2026-2027. In terms of other revenue, it will receive the tax levy from Princeton residents which is capped at 2%, with some exceptions. Districts may exceed this cap to cover increased healthcare benefits, depending on how their costs compare to the state’s health benefits program. PPS’s increase is lower (the state’s is rising 31%), which will allow it to increase the levy by an additional 2.3% for healthcare. Also, from years when the max 2% was not used, districts can bank the difference. So, PPS also has $13,600 remaining from previous years to fold in. In total, with Board approval, PPS could increase the school tax levy by 4.33%.
In addition, PPS also receives Cranbury tuition, contributions (mainly from Princeton University), and this year $300,000 from the municipal PILOT agreement. Yet somehow, finances are still tight. Why? Healthcare premiums are rising roughly 15%, out-of-district tuitions are up 5.4%, maintenance has increased 4.9%, and transportation contracts could go up by 3.58%. PPS also has to cover a charge for Princeton Charter School, which went up $425,000 over last year. Additionally, a new municipal sewer charge of $100,000 is being added to the books.
“In terms of state aid, we enjoyed an increase of approximately 3.6%, but we lost 3% of our state aid last year, so our state aid is up about one-half a percent over the past two years,” explains PPS Superintendent Dr. Michael LaSusa. “Budgetary challenges are common across the state right now and many districts are in a state of crisis.”
Dr. LaSusa highlights districts like Tenafly (a community a lot like Princeton), which will see an 8.3% tax levy increase. Though high, it pales in comparison to Hoboken’s 27% increase in the tax levy – both impacted by health insurance premiums.
Beyond healthcare, the question remains: if a high-taxing municipality like Princeton is struggling, how do communities with lower-taxed residents afford to fund their schools?
“Some districts offer only a couple of world languages. Some districts have much larger class sizes. Some districts do not offer middle school sports. Some districts run half as many AP courses,” Dr. LaSusa adds. “Our community has invested in its schools because it values the programs that the district offers and has made the collective choice over time that it is important to provide a rich and robust set of learning opportunities that go beyond the minimum required by the state. We are committed to upholding this investment and this value proposition.”
ROBBINSVILLE’S SITUATION
While PPS has a $743,296 gap to fill, nearby Robbinsville Public Schools needs to make cuts of approximately $2.4 million to balance its budget.
In March, Robbinsville residents voted down a school referendum that would have helped meet the district’s needs. The hope was to get voter approval to exceed the 2% tax levy cap and raise $5,031,476 to avoid budget cuts. In addition, Robbinsville is one of two Mercer County districts seeing its state aid down 3%, the maximum allowable funding decrease.
“We are disappointed by the state’s decision to reduce aid to the Robbinsville Public Schools,” shares Robbinsville Superintendent Dr. Patrick Pizzo. “These cuts, coupled with rising costs and the rejection of the recent referendum, are forcing us to undergo staff reductions and make noticeable cuts to areas such as sports and clubs, courtesy bussing, curriculum programming and technology services to balance the budget. These limitations present several challenges, but I am confident our great team here in Robbinsville will work with what we have to continue delivering well-rounded educations for all of our students.”
At least 60% of the school budget goes to salaries and benefits. On top of numerous staff positions that have been cut in recent years, it is expected at least 20 more classroom teaching positions, and nine student-facing educator roles will be eliminated this year. Some additional support staff positions may also be cut.
POSSIBLE SOLUTIONS
To create its balanced budget, PPS will either have to make cuts or find new streams of revenue. Through attrition, reorganization, or moving staff into different positions, there are attempts being made to cut personnel costs. There is also a keen eye towards eliminating subscription services or memberships that are used for technological and other needs. There is additionally the opportunity to pool resources to help cut costs.
“We have entered into shared service agreements with the municipality in the past, most recently for tech support (this is not currently active). We also routinely enter into shared transportation agreements with other districts to lower transportation costs when we have a student that’s out of district and another district can transport the student for less,” details PPS Board of Education President Dafna Kendal.
PPS has considered pooling healthcare this year. Though our 15% increase is high, neighboring districts are seeing higher increases making it not in the district’s best interest to pool right now. It is possible that activity fees or facility use fees might need to be adopted to bring in extra revenue.
COSTS OF THE BUDGET
The Governor’s K-12 budget plan still needs to be reviewed by the Senate and Assembly as part of the Fiscal Year 2027 State Budget. Changes are unlikely but could be proposed before the budget bill is voted on and finally adopted by June 30th.
Across Mercer County, Ewing, Hamilton, Hopewell Valley Regional, Lawrence, Princeton, Trenton and Mercer County Vocational are expected to see state aid increases. East Windsor, Robbinsville and West Windsor-Plainsboro are all anticipating decreases.
It is the School Funding Reform Act that currently determines a district’s state aid for the year, capping certain categories. According to the NJ Department of Education, “The funding formula is applied uniformly to all districts. Aid fluctuates year to year based on evolving student and community needs, which include the district’s student enrollment, the proportion of low-income students, the number of students with limited English proficiency, and student grade levels.
The formula also considers a district’s ability to support its local schools. This is measured by property value and resident income, which determine the amount the community is expected to contribute to education funding. An increase in property values, a decline in enrollment, or an increase in transportation of students needing special transportation services can affect a school district’s funding amounts.”
It is widely recognized that the current formulas are not sustainable and more must be done. Just three months into office, Sherrill has stated a desire for her administration to “pursue strategies to help control higher costs facing school districts, particularly in employee benefits and healthcare costs, special education services, contracted services, and student transportation.”
While some initial reforms are proposed in the latest budget, more work is expected to modernize state funding levels.
Lisa Jacknow spent years working in national and local news in and around New York City before moving to Princeton. Working as both a TV producer and news reporter, Lisa came to this area to focus on the local news of Mercer County at WZBN-TV. In recent years, she got immersed in the Princeton community by serving leadership roles at local schools in addition to volunteering for other local non-profits. In her free time, Lisa loves to spend time with her family, play tennis, sing and play the piano. A graduate of the S. I. Newhouse School of Public Communications at Syracuse University, Lisa was raised just north of Boston, Massachusetts but has lived in the tri-state area since college. She is excited to be Editor and head writer for Princeton Perspectives!