Murphy budget proposes $22.2B for education, formula changes to cap aid drops and expand preschool and tutoring

Commissioner, speaking to the New Jersey Assembly Budget Committee, outlined the education elements of Governor Murphy’s proposed fiscal 2026 budget and described formula changes intended to limit year-to-year volatility in state aid.

"Thank you for the opportunity to be here and discuss the preschool and k to 12 education components of governor Murphy's proposed budget for fiscal year '20 '20 '6," the Commissioner told the committee, then summarized spending and formula adjustments.

The department described a proposed total education appropriation of $22.2 billion, including about $12.1 billion in direct formula aid to school districts. Under the proposal the department said it would smooth the formula’s local share calculation by using multiple years of income and property valuation data and would change how special education aid is calculated — moving from a census-based method to a measure tied to each district’s special-education enrollment.

The department also told lawmakers the budget would include $1.3 billion for preschool (with $10 million specifically for expansion to new districts), a $7.5 million grant program for high-impact tutoring, and a $3.0 million grant program to support local efforts to implement phone-free school policies and related training. On the formula side, the department said the proposal would limit losses to no more than a 3% reduction in state aid for the four primary aid categories for any district in a single year and would allow a separate, limited supplemental aid mechanism tied to tax-levy flexibility for qualified districts.

On federal COVID-era funding, the commissioner described a situation affecting 21 districts where ARP-ESSER late-liquidation approvals had been pulled; the department said the districts had planned HVAC and window projects and estimated the amount at roughly $85 million in total. The department said it has joined other states in litigation and is pursuing recovery of those funds.

School facilities and SDA projects also drew committee attention. The School Development Authority’s executive director (Manny) summarized progress on a 20-project capital plan, noting several projects in design-build and an expected near-term completion of certain federally funded work. SDA staff and the department said construction costs and supply-chain timing have affected schedules and drawdowns on federal grants.

Committee members pressed the department on details: how the new formula smoothing would balance property and income measures, whether the department can give districts earlier notice of aid, how the tax-levy incentive program would operate and how the department will ensure mental-health funding reaches counselors and social workers rather than only physical security. The commissioner said the department has begun releasing some district-level information earlier than in past years to aid local planning and that the Educational Adequacy Report documents the cost updates and allocations (including a roughly 7.4% increase in the base per-pupil cost presented as part of this year’s adequacy update).

On special education, the department said it increased per-pupil support and is reallocating some previous adjustment-aid dollars to better align with special-education spending; it characterized the move from a census-based distribution to an enrollment-based approach as largely a statewide net wash but noted the department also increased special-education support levels in the current proposal.

The department described multiple ongoing efforts that are not direct budget votes: a teacher recruitment campaign (including memoranda of understanding with foreign partners to recruit language teachers), expanded data and public-facing dashboards planned for rollout this summer, and regulatory steps tied to Medicaid reimbursement for school-based behavioral health services that remain contingent on federal CMS approval and subsequent state regulatory changes.

Committee members raised questions about timing, local tax impacts and how districts should plan if their aid drops. The department repeatedly framed several of the governor’s proposals as optional tools for local districts (for example, the levy flexibility supplemental aid) rather than mandates. No formal committee votes on the governor’s proposal were recorded during the hearing.

The hearing closed with lawmakers and department officials acknowledging follow-up items: legal action on the federal clawback, planned dashboard and data releases, and details on how tutoring and preschool expansion grants will be awarded.

Ending: The discussion framed the budget as a policy package in proposal form: the department presented allocations and implementation plans, lawmakers pressed for more granular data and safeguards, and several items — federal litigation, CMS approval for Medicaid changes and final budget votes — remain open.