LEGISLATIVE FISCAL ESTIMATE
ASSEMBLY, No. 5770
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: AUGUST 11, 2025
SUMMARY
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Synopsis: |
Prohibits application of State aid growth limit on certain school districts in 2025-2026 school year. |
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Type of Impact: |
One-year State expenditure increase from the General Fund and the Property Tax Relief Fund. Concurrent local revenue increase. |
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Agencies Affected: |
Department of Education. Certain Local School Districts. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
FY 2026 |
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State Expenditure Increase |
$44.4 million |
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Local Revenue Increase |
$44.4 million |
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· The Office of Legislative Services (OLS) estimates that the bill will result in a total State school aid increase of approximately $44.4 million. The OLS finds that 97 school districts would experience aid increases in FY 2026 as a result of the bill.
· In crafting its estimate, the OLS calculated the costs of removing the six percent State aid growth limit from the school aid increases of school districts that experienced net decreases in State school aid between the 2017-2018 and 2024-2025 school years. The six percent State aid growth limit was enacted as part of the FY 2026 Appropriations Act.
BILL DESCRIPTION
This bill prohibits the application of any State aid growth limit to the amount of uncapped FY 2026 State school aid calculated for a school district that experienced a net decrease in State school aid between the 2017-2018 and 2024-2025 school years.
The FY 2026 State aid notices, distributed to school districts in February 2025, included a six percent limit on State school aid increases compared to the amount of State aid provided in FY 2025. In calculating this limit, the Department of Education calculated the amount of uncapped equalization aid, special education categorical aid, security aid, and transportation aid for which a school district would be eligible in the 2025-2026 school year. If a school district’s FY 2026 uncapped State school aid total in these categories was projected to increase by greater than six percent, the district’s State aid entitlement in these categories was reduced through the application of a State aid growth limit so that the increase was no greater than six percent.
While the six percent limit was proposed in the State aid notices as part of the FY 2026 Governor’s Budget recommendations, the limit was later enacted as part of the FY 2026 Appropriations Act. This bill would prohibit the application of the State aid growth limit to school districts that experienced a net decrease in their State school aid allocations between the 2017-2018 school year and the 2024-2025 school year.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that this bill will result in a total State school aid increase of $44,361,400. The OLS finds that, while 177 school districts experienced net decreases in State school aid between the 2017-2018 and 2024-2025 school years, some districts were either not projected to receive an increase in State school aid in FY 2026 or were projected to receive an increase of less than six percent. Consequently, only 97 of those 177 districts are subject to the six percent State aid growth limit in FY 2026. Those 97 school districts would therefore experience aid increases in FY 2026 as a result of the bill.
In crafting its estimate, the OLS used data provided by the Department of Education, which were used to calculate the currently prorated FY 2026 State school aid amounts for school districts based on the six percent State aid growth limit.
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Section: |
Education |
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Analyst: |
Senior Fiscal Analyst |
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Approved: |
Thomas Koenig Legislative Budget and Finance Officer |
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).