Rising Health Costs, Declining State Aid Impact Bernards Township School Budget

BASKING RIDGE, NJ — The Bernards Township School District is facing financial pressures yet again in its budget for the 2026-27 school year. This has prompted the Board of Education(BOE) to discuss passing a resolution to send to the state legislatures in hopes of rectifying funding issues.

The BOE had scheduled a vote on its initial budget at the Monday meeting, but moved the action to the next meeting due to a delay in receiving its state aid figures.

Board Vice President and Finance Liaison David Shaw reported that the Finance Committee examined specific financial pressures facing the district alongside broader trends across New Jersey and Somerset County.

"Key pressures include health benefit costs, rising significantly across the state with most districts projecting increases of approximately 25 percent in the coming year," said Shaw. "25 percent, that’s crazy."

The committee noted that districts in Somerset County are generally anticipating levy increases of six percent. This figure reflects broad cost pressures currently impacting the region.

The committee also reviewed the status of extraordinary aid from the state. The funding rate for this aid has seen a substantial decline over the years.

The funding dropped from approximately 90 percent of eligible costs to approximately 50 percent.

"This has materially increased the district’s unfunded burden for students requiring extraordinary services," said Shaw.

The number of students with qualifying needs has grown over this period, which further compounds the municipal impact.

Business Administrator Jim Rollo said the district used to receive 90 percent of the eligible costs associated with extraordinary services about four or five years ago. Leaving the district only on the hook for 10 percent of the cost.

"That percentage has reduced each year by about 10 percent, while our district's extraordinary costs have been increasing. The percentage of aid we have been getting is decreasing, which is creating pressure on the overall," said Rollo. "It's down to about 50 percent of eligible costs from 90 percent. … equal to $1 million-plus or closer to a couple of million."

The preliminary budget indicates that revenue is projected to decrease while expenditures are expected to increase, said Shaw.

This results in a significant financial gap that the district must address before the final budget adoption.

Shaw said the gap the district is looking to close is around $4 million.

Contributing factors on the revenue side include lower interest income and reduced balances from capital spending. The district also expects a modest increase in state aid and a lower planned fund balance draw.

On the expense side, health benefits remain the largest driver of increased costs.

"These are the biggest issues that are pressing for us. It’s the extraordinary aid and the medical. It is just unbelievable that we lost aid from extraordinary aid and how much medical is going up," said Shaw.

Advocacy Resolution

Due to these issues, the Board of Education discussed adopting an Advocacy Resolution, which would be sent to state officials.

The issues of rising healthcare costs and decline in extraordinary state aid "are kind of long-standing over the past several years," said Superintendent Nick Markarian.

"We are talking about multiple millions of dollars that would be able to support our programs if the formula were fully funded or even if it got to that 90-plus range that it was four or five years ago. It would be multiple millions of dollars," said Markarian.

Shaw warned residents that "the pain is going to be spread around. The taxes are going up, and things are going to be cut, so it will hit both ends. And a lot of it, not all of that, would be alleviated if the state were living up to its obligation."

"We are not unique in this. This is all around the state, and other school districts are worse off than us, but the more districts that send in resolutions like this, hopefully it catches some eyes in Trenton because it is really putting the squeeze on every district," said Shaw. "We are better off than some, but its is still going to be pain points across the district taxpayers and to the schools."

The official Advocacy resolution is likely to be voted by the BOE at its March 23 meeting.

Board member Robin McKeon asked community members to write letters or emails to their legislators.

"It makes a much bigger impact when they are bombarded with emails or calls from people in town," said McKeon.

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