Montclair Is Struggling With Another School Budget Gap, $3.7M Deficit Looms Ahead

MONTCLAIR, NJ — The Montclair Public School District is once again struggling with a multi-million-dollar budget gap, administrators say.

The district's finance committee gave a progress update on the 2027-2028 budget at Monday's board of education meeting. View their presentation here.

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Currently, expenses are outpacing revenue by $4.9 million. However, the district has $1.2 million available in banked cap funds from prior years, which could lower the shortfall to $3.7 million.

Rising health insurance costs ($2.08 million) and salaries ($1.52 million) account for most of the gap.

Administrators said there are still unknown factors at play, such as the amount of state aid that the district will see next year, or a potential health insurance waiver.

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WHY CAN'T THE DISTRICT JUST MAKE MORE CUTS?

The latest gap isn't a one-time problem – there is a structural deficit built into the budget that cuts alone will not solve. And it will happen again every year unless permanent changes are made, the district's finance committee said.

The problem? Expenses are rising faster than revenue.

Under state law, the district is only able to raise local taxes by 2 percent per year, with limited exceptions. But the costs of keeping a school district running are rising across the board – and far outpacing the 2 percent cap.

Administrators shared a graph that lists some major expenses the district is facing in 2027-2028:

There are three ways to dig out of a "recurring gap" like the one Montclair is stuck in, district administrators said:

• New Revenue – Find more options when it comes to raising money in the district
• More State Aid – Push for a change in the state aid funding formula
• Cost Savings – Explore additional "cost-saving" measures and cuts

One of these options – beefing up revenue – took place in Montclair earlier this year with a property tax hike and a voter-approved school referendum.

The 2026-2027 spending plan will increase the local tax levy by about 3.9 percent. A homeowner with a property assessed at $639,000 will pay $851 more for the school portion of their taxes. This tax increase is separate from the town's March 10 referendum, which approved a one-time, $12.6 million tax hike and rejected a permanent $5 million per year increase.

The district still needed to make a wave of cuts to balance its budget, including staff reductions and the repurposing of Renaissance Middle School into an early learning center.

>> RELATED: Triple-Whammy Tax Hike Lurks For Montclair Homeowners

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