If Governor Sherrill Doesn’t Fix the Funding Formula, West Orange Could Lose Millions in Special Ed Aid

New Jersey’s school funding formula is designed to ensure that every school district has the appropriate resources to provide a thorough and efficient education to their students. A big piece of that is making sure that every district has sufficient funds to serve their special education students.

These students cost more to educate. They might require a smaller class size, the support of a paraprofessional, or other related services. The New Jersey Department of Education estimated that it cost an additional $23,000 to educate the typical special education student.

In theory, the formula provides aid to make up for a district’s actual costs for special education. In reality, the amount a district actually receives can vary wildly.

When the School Funding Reform Act of 2008 was passed, it included a provision to calculate special education funding via a census-based method. This assumes that in every district, the same percentage of students receive special education services.

The problem is that the actual number of special ed students in a given district could be much higher or lower than the state average. This results in some districts not actually receiving the funding they need to fully serve their special ed population.

Governor Phil Murphy fixed the way this was calculated last year - and state aid for the 2025-26 school year was based on actual special education enrollment. Since then, the Legislature has failed to amend the funding formula.

Governor Mikie Sherrill could take the same action to fix things temporarily, but it’s past time New Jersey makes this change permanent.

Why This Matters for West Orange

The percentage of students receiving special education services in West Orange is significantly higher than the state average, and reverting to the old census based method of determining funding would rob us of the funding we need to serve our students.

To calculate the amount of funding a district receives, the NJDOE calculates the number of special education students by the excess cost to educate a special education student. This is then modified by a factor that adjusts costs up or down slightly for different geographical regions.

This total is then divided into parts. ⅓ of this amount is delivered to each district in the form of categorical aid. The other ⅔ gets added to a district’s adequacy budget. If the district receives equalization aid, which West Orange does, then this would effectively increase the amount of equalization aid for which the district is eligible.

For the 2025-26 school year, the NJDOE used actual enrollment figures to calculate each district’s amount of special ed aid. For West Orange, actual special ed enrollment was 1,362. Based on the NJDOE’s excess cost per-pupil ($23,172) and the geographic adjustment for Essex County (1.02370), this comes to a total excess cost of about $33 million.

One third of that - about $11 million - was provided to the district in the form of categorical special education aid. The other two thirds increased our adequacy budget and resulted in the district receiving equalization aid.

If the state had used the census based methodology instead, they would have assumed that 16.50% of our students received special education services - and funded us as if our special ed enrollment was 1,111.

That would have reduced our calculated cost in the formula significantly. The result would be about a $2 million reduction in special ed categorical aid and a $4 million reduction in equalization aid.

The exact figures for the 2026-27 school year will be slightly different, but the bottom line won’t change. If the state reverts to the old census based funding method, West Orange stands to potentially lose millions of dollars in state aid.

For a more detailed explanation of how this part of the funding formula works, check out this deeper analysis.

Where Would the Money Go?

The worst part of this problem is that changing the formula back to the old method doesn’t save the state any money. It’s more or less cost neutral.

But it does reallocate funds from districts like West Orange, Montclair, and South Orange - which all have a higher than average number of special education students - to districts that have fewer special education students.

• In Millburn, only 12.9% of students are special ed, and the district would receive an extra $1.3 million.
• In Ridgewood, only 11.7% of students are special ed, and the district would receive an extra $2.0 million.
• In West Windsor-Plainsboro, only 8.7% of students are special ed, and the district would receive an extra $5.4 million.

Transferring funds earmarked specifically for special education away from districts with more special education students to districts with fewer special education students is indefensible. And it would have a significant negative impact on districts like West Orange.

For a more detailed look at how aid would be redistributed by this change, check out this Tableau dashboard.

The Road Ahead - Who Will Fix This?

At the end of last year, the NJ Department of Education gathered feedback on whether and how to improve the state’s funding formula. They issued a report in December, “Examination of School Funding Policies” to share the results of that outreach.

While some topics proved more controversial, 86% of respondents to their survey agreed that the state should continue to use actual special education enrollment data instead of the old census based method. Almost everyone thought this was an appropriate step to take.

This reform was incorporated into a bill that passed the State Senate (S3917). Its companion bill (A5310) was amended in the Assembly Education Committee to contain the same language. However, the Assembly bill never made it to a floor vote before the end of the Legislative session and it effectively died.

The Assembly bill was reintroduced at the beginning of the new session (A2284), but there is currently no companion bill in the Senate. It seems unlikely that the Legislature will take action to fix this issue prior to Governor Sherrill’s first budget address in March.

That means it is up to her to fix this problem for the 2026-27 school year. A failure to do so would lead to significant reductions in aid to many school districts like West Orange. It wouldn’t save the state any money, but it would redirect that aid - earmarked for serving special education students - to school districts with fewer special education students.

It’s critical that Governor Sherrill directs the New Jersey Department of Education to make this change for the 2026-27 school year - and for leaders in the Assembly and the Senate to make this a permanent change to the school funding formula moving forward. If you want to support West Orange through this budget, reach out and let them know.

Brian Rock is currently the President of the West Orange Board of Education. He was first elected to the Board in 2021, and he has served as President since 2023. In November, the Board sent official written comments to the NJDOE in response to their outreach recommending among other things the continuance of using actual special ed enrollment data in the formula. In December, the Board passed a resolution calling for reforms to the funding formula, including passage of S3917 / A5310.