On Tuesday, Feb. 25, Gov. Phil Murphy made his annual budget address and released a summary of his administration’s proposed fiscal year 2026 state budget. Known as the “Budget in Brief,” this high-level document represents the first step of the state’s four-month budget development process. The administration will release its full budget proposal in the coming weeks.

As required by law, the New Jersey Department of Education issued state aid notices to districts two days following the delivery of the governor’s budget address. District-by-district, countywide and preschool aid allocations can be found on the New Jersey Department of Education’s website.

The administration’s budget proposal includes $22.2 billion for pre-K to 12 education – approximately 38% of the total state budget. The New Jersey School Boards Association’s Feb. 25 School Board Notes article – “Governor Touts Record Education Spending in Fiscal Year 2026 Budget Address” – provided brief, then-immediately-available education highlights of the Budget in Brief. In this article, the NJSBA provides a more complete summary.

Additional and more detailed information on the proposed fiscal year 2026 budget will become available in the coming weeks, and the NJSBA will continue to share relevant highlights through School Board Notes.

K-12 Formula Aid

For the second consecutive year, the administration proposes fully funding the School Funding Reform Act formula. This equates to approximately $12.06 billion in formula aid – a $386 million (3.3%) increase over fiscal year 2025.

The initial budget proposal includes several significant developments regarding the funding formula that reflect various advocacy priorities of the NJSBA. First, the proposal includes several tools to decrease aid volatility and increase predictability. As announced by the NJDOE on Feb. 18, the state plans to limit, by a maximum of 3%, decreases in the four main categories of state aid for each district. (Those categories are equalization, special education, security and transportation aid. Changes to other aid categories, including Choice Funding, Military Impact Aid, County Vocational Stabilization Aid and Educational Adequacy Aid – which are determined through factors such as annual participation or enrollment – are not among the categories being held to that reduction cap.) The budget proposal also mentions a cap on year-over-year increases in aid; an initial analysis of NJDOE’s state aid notices indicates that increases in those four main categories of aid are being capped at 6%. Additionally, the administration is proposing to use three-year averages for property values and income when calculating a district’s local fair share. According to a statement from the governor, this adjustment is intended to “bring greater stability to the formula’s measure of a community’s capacity to support its education costs.”

The administration is also proposing the creation of “a mechanism for additional tax levy growth cap flexibility for some districts.” Outside reporting has indicated that this flexibility would be available to districts that are raising less tax revenue than their local fair share. The proposal also allocates $20 million for new “tax levy incentive aid,” which would provide additional state funding to support districts that increase local revenue. Increasing tax cap flexibility has been an advocacy priority of the NJSBA, and the Association will be awaiting details of this plan in the budget detail document to be released in the coming weeks.

Finally, the proposal includes a switch in calculating special education aid using actual enrollment numbers and an adjustment to per-pupil costs to ensure mental health and school security needs are accounted for. General special education aid is set to increase from fiscal year 2025 by almost $403 million (29.5%) according to NJDOE’s state aid details, while security aid will increase by $59 million (16.1%). Aid for transportation – another fast-rising cost for districts – will increase by $139 million (36.7%). Adjustment aid has been eliminated as a separate category.

Preschool Aid

The proposal would increase preschool education aid by $34.6 million (2.8%), for a total of $1.27 billion. This funding would fully fund programs started in 2024-2025 and will include $10 million to expand programs into new districts. The proposal also mentions an initiative to provide cost-sharing as part of those expansion grants to help accelerate universal pre-K.

Extraordinary Special Education Aid

The proposal would maintain funding for extraordinary special education aid at its fiscal year 2025 level: $420 million.

Academic Programs

The budget proposal includes information on several academic initiatives:

  • In noting the literacy package Murphy signed in 2024, the administration hopes to “continue to advance literacy initiatives, help districts implement screening, and leverage a multi-million-dollar federal grant award.” The summary proposal does not include specific dollar amounts for these initiatives.
  • The proposal also includes $7.5 million in new grant funding to support districts offering high-impact tutoring to students in need of extra academic support.
  • Finally, the proposal indicates that funding for computer science programs will be extended.

Student Health

The governor’s proposal includes:

  • $3 million for a new grant program to support schools in removing cell phones from classrooms.
  • $2 million in new funding for school lead filters.
  • Funding for school meals for over 17,000 students through the Working-Class Families Anti-Hunger Act and a recommitment to the Summer Electronic Benefits Transfer by supplementing $75 million to be received from the federal government with $4.4 million in state funds.
  • Level funding ($43 million) for the New Jersey Statewide Student Support Services (NJ4S) network of regional hubs launched in 2023 to coordinate and deliver youth mental wellness services at various community locations, including schools. The proposal states that, to date, services have been provided to over 460,000 students.

School Facilities and Operations

The proposal includes flat funding for school construction in fiscal year 2026. The administration signaled its intent to disburse an additional $350 million from the $1.9 billion that was appropriated to the Schools Development Authority in 2022 “for current projects and to help the SDA move forward on projects identified in its 2019 Statewide Strategic Plan.” And, like the current budget year, $50 million of additional general fund appropriations will be available to support capital grants in SDA districts.

The proposal also includes decreases in funding to Local Efficiency Achievement Program and School Regionalization Efficiency Program grants. Funding for those grant programs totaled $8 million in fiscal year 2025, while the proposal asks for $3 million in the upcoming budget year.

Other Initiatives

The proposal includes information on several new items heading into fiscal year 2026. First, the proposal indicates the state will save $20 million in “Public Notice Reform Savings.” As has been reported in previous editions of School Board Notes, the governor has signed multiple bills into law providing temporary relief, so that local government bodies can post public notices on digital formats of newspapers to comply with the Open Public Meetings Act and other public notice requirements. The inclusion of these savings in the budget proposal may indicate that the administration is working with the assumption that government bodies will be able to post public notices on their own websites moving forward, which is a position that the NJSBA has taken in its advocacy work.

Echoing Murphy’s State of the State speech, the budget proposal indicates that the administration intends to push to require full-day kindergarten in all the state’s school districts. To date, the administration has not shared any funding amount tied to this proposal.

The budget proposal would decrease funding for teachers’ scholarships, stipends and loan redemption from $15 million to $3.5 million.

Finally, the proposal includes $1 million in new “Youth Vote Expansion Grants” to “local government leaders across New Jersey to create new opportunities for 16- and 17-year-olds to vote in local school board elections.”

Next Steps

The Legislature will soon begin its tradition of holding a series of committee hearings to allow the public and stakeholders to weigh in on the governor’s proposal. At the end of March, both the Senate and General Assembly will take a break from its standard legislative activity while the budget committees of each house will receive testimony from executive branch agency heads and ultimately introduce, discuss and pass a fiscal year 2026 budget bill for the governor’s signature in advance of the June 30, 2025, constitutional deadline.

The full fiscal year 2026 Budget in Brief can be found on the Office of Management and Budget’s website. The NJDOE’s 2025-2026 state aid notices can be found on NJDOE’s website. The NJSBA will continue to provide updates on the budget development process as details become available.