TRENTON, NJ — New Jersey’s school funding formula shortchanges schools serving students from low-income families by about $5,300 per student, leaving 80 percent of Black and Latinx/Hispanic students in schools without adequate resources, according to a new report released today by New Jersey Policy Perspective (NJPP). The report, based on research by Dr. Bruce D. Baker of the University of Miami, shows that fixing the formula would cost about $3.5 billion annually — bringing school spending in line with levels before the 2008 recession, measured as a share of the state’s economy.
The report, Resetting School Funding for New Jersey’s Next Decade, reveals that while New Jersey ranks among the top states on national tests, a large gap remains between test scores of students from low-income families and their wealthier peers. Schools serving students in poverty currently receive only 21 percent more funding per student who qualifies for free or reduced-price lunch, far below the 47 to 57 percent the formula intends to provide.
“A Black high school student in a high-poverty district who is in crisis will have less access to a mental health professional than students in more affluent districts. A first-grader who speaks Spanish at home may face larger class sizes than students in nearby wealthier towns, preventing her from learning English as fast as she could,” said NJPP Special Analyst for Education Policy Dr. Mark Weber, author of the report summary and a Fellow at the National Education Policy Center. “This isn’t an accident. It’s the result of a funding formula that doesn’t provide schools with the resources they need to serve students from low-income families. New Jersey can fix this, and the path forward is clear.”
Key findings from the report:
- Schools serving students in poverty receive far too little additional funding. For every 10-percentage point increase in students qualifying for free or reduced-price lunch, schools spend only about $300 more per pupil on average—nowhere near enough to provide smaller class sizes, specialists, and support services.
- The racial equity crisis is stark. A Black or Latinx/Hispanic student in New Jersey has about a four in five chance of attending an underfunded school, while a white student has about a one in two chance. This difference reflects decades of policy decisions that have systematically underinvested in communities of color.
- The solution is achievable. Schools should receive $8,880 more per student from a low-income family, up from the current $2,960. This additional $5,290 would allow schools to reduce class sizes, hire reading specialists and math coaches, provide after-school tutoring and summer programs, and offer counselors and social workers.
- The investment is affordable. With approximately 586,000 students who qualify for free or reduced-price lunch, the total cost is about $3.5 billion each year — only a nine percent increase in the total budgeted spending of New Jersey school districts for 2025-26. This would bring total school spending close to what New Jersey spent before the 2008 recession, measured as a share of the state’s economy.
The additional funding would allow schools serving students from low-income families to provide resources that are standard in schools serving wealthier students but often missing in high-poverty communities, including smaller class sizes, reading specialists, after-school programs, and updated technology.
“New Jersey has a constitutional obligation to provide all students with an education that prepares them to succeed,” Weber added. “We know proper funding works. New Jersey’s high test scores prove that. But we’re leaving too many students behind, particularly Black and Latinx students. The state must act now to fulfill its constitutional mandate and ensure every student has the opportunity to thrive.”
The report recommends that New Jersey policymakers urgently change the current formula to increase the additional per-student funding for students from low-income families from $2,960 to $8,880, keep this higher funding level over the long term, and remove the sliding scale that provides different amounts based on district poverty concentration.
The full report is available at njpp.org.
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