Category: Explainer

TANF Explained: New Jersey’s Safety Net Steadily Falls Short

Posted on by Tonanziht Aguas
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    New Jersey’s main cash assistance program for families has lost more than a third of its buying power since 1998.[1] A family of three now qualifies for a maximum of $559 a month, barely enough to cover the cost of groceries for most of the month, let alone rent, utilities, or transportation.[2] This is Temporary Assistance for Needy Families (TANF), the program designed to help families through hard times.

    The program reaches fewer families than it once did. This does not mean poverty has fallen. Instead, it shows that TANF has become too difficult to access for the families who need it most.

    Families are better positioned to get through hard moments when they have economic stability. But when someone loses a job, faces a medical crisis, or struggles to make ends meet, too many families lack the resources that would prevent a short-term setback from becoming a long-term hardship. That burden falls hardest on low-income families, which is why cash assistance is an effective tool the state uses to lift families out of poverty. New Jersey should strengthen TANF, so families count on support when hard times hit.

    This explainer answers common questions about how TANF works, who it serves, what is at stake for New Jersey families, and how the state can improve it.

    What is TANF?

    Temporary Assistance for Needy Families (TANF) is a federal poverty-fighting program that provides states with a fixed annual amount of money to support cash assistance — or monthly payments — and work-related services for low-income families.[3] Congress created TANF in 1996 to replace the prior government assistance system, Aid to Families with Dependent Children (AFDC), and to give states broad flexibility in designing and running their own programs.[4] To receive funding year after year, states contribute their own state dollars, called Maintenance-of-Effort, and adhere to federal TANF’s guidelines.[5]

    At its core, TANF is meant to be a bridge: time-limited support that keeps families afloat during moments of financial crisis while they work toward long-term stability through employment, education, or securing stable housing.[6] However, from the beginning, the program was shaped more by the goal of moving people off government assistance than by a commitment to eliminating poverty.[7] That early design framework, rooted in outdated and racialized assumptions about who needs help and how to deliver it, has survived for nearly three decades.[8] Reforming New Jersey’s TANF program is an opportunity to correct those longstanding shortcomings and bring it in line with today’s economic realities, ensuring it functions as the vital tool families have always needed.

    How Does TANF Connect to Work First New Jersey (WFNJ)?

    In New Jersey, the federal Temporary Assistance for Needy Families program is administered through Work First New Jersey (WFNJ), an umbrella program run by the state Department of Human Services’ Division of Family Development that oversees several work-related programs.[9] WFNJ was created in response to a federal “welfare overhaul,” known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and provides temporary cash assistance, work supports, and employment services to eligible residents.[10]

    The WFNJ program has three main parts:

    • Temporary Assistance for Needy Families (TANF): Cash assistance and work supports for families with dependent children and low incomes.[11]
    • General Assistance (GA): A state-funded program for single adults and childless couples who are not eligible for TANF.[12] New Jersey is one of only a few states that still offer this benefit.[13]
    • Emergency Assistance (EA): Short-term housing and shelter-related help available to people who qualify for WFNJ and meet certain requirements.[14]

     

    TANF Program Structure: Federal to Local

    Who Qualifies for TANF in New Jersey?

    Families with dependent children (children up to age 18) can get TANF cash assistance if they meet strict income and asset requirements. However, the eligibility rules have not been updated in any major way since 1997, even as the cost of living has climbed in the state.[15]

    To qualify and keep benefits, families must follow these rules:

    Financial eligibility and limitations

    • Monthly income below a specific amount based on family size.[16]
    • Families can keep no more than $2,000 in resources (for example savings in a bank account), except for specific exempt resources (examples of exemptions are ownership of a motor vehicle or property that does not produce revenue).[17]
    • All income is counted when determining eligibility (for example a portion of child support or dividend earnings), except for specific exempt sources (examples of exemptions are income tax refunds and SSI benefits).[18]

     

    Work and participation requirements

    • Parents must participate in work activities for at least 35 hours each week.[19]
    • A specific set of educational or vocational activities may count toward meeting work activity requirements for a period of time.[20]

     

    Time limits and family rules

    • Cash assistance is limited to five years (60 months) over a lifetime, with the exception of families that qualify for New Jersey’s extreme hardship category.[21]
    • Work activities must begin within the first two years (24 months) of receiving assistance.[22]
    • Non-compliance can result in a full-family penalty, or withholding of assistance, though it is not imposed immediately.[23]

     

    Administrative and other requirements

    • Parents must cooperate with child support rules. This includes giving the state rights to child support payments, with only a small amount of those payments passed on to families with children.[24]
    • Most non-citizen or lawful permanent residents are not allowed to receive assistance during their first five years in the United States, though exemptions exist for groups such as refugees, people seeking asylum, and others with specific protections.[25]

     

    Why Are the Eligibility Rules so Strict?

    TANF’s harsh features are not the product of neutral policymaking. They were shaped by racialized narratives about poverty that dominated federal cash assistance debates from the 1960s through the 1990s. These stories painted certain parents, Black mothers in particular, as irresponsible and unwilling to work. Policymakers then used those stereotypes to justify tying assistance to behavioral requirements.[26]

    New Jersey went further than federal law required on many of these restrictions. The Garden State was the first in the nation to adopt a family cap policy, which denied additional assistance to parents who had another child while receiving TANF.[27] The policy rested on the deeply racist assumption that Black and Brown people were having children irresponsibly or to increase their benefits.[28] In reality, it carried forward a legacy of reproductive control and punishment, treating family growth as something to be regulated rather than a basic human right, and ignoring the causes of poverty in favor of policing parents’ decisions.[29]

    Although New Jersey repealed the family cap in 2020, the underlying assumptions did not disappear.[30] The same stereotypes that feed into the idea of families needing to be monitored, corrected, or punished into “responsible” behavior continue to shape many of TANF’s current rules, including work requirements that go further than federal law and other policies that make it harder for families to enter, remain in, or exit the program.[31]

    How Much Do Families Actually Receive?

    Families receive very little compared to the cost of living. For a family of three, the maximum monthly cash payment is $559 (about $6.13 per person per day), but many families receive less than the maximum.[32] On an annual basis, the maximum benefit for a family of that size is $6,708.[33] For context, a family of three spends more than $10,000 a year on food alone in New Jersey.[34] The 2026 federal poverty level for a family of three is $27,320, meaning that the maximum TANF grant amounts to less than a quarter of that figure.[35]

    TANF's Limits Keep Families Locked Out and Left Short

    Benefit levels have also lost significant ground to inflation. As of 2026, the TANF grant has lost more than 34 percent of its buying power since 1998.[36] The most meaningful increase to the benefit level came in 2019-2020, when the maximum grant was last increased.[37] While that increase helped, it only partially restored what two decades of inflation had worn away; the grant has continued to fall behind New Jersey’s rapidly rising housing, food, and transportation costs ever since.

    To better illustrate the decline in buying power, consider the following: the 1998 TANF payment for a family of three was $424, but in 2026 dollars it is equal to $853.38.[38] Today’s grant stands at $559, a few hundred dollars less, and has been fixed for more than seven years.[39] If a family was relying on the monthly TANF maximum grant in years 1998 and 2026, and spending simply on some of the recommended dietary food items in the USDA Thrifty Food Plan, here’s what grocery costs would look like:

    TANF Grants No Longer Cover the Cost of Basic Necessities

    How is TANF Funded?

    TANF is funded through a mix of federal and state dollars. The federal government provides New Jersey with a fixed annual amount of nearly $403 million in Fiscal Year 2023.[40] That amount has not changed since 1996, meaning its real value has eroded significantly over nearly 30 years. This also means that the funding has not accounted for inflation, shifts in populations, or changes in those eligible for or receiving assistance.[41]

    To access those federal funds, New Jersey must also contribute state money through a requirement known as Maintenance-of-Effort (MOE).[42] MOE rules require states to spend a minimum amount of non‑federal money based on what they invested in pre‑TANF programs in Fiscal Year 1994.[43] For New Jersey, this means maintaining spending at either 80 percent or 75 percent of its 1994 level.[44] The threshold varies depending on two factors:

    • whether the state meets its federal work participation rate, and
    • whether the state provides funding to tribal TANF programs operating within its borders.

     

    New Jersey does not have a tribal TANF program because there are no federally recognized tribes in the state.[45] However, it must still meet federal work participation standards — 50 percent of all families and 90 percent of families with two parents must be engaged in qualifying work activities.[46] In federal Fiscal Year 2024, the state’s MOE spending in TANF and separate programs totaled just more than $1.67 billion.[47]

    Within these broad requirements, states have considerable flexibility in how they use TANF dollars.[48] Funds can support monthly payments, pre‑K programs, job training, and cover a wide range of expenses such as “transportation, child care, or other costs necessary for participating, such as uniforms, books, or supplies.”[49]

    In New Jersey, however, only about five percent of TANF funds go toward direct cash assistance, specifically in the form of monthly grants, for families in crisis.[50] A much larger share is directed toward other programs, including pre-K and refundable tax credits.[51] While this flexibility is valuable, it also means that little TANF funding reaches families in the form of monthly grants when they need it most.

    Is TANF Being Threatened by Federal Cuts?

    Since early 2025, the federal government has been considering significant cuts to the federal TANF program.[52] Because TANF has fixed annual funding, any federal cut would directly reduce the resources available to states. States would then face difficult choices: reduce benefits and services, or use state funds to make up the difference.

    At the same time, the federal government has threatened cuts or already disrupted several other core safety net programs such as the Low Income Home Energy Assistance Program, the Supplemental Nutrition Assistance Program (SNAP), and other programs that many TANF-receiving families rely on to meet basic needs.[53] Instability across these programs, combined with delays in federal funding, risks worsening conditions for New Jersey’s underserved families at a moment when the safety net is already stretched thin.

    Has TANF Been Effective at Reducing Poverty?

    TANF’s monthly grants remain one of the most important tools New Jersey has to lift families out of poverty. Cash assistance has consistently been shown to work: when families receive direct income support, they experience greater stability, children have better health and educational outcomes, and parents are better able to build long‑term economic security.[54] But these benefits only materialize when programs are adequately funded, accessible, and designed to meet real need.

    As it is now, TANF reaches too few families with too little cash support. In the nearly three decades since the 1996 welfare reform, the program has grown increasingly difficult to access, even as the need has not gone away.

    A few numbers show how much ground has been lost:

    • The program reaches far fewer families than it once did. Before TANF replaced AFDC, New Jersey assisted well above the national average of 72 per 100 families in poverty.[55] In 2022-2023, New Jersey served only 11 families per 100, far below the national average of 20.[56]
    • Enrollment is dangerously low, but the need is not. In 2025, TANF served an average of 26,500 people across New Jersey's 21 counties, a sharp drop from nearly 31,300 the previous year.[57]
    • Children have borne the brunt of TANF’s decline. TANF’s decline has eliminated monthly payments to thousands of children statewide, from 163,997 children in 1997 to 20,446 children in 2024, with the steepest count losses in high-poverty counties like Camden, Essex, and Hudson.[58] This is a stark contrast to the reality that one in nine children in New Jersey experiences poverty.[59]

     

    The gap between what TANF could do and what it currently does is felt most by Black and Hispanic/Latinx families, who in Fiscal Year 2023 made up 47.8 percent and 31.9 percent of NJ TANF recipients, respectively.[60] These disparities reflect long-standing racial inequities in income, employment, and wealth — inequities that shape who most needs support from a program like TANF. They also reveal who is too often left without help because of the program’s restrictive design and limited reach, especially in communities that have been historically excluded from economic opportunity.[61] The answer is not to abandon TANF. It is to make it work the way it is supposed to.

    What Reforms Are Needed?

    Efforts to reform TANF have been ongoing in New Jersey for years.[62] Some important changes have already been secured, including a one-time grant increase in state fiscal year 2020 and the repeal of the family cap policy.[63] But broader reform has remained out of reach. A comprehensive bill addressing a wider range of TANF shortcomings has moved through the statehouse year after year without passing.

    The proposals below reflect the core areas where reform advocates and legislators have focused their efforts, and where New Jersey must act to build a stronger, more modern TANF:

    • Raise benefit levels and keep them up with inflation. The most urgent change is increasing the monthly grant amount. The current 2026 maximum benefit covers only a fraction of what it costs to live in New Jersey.[64] The monthly payment should be raised to at least 50 percent of the federal poverty level and New Jersey should adopt an automatic cost‑of‑living adjustment so that grants keep pace with inflation without requiring annual legislative action.[65]
    • Direct more money to cash assistance. New Jersey currently allocates only about five percent of its TANF block grant toward direct cash assistance.[66] That share should be much higher. Prioritizing TANF dollars in the form of monthly grants, rather than diverting them to other programs, would ensure that funds reach families who need immediate support to pay rent, buy food, and cover basic expenses.
    • Update eligibility rules and time limits. Eligibility rules must be modernized so families enter, remain in, and transition off TANF more smoothly. This includes:
      • Raising income and asset limits to reflect today’s costs.[67]
      • Simplifying applications and reducing documentation requirements.[68]
      • Addressing chronic administrative understaffing to improve access.[69]
    • Aligning work requirements with reality. New Jersey’s work requirements exceed federal standards, requiring 35 hours each week for most parents. This is often impossible for families dealing with unstable jobs, irregular schedules, limited child care, or health challenges.[70] Aligning state rules with federal guidelines would reduce unnecessary case closures and better reflect the realities of low‑wage work. Just as important, TANF should treat a broader range of education, training, and earning credentials as core work activities. Recognizing these pathways as fully valid would support long‑term economic progress rather than punishing families for circumstances beyond their control.
    • Fix the benefits cliff. Under current rules, even a modest increase in earnings may trigger a sudden loss of benefits, hurting stability.[71] Expanding the amount of earnings that do not count against benefits would allow families to keep more support as savings as their wages grow. This would give parents the breathing room to build financial stability gradually rather than face an abrupt cutoff the moment their income rises.

     

    Conclusion

    Strengthening TANF is one of the most direct ways the state can lift families out of poverty. But doing that requires confronting decades of policy choices that have steadily narrowed who has access to help and how much they receive.

    State lawmakers have a critical role to play. By raising benefit levels, updating outdated eligibility rules, and redirecting more TANF money toward the families the program was built to serve, New Jersey can build a safety net that meets families where they are. With a stronger TANF, the state can reduce deep poverty by ensuring families in crisis have a floor to stand on.

    End Notes

    [1] NJPP Analysis of U.S. Department of Health and Human Services Federal 2026 Poverty Guidelines to determine the amounts for varying federal poverty levels, Work First New Jersey grant amounts provided through the New Jersey state budget and Department of Human Services, and Bureau of Labor Statistics Consumer Price Index Calculator to consider inflation, Jan. 2026.

    [2] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, Schedule I and Schedule II, 2024.

    [3] Congressional Research Service, The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History, Jan. 6, 2025.

    [4] Center on Budget and Policy Priorities, Policy Basics: Temporary Assistance for Needy Families, Mar. 1, 2022.

    [5] Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025.  Lower-Basch, E. and Burnside, A., TANF 101: Block Grant, The Center for Law and Social Policy, Mar. 2025.

    [6] Congressional Research Service, The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History, Jan. 6, 2025.

    [7] Lower-Basch, E. and Burnside, A., TANF 101: Block Grant, The Center for Law and Social Policy, Mar. 2025.

    [8] Floyd, Ife, et al., TANF Policies Reflect Racist Legacy of Cash Assistance, Center on Budget and Policy Priorities, Aug. 4, 2021.

    [9] Note that the state’s TANF program is often referred to as WFNJ/TANF or simply TANF.

    [10] Justia Regulations, NJ Admin Code 10:90-1.1, Jun. 16, 2025. Floyd, Ife, et al., TANF Policies Reflect Racist Legacy of Cash Assistance, Center on Budget and Policy Priorities, Aug. 4, 2021.

    [11] NJ Department of Human Services, Work First New Jersey, Jan. 2026.

    [12] NJ Department of Human Services, Work First New Jersey, Jan. 2026.

    [13] National Council on Aging, What is General Assistance and Who Qualifies for it?, Aug. 16, 2024. Schott, L., General Assistance Programs Very Limited in Half the States and Nonexistent in Others, Despite Need, Center on State on Budget and Policy Priorities, Jul. 22, 2020.

    [14] People who receive Supplemental Security Income (SSI), which provides monthly payments to individuals with limited income and resources, including those who are 65 or older, blind, or disabled, are also eligible to apply for emergency assistance. See for example: New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026. Social Security Administration, Supplemental Security Income (SSI) in New Jersey, 2026.

    [15] New Jersey’s TANF program has seen some changes throughout the years, but these changes were too specific and limited in nature. See for example: Center on Budget and Policy Priorities, States Should Follow New Jersey: Repeal Racist “Family Cap”, Oct. 14, 2020. Department of Human Services, Murphy Administration Boosts Payments for Families & Individuals in Need, Sep. 4, 2019.

    [16] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, Schedule I, 2024.

    [17] NJ Department of Human Services, Get Work First New Jersey, Jan. 2026.

    [18] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 21, 2024.

    [19] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 24, 2024.

    [20] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 29, 2024.

    [21] States are allowed to extend families’ support beyond the lifetime limit if they fall under certain state-defined categories of “extreme hardship.” Those categories can include serious medical conditions, domestic violence situations, and more. However, states can only provide this exemption of the lifetime limit and extension of support for up to 20 percent of their caseload. Families that qualify for New Jersey’s 20 percent extreme hardship category are supported through a separate program funded with state money. New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 12, 19, and 24, 2024.

    [22] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 24, 2024.

    [23] NJ Department of Human Services, Staying on Work First New Jersey, Jan. 2026.

    [24] NJ Department of Human Services, Get Work First New Jersey, Jan. 2026.

    [25] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 15, 2024.

    [26] Floyd, Ife, et al., TANF Policies Reflect Racist Legacy of Cash Assistance, Center on Budget and Policy Priorities, Aug. 4, 2021. Floyd, I., States Should Follow New Jersey: Repeal Racist “Family Cap”, Center on Budget and Policy Priorities, Oct. 14, 2020.

    [27] Covert, B., New Jersey, Birthplace of Welfare Family Caps, Has Finally Repealed Them, TalkPoverty, Oct. 16, 2020.

    [28] Floyd, I., States Should Follow New Jersey: Repeal Racist “Family Cap”, Center on Budget and Policy Priorities, Oct. 14, 2020.

    [29] Patel, U. and Shrivastava, A., Reproductive Justice and TANF: Repealing “Family Cap” Policies Promotes Economic Justice and Family Autonomy, Center on Budget and Policy Priorities, Dec. 19, 2023.

    [30] Covert, B., New Jersey, Birthplace of Welfare Family Caps, Has Finally Repealed Them, TalkPoverty, Oct. 16, 2020.

    [31] Floyd, I., States Should Follow New Jersey: Repeal Racist “Family Cap”, Center on Budget and Policy Priorities, Oct. 14, 2020. Floyd, Ife, et al., TANF Policies Reflect Racist Legacy of Cash Assistance, Center on Budget and Policy Priorities, Aug. 4, 2021. Patel, U. and Shrivastava, A., Reproductive Justice and TANF: Repealing “Family Cap” Policies Promotes Economic Justice and Family Autonomy, Center on Budget and Policy Priorities, Dec. 19, 2023. New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, pg. 24, 2024.

    [32] New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, Schedule I and Schedule II, 2024. State of New Jersey, The Governor’s FY 2027 Budget: Detailed Budget, pg. D-244 - pg. D-245, Mar. 2026.

    [33] NJPP Analysis of New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, Schedule I and Schedule II, 2024.

    [34] Massachusetts Institute of Technology, Living Wage Calculation for New Jersey, Feb. 28, 2026.

    [35] NJPP Analysis of U.S. Department of Health and Human Services Poverty Guidelines for 2026 to determine the amounts for varying federal poverty levels, Jan. 2026.

    [36] NJPP Analysis of U.S. Department of Health and Human Services Federal Poverty Guidelines for 2026 to determine the amounts for varying federal poverty levels, Work First New Jersey grant amounts provided through the New Jersey state budget and Department of Human Services, and Bureau of Labor Statistics Consumer Price Index Calculator to consider inflation, Jan. 2026.

    [37] Department of Human Services, Murphy Administration Boosts Payments for Families & Individuals in Need, Sep. 4, 2019. Holom-Trundy, B., Adjusting Work First New Jersey Eligibility Would Help Tackle Child Poverty, New Jersey Policy Perspective, Feb. 14, 2022. Holom-Trundy, B., Expand Anti-Poverty Programs to Help Families in Crisis, New Jersey Policy Perspective, Jan. 22, 2025.

    [38] NJPP Analysis of New Jersey Department of Human Services New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026 of grant amounts on Schedule II and Bureau of Labor Statistics Consumer Price Index Calculator to consider inflation, Jan. 2026.

    [39] Department of Human Services, Murphy Administration Boosts Payments for Families & Individuals in Need, Sep. 4, 2019

    [40] Center on Budget and Policy Priorities, New Jersey TANF Spending, Jan. 16, 2026.

    [41] Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025. Congressional Research Service, The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History, Jan. 6, 2025.

    [42] Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025.

    [43] Administration for Children & Families, Categories and Definitions for TANF and MOE Funds, Nov. 13, 2020. Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025.

    [44] Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025.

    [45] Administration for Children & Families, Help for Families: TANF Program Contact Information, Accessed Mar. 23, 2026.

    [46] Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025.

    [47] Administration for Children & Families, TANF Financial Data - FY 2024, Jan. 22, 2026.

    [48] Congressional Research Service, Temporary Assistance for Needy Families (TANF) Block Grant: A Primer, Aug. 26, 2025. Congressional Research Service, The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History, Jan. 6, 2025.

    [49] NJ Department of Human Services, Get Work First New Jersey, Jan. 2026.

    [50] Center on Budget and Policy Priorities, New Jersey TANF Spending, Jan. 16, 2026.

    [51] Administration for Children & Families, TANF and MOE Spending and Transfers by Activity, FY 2024: New Jersey, Nov. 21, 2025.

    [52] Luhby, T., Trump is freezing funds for small but key welfare program. Here’s what TANF does, CNN, Jan. 7, 2026. Schmit, S. and Wilensky, R., Cuts to SSBG, TANF Would Eliminate Child Care for 40K Children, Disrupt Care for Millions More, The Center for Law and Social Policy, Mar. 2026,

    [53] Macartney, S. and Ghertner, R., How Many People that Receive One Safety Net Benefit Also Receive Others?, U.S. Department of Health and Human Services, Jan. 20, 2024. Lucas, A. and Repko, M., Proposed SNAP cuts could pressure low-income shoppers — and retailers that serve them, CNBC, Apr. 16, 2025. Harvard Kennedy School, Explainer: Understanding the SNAP program—and what cuts to these benefits may mean, Nov. 10, 2025. Picchi, A. and Cunningham, M., Low-income families face a financial cliff as government shutdown threatens 4 federal aid programs, CBS News, Oct. 31, 2025.

    [54] Haider, Areeba, et al., Re-Envisioning TANF: Toward an Anti Racist Program That Meaningfully Serves Families, Georgetown Center on Poverty and Inequality, Oct. 20, 2022.

    [55] Center on Budget and Policy Priorities, Trends in State TANF-to-Poverty Ratios, Oct. 1, 2025.

    [56] Center on Budget and Policy Priorities, Trends in State TANF-to-Poverty Ratios, Oct. 1, 2025.

    [57] NJ Department of Human Services, Current Program Statistics - December 2025, Table 1, Mar. 2026.

    [58] NJPP analysis of ACNJ 1998 Kids Count data and DFD 2024 Current Program Statistics data, all years are for enrollment in June. Small Area Income and Poverty Estimates (SAIPE) data for poverty under age 18 for years 1997 and 2024.

    [59] U.S. Census Bureau, Poverty Status in the Past 12 Months, American Community Survey, ACS 1-Year Estimates Subject Tables, Table S1701, Sep. 2024.

    [60] Administration for Children & Families, Characteristics and Financial Circumstances of TANF Recipients, Fiscal Year 2023, Table 10, Oct. 3, 2024.

    [61] Aguas, T., Census 2024: Economic Gains Bypass Many New Jersey Communities, New Jersey Policy Perspective, Oct. 21, 2025.

    [62] Symons, M., Major overhaul of NJ’s welfare program passed by Senate, NJ 101.5, Apr. 14, 2020. Koball, H. and Hartig, S., Op-Ed: NJ’s TANF program falls short in supporting families in poverty, NJ Spotlight News, May 31, 2022. Castro, R., Promoting Equal Opportunities for Children Living in Poverty, New Jersey Policy Perspective, Apr. 2020.

    [63] Department of Human Services, Murphy Administration Boosts Payments for Families & Individuals in Need, Sep. 4, 2019. Covert, B., New Jersey, Birthplace of Welfare Family Caps, Has Finally Repealed Them, TalkPoverty, Oct. 16, 2020.

    [64] NJPP Analysis of TANF benefit amounts and 2026 federal poverty levels. See for example: U.S. Department of Health and Human Services Poverty Guidelines for 2026 to determine the amounts for varying federal poverty levels, Jan. 2026. New Jersey Department of Human Services, New Jersey State Plan for Temporary Assistance for Needy Families (TANF) FFY 2024 - FFY 2026, Schedule I and Schedule II, 2024.

    [65] Azevedo-McCaffrey, D. and Aguas, T., Continued Increases in TANF Benefit Levels Are Critical to Helping Families Meet Their Needs and Thrive, Center on Budget and Policy Priorities, Feb. 26, 2025. Castro, R., Promoting Equal Opportunities for Children Living in Poverty, New Jersey Policy Perspective, Apr. 2020.

    [66] Center on Budget and Policy Priorities, New Jersey TANF Spending, Jan. 16, 2026.

    [67] Burnside, A. and Fairbanks, J, Eliminating Asset Limits: Creating Savings for Families and State Government, The Center for Law and Social Policy, Oct. 2023.

    [68] There is no recent published research examining New Jersey TANF participants’ experiences with WorkFirst NJ specifically. However, studies from other states offer insight into how participation rules and administrative processes can shape families’ ability to remain on the program. Qualitative research from Illinois documents that many TANF recipients experience the program as difficult to navigate, with complex work requirements and procedural hurdles contributing to case closures. While these findings do not describe New Jersey’s system, they illustrate broader patterns in how TANF’s design can create barriers for families. See for example: Heartland Alliance, Resigned to the Process: Barriers to Accessing and Maintaining TANF among Low-Income Families with Young Children in Illinois, 2022.

    [69] Holom-Trundy, B., Outdated and Ineffective: Why New Jersey Needs to Update Its Top Anti-Poverty Program, New Jersey Policy Perspective, May 22, 2025.

    [70] There is no recent published research examining New Jersey TANF participants’ experiences with WorkFirst NJ specifically. However, studies from other states offer insight into how participation rules and administrative processes can shape families’ ability to remain on the program. Qualitative research from Illinois documents that many TANF recipients experience the program as difficult to navigate, with complex work requirements and procedural hurdles contributing to case closures. While these findings do not describe New Jersey’s system, they illustrate broader patterns in how TANF’s design can create barriers for families. See for example: Heartland Alliance, Resigned to the Process: Barriers to Accessing and Maintaining TANF among Low-Income Families with Young Children in Illinois, 2022.

    [71] Stevens, W., Mitigating TANF Benefits Cliffs, National Conference of State Legislature, Mar. 1, 2024.

    New Jersey’s Clean Energy Funds: What They Are and Why They Matter

    Posted on by Alex Ambrose

    From: Alex Ambrose, New Jersey Policy Perspective

    Date: February 27, 2026

    RE: Clean Energy Fund and Regional Greenhouse Gas Initiative Fund

    This memo serves as a briefing on the Clean Energy Fund and the Regional Greenhouse Gas Initiative Fund. It summarizes the purpose of these funds as well as provides examples of their uses. Investing in medium- and long-term clean energy solutions benefits all ratepayers, especially those already struggling with high energy costs — yet continued diversions of these funds undermine that promise. This memo summarizes the purpose of each fund, provides examples of their uses, documents the history and scale of diversions, and explains the threat of future diversions.

    The Clean Energy Fund

    The Clean Energy Fund is New Jersey’s primary mechanism for financing clean energy investments and incentivizing the use of clean energy. Established in 1999, the fund is supported by a portion of the Societal Benefits Charge (SBC), an existing line item on residential and commercial energy bills.[1] In Calendar Year 2024, the SBC collected over $868 million in revenue, with the average electric customer paying less than five percent of their bill towards the SBC.[2] The SBC as well as the Clean Energy Program are overseen by the NJ Board of Public Utilities (BPU).[3]

    What does it fund?

    The Clean Energy Fund supports the Clean Energy Program, which includes two types of primary investments: energy efficiency measures and renewable energy infrastructure. Energy efficiency measures include providing funding for businesses, homeowners, and public buildings to retrofit for clean energy technology as well as purchasing more energy-efficient appliances. Renewable energy infrastructure investments include support for solar technology, development of offshore wind, creation of energy storage, and more.[4]

    In FY2025, the Clean Energy Program funded initiatives such as:[5]

    • Triennium 2, an energy efficiency program
    • Dual-Use Solar Program, a program to put solar panels on farmland
    • Community Energy Grant, a program to give municipalities funding to create community energy plans
    • Residential Energy Assistance Payments or targeted ratepayer relief
    • Clean Transportation, which incentivizes zero-emission vehicles and charging infrastructure
    • State Energy program, which incentivizes the efficient use of energy including through benchmarking

     

    In FY2026, the BPU proposed new initiatives for the Clean Energy Program including the Garden State Energy Storage Program and the Urban Heat Island program.[6] As of June 2025, the estimated amount in the Clean Energy Fund was approximately $653 million.[7]

    The BPU notes that there is often carryover year-to-year with the Clean Energy Fund since projects can take many years to implement; therefore, some funds may be assigned to future projects but not yet given out and need to be carried over to the next year’s budget.[8]

    History of Annual Budget Diversions

    Since Fiscal Year 2010, state lawmakers have diverted the Clean Energy Fund to plug budget holes and finance line items unrelated to clean energy such as park maintenance and utility bills for state buildings. In total, lawmakers have raided nearly $2.62 billion (in 2026 dollars) from the Clean Energy Fund.[9]

    History of Use for Ratepayer Relief

    In 2024, the Murphy Administration offered a one-time $175 bill credit to households that already qualified for existing energy assistance programs through the Residential Energy Assistance Payment (REAP).[10] In total, approximately $46 million from the Clean Energy Fund was distributed to customers, although the Board attempted to use more, but nearly $3 million was returned to the Board due to “unsuccessful application to eligible accounts.”[11] While the exact mechanism for the lack of success is not clear, it is an example of structural barriers to assistance programs.

    In 2025, the BPU offered a similar credit in the form of seven $25 bill credits applied monthly, starting in August 2025. The BPU directed approximately $49 million from the Clean Energy Fund to bill credits for qualifying low-income households.[12]

    With billions of dollars of investments already missing due to continued diversions, the time to end the inappropriate use of the Clean Energy Fund is now. While the Clean Energy Fund has flexibility in how it is used, the need for more investment in longer-term solutions, such as energy storage, clean transportation, and more, is clear.

    Regional Greenhouse Gas Initiative (RGGI) Fund

    The Regional Greenhouse Gas Initiative (RGGI) — or as New Jersey refers to it in the annual state budget, the Global Warming Solutions Fund — is a cap-and-invest effort among participating states aimed at reducing pollution from power plants.[13]

    How does it work?

    A total of 165 power-generating facilities across the ten RGGI states are subject to the requirements of the program as the facility must have more than 25 megawatts of generating capacity.[14] States set an allowable limit on pollution and regulated facilities must purchase allowances equal to the amount of carbon emissions they emit at quarterly regional auctions.[15] From that auction, each state then receives funds equal to their contribution to the planned decline in emissions; these funds are put into each state’s RGGI fund to be invested back into communities for energy efficiency, clean energy infrastructure, and other programs.[16] Regionally, the program has created a net of $669 million in economic benefits as well as nearly 8,000 jobs added between 2018 and 2020.[17]

    While Governor Christie pulled New Jersey out of RGGI, the state rejoined under Governor Murphy in 2020.[18] As of 2025, the total amount the state has received in RGGI funds is over $1.11 billion.[19] The estimated amount in the state Fund as of June 2025 was approximately $535 million.[20]

    How are the funds used in New Jersey?

    The funds are divided between three state entities: the Department of Environmental Protection (DEP), the Board of Public Utilities (BPU), and the Economic Development Authority (EDA).[21] According to the enabling statute, the funding is to be used by each agency for the following purposes:[22]

    EDA (60 percent)

    • Supporting energy efficiency and renewable energy for commercial, institutional, and industrial entities
    • Developing combined heat and power production
    • Stimulating or rewarding investment in innovative carbon abatement technology
    • Developing offshore wind

    BPU (20 percent)

    • Reducing electricity demand or costs to electricity customers in the low- and moderate-income (LMI) sector with a focus on urban areas, such as addressing urban heat island effect

    DEP (20 percent) for greenhouse gas reduction

    • 10 percent to supporting local governments reducing greenhouse gas emissions, such as through energy efficiency, renewable energy, distributed energy resources, and land use planning, and 10 percent for stewardship and restoration of forests and tidal marshes

     

    Examples of successful RGGI-funded projects include the microtransit program “GoTrenton!” and the tree-planting Trenton-based project “Throwin’ Shade.”[23] The New Jersey RGGI Climate Investments Dashboard also provides examples of successful RGGI-funded projects across the state.[24]

    Funding decisions are guided by the RGGI Strategic Funding Plan, which is jointly created every three years with the three funded entities: the BPU, the DEP, and the EDA.[25]

    History of Use for Ratepayer Relief

    In 2025, the Board of Public Utilities approved a Universal Bill Credit, a $100 credit applied to all New Jersey residential bills regardless of income.[26] The total amount committed was $385 million, $123 million of which was from the BPU’s RGGI funds — the full amount of the Board’s unspent funds from the 2023-2025 funding round.[27]

    The RGGI Strategic Plan outlines nine specific initiatives for the funding, only one of which is ratepayer relief. The rest are clean transportation, building decarbonization, coastal and forest restoration, New Jersey’s Green Bank, clean energy infrastructure, clean manufacturing, and clean energy workforce and supply chain.[28] However, one graph appears to give priority to ratepayer relief over other initiatives:

    Source: NJ RGGI 2026-28 Strategic Funding Plan. p.17

    This graph appears to state that the only priority the agencies plan to fully fund to the maximum percentage is ratepayer relief; while transportation has a minimum investment of approximately 11 percent, the rest of the priorities received a commitment to only receive approximately 1 to 2 percent of funding. The lack of commitment to the other priorities could demonstrate the intent or desire to use funds outside of the BPU’s 20 percent allocation in ways not aligned with the strategic plan and the state statute.

    Conclusions and recommendations

    It is clear from the law that the BPU portion of the RGGI funds is the only portion eligible to be used for ratepayer relief, and specifically must be used only for low- and moderate-income ratepayers. Additionally, the Clean Energy Fund diversions, both for the annual budget and for ratepayer relief, must be immediately scaled back. The Clean Energy Fund must be used for its intended purpose — funding clean energy — to provide both medium- and long-term ratepayer relief. Using both RGGI and CEF for ratepayer relief is a stopgap measure that does nothing to address the underlying causes for higher electric bills.

    End Notes

    [1] Ambrose, A. Stop the Raids: The Clean Energy Fund Should Fund Clean Energy. New Jersey Policy Perspective. (2023).

    [2] Email from New Jersey Board of Public Utilities. Feb. 10, 2026. On file with the author.

    [3] N.J. Stat. Sec. 48:3-60.12a. 2022.

    [4] Ambrose, A. Stop the Raids: The Clean Energy Fund Should Fund Clean Energy. New Jersey Policy Perspective. (2023).

    [5] New Jersey Board of Public Utilities. BPU Response to OLS Questions. FY 2025-26. Accessed Feb. 2026. p.22.

    [6] Ibid.

    [7] New Jersey Board of Public Utilities. Docket No. QO25040206: In the Matter of the Clean Energy Programs and Budget for Fiscal Year 2026. p.4.

    [8] Ibid.

    [9] NJPP analysis of annual legislative budgets. See also Ambrose, A. Stop the Raids: The Clean Energy Fund Should Fund Clean Energy. New Jersey Policy Perspective. (2023).

    [10] New Jersey Board of Public Utilities. Docket No. QO24020120: In the Matter of Disbursement of Clean Energy Program Funds for the Residential Energy Assistance Payment. p.2.

    [11] Ibid.

    [12] New Jersey Board of Public Utilities. June 25, 2025 Meeting Minutes. p.21.

    [13] RGGI, Inc. Elements of RGGI. Accessed Feb. 2025.

    [14] Congressional Research Service. The Regional Greenhouse Gas Initiative: Background, Impacts, and Selected Issues. Jul. 16, 2019. p.2.

    [15] RGGI, Inc. RGGI 101 Fact Sheet. Accessed Feb. 2026.

    [16] Ibid.

    [17] Stuart, D. and Hibbard, P. The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States. Analysis Group. May 2023. p.8-9.

    [18] RGGI, Inc. RGGI States Welcome New Jersey as Its CO2 Regulation is Finalized. Jun. 17, 2019.

    [19] New Jersey Department of Environmental Protection. Regional Greenhouse Gas Initiative. Accessed Feb. 2026.

    [20] New Jersey Department of Treasury. FY 2026 Supplementary Information. p.80.

    [21] N.J. Stat. 26:2C-51

    [22] N.J. Stat. 26:2C-51(7b(1-4)).

    [23] New Jersey Department of Environmental Protection. Regional Greenhouse Gas Initiative: Investing in NJ’s Climate-Smart Future. Accessed Feb. 2025.

    [24] New Jersey Department of Environmental Protection. New Jersey RGGI Climate Investments Dashboard. Accessed Feb. 2025.

    [25] New Jersey Department of Environmental Protection. RGGI Strategic Funding Plan FAQs. Accessed Feb. 2025.

    State of New Jersey. 2026-28 Regional Greenhouse Gas Initiative Strategic Funding Plan. Accessed Feb. 2025.

    [26] New Jersey Board of Public Utilities. Docket No. QO25070389: In the Matter of the Establishment of the Residential Universal Bill Credit (“RUBC”). Aug. 13, 2025.

    Note: the remaining $263 million is from the Solar Alternative Compliance Payment (ACP) account. ACP is widely considered an appropriate fund for ratepayer relief.

    [27] Ibid. p.4.

    [28] State of New Jersey. 2026-28 Regional Greenhouse Gas Initiative Strategic Funding Plan. Accessed Feb. 2025.

    How Does New Jersey Fund Its Schools — And How Can We Make It Fairer?

    Posted on by Mark Weber
    Table of Contents
      Add a header to begin generating the table of contents

      New Jersey leads the nation in education spending and student achievement.[1] In 2024, for example, New Jersey eighth graders ranked among the top three states in both mathematics and reading on national tests.[2] Much of the success of New Jersey’s schools can be attributed to the strong effort it makes to fund its schools: the state spends more on K-12 education, as a percentage of its economy, than any other state in the nation.[3]

      Despite these successes, New Jersey faces a persistent achievement gap. Black and Latinx/Hispanic students consistently underperform compared to white students, and students from low-income families lag behind their peers.[4] This gap stems partly from lack of funding: New Jersey’s students of color are often in schools that lack the funding they need to provide a quality education.[5]

      School funding policy affects more than students, families, teachers, and education advocates. New Jersey spends more on K-12 education than any other budget category as a percentage of state and local spending.[6] All of New Jersey’s taxpayers have an interest in understanding how the state funds its schools.

      This explainer provides an overview of school funding in New Jersey: why funding matters, where funding comes from, the state’s role in funding schools, and how school funding can be improved.

      Why does funding matter for schools?

      Funding matters for schools because schools need money to provide the services and staff necessary to support students. Greater funding leads to better outcomes: higher test scores, increased graduation rates, and better college completion rates.[7] These outcomes produce economic gains and better standards of living while improving health.[8]

      Bottomline: Students need well-funded schools to succeed.

      Do some schools need more resources than others?

      An important principle in school funding is equal educational opportunity: All students should have the same chance to achieve rigorous educational goals, regardless of their backgrounds.

      Students who struggle with economic, linguistic, or accessibility barriers face greater educational challenges than others. New Jersey school funding law recognizes three types of students in particular:[9]

      1. Students from low-income families. These are students who qualify for free or reduced-price lunch (FRPL) under the National School Lunch Program. These students live in households with an income lower than 185 percent of the poverty line.
      2. Students who are multilingual learners. These students are often referred to as "English language learners" or "Limited English Proficient" students.
      3. Students with learning disabilities. This includes speech and language impairments, autism, visual and hearing impairments, health impairments, specific learning disabilities such as dyslexia, and others. Federal and state law recognizes 13 special education classifications.

      Because these students have more obstacles to their education, they need extra support: smaller classes, specialized educators, social services, health services, remedial instruction, and so on. When a school district has more students facing these challenges, it needs more funding to serve those students’ needs.

      Where do New Jersey public schools get their funding?

      School funding is a mix of federal, state, and local revenues. Federal funding is a small part of New Jersey’s school funding. Most school funding comes from a mix of local taxes and state aid.

      Most of New Jersey's School Revenues are Split Between State and Local Sources - Pie chart illustrating the sources of school revenues: 47.2% state, 46.3% local, and 6.5% federal.

      The data above include revenues for charter schools, which are publicly-funded schools that operate independently from traditional school districts. The data does not include private schools.

      Why is state funding necessary for schools?

      The New Jersey Constitution guarantees all school-aged children in the state access to a “thorough and efficient system of free public schools.”[10] To meet this constitutional mandate, New Jersey’s courts have ruled the state must “...create a funding formula based on curriculum content standards and to demonstrate that the formula addresses the needs of disadvantaged students everywhere...”[11]

      New Jersey maintains statewide content standards across multiple content areas with clearly defined learning goals.[12] If a district cannot raise enough local revenue to meet these state standards, the state’s courts have ruled that the state must step in and help.[13]

      New Jersey school districts raise their local funds primarily through property taxes, but some districts have higher property values than other districts. Districts with higher property values can raise revenue more easily than districts with lower property values. This puts an unfair burden on less-affluent districts, which must increase their tax rates more than affluent districts to raise the same amount of money.

      Here’s how: Imagine two school districts of the same size, but with different districtwide property values per pupil. To raise an equal amount of revenue (in this example, $10,000 per pupil), the district with lower property values has to have a higher tax rate than the district with higher property values.

      Example: Property Values and Tax Rates in a Hypothetical School District - Table

      To make tax rates more fair for less-affluent districts, school districts with lower property values need more revenue from sources outside their district. This is why New Jersey provides state aid to school districts: it allows the state to fulfill its constitutional mandate and it saves local taxpayers from paying extremely high property taxes.

      How do New Jersey leaders decide how much state funding a school district will receive?

      After years of legal challenges from underfunded school districts, New Jersey state leaders passed the School Funding Reform Act (SFRA) in 2008.[14] The law spells out a formula that determines how much state funding, in the form of state aid, every school district gets. The courts have found that the SFRA formula — which accounts for a variety of student characteristics, district property values, and other factors — allows the state to meet its constitutional mandate, so long as the formula is implemented correctly and the state fully funds it.[15]

      How does the state’s school funding formula work?

      The SFRA is complex. It grants several different types of state aid to school districts. The most important of these is “equalization aid,” which is distributed through this simplified formula:

      District Adequacy Budget - Local Fair Share = Equalization Aid

      To break down each of these parts:

      • District adequacy budget. This is the amount of funding the SFRA formula says a district needs to educate its students at the level the state constitution demands.[16] Districts with more students in poverty or more Multilingual Learners will have larger adequacy budgets.
      • Local fair share. This is the amount of money the law says is fair, given the district’s property values and resident wealth, for a district to tax itself for its schools. In general, districts with higher property values (per pupil) will have higher local fair shares than districts with lower property values, because it is easier for affluent districts to raise local revenues than less-affluent districts.[17]
      • Equalization aid. When the local fair share is subtracted from the adequacy budget, the amount left is the amount of state funding a district should receive. That funding is called “equalization aid.”[18]

      In addition to adequacy aid, the SFRA also grants aid that is “off formula”:

      • Categorical aid. This is state aid districts receive even if their budgets could be covered entirely by their local fair share. In other words, categorical aid is aid outside the adequacy budget. Categorical aid includes funding for security, transportation, and, importantly, special education.

      The SFRA has several additional provisions that affect the distribution of state aid. However, the adequacy formula, local fair share, and categorical aid are the heart of its funding formula.

      It is important to note that even though this formula is spelled out in law, the state never fully funded its obligations through the formula until recently.[19] For years, districts were expected to adequately educate students, even when they weren’t receiving the state aid the SFRA says they should have. In 2024, Governor Phil Murphy announced his budget for FY2025 would “...fully fund New Jersey’s school funding formula…”[20] As we discuss below the SFRA formula is out of date and does not provide the funding needed to meet the state’s current learning standards.

      How do poverty and other factors affect the state’s calculation of school funding?

      Schools enrolling more students who live in poverty, or who are multilingual learners, require more resources to adequately meet the needs of those students. Smaller class sizes, multilingual instruction specialists, classroom supports, health services, social workers, and other supports for at-risk students all require additional funding. Without it, students facing economic barriers will not have equal educational opportunities.[21]

      In the 2024-25 school year, 42 percent of New Jersey students qualified for free or reduced-price lunch, a measure of student poverty — that's more than 550,000 students, nearly half of all students in New Jersey.[22] Eleven percent of students were multilingual learners. These students’ schools need additional funding if they are to provide an adequate education.

      To provide that additional funding, the SFRA adequacy formula uses “weighted student enrollment.” The formula starts by giving every student a weight of 1.0. Students who are Multilingual Learners (ML) get an extra weight of 0.5. In other words, when counting up the weighted student enrollment, every ML student counts as a student-and-a-half.

      Students who qualify for free or reduced-price lunch (FRPL) are weighted between 0.47 and 0.57 more, depending on the concentration of economic disadvantage in their district.[23] Middle school students are weighted more than elementary students. High school students are weighted more than that, and vocational-technical students even more. 

      The table below gives an example of how weighted student enrollment works. A hypothetical school district has 1,000 students. Five percent are multilingual language learners, and 10 percent qualify for free or reduced-price lunch. Because ML students are weighted at 0.5, every one counts as a student-and-a-half. Half a student is added to the total weighted student enrollment for each ML student. The FRPL weight of 0.47 adds another 47 students to the weighted count. The result is an additional 72 students are added to the final weighted student enrollment figure.

      Example: Weighted Student Enrollment in a Hypothetical School District - Table

      Calculating Adequacy Budgets

      Once the weighted student enrollment is calculated, it is multiplied by the “base cost”: the per pupil amount New Jersey has determined is needed to educate an elementary school student who is not in economic disadvantage and is not a multilingual learner. As our example shows below, the result is that school districts enrolling more students facing economic barriers or ML students will have larger adequacy budgets.

      Example: Unweighted and Weighted Adequacy Budgets in a Hypothetical School District - Table

      Note that students with learning disabilities are not weighted in the same way as FRPL or ML students. Special education funding is discussed below.

      This system can only work if the base amount and weights are correct. If the base cost is lower than what’s actually needed, the district adequacy formula will not provide enough funding for school districts to meet their goals. Furthermore, if the base cost is correct but the weights are too low (and there is not enough additional funding for students who face greater obstacles), districts with high proportions of students who live in poverty or speak English as a second language will have district adequacy budgets that are much lower than they need to be to fully support students.

      How does New Jersey fund special education?

      Students with learning disabilities are not weighted in the same way as free/reduced-price lunch or ML students in the SFRA adequacy formula. Until recently, the state assumed the same percentage of students in every district would have special education needs, and calculated aid accordingly. This is known as “census-based” funding.[25] The rationale for using it was that, if the state instead weighted students with disabilities like FRPL or ML students, districts would be incentivized to over-classify students, since more state aid would flow to them if they did.

      Recently, Governor Phil Murphy proposed using actual special education enrollment numbers in place of census-based funding.[26] The SFRA law remains unchanged as of this writing. Whether actual counts of students with disabilities will be used in the future depends on the actions of state leaders over the next year.

      A portion of special education funding is categorical aid and “off formula.” In other words, districts receive that funding, even if they have enough local funding to provide an adequate education for their students.[27] This is one of the primary reasons why even the most affluent districts, whose local fair share easily covers their budgets, still get some state funding. The SFRA also provides “extraordinary special education aid” for districts that enroll students who have exceptionally high-cost needs.[28]

      Does the school funding formula provide enough money for students to meet the state’s standards?

      The SFRA formula recognizes that students in poverty, multilingual learners, and students with disabilities need more resources to be able to meet the state’s standards. The formula can only provide New Jersey’s schools with what they need if it has been calibrated correctly. Specifically: the base amount has to match the true per pupil amount needed to provide an education that meets constitutional standards to students in grades K through 5, and the weights must accurately reflect the additional costs of providing equal educational opportunity to all students.

      Evidence shows that the SFRA weights are not correct. Therefore, districts with higher concentrations of poverty often do not receive the funding they need.[29] Since the original law passed in 2008, New Jersey has raised its educational standards. This means more money is needed to provide an adequate education for all students.[30] Resetting the weights to reflect the actual costs of meeting New Jersey’s current standards is necessary for the SFRA to remain in compliance with New Jersey’s constitution.

      How are charter schools funded?

      Charter schools are independent schools that operate separately from traditional public school districts. If a resident student chooses to attend a charter school, their home school district “passes through” 90 percent of the funding for that student, based on their characteristics (ML, FRPL, special education).[31] The funding includes both state aid and local revenues. The charter funding formula matches the SFRA adequacy formula closely, passing through more funding when more students with special needs enroll in a charter.

      The theory behind only giving 90 percent of the per student funding amount is that public school districts have fixed costs that don’t decline when students leave to attend charter schools. If a few students leave a school, the school still has to be heated, cooled, cleaned, and maintained at the same cost. This raises per pupil costs for the district. Districts are also required, by law, to provide transportation to resident students enrolled in charters, and to administer the disbursement of payments to those charters.[32]

      It is critically important that, for the fiscal health of school districts, these additional costs are reflected in the state’s school funding system. To date there has been no state-sponsored study done to determine the actual fiscal impact of charter schools on public school districts. This is a serious oversight that must be addressed.

      Other states offer vouchers for private school; how would they affect school funding in New Jersey?

      Private school vouchers would almost certainly raise costs for New Jersey taxpayers and would not close school funding gaps in the state.[33]

      In other states that have implemented voucher programs, a large proportion of students receiving vouchers were already enrolled in private schools. Because these students would attend private school even without a voucher, subsidizing them becomes an additional burden on the state budget.[34]

      Recent studies have also shown students in large-scale voucher programs perform significantly worse on standardized tests than their public school counterparts, even when controlling for student differences.[35] Worse results for more money is a bad deal for New Jersey.

      How can we improve school funding in New Jersey?

      There are several steps the state can and should take to improve school funding:

      • Make funding data transparent. The school funding formula calculations are not published publicly and are difficult to understand and interpret. The state should create an easy-to-read version of this data, as it has for other fiscal and education data.
      • Update the funding formula. The state should hire outside experts to evaluate the calibration of the school funding formula so the base and weights in the formula are set correctly.
      • Fix special education funding. The state should convene a task force on special education funding with a mandate to improve the school funding formula’s accounting for students with learning disabilities.
      • Study charter school costs. The state should undertake a study of the fiscal impact of charter schools on school districts so financial harm from charter school enrollments are reduced.
      • Reject school privatization. The state should firmly reject any attempt to bring vouchers, education savings accounts, or other forms of school privatization into New Jersey.

       

      End Notes

      [1] Rosenberg, L., N.J. schools are No. 1 in the nation, new ranking says. nj.com. May. 07, 2025.

      [2] National Center for Education Statistics. The Nation’s Report Card, State Profiles, New Jersey. Ranks are based on figures rounded to the nearest point. Department of Defense schools are excluded.

      [3] School Finance Indicators Database. State School Finance Profiles. 2025.

      [4] Gross, H.NJ students fail to regain ground lost during pandemic. NJ Spotlight. Jan. 29, 2025.

      [5] Baker, B.D. and Weber, M.A.. Separate and Unequal: Racial and Ethnic Segregation and the Case for School Funding Reparations in New Jersey. New Jersey Policy Perspective. 2021.

      [6] Urban Institute. State Fiscal Briefs: New Jersey. Sep. 2025.

      [7] Baker, B.D. & Knight , D. Does Money Matter In Education? Third Edition. Albert Shanker Institute. January 2025.
      Northwestern Institute for Policy Research. The Benefits of Increased School Spending. March, 2017.

      [8] Raghupathi, V., Raghupathi, W. The influence of education on health: an empirical assessment of OECD countries for the period 1995–2015. Arch Public Health 78, 20. 2020.

      Learning Policy Institute. Student Mental Health and Education [Fact sheet]. 2025.

      Learning Policy Institute. How Money Matters: Education Funding and Student Outcomes [Fact sheet]. 2025.

      Hanushek, E.A.,  Ruhose, J., & Woessmann, L. “Economic Gains from Educational Reform by US States.” Journal of Human Capital 11:4, 447-486. 2017.

      [9] N.J. P.L. 2007, Chapter 260. “The School Funding Reform Act.”

      [10] New Jersey State Constitution (1947).

      [11] Abbott, et al. v. Fred G. Burke, Commissioner of Education, et al. (Abbott XX).

      [12] NJ Dept. of Education. New Jersey Student Learning Standards. 2025.

      [13] Education Law Center. The History of Abbott v. Burke.

      [14] N.J. P.L. 2007, Chapter 260. “The School Funding Reform Act.”

      [15] Baker, B.D. &  and Weber, M. Reforming School Funding in New Jersey: Equity For Taxpayers, Excellence For Students. Trenton, NJ: New Jersey Policy Perspective. 2024.

      [16] Baker, B.D., & Weber, M.A. Unlocking Academic Success: Revitalizing New Jersey’s School Funding Formula for Student Achievement. New Jersey Policy Perspective. 2023.

      [17] The SFRA’s local fair share formula takes into account both property values and resident income. These two factors are closely correlated, but there are variations. This explains why two districts with the same property value per pupil but different income per pupil might have different local fair shares.

      [18] N.J. P.L. 2007, Chapter 260, Section 10. “The School Funding Reform Act.”

      [19] Fuller, C. Understanding New Jersey School State Aid Funding. New Jersey School Boards Association. 2024.

      [20] State of New Jersey, Governor Phil Murphy. Governor Murphy Highlights Record School Funding Increase in Fiscal Year 2025 Proposed Budget Plan Feb. 29, 2024.

      [21] Baker, B. D., & Knight, D. Does money matter in education? Albert Shanker Institute. 2025.

      [22] Data source: NJ Department of Education. Fall Enrollment Reports. 2024.

      [23] The SFRA formula has a “combo” weight for students who are both multilingual learners and qualify for free or reduced-price lunch. For simplicity’s sake, we omit this weight from our example.

      [24] NJDOE, Education Adequacy Report, p.5. 2025.

      [25] Farrie, D. & Ciullo, N. The Impact Of Census-Based Funding For Special Education. Education Law Center. April 2024.

      [26] Gross, H. NJ school aid destined for big changes? NJ Spotlight. Feb. 26, 2025.

      [27] That proportion is stated as one-third in the SFRA law. (N.J. P.L. 2007, Chapter 260. “The School Funding Reform Act.” ) In reality, however, districts have not always received this amount, as the SFRA formula was underfunded.

      [28] N.J. P.L. 2007, Chapter 260, Section 13. “The School Funding Reform Act.”

      [29] Baker, B.D. &  and Weber, M. Reforming School Funding in New Jersey: Equity For Taxpayers, Excellence For Students. Trenton, NJ: New Jersey Policy Perspective. 2024.

      [30] Baker, B.D., & Weber, M.A. New Jersey School Funding: The Higher the Goals, the Higher the Costs.  New Jersey Policy Perspective. Feb. 2, 2022.

      [31] Rubin, J.S. New Jersey Charter School Funding. Rutgers University SOAR Repository. 2015.

      [32] N.J.S.A. 18A:36A-12. “Charter School Program Act Of 1995”

      [33]  Weber, M. (2024) No Matter What You Call Them, Private School Vouchers Are Bad for New Jersey. New Jersey Policy Perspective. Apr. 16, 2024.

      [34] Weber, M. (2024) No Matter What You Call Them, Private School Vouchers Are Bad for New Jersey. New Jersey Policy Perspective. Apr. 16, 2024.

      [35] Lubienski, C., Faulkner, P., Canbolat, Y., & Curlin, J. Summary of Research on School Vouchers.  Center for Evaluation and Education Policy, Indiana University, Bloomington. 2023.

      Why Are New Jersey’s Electricity Bills Going Up, and What Does PJM Have to Do With It?

      Posted on by Alex Ambrose

      Energy powers our everyday life, from keeping homes warm in the winter to keeping food safe and allowing kids to study at home. But in New Jersey, electricity costs are 20 percent higher than the national average, which means low-income families often have to choose between basic needs like groceries or keeping the lights on. The most cost-effective way to keep energy affordable is by expanding clean, reliable energy sources, such as solar and wind, paired with battery storage.

      PJM — the grid operator named for its original member states: Pennsylvania, “Jersey,” and Maryland — manages the power grid for New Jersey and 12 other states and Washington, D.C. But PJM is stalling the transition to clean energy by delaying the connection of new renewable projects and failing to adequately plan for growing demand. These delays are contributing to rising electricity prices. As a result, starting in June 2025, New Jersey households will see their utility bills increase by more than $20 per month.

      This explainer provides an overview of PJM’s role in New Jersey’s energy system, why energy prices are rising, and how key policy options and a faster transition to clean energy could protect families from even higher bills.

      Table of Contents
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        What is PJM?

        PJM is the Regional Transmission Organization (RTO) responsible for managing the power grid and electricity markets in 12 states and Washington, D.C.[1] PJM provides electricity to approximately 67 million people across the region and is the nation’s largest RTO.[2]

        As a private entity overseen by federal regulators, PJM has significant authority over the state’s electricity system, yet operates with limited transparency. Its decisions influence:

        • How much residents pay for electricity,
        • Which energy sources supply residents’ access to power, and
        • How and when new energy projects connect to the electric grid.

         

        How is PJM Different from Utility Companies?

        In New Jersey, most residents get electricity from one of the four major utility providers: Atlantic City Electric (ACE), Jersey Central Power & Light (JCP&L), Public Service Electric & Gas (PSE&G), or Rockland Electric Company (RECO).

        Unlike these companies, PJM is not a consumer-facing utility company. Instead, PJM operates at the regional level, overseeing the generation and transmission of electricity across multiple states. Generation refers to how electricity is produced from sources like solar or wind farms, natural gas, or coal plants. Transmission refers to how that electricity travels long distances from where it’s generated to local utility systems. PJM manages the energy markets and plans and approves new energy infrastructure.

        By contrast, utility companies are responsible for distributing energy to homes and businesses. They maintain local infrastructure, like wires and poles, and they handle billing and customer service. Basically, PJM handles the big picture grid and wholesale electricity markets, while your utility company delivers the power to your door.

        If you look at your electric bill, you’ll usually see two main charges: supply and distribution.

        • Supply charges reflect the costs of the electricity itself, which is set through PJM’s competitive markets. These processes are regulated by the Federal Energy Regulatory Commission, or FERC, an agency within the federal government.
        • Distribution charges are the costs of getting electricity to your home, which are set by the local utility company and regulated by the New Jersey Board of Public Utilities (BPU).

         

        Example Bill from PSE&G, A New Jersey Utility Company

        Starting in June 2025, the supply portion of your bill will increase. This part of your bill is shaped by PJM’s planning decisions and market structure — not by state regulators. 

        What Does PJM Do?

        PJM has three main jobs: transmission planning, managing the energy market, and managing the capacity market, giving PJM significant influence over which energy projects come online, how electricity flows across the region, and ultimately, how much consumers pay.[3]

        1. Transmission Planning:
          PJM oversees the planning and development of the high-voltage transmission system that carries electricity from where it’s generated, like power plants and large solar fields, to where it’s used, like homes and businesses. This includes planning and designing a grid that can reliably meet the region’s energy needs, both now and in the future, and prepare for disruptions, such as extreme weather or equipment failures.
        2. Managing the Energy Market:
          PJM operates a wholesale energy market that balances electricity supply and demand in real time — day by day and hour by hour. Acting as a broker between companies that generate electricity and utility companies, PJM determines which power sources will run and how much electricity they should generate at any given time. The goal is to meet demand at the lowest possible cost while maintaining grid reliability.
        3. Managing the capacity market:
          To plan for future demand, PJM forecasts electricity needs for the region to ensure enough electricity is available during peak usage, such as during summer heat waves. This is done through the capacity market, where electricity suppliers participate in auctions and utilities buy as much electricity as they expect customers will need. This system between PJM, electricity suppliers, and utilities helps maintain a reliable grid by ensuring enough power will be available when it’s needed most and helps avoid price spikes due to shortages.

        Why are Energy Bills Going Up June 2025?

        The increase in energy bills beginning in June 2025 is largely driven by higher prices in PJM’s capacity market. As previously mentioned, the capacity market functions like an auction where utility companies buy energy in advance to meet future demand during peak periods, such as extremely cold or hot days.

        In PJM’s most recent auction in early 2025, prices rose higher than expected due to a surge in projected demand. PJM attributes this increase to two main factors:

        1. Rapid growth in energy use for expected data centers, and
        2. A shortage of new, reliable energy projects being built and connected to the grid.[4]

        According to PJM, data centers alone account for 70 percent of the projected increase in demand.[5] But supply has not kept pace with this unexpected increase in demand. As a result, utilities paid more for future capacity, and those costs are passed on to customers.

        A significant reason for this supply shortfall is PJM’s own delays in connecting new energy projects to the grid. Before a new project, such as a solar or wind farm, can connect to the grid and deliver electricity, it must go through PJM’s interconnection queue. This is a review process that assesses whether the project can be safely added to the grid, but in practice, this has become a major bottleneck. As of March 2025, 143 gigawatts worth of projects — including 79 projects in New Jersey — were awaiting approval in the interconnection queue, enough to power about 115 million homes.[6] For comparison, PJM currently has about 179 gigawatts on the grid as of 2025.[7] In 2022, PJM decided it would not review newer project applications until early 2026, and it’s unlikely that projects currently applying to join the grid will come online before 2030. However, PJM’s recent Resource Reliability Initiative fast-tracked primarily fossil fuel projects, even though over 95 percent of projects awaiting approval are renewable and storage projects, giving gas-powered energy an unfair advantage.[8]

        Other regional grid operators (RTOs), like the Midcontinent Independent System Operator (MISO), engage in long-term, comprehensive planning, grouping infrastructure projects, and evaluating them based on total system benefits.[9] PJM has lagged in its planning and market reforms, leaving the region more vulnerable to price spikes.

        Adding to the challenge is PJM’s governance structure, which gives significant influence to for-profit, utility and fossil fuel companies.[10] Unlike public agencies, PJM operates largely behind closed doors with limited transparency and few opportunities for public input or accountability. This lack of transparency makes it difficult for state governments or consumers to inform decisions that directly affect utility bills.

        According to a recent analysis from Evergreen Collaborative, if PJM continues business-as-usual, New Jersey residents could see their electricity bills increase to over $2,000 a year by 2040.[11] However, if PJM reforms its planning and governance processes, accelerates clean energy connections to the grid, and improves transparency, New Jersey households could see up to $405 in annual savings.[12]

        How Does Clean Energy Affect Rates and Reliability?

        Clean energy, especially solar and wind, helps reduce electricity costs for both utilities and consumers.[13]  These sources are among the cheapest forms of electricity available, in part because they run on free, renewable resources, like sunshine and wind, and they do not require fuel purchases, imports, or costly maintenance associated with fossil fuel systems. When paired with battery storage, clean energy can reliably meet demand even when it’s not sunny or windy.[14]

        States that added clean energy to their grid at the highest rates, like Iowa, New Mexico, Kansas, and Oklahoma, saw the lowest electricity rate increases between 2020 and 2023.[15] Thanks to federal incentives like the Inflation Reduction Act, clean energy will become increasingly cheaper to build and operate over time. In PJM’s interconnection queue, over 95 percent of pending projects are clean energy and energy storage projects.[16] Delays in approving and connecting these projects are directly contributing to higher electricity bills for households and could also hinder states like New Jersey from meeting their clean energy and climate goals.[17]

        In contrast, New Jersey continues to rely heavily on fossil fuel energy sources such as natural gas, which has become increasingly expensive and unreliable.[18] Natural gas plants in New Jersey require out-of-state fuel, need regular maintenance to prevent dangerous gas leaks, and often fail during extreme hot and cold weather — two major periods when customers need electricity the most.[19] For example, during Winter Storm Elliot in 2022, natural gas plants' failures accounted for 70 percent of the forced outages in PJM territory, while wind energy production in MISO territory remained high.[20]

        New Jersey will need more reliable energy sources as the climate crisis continues to drive more extreme weather. Expanding clean energy, like solar and wind paired with battery storage, would provide a large supply of affordable electricity, reducing dependence on aging and unstable fossil fuel infrastructure and improving grid reliability.[21]

        How Can PJM’s Decisions Affect Environmental Justice Communities?

        PJM’s decisions have significant implications for environmental justice (EJ) communities, which are disproportionately burdened by pollution from fossil fuel plants. In fact, a recent study by Applied Economics Clinic found that over half of PJM’s fossil fuel power plants are within one mile of an EJ community.[22]

        These communities — often Black, Latinx, Indigenous, and low-income neighborhoods — have long faced the cumulative impacts of environmental harm, including higher exposure to air pollution, elevated rates of respiratory illness and cancer, and limited access to clean energy solutions. Nationally, Black and Latinx/Hispanic residents are exposed to 56 percent and 63 percent more air pollution, respectively, than they produce.[23]

        While New Jersey’s landmark Environmental Justice law gives the state authority to deny new permits in overburdened areas, PJM’s market structure continues to allow older, uneconomical plants to operate, prolonging pollution and public health risks.

        By accelerating the integration of clean energy sources like solar and wind, PJM can reduce reliance on these aging plants and begin to remedy long-standing environmental inequities.

        What Can be Done to Prevent Even Higher Bills and Improve the Grid?

        With energy bills set to rise by over $20 per month for the average household starting in June 2025, state lawmakers must take immediate and long-term policy actions to protect residents from future price spikes. State lawmakers should prioritize the following:

        Increase Transparency and Public Oversight of PJM:

        State leaders should require PJM to operate with greater transparency and prioritize consumer interests. Governor Josh Shapiro and the Commonwealth of Pennsylvania sued PJM to cap prices and won, saving customers in PJM regions up to $21 billion over the next few years.[24] In New Jersey, the Legislature held hearings to learn more about the cause of these rate hikes, and Governor Murphy called on the organization to take action to lower costs.[25] The New Jersey Division of Rate Counsel joined with Maryland and Delaware to call on FERC to require PJM to re-run the recent auction to reduce costs.[26] Additionally, as of early March 2025, six states plus New Jersey have introduced bills to increase PJM transparency.[27]

        Reduce Energy Demand

        • Invest in Energy Efficiency: New Jersey should expand programs that incentivize the use of energy-efficient appliances, building retrofits, and weatherization projects to lower overall electricity consumption. New Jersey’s offerings include the Comfort Partners program, which reduces eligible residents’ energy bills through better insulation at no cost, rebates for qualifying appliances, and incentives for commercial equipment upgrades.[28]
        • Manage Data Center Growth: PJM cites data center growth as the primary driver of the demand increase. As data centers drive new energy demand, states could explore policy models that require large energy users to directly offset their consumption with new clean energy generation. Models like New Jersey’s proposed "bring your own clean energy" approach, which would require data centers to build and use clean energy sources, or California’s proposed differentiated electricity rates for industrial users may offer paths forward that would ensure industrial users, not households, bear the cost of increased energy demand.[29]


        Increase and Accelerate Energy Supply by Expanding DERs:

        Expand Distributed Energy Resources (DERs) are small-scale projects that provide energy to customers “behind the meter,” or before they interact with the larger grid.[30] Encouraging investments in rooftop solar and battery storage systems can help expand local energy supply, improve reliability, and reduce overall costs without waiting for large grid-scale projects to be approved through PJM. States can remove barriers and create incentive programs to encourage customers to install solar and battery storage on their properties, helping to increase supply while reducing customers' energy bills.

        Strengthen Energy Affordability and Assistance Programs

        • Defend and Expand LIHEAP and State Energy Assistance: Building on existing programs like the Low-Income Home Energy Assistance Program (LIHEAP) can help cushion households from rising energy costs. LIHEAP provides federal funding to states to help low-income households with utility bills and energy-related repairs, and New Jersey's LIHEAP program can provide up to $1,278 to eligible residents.[31] But the federal government is also considering cutting LIHEAP program funding, leaving states to either step up to fill the shortfall or be forced to cut people from the program. States can also consider complementary programs that provide targeted assistance to low-income populations.
        • Grow Community Solar Programs: Expanding access to community solar programs enables households, especially renters and lower-income families, to benefit from clean energy savings without needing individual installations. New Jersey’s landmark Community Solar program provides a discount on electricity bills.[32] The program allows customers who can’t build their own solar projects to still reap the benefits of clean energy while saving money.
        • Create Consumer Energy Relief Funds: New Jersey can evaluate innovative funding approaches, such as using proceeds from climate programs or penalties from utilities that do not meet clean energy targets, to establish consumer assistance funds. For example, Delaware has proposed creating an energy fund to help consumers whose annual household income is less than 350% of the federal poverty level, or $112,525 for a family of four.[33] Similarly, Maryland has a proposal that would create an “energy hardship credit,” funded by payments from utility companies that don’t meet clean energy targets.[34] Finally, Washington proposed establishing a statewide low-income energy assistance program funded by proceeds from the state’s cap-and-invest auction revenues.[35]
        • Expand Utility Shutoff Protections: New Jersey protects customers from having their utilities shut off during the winter months under the Winter Termination Program.[36] However, that protection is only during the winter months and for people with medical conditions. Expanding shutoff prevention programs to include times of extreme heat will help residents as the climate crisis increases temperatures and threatens public health.[37]

        Conclusion

        PJM must do better — and it can.

        Adding more clean energy to the grid is one of the most effective ways to lower costs for ratepayers and improve grid reliability across the PJM region. However, achieving that goal will require greater transparency in PJM’s decision-making and meaningful reforms to its planning and interconnection processes so that new energy projects can come online faster.

        State lawmakers also have a critical role to play. By advancing policies that promote energy efficiency, strengthen consumer support programs, and manage demand from large energy users like data centers, New Jersey can help build an energy system that is more affordable, resilient, and equitable. With cleaner, more stable sources of power, the state can not only meet its climate goals but also protect residents from rising energy costs and ensure that no community is left behind.

        End Notes

        [1] PJM - At a Glance. PJM Interconnection. Apr. 8, 2025.

        [2] PJM - At a Glance. PJM Interconnection. Apr. 8, 2025.

        [3] PJM 101 Presentation. Consumers for a Better Grid. Jan. 22, 2025.

        [4] 2025 Long-Term Load Forecast Report Predicts Significant Increase in Electricity Demand. PJM Inside  Lines. Jan. 30, 2025.

        [5] Chavin, Sabine, et al.Tackling the PJM Cost Crisis. Evergreen Collaborative. Apr. 15, 2025. p.6.

        [6] Stanel, Jason M. New Jersey Senate Legislative Oversight Committee. Mar. 3, 2025. p.4.; Written Testimony Christine Guhl-Sadovy President, New Jersey Board of Public Utilities Senate Select Committee Assembly Telecommunications and Utilities Committee. Apr. 1, 2025; NJPP Analysis of PJM’s interconnection queue.

        [7] PJM Summer Outlook 2025: Adequate Resources Available for Summer Amid Growing Risk. PJM Inside Lines. May 9, 2025.

        [8]PJM Interconnection, L.L.C., 181 F.E.R.C. ¶ 61,162 at p. 15 (2022); Howland, E. “PJM fast-tracks 11.8 GW, mainly gas, to bolster power supplies.” Utility Dive. May 5, 2025.

        Silverman, Abraham, et al. Outlook for Pending Generation in the PJM Interconnection Queue. May 8, 2025.

        [9]Lang-Ree, C. and McIntire, N. What PJM Can Learn from MISO About Transmission Planning. NRDC. Jan. 9, 2024.

        [10] Transparency and Good Governance. Consumers for a Better Grid.

        [11] Chavin, Sabine, et al.Tackling the PJM Cost Crisis. Evergreen Collaborative. Apr. 15, 2025. p.1.

        [12] Chavin, Sabine, et al.Tackling the PJM Cost Crisis. Evergreen Collaborative. Apr. 15, 2025. p.5.

        [13] Allen, Lauren. Green energy is cheaper than fossil fuels, a new study finds. Jan. 20, 2023.

        [14] Benefits of Energy Storage. American Clean Power.

        [15] Pierpont, Brendan. Clean Energy Isn’t Driving Power Price Spikes. Energy Innovation Policy & Technology LLC. Jul. 2024. p.2.

        [16] Meet the Organization Raising Energy Bills Up to 30 Percent in 13 States. Evergreen Action. Jan. 23, 2025.

        [17] Ammann, Dana. Waiting Game: How the Interconnection Queue Threatens Renewable Development in PJM. NRDC. May 18, 2023.

        [18] New Jersey State Energy Profile. U.S. Energy Information Administration. Accessed Apr. 30, 2025.

        [19] Pennsylvania State Energy Profile. U.S. Energy Information Administration. Accessed Apr. 30, 2025.

        [20] Winter Storm Elliott Event Analysis and Recommendation Report. PJM Interconnection. Jul. 17, 2023. p. 2.

        Overview of Winter Storm Elliott December 23, Maximum Generation Event. MISO. Jan. 17, 2023. p. 11.

        [21] Chang, Rachel. Renewable Energy Is the Key to Building a More Resilient and Reliable Electricity Grid. Center for American Progress.

        [22] Castigliego, J.R., et al. PJM's Capacity Market: Clearing Prices, Power Plants,and Environmental Justice. Oct. 2021. p.i.

        [23] Tessum, C. et al. Inequity in consumption of goods and services adds to racial–ethnic disparities in air pollution exposure. PNAS. Mar. 11, 2019.

        [24] FERC Approves Governor Shapiro’s Settlement with PJM to Prevent Unnecessary Price Hikes and Save Consumers Over $21 Billion on Utility Bills. Commonwealth of Pennsylvania. Apr. 22, 2025

        [25] Public Hearing Before Senate Select and Assembly Telecommunications and Utilities Committees (March 28, 2025) available at https://www.njleg.state.nj.us/archived-media/2024/SSC-meeting-list/media-player?committee=SSC&agendaDate=2025-03-28-10:00:00&agendaType=J&av=A

        Letter from Governor Philip Murphy to Mark Takahashi, Chair of PJM Interconnection (January 17, 2025) available at https://www.pjm.com/-/media/DotCom/about-pjm/who-we-are/public-disclosures/2025/20250121-nj-gov-murphy-letter-re-capacity-market-price-cap.pdf

        [26] Howland, Ethan. FERC should order PJM to rerun last capacity auction: ratepayer advocates. Utility Dive. Apr. 14, 2025.

        [27] States Introduce Legislation to Increase Transparency in PJM Interconnection. National Caucus of Environmental Legislators. Mar. 10, 2025; N.J. A5463 (2025). https://www.njleg.state.nj.us/bill-search/2024/A5463

        [28] Find A Program. New Jersey’s Clean Energy Program.

        [29] N.J. S4143 (2025). https://pub.njleg.state.nj.us/Bills/2024/S4500/4143_I1.PDF

        C.A. SB57 (2025). https://leginfo.legislature.ca.gov/faces/billPdf.xhtml?bill_id=202520260SB57&version=20250SB5796AMD

        [30] Johnson, Tom. Thinking Small Could Alter Power Grid by Integrating Small-Scale Power Systems. NJ Spotlight News. Jul. 11, 2019.

        [31] LIHEAP Benefit Levels for Heating, Cooling, and Crisis: States and Territories. LIHEAP Clearinghouse. Access Apr. 30, 2025.

        [32] For Subscribers - Community Solar. New Jersey’s Clean Energy Program.

        [33] D.E. HB 50 (2025). https://www.legis.delaware.gov/BillDetail/142102.

        2025 Poverty Guidelines: 48 Contiguous States. U.S. Department of Health and Human Services. Accessed Apr. 30, 2025.

        [34] Condon, Christine. Lawmakers toss consumer electric bill refund into grab bag of energy bills. Baltimore Sun. Mar. 26, 2025.

        [35] W.A. HB 1903 (2025). https://app.leg.wa.gov/billsummary?BillNumber=1903&Initiative=False&Year=2025; Washington’s Cap-and-Invest Program. Department of Ecology, State of Washington.

        [36] Winter Termination Program. New Jersey Department of Community Affairs.

        [37] Hu, Akielly. Utilities are shutting off power to a growing number of households. Grist. Mar. 18, 2025.

        Immigrants are a Vital Part of New Jersey’s Future

        Posted on by NJPP Staff

        By

        Published on Nov 26, 2024 in Economic Justice, Immigrants' Rights

        Immigrant workers and business owners grow New Jersey’s economy

        2.2 million immigrants reside in New Jersey. Immigrants work in low-wage, middle-wage, and higher-wage jobs in sectors across our state’s economy.

        29% of New Jersey’s workers are immigrants, including:

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        22% of retail salespeople

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        30% of registered nurses

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        64% of software developers

        45% of Main Street business owners in New Jersey are immigrants, operating storefront shops that help keep downtown areas vibrant.

         

        Immigrant workers and business owners generate $194 billion of economic output in New Jersey. Immigrant contribution to GDP is about the same as immigrant share of the labor force.

        Immigration increases opportunity for people in New Jersey

        When immigrants move to New Jersey, the economy grows. That doesn’t mean fewer jobs, it means more jobs: there are more consumers, more workers, and more business owners. Study after study shows there is no fixed number of jobs in a state. Immigration creates opportunities that benefit U.S.-born workers too.

        As New Jerseyans age, we’ll need more workers

        As our population ages, new immigrants help keep our economy growing at a sustainable rate. Immigrants help meet growing needs for health care, home care, and supportive services that are key for older New Jerseyans to have a dignified retirement.

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        Some people try to scapegoat immigrants to keep us divided. We don’t have to fall for it.

        After decades of stagnating wages, today wage growth is starting to move in the right direction. We know how to create a good economy for workers. It requires uniting around policy choices like investments in infrastructure, manufacturing, and our care economy with strong labor standards. Regardless of race or country of birth, we all do better when we unite for policies that grow jobs and wages.

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        For sources and methodology, visit immresearch.org/publications/states 

        Download a Print-Ready Version
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        When you give to NJPP, you power the research, communications, and partnership building necessary to make policy work for people, so every New Jerseyan can achieve their goal for a healthy and vibrant life.

        What The Dobbs Decision Means for Abortion Rights in New Jersey and Beyond

        Posted on by Brittany Holom-Trundy

        On June 24, 2022 the U.S. Supreme Court overturned the constitutional right to abortion care, significantly scaling back access to reproductive health care across the country. This explainer breaks down the impact of that decision both nationally and here in New Jersey.[i]

         

        What does the Dobbs decision mean for abortion rights in the United States?

        The U.S. Supreme Court’s 6-3 decision in the case of Dobbs v. Jackson Women’s Health Organization overturned the constitutional right to abortion as recognized for nearly 50 years since the landmark cases of Roe v. Wade and Planned Parenthood v. Casey.[ii] With federal protection gone, the legality of abortion at all stages of pregnancy will now be decided by individual states, putting the futures and lives of millions of people and their families at risk.

        The right to an abortion is essential to the health, safety, and well-being of individuals who are or can become pregnant. The radical decision by the conservative court turns a blind eye to the individual needs of people who are pregnant and the many reasons they may seek an abortion.

        Who will be most impacted by this decision?

        The Dobbs decision will most impact those who live in states that ban abortion and do not have the financial means or time to travel to states where abortion care remains legal. Those who seek abortion care disproportionately earn low wages and, due to the nation’s legacy of slavery and exclusionary policies, that means Black and brown residents face the greatest barriers to accessing reproductive health care. When those with low incomes receive the care they need, their future socioeconomic and health conditions improve.[iii] Yet, when they are denied care, the harm to their overall well-being and that of their children can last for decades.

        What does this decision mean for New Jersey’s abortion laws?


        Do New Jersey's laws go far enough to guarantee access to abortion care?

        The short answer: No, not everyone can access abortion care in New Jersey because rights alone do not equal access to services. Barriers like cost or a lack of nearby providers can delay care and, in some cases, push it completely out of reach.[xi] Here is how these barriers play out in New Jersey.

        Insurance Coverage and Affordability

        Cost remains one of the biggest barriers for people seeking health care in New Jersey. Nearly 700,000 New Jersey residents do not have insurance coverage and must rely on non-profit funding sources or state-run programs to cover the cost of any care they need.[xii] This includes over 480,000 people of reproductive age (19-54 years old).[xiii] Nearly 100,000 of New Jersey’s uninsured residents identify as Black and over 325,000 identify as Hispanic/Latinx.[xiv] This disparity in insurance coverage means health care cost barriers disproportionately harm Black and Hispanic/Latinx communities and worsen already inequitable maternal health outcomes.[xv]

        Even those who have insurance coverage may not be able to afford the procedure due to high out-of-pocket costs, such as copays. Health insurance plans can include high deductibles — the amount a person must pay out of pocket before services are covered — and high copays (flat rates for covered services) or coinsurance (a set percentage that a person pays for a covered service). Plans can also differ by employer or provider and can change year to year, creating confusion amongst residents about what their plan may cover.

        Finally, the cost of an abortion depends on the pregnancy.[xvi] An abortion in the first trimester may cost a few hundred dollars or a few thousand dollars if the patient requires a hospital procedure due to pre-existing conditions. An abortion in the second trimester costs significantly more, as some procedures can cost more than $5,000.[xvii] This means that if someone is unable to access care early in their pregnancy due to cost barriers, geographic and time constraints, or because they didn’t know they were pregnant, they may face a higher bill than someone who learned about the pregnancy early and secured an appointment without delay.

        Geographic Proximity

        The location of available abortion providers can also impede access to care. Roughly one third of New Jersey counties — home to more than a quarter of all New Jersey women — do not have an abortion provider, meaning that more than one in four women do not have access to an abortion provider close to home.[xviii] And this is likely an undercount since available data does not represent an accurate count of people who can become pregnant, including transgender and nonbinary individuals.

        At a time when the availability of maternal services in counties is in danger — exemplified by the recent closing of Cape May County’s only maternity ward — the limited availability of abortion providers puts many New Jersey residents and their families at an unfair disadvantage with lifelong consequences.[xix] Like other types of health care, and particularly care that can be urgent, the lack of nearby providers remains a key barrier to timely, quality care. 

        Immigration Status

        Abortion access, like other aspects of health care, is severely limited by restrictions on health insurance coverage due to immigration status. Rules that restrict which immigrants can access health insurance plans through health care marketplaces like GetCoveredNJ and state- and federally-run programs like Medicaid mean that many immigrant families do not qualify to enroll in coverage and struggle to find affordable insurance through private plans. Legal Permanent Residents are barred from enrolling in Medicaid for five years.[xx] Undocumented immigrants are barred from all programs except where the state has set up its own funding.[xxi] This lack of options forces individuals and families to pay for care with their own savings—which are often limited due to low-paying jobs. Without an expansion of affordable options, immigrant families will continue to be left behind.

        How can state lawmakers improve abortion access in New Jersey?

        Improving abortion access requires policies to ensure that everyone, regardless of immigration status, insurance status, gender, income, age, or location has access to reproductive health care when needed. Here are three top policy changes that would improve abortion access in New Jersey right now, many of which are included in a bill (S2918/A4350) introduced in June 2022 to improve equitable access to abortion care.[xxii]

        Guarantee insurance coverage of abortion with no copays

        New Jersey's Medicaid program, NJ FamilyCare, covers abortion without any out-of-pocket costs. But for private insurance plans, coverage of abortion care is not mandated.[xxiii] This means that access to this essential care not only relies on having insurance but on whether an employer or program has chosen to include abortion care in their health plan.

        New Jersey can step up its role as a national leader in reproductive rights by mandating coverage in all state-regulated private plans and prohibiting cost-sharing for abortions. This is not a new concept: Seven states mandate coverage of abortion in all private insurance plans, including plans on their state health insurance marketplaces.[xxiv] As of January 1, 2023, all seven states outside of New Jersey that mandate abortion coverage (California, Illinois, Maine, Maryland, New York, Oregon, and Washington) will also all prohibit cost-sharing (deductibles, copays, or coinsurance), to make sure that, even when covered, the service remains affordable to the patient.[xxv] Following these states’ examples will help to ensure equitable access to coverage.

        Secure funding for those who are uninsured or underinsured

        The ability to access affordable reproductive care, including abortion, should not rely on a health care system that allows gaps persistent in coverage. Thousands of New Jerseyans, including undocumented immigrants and part-time workers who do not qualify for benefits, struggle to find quality, affordable coverage. And we know that without coverage, paying out of pocket is often untenable, putting health care, including time-sensitive abortion care, out of reach.

        Mutual aid groups and non-profit entities, like the New Jersey Abortion Access Fund, can help, but these resouces can’t be expected to fill the access gaps alone. The state must take on a more defined role. Financial assistance for prenatal care and contraception is currently available for those who are uninsured, including undocumented immigrants, through the New Jersey Supplemental Prenatal and Contraceptive Program (NJSPCP).[xxvi] However, this program does not cover abortion care, nor is it codified in state law, leaving it vulnerable to cuts under a different administration in the future.

        New Jesey can do three things to guarantee greater equity in abortion access: Expand services of NJSPCP to include abortion care, expand eligibility of NJSPCP to allow underinsured residents to access the program, and enshrine into statute the expanded program to codify these protections.

        Expand services across the state so geographic proximity does not limit access to services

        The state can do more to help support the availability of reproductive health services and providers across the state.[xxvii] The New Jersey Board of Medical Examiners rule change expanding which medical professionals can now perform abortion services will certainly help to grow the provider pool. However, the policy change must be codified into state law to protect this new class of providers from a future administration that could potentially be hostile to reproductive rights. The state should also commit to sustained support of family planning services (such as birth control, cancer screenings, and testing and treatment for sexually transmitted infections and HIV) and grants to help close remaining access gaps in counties without a single abortion care provider.

        End Notes

        [i] Many thanks to the teams at ACLU of New Jersey, Cherry Hill Women’s Center, and Planned Parenthood of Northern, Central and Southern New Jersey, Inc. for their helpful feedback in the preparation of this explainer!

        [ii] Supreme Court of the United States, Jackson Women’s Health Organization, 2022, Docket No. 19-1392. Documents available at: https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/19-1392.html

        [iii] Guttmacher Institute, Induced Abortion in the United States, 2019. https://www.guttmacher.org/fact-sheet/induced-abortion-united-states; Advancing New Standards in Reproductive Health (ANSIRH) at University of California - San Francisco, The Turnaway Study, 2020. https://www.ansirh.org/research/ongoing/turnaway-study

        [iv] New Jersey Supreme Court, Right to Choose v. Byrne, 91 N.J. 287, 1982, Justia. https://law.justia.com/cases/new-jersey/supreme-court/1982/91-n-j-287-0.html

        [v] UCLA Obstetrics and Gynecology, Medical versus Surgical Abortion, 2022. https://www.uclahealth.org/obgyn/medical-versus-surgical-abortion; New Jersey Monitor, Murphy signs law solidifying abortion rights in New Jersey, 2022. https://newjerseymonitor.com/2022/01/13/murphy-signs-law-solidifying-abortion-rights-in-new-jersey/;

        [vi] Office of Governor Phil Murphy, New Jersey Expands Access to Reproductive Health Care, Adopts New Rules from Unanimous Vote by State Board of Medical Examiners, 2021. https://www.nj.gov/governor/news/news/562021/20211206a.shtml

        [vii] New Jersey Monitor, State board expands access to abortion in N.J. through regulation changes, 2021. https://newjerseymonitor.com/briefs/state-board-expands-access-to-abortion-in-n-j-through-regulation-changes/

        [viii] Office of Governor Phil Murphy, Governor Murphy Signs Legislation to Protect Reproductive Health Care Providers and Out-of-State Residents Seeking Reproductive Services in New Jersey, 2022. https://www.nj.gov/governor/news/news/562022/20220701a.shtml

        [ix] New Jersey Office of the Attorney General, Acting AG Platkin Establishes Reproductive Rights Strike Force” to Protect Access to Abortion Care for New Jerseyans and Residents of Other States, 2022. https://www.njoag.gov/acting-ag-platkin-establishes-reproductive-rights-strike-force-to-protect-access-to-abortion-care-for-new-jerseyans-and-residents-of-other-states/

        [x] New Jersey Policy Perspective, Affordable for Some: What’s Included and Missing in New Jersey’s FY 2023 Budget, 2022. https://www.njpp.org/publications/blog-category/affordable-for-some-whats-included-and-missing-in-new-jerseys-fy-2023-budget/

        [xi] Guttmacher Institute, Induced Abortion in the United States, 2019. https://www.guttmacher.org/fact-sheet/induced-abortion-united-states; Kaiser Family Foundation, Abortions Later in Pregnancy, 2019. https://www.kff.org/womens-health-policy/fact-sheet/abortions-later-in-pregnancy/

        [xii] NJPP Analysis of American Community Survey Data, 2020 5-Year Estimates. https://data.census.gov/cedsci/table?q=health%20insurance&g=0400000US34&tid=ACSST5Y2020.S2701

        [xiii] Generally, medical definitions of reproductive age range from 12 or 15 years old to 49 or 51 years old for women. Because the Census does not provide further breakdown, the above estimate provided the closest groupings available.

        [xiv] NJPP Analysis of American Community Survey Data, 2020 5-Year Estimates. https://data.census.gov/cedsci/table?q=health%20insurance&g=0400000US34&tid=ACSST5Y2020.S2701

        [xv] NJ Spotlight News, Access to abortion is an uphill battle for some in New Jersey, 2022. https://www.njspotlightnews.org/2022/07/nj-abortion-access-obstacles-state-law-supreme-court-roe-overturned/; NJ Spotlight News, Advocates fear Roe v. Wade ruling will impact Black women most, 2022. https://www.njspotlightnews.org/2022/06/us-supreme-court-roe-v-wade-nj-fear-racial-inequities-black-women-people-of-color/

        [xvi] Health Affairs, Trends In Self-Pay Charges And Insurance Acceptance For Abortion In The United States, 2017–20, 2022. https://www.healthaffairs.org/doi/10.1377/hlthaff.2021.01528

        [xvii] Range of costs determined through discussions with abortion providers in New Jersey.

        [xviii] Guttmacher Institute, Abortion Incidence and Service Availability in the United States, 2017, 2019. https://www.guttmacher.org/report/abortion-incidence-service-availability-us-2017

        [xix] The Press of Atlantic City, Come September, maternity services will no longer be offered at Cape Regional Medical Center, 2022. https://pressofatlanticcity.com/news/local/come-september-maternity-services-will-no-longer-be-offered-at-cape-regional-medical-center/article_9abcc3f8-09f8-11ed-8493-57a5151d95a7.html; Additionally, across the country, there have been concerns about the impact of the growth and consolidation of Catholic health care systems which may limit access to care: https://apnews.com/article/abortion-health-religion-new-york-oregon-8994d9b5fd0040d40d19fd1e44c313d8

        [xx] New Jersey Department of Human Services, NJ FamilyCare - Immigrant Information, 2022. http://www.njfamilycare.org/imm_info.aspx

        [xxi] One example of a state-funded program in New Jersey is the Cover All Kids program, which will open up NJ FamilyCare to all kids under the age of 19, regardless of immigration status, starting in January 2023.

        [xxii] New Jersey Legislature, S2918/A4350: Strengthens access to reproductive health care; appropriates $20 million, 2022. https://www.njleg.state.nj.us/bill-search/2022/S2918; Thrive New Jersey, Abortion Access, 2022.  https://www.thrive-nj.com/rfa

        [xxiii] Rutgers Today, What Does Overturning Roe v. Wade Mean for New Jersey?, 2022. https://www.rutgers.edu/news/how-far-does-new-freedom-reproductive-choice-act-go-keep-abortion-legal-new-jersey

        [xxiv] Guttmacher Institute, Regulating Insurance Coverage of Abortion, 2022. https://www.guttmacher.org/state-policy/explore/regulating-insurance-coverage-abortion

        [xxv] Guttmacher Institute, Regulating Insurance Coverage of Abortion, 2022. https://www.guttmacher.org/state-policy/explore/regulating-insurance-coverage-abortion; Office of Governor Gavin Newsom, Governor Newsom Signs Legislation to Eliminate Out-of-Pocket Costs for Abortion Services, 2022. https://www.gov.ca.gov/2022/03/22/governor-newsom-signs-legislation-to-eliminate-out-of-pocket-costs-for-abortion-services/; New York, Protecting & Strengthening Abortion Rights, 2022. https://www.ny.gov/abortion-new-york-state-know-your-rights/protecting-strengthening-abortion-rights

        [xxvi] New Jersey Abortion Access Fund, About Us, 2022. http://njaaf.weebly.com/; New Jersey Department of Human Services - NJ FamilyCare, New Jersey Supplemental Prenatal and Contraceptive Program (NJSPCP), 2022. http://www.njfamilycare.org/njspcp.aspx

        [xxvii] Recent reporting has discussed the need for OB/GYNs in New Jersey, particularly in certain areas. See: NJ.com, A Shortage of OB-GYNs Looms. Why are They Fleeing N.J.?, 2022. https://www.nj.com/healthfit/2022/11/why-are-ob-gyns-fleeing-nj-a-shortage-looms-on-the-near-horizon.html. It’s important to note that, as a state, New Jersey has a higher number of OB/GYNs than many other states (see Bureau of Labor Statistics, Occupational Employment and Wages, 29-1218 Obstetricians and Gynecologists, 2021. https://www.bls.gov/oes/current/oes291218.htm). Yet, finding ways to improve access to care should always be prioritized. OB/GYNs are one type of reproductive health care provider who can play a key role in access to abortion. As noted above, the Board of Medical Examiners rule change expands the types of providers able to provide their full scope of care, including abortion. This rule change helps to address one path to access. Ensuring all types of providers and their services are available across the state will be important for building more equitable access to care.

        ANCHORs Aweigh: Explaining Governor Murphy’s New Property Tax Relief Program

        Posted on by Peter Chen

        Everyone in New Jersey deserves a fair property tax system, where lower-income and lower-wealth families get money back for the high cost of housing, while wealthier families pay what they owe to support schools and high-quality public services that strengthen our communities. So when property tax relief proposals come along, we must ask: Who does this program make New Jersey affordable for, and by how much? Does it advance equity and close the gap between wealthy and the rest, or does it widen that gap?

        As the centerpiece of his latest budget proposal, Governor Murphy announced a new property tax credit named “ANCHOR” (Affordable New Jersey Communities for Homeowners and Renters). This explainer outlines the size and scope of the proposal, how it stacks up against existing property tax relief benefits, and highlights who benefits most from it — and by how much.

        What is ANCHOR?

        Despite the new name, ANCHOR is really an expansion of the Homestead Benefit program, which provides property tax relief to homeowners who earn up to $75,000 per year, as well as seniors and those who meet the state’s definition of “disabled” earning up to $150,000 per year.

        The proposed ANCHOR program would expand the Homestead Benefit in three main ways:

        • Increasing the credit amount for current recipients
        • Extending the benefit to homeowners with higher incomes ($75,000-$250,000 annual income)
        • Reopening the benefit to renters on a limited basis.

         

        The credit would cost an additional $550 million in Fiscal Year 2023 — for a total of $893 million in property tax credits — and would increase in subsequent years.[i] The average yearly credit amount for homeowners would be $682 and the renter credit would be fixed at either $150 or $250, depending on other factors.

        Who benefits from ANCHOR?

        It’s important to contrast the proposed ANCHOR program with the Homestead Benefit that it would replace.

        Homeowners: As noted above, the ANCHOR proposal would extend property tax relief to households earning between $75,000 and $250,000, well into the top 15 percent of earners in the state.[ii] For reference, the median household income in New Jersey was roughly $83,000 in 2019.[iii]

        The following graphs show how much homeowners would receive in the new ANCHOR program, as a percentage of their total property tax bill, compared to the current Homestead Benefit program.[iv]

        Although households in all eligible income ranges receive increases, the increases are largest for the higher-income homeowners not previously eligible for the credit. More than $150 million of the credit would go to households earning $150,000 annually or more, including households well within the top 20 percent of New Jersey earners.[v] Of the $550 million in additional funding for the program, more than a quarter would go to well-off households.

        A property tax credit that advances equity should not include benefits to the wealthiest households simply because they happen to own their homes.

        Renters: The ANCHOR proposal notably includes renters in property tax relief. Renters, on average, have lower incomes than homeowners in New Jersey – where median homeowner income ($112,000) is more than double median renter income ($52,000).[vi] Although renters do not pay property taxes directly, a substantial portion of their rent goes toward their landlords’ property tax payments.[vii]

        The credit amounts proposed in ANCHOR are substantially smaller than for homeowners. Benefits are fixed at $150 for most renters earning under $100,000, and $250 for seniors or disabled renters who earn less than $70,000.[viii] In total, payments to renters make up only about $100 million of the nearly $900 million cost of the ANCHOR program in the coming fiscal year – less than the amount going to households earning $150,000 or more. To advance a more equitable tax code, the dollar amount going to renters should be increased to parity with homeowner benefits.

        To better enable the program to alleviate wealth inequality and help those who need it most, the ANCHOR program should direct fewer dollars to high-income homeowners, and more to renters.

        How does a property tax credit affect wealth inequality?

        As lawmakers on both sides of the aisle talk about the need to make the state more affordable —  in this case, through property tax rebates  — they gloss over the fact that property ownership is heavily tied with wealth. The median homeowner nationally has $255,000 in net worth, compared with a mere $6,300 for the median renter.[ix] And this wealth includes non-home wealth as well, as homeowners possess on average more financial assets like bonds, stocks, and retirement accounts.[x]

        Why does wealth matter? Wealth provides families and communities with greater economic security and opportunity, enabling them to sustain financial shocks, afford educational opportunities for their children, invest in business opportunities, and engage in greater political advocacy.

        And because Black and Hispanic/Latinx New Jersey residents make up a much smaller proportion of homeowners than they do of the population as a whole, the gap between wealth in homeowners and renters also drives racial wealth inequality. As one recent report from the New Jersey Institute for Social Justice points out, the median white household in New Jersey has $132,000 in home equity, while the median Black and median Hispanic/Latinx household have $0.[xi]

        White householders make up 74 percent of all owner-occupied units in the state, but only 39 percent of renter-occupied units. Benefits that go primarily to homeowners run the risk of disproportionately benefiting wealthier, white households.

        Further, like the current Homestead credit, the ANCHOR credit is based on a percentage of a homeowner’s tax bill, which will likely benefit those with more expensive homes. For example, 10 percent of a $1 million home’s tax bill is much higher than 10 percent of a $300,000 home’s tax bill in the same town.[xii]

        Any property tax benefit runs the risk of primarily benefiting homeowners who already have substantial wealth, rather than low- and moderate-income residents who need the most help with housing costs.

        How will this work in practice?

        These concepts can be difficult to convey, especially the interplay between higher incomes and higher property values and tax bills. Here are some hypothetical examples of the ANCHOR credit as proposed for FY 2023 to better illustrate who will benefit — and by how much. The dollar amounts are in the ballpark of the median property tax bills and household incomes for the towns indicated.

        Although all income groups in the eligibility range benefit, the largest gains would go to those with high property tax bills earning between $75,000 and $250,000. But this range is quite wide, and individual results may vary on factors including a property’s assessed value, local property tax rates, and special levies, to name a few.

        There’s also a large difference in financial footing between a household of four with an income of $200,000 and a household of one with an income of $100,000, including the home they might own or rent and the town where they live.

        Even with the wide range of possible credit amounts, a credit that advances affordability and economic equity should not provide households with income above $150,000 with average benefit amounts three times greater than the maximum renter benefit amount.

        So, as lawmakers propose ways to make New Jersey more affordable through new property tax relief, the question remains: Affordable for who?

        End notes

        [i] State of New Jersey, Budget in Brief FY 2023, pg. 11-12.  https://www.nj.gov/treasury/omb/publications/23bib/BIB.pdf

        [ii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars). https://data.census.gov/cedsci/table?q=s1901&g=0400000US34&tid=ACSST5Y2019.S1901

        [iii] U.S. Census Bureau, American Community Survey 2019 5-Year Estimates, Table S1901: Income in the Past 12 Months (in 2019 Inflation-Adjusted Dollars). https://data.census.gov/cedsci/table?q=s1901&g=0400000US34&tid=ACSST5Y2019.S1901

        [iv] Derek Hall, Here’s how much you would get in N.J. property tax rebates under new Murphy plan, NJ.com (March 8, 2022). https://www.nj.com/politics/2022/03/heres-how-much-you-would-get-in-nj-property-tax-rebates-under-new-murphy-plan.html

        [v] The top quintile in New Jersey income starts around $166,000. See U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table B19080: Household Income Quintile Upper Limits. https://data.census.gov/cedsci/table?q=income%20quintile&g=0400000US34&tid=ACSDT5Y2019.B19080

        [vi] U.S. Census Bureau, American Community Survey 2019 5-year estimates, Table S2503: Financial Characteristics. https://data.census.gov/cedsci/table?q=income%20tenure&g=0400000US34&tid=ACSST1Y2019.S2503

        [vii] Under New Jersey’s current property tax deduction system, 18% of rent paid during the year is considered property taxes paid. https://www.state.nj.us/treasury/taxation/njit35.shtml

        [viii] Budget in Brief FY2023 at pg. 12.

        [ix] Federal Reserve, Survey of Consumer Finances, year 2019 data. https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median

        [x] Federal Reserve, Survey of Consumer Finances, year 2019 data. https://www.federalreserve.gov/econres/scf/dataviz/scf/table/#series:Net_Worth;demographic:housecl;population:all;units:median

        [xi] New Jersey Institute for Social Justice, Making the Two New Jerseys One, February 15, 2022, https://assets.nationbuilder.com/njisj/pages/689/attachments/original/1645217098/Making_the_Two_New_Jerseys_One_2.15.22-compressed.pdf?1645217098

        [xii] The Homestead Benefit does have a cap of $10,000 on claimable property taxes paid. N.J. Division of Taxation, How Homestead Benefits Are Calculated, last updated July 16, 2021, https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml.

        [xiii] The Homestead Benefit currently caps eligible property tax bills at $10,000. This table assumes the cap will remain in the ANCHOR program.

        https://www.state.nj.us/treasury/taxation/homestead/hrhomeowneramounts.shtml.

        For the People, By the People: New Jersey State Budget 101

        Posted on by Marleina Ubel

        Every year, New Jersey legislators make choices that shape our communities through the state budget. The budget reveals short-term and long-term priorities of the state and is, at its very core, a moral document. It is how we pool all of our resources together, mainly through taxes, to fund vital programs and essential services that benefit all of us, including public schools and colleges, highways, mass transit, public-health infrastructure, and the social safety net. Communities, programs, services, and lives depend on the state budget.

        Yet, despite the importance of the budget, many New Jersey residents do not understand the budget document or process, as they are complicated and rarely transparent. There is also a significant lack of information about how changes in the budget help or harm specific programs and services that are important to the overall economic and social health of the state, or how those programs and services are funded ー or, in many cases, underfunded. This explainer demystifies the state budget, including where the money comes from and goes, how the budget is created, and how residents can be a part of the process.

        The Budget: What is it?

        The state budget is a formal declaration of where public funds will be allocated. It is also a piece of legislation known as the Appropriations Act, which is passed by the Legislature and signed into law by the Governor every year. As such, it determines whether taxes increase or decrease, which residents and businesses will shoulder those changes, and how the state will gain and distribute additional revenue. This is important because policies that govern our shared investments should ensure that all people, regardless of their race, gender, income, or address, get a fair shot at economic opportunity and financial stability.

        The budget is drafted with input from the Governor, state departments and agencies, the Legislature, residents, and after reading this explainer, you!

        Where Does the Money Go?

        The New Jersey budget funds programs and services that directly benefit the lives of all 8.9 million residents across the state. Through the budget, the state provides aid to 1.37 million students in 584 operating school districts[i] and supports over 300,000 college students attending New Jersey’s 30 public universities and colleges.[ii] It funds salaries and pensions for almost 70,000 state employees[iii] who keep the state government running and provides aid to local municipalities (read: cities, boroughs, townships) so they can meet the unique needs of their communities. The budget also funds critical safety net programs for when families fall on tough times, and many other things we tend to take for granted, such as clean air and water, reliable transit infrastructure, enforcement of labor laws, and much more. It is difficult to find anything that is not touched by the state government.

        The largest areas of the budget are education and health and human services, which includes needs-based programs for families with limited income like Social Security Insurance (SSI) and Temporary Assistance for Needy Families (TANF).[iv] The chart below outlines some of the major expenditures in the budget for Fiscal Year 2021.[v]

        Given that Education and Health and Human Services have long been the state’s largest investments, it’s worth exploring some key program areas and how they are impacted by the budget.

        Education

        Education accounts for the largest percentage of state appropriations, or money dedicated for a certain purpose ー and for good reason. High-quality public schools are a building block of New Jersey communities, as education spending is fundamental to advancing equity, building a strong workforce, and promoting social mobility. There are almost 1.4 million children enrolled in New Jersey public schools, and the quality of their education determines the future prosperity of the state.[vi] State spending on education goes toward funding things like textbooks and other supplies for students, fee waivers for activities and testing for low-income students, special education accommodations, and salaries and pensions for teachers, counselors, nurses, and other staff. It also includes costs associated with keeping public schools safe places to learn that are free of asbestos, lead, and other contaminants.

        While New Jersey is known for having some of the best schools in the country, the state has routinely underfunded its school aid formula — sometimes by as much as $1 billion each year.[vii] There have been some attempts to close this funding gap, but they have fallen short and the state is backsliding.[viii] Further, salaries for many teachers and support staff are still alarmingly low,[ix] many schools still do not have what they need to be safe and effective institutions of learning, and guidance counselors and social workers are either overworked or have been let go to cut costs.[x] Until the state fully funds public education, some school districts will remain under-resourced and ill-equipped to provide students with a quality education. This inequality often falls along lines of race and class, underscoring the need for continued investment in public schools so all our children receive the education they deserve.

        Health and Human Services

        The Department of Human Services (DHS) is home to several critical safety net programs that help to keep New Jersey residents healthy. They include NJ FamilyCare, the state’s public health insurance program, which provides coverage for children, low-income adults, and the elderly; WorkFirst NJ, the state’s welfare program, which provides cash assistance to families having trouble affording basic needs; and the Supplemental Nutrition Assistance Program (SNAP), the state’s food assistance program, which helps low-income people put food on the table. DHS also provides support for residents with substance abuse issues, families in need of affordable child care, and housing assistance for people with developmental disabilities. Moreover, DHS provides critical support for the elderly with subsidized drugs for seniors, funds for long-term care facilities, and on-site investigations in cases of abuse or neglect.

        The Department of Health makes up the state’s public health infrastructure and is the first line of defense in responding to public health crises such as the COVID-19 pandemic. They respond directly by disseminating information and helping connect individuals with critical resources, and they respond indirectly by funding local health initiatives in communities. The Department of Health also keeps some of the most vulnerable people in our state healthy through prevention education and the establishment of Harm Reduction Centers.

        With nearly four in ten New Jersey residents struggling to make ends meet,[xi] a growing number of people experiencing substance use and mental health disorders, and an aging population that requires care and support, continued investments in a health infrastructure and robust social safety net are needed to maintain a strong quality of life for millions of New Jersey residents.

        Where Does the Money Come From?

        New Jersey, like all states, funds the state government with revenue from taxes, fines and fees, and transfers from the federal government.

        A majority of the state’s revenue comes from the income tax, sales tax, and the corporate business tax (CBT), which account for approximately 75 percent of the state budget. Other major taxes include cigarette, alcohol, and motor fuel taxes. The state also generates revenue through various departmental fees, including marriage licenses, hunting and fishing licenses, and parking tickets.

        Tax contributions are placed into multiple funds that New Jersey draws on to finance the necessities outlined above. Of these, the General Fund and the Property Tax Relief Fund are the largest and most important.

        The General Fund is where all state revenues not restricted by statute, or not dedicated to specific areas of the budget, are deposited and from which most appropriations are made. The revenues in the Property Tax Relief Fund, however, are dedicated to reducing or offsetting property taxes. The chart below illustrates the actual revenue that was generated and deposited into the General Fund in 2019.[xii]

        The Property Tax Relief Fund is made up of revenue generated from the New Jersey Gross Income Tax and one half-cent of the Sales and Use Tax. This fund provides direct property tax relief through programs like the Senior Freeze and Homestead Rebate, as well as indirect relief by funding local school districts and essential services provided by local governments — investments that would otherwise be funded by property taxes.

        Is There Enough Revenue to Meet New Jersey’s Needs?

        Taken together, New Jersey generates approximately $40 billion in revenue every year. While that may be a large amount of money, the state budget has struggled to keep up with mere inflation over the last decade — due in part to some major tax cuts that benefitted wealthy individuals and big corporations. Because states are required to pass balanced budgets, meaning annual spending cannot exceed annual revenue collections, the state must bring in additional revenue to pay for its growing obligations, including programs that were chronically underfunded over the last thirty years.[xiii] Even without new programs, the state must ramp up spending over the next few years to fully fund public schools (in adherence to the School Funding Reform Act) and make full annual pension contributions, which were routinely skipped under previous administrations. The state must also raise enough revenue to build up a healthy surplus and Rainy Day Fund to protect against future economic downturns. New Jersey currently has one of the lowest Rainy Day Funds in the nation as the reserves were never replenished after the Great Recession.

        New Jersey needs new, fairer ways to raise revenue to both meet its existing obligations and make new investments that benefit our communities. By making the tax code fairer, New Jersey can create a healthy and vibrant place to live for everyone that calls New Jersey home.

        How Does the Budget Become Law?

        In New Jersey, the fiscal year runs from July 1st to June 30th of every year, but the budget process extends across many months and includes lots of different stakeholders — from the Legislature, to the Governor, to the leaders of state departments and agencies, to members of the public like you! Given the size and significance of the budget, it should be no surprise that the process is long and sometimes complicated. Let’s break it down.

        What is the Budget Timeline?

        The budget process is a nearly year-round affair.

        September – January: It starts with the Office of Management and Budget (OMB), which manages the state’s financial assets, assessing the economy and making predictions about how much revenue is likely to be generated in the following year. With input from state agencies, they also make predictions about how much revenue will be needed to fund existing programs and departments.

        January – February: With the projections from the OMB and requests for funding made by various departments, the governor prepares and presents a budget proposal to the Legislature and the public through the annual budget address, which takes place on or before the fourth Tuesday in February.[xiv] The governor’s address is what’s colloquially known as the start of “budget season” in Trenton.

        February – May: Like OMB, the Office of Legislative Services (OLS) produces its own revenue projections, which the Legislature uses to craft their own budget or, as is often the case, make adjustments to the governor’s budget proposal. All the while, they hold extensive committee hearings for state agencies and the general public about their budget priorities. This part of the process begins after the governor’s budget address and generally runs through May.

        June: The Legislature drafts and releases its own budget proposal, known as the Appropriations Act, which must be approved with a majority vote by both the Assembly and the Senate.[xv] Finally, the bill goes before the governor to be signed before the June 30th deadline.[xvi]

        What is the Role of the Governor?

        The governor of New Jersey enjoys an incredible amount of power and leverage in the budget process. Through the budget address, the governor sets the tone and priorities for the budget process. The governor’s initial budget proposal is also often used as the foundation for the Legislature’s budget bill. The governor also determines how much revenue is ultimately needed to balance the budget — which has big implications on tax policy — as the executive branch has the sole power to certify revenue estimates. And because the governor appoints the state Treasurer (as well as every other department head) the governor can influence both revenue projections and how much departments and agencies request in funding.

        Once the Legislature passes their own budget proposal, the governor has four options:

        1. Sign the proposal, as is, into law.
        2. Reject the entire budget proposal outright and send it back to the Legislature.[xvii]
        3. “Line-item veto” certain spending priorities before signing the budget into law.
        4. If revenue projections from the OMB and the OLS are far enough apart, the governor may accept the budget as is and put some funding into a lockbox to be released later in the year if enough revenue is collected to cover those investments.

        After the budget is signed into law, the governor also has the power to change the budget through Executive Orders. Nothing can be added to the budget, however, without approval from the Legislature.

        What is the Role of the Legislature?

        Once the governor releases a full budget proposal, the Legislature gets to work crafting their own bill with their own spending and revenue priorities. While the Legislature can choose to accept the governor’s budget in its entirety, this is unlikely. What often happens is that the Legislature writes their own budget and then negotiates a final deal with the governor.

        Each house, the Senate and General Assembly, has their own budget committee that holds budget hearings throughout the Spring. Each committee has their own chairperson who wields power over their respective house’s budget process, but the Senate President and the Speaker of the Assembly ultimately act as the final gatekeepers for what is included in or excluded from the budget. The committees are responsible for hearing testimony from the public and all the state department heads. All of these hearings are also open to the public to attend.

        After the budget becomes law, the Legislature has the power to change it by drafting and approving new bills to allocate funding for a particular program or service. This bill would have to follow the same process as the Appropriations Act and be signed into law by the governor.

        If the governor vetoes a bill or performs a line-item veto, the Legislature has the power to override the veto with a two-thirds majority of all members of both the General Assembly and Senate.[xviii]

        How Can Members of the Public Participate in the Budget Process?

        Active participation in the budget process can really make a difference. Advocates and members of the public alike can and should share their priorities with the governor’s office and members of the Legislature both before and during the formal budget process.

        While the governor is preparing the budget proposal, residents can contact the governor’s office to voice support for specific programs or initiatives that rely on state funding. You can also contact the governor’s office later in the budget process to voice your opinion in support of or opposition to potential programs at risk of being cut or line-item vetoed.

        During the Legislature’s budget hearings, one of the best ways for residents to ensure their voices are heard is to testify at one of three public hearings offered by the Senate and Assembly budget committees. These hearings are often held across the state, with one meeting in each region of New Jersey: North, Central, and South. Anyone who signs up to testify can give comments. Legislators are meant to represent the people and be responsive to community needs. Believe it or not, most legislators like to hear from their constituents. Giving the issues you care about a face by providing a personal account can make an impact.

        Writing, calling, and emailing legislators, including your own representative as well as those serving on the budget committees, with concerns or questions regarding a particular program or initiative is another way to ensure your voice is heard.

        During the month of June, legislators negotiate the final budget within their caucuses and with the governor’s office. This is the time when advocates are the most active, lobbying and otherwise engaging legislators and the general public. This is a great opportunity to tap into your local advocacy organizations and meet with legislators about items in the budget that are of concern to you!

        Glossary of Terms

        Term

        Definition
        Appropriation A sum of money that is authorized by the Legislature for a specific expenditure for a single fiscal year.
        Appropriations Act The bill passed by the New Jersey Legislature that ultimately becomes the state’s annual budget. The budget becomes law when the Appropriations Act is signed by the Governor.
        Corporate Business Tax (CBT) A tax on the net income or capital of a corporation. There are different rates for C and S Corporations.
        Earmark Designated funds or resources for a particular purpose.
        Expenditure Money owed, whether paid or unpaid.
        Fiscal Year The twelve-month period to which the annual budget applies. New Jersey has a July 1 to June 30 fiscal year.
        General Assembly One of the two Houses that comprises the state Legislature. The General Assembly has 80 members, two elected from each legislative district, and is presided over by the Assembly Speaker.
        Line Item Any single item for which an appropriation is provided in the Appropriations Act.
        Line-Item Veto Applying only to bills containing an appropriation, this veto action allows the Governor to approve the bill but reduce or eliminate funding for specific items.
        Office of Legislative Services (OLS) A non-partisan agency of the Legislature that provides professional support services, including analysis, research, bill drafting, and legal services. In addition, the office provides information about the Legislature to the public.
        Office of Management and Budget (OMB) An agency of the Governor’s Office that manages New Jersey’s financial assets. With direction from the Governor, the annual budget is the responsibility of the Office of Management and Budget (OMB).
        Senate One of the two Houses that comprises the state Legislature. The Senate has 40 members, one elected from each legislative district, and is presided over by the Senate President.
        Senate President The chief presiding officer of the Senate during legislative sessions. The Senate President appoints committee chairs and members of committees and commissions, refers bills and resolutions to reference committees, sets the agenda for session days, and supervises the administration of the day-to-day business of the Senate.
        Speaker of the General Assembly The chief presiding officer of the General Assembly during legislative sessions. The Assembly Speaker appoints committee chairs and members of committees and commissions, refers bills and resolutions to reference committees, sets the agenda for session days, and supervises the administration of the day-to-day business of the General Assembly.
        Veto An official action taken by the Governor to nullify or deny a legislative action.

         

        End Notes

        [i] State of New Jersey Department of Education. (2019). https://www.state.nj.us/education/data/fact.htm

        [ii] Nelson, B. (2019, July 25). What N.J. colleges are growing (and shrinking) the most? NJ.com. Retrieved 2020, from https://www.nj.com/data/2019/07/what-nj-colleges-are-growing-and-shrinking-the-most.html

        [iii] https://www.state.nj.us/csc/about/publications/workforce/pdf/2018%20Workforce%20Profile%20final%20copy.pdf

        [iv] In NJ, TANF is also called “Work First New Jersey.”

        [v] Some of the agencies that are separate have been combined in this chart in order to make it easier to digest.

        [vi] Nj.gov: https://www.nj.gov/treasury/omb/publications/19citizensguide/citguide.pdf

        [vii] Clark, Kakkar, & Marcus (2020, September). Here’s how much money every N.J. school district gets in state funding shakeup.https://www.nj.com/education/2020/02/heres-how-much-money-every-nj-school-district-gets-in-state-funding-shakeup.html

        [viii] Sitrin (2020, September) Why New Jersey’s progressive school funding formula still isn’t working for some children. https://www.politico.com/states/new-jersey/story/2020/09/30/why-new-jerseys-progressive-school-funding-formula-still-isnt-working-for-some-children-1318599

        [ix] Weber, M. (2019, September). New Jersey’s Teacher Workforce, 2019: Diversity Lags, Wage Gap Persists. https://www.njpp.org/wp-content/uploads/2019/09/NJ-Teacher-Workforce-2019-Full-Report.pdf

        [x]This report highlights how schools suffer (and which schools) due to lack of investment:  https://www.njpp.org/publications/blog-category/new-jerseys-school-re-openings-are-racially-unequal/

        [xi] ALICE (Asset Limited, Income Constrained, Employed) Project, New Jersey (2020). https://www.unitedforalice.org/Attachments/AllReports/2020ALICEReport_NJ_FINAL.pdf

        [xii] FY2019 is the most recent year for which there is actual revenue data. The data for more recent years are currently “estimated” revenues. Source: Office of Management and Budget: Summaries of Revenues, Expenditures, and Fund Balances.

        [xiii] The archives containing all budget documents can be found on the OMB’s website. This is a summary of the funds from FY2010, indicating that the balance of the state funds is just under 30 billion.

        [xiv] Some exceptions are made to this deadline: it can be superseded by legislation, and if it is a governor’s first term, there is an extended deadline of March 13th.

        [xv] At least 21 votes in the Senate and 41 in the General Assembly

        [xvi] More detailed and technical information about the state’s budget process: NJ OMB

        [xvii] If a Governor vetoes a bill, the Legislature can override it by a vote of at least two-thirds of the members of each house.

        [xviii] Here is a FAQ from the OMB that contains more technical information and links to all the budget publications released by the state.

        GetCoveredNJ: How New Jersey’s State-Based Exchange Will Make Health Coverage More Affordable

        Posted on by Brittany Holom-Trundy

        Health coverage for all New Jerseyans is essential for protecting public health, especially during a global health crisis. The COVID-19 pandemic — along with the ongoing attempts by the outgoing Trump Administration to derail the Affordable Care Act (ACA) — have put all residents at risk. In an important move towards building a health system that better addresses the needs of New Jersey residents, the state opened its own state-based health exchange (SBE) on November 1, 2020.

        The state-based exchange will help to increase access to, and affordability of, health insurance, particularly for low-income residents who, due to decades of discriminatory policies, are disproportionately Black and Latinx. By improving the state’s ability to address racial equity in health and meet the demands of an increasingly expensive health care landscape, the exchange promises to increase coverage rates and better protect public health in the Garden State. This explainer answers frequently asked questions about this new state-based health exchange.


        What is a state-based health exchange (SBE)?

        A state-based health exchange (SBE) is a platform that offers residents health insurance coverage options while promoting competition among insurance companies, which can lower costs.[1] For residents of New Jersey, the SBE will take the place of the federal Marketplace, HealthCare.gov. This new “Marketplace” allows individuals and families to compare and purchase coverage plans that best support their needs.[2] It also allows those who qualify to get financial support for health insurance from the state or federal government.[3] New Jersey’s new SBE opened for enrollment on November 1, 2020; the enrollment period is open until January 31, 2021.

        The advantage of a SBE over the federal HealthCare.gov exchange is that the state controls all aspects of the Marketplace, from creating and managing its own website for the exchange, to advertising, setting the enrollment period, and determining eligibility for financial support. These moves should also help make coverage more affordable, allow for greater engagement with potential enrollees, and make the system easier to use.

        With a SBE, the state is able to tailor the exchange to the unique needs of New Jersey residents, particularly for low-income communities and people of color who have struggled to enroll or afford coverage in previous years. Other states’ experiences with SBEs have shown that, with adequate funding and personnel support, SBEs can better offer personalized assistance and build confidence in the exchange. They can help people feel better protected from the risks of information sharing with federal agencies during times of uncertainty and attacks on immigrant populations from the federal government.[4] In using these strategies, SBEs in other states have successfully reduced their uninsured rates and seen higher rates of insurance amongst younger enrollees.[5]

        For the 2021 plan year, New Jersey joins 13 states and the District of Columbia with SBEs, including a number of regional neighbors, such as Pennsylvania, New York, Connecticut, and Maryland.[6]

        How does the state-based exchange improve coverage options for New Jersey residents?

        Beginning with the 2021 plan year, New Jersey is offering expanded support and financial assistance to make it easier for residents to enroll in coverage. With continued focus on these efforts, the state can continue to improve health care access and affordability for all Garden State residents.

        The new SBE will improve health coverage options by:

        Expanding the Enrollment Period
        New Jersey residents will have double the amount of time to shop for an insurance plan on the exchange compared to people in states using the federal exchange.[7] The state’s enrollment period this year runs from November 1, 2020 through January 31, 2021.[8] This extended opportunity to enroll in coverage will give residents more time to explore their options and choose an appropriate option that best fits their needs. For coverage that begins on January 1, 2021, residents must sign up by December 31, 2020.[9]

        Providing Additional Navigator Program Assistance
        The Navigator program is a part of the ACA that is designed to help people learn about the exchange and enroll in a plan appropriate for them. Navigators act as liaisons within communities, helping residents understand the exchange website, explore their plan options, and complete eligibility and enrollment forms. Navigators have been shown to be effective in increasing insurance coverage rates and successfully connecting diverse populations.[10]

        Over the years, federal funding for the Navigator program has been drastically cut, hurting access and enrollment.[11]Once a state adopts a SBE, it is responsible for funding the program, allowing for greater investment even when federal funding is cut. With the New Jersey state exchange, the state dedicated $3.5 million for 16 organizations across the state to serve as Navigators for the 2021 plan year.[12] This is an increase of $1.5 million over the amount that the state dedicated for the 2020 plan year and is about nine times greater than the $400,000 that New Jersey received when still using a federally-facilitated exchange for the 2019 plan year.[13] The increased funding will be essential to the exchange’s success and to increasing coverage for residents across the state.

        Providing Additional Financial Assistance
        With the passage of the state exchange in July 2020, New Jersey replaced the recently repealed federal health insurance assessment with one at the state level.[14] This fee on health insurance companies provides funding for a new state-level subsidy on the SBE.[15] This means that, in addition to the federal financial assistance provided through the exchange (known as the Advanced Premium Tax Credit, or APTC), enrollees with incomes below 400 percent of the federal poverty level may also receive additional assistance with their monthly payments. 

        Keeping Costs Under Control
        States that run their own SBEs are better able to curb premium increases and control costs for their enrollees.[16] Having also established a reinsurance program — which provides payments to health insurers to help mitigate the costs of large claims — additional state subsidies, and regulation of short-term plans, New Jersey can better improve cost control with the SBE and further dampen rising prices for coverage.[17] Without having to pay the user fees for utilizing the federal platform and by shifting the exchange to a more uniquely New Jersey consumer-oriented approach, there remains an opportunity for further improvements in the Marketplace mirroring those seen in other states with SBEs.[18]

        How is New Jersey’s new exchange different from the old exchange?

        From 2014 to 2019, New Jersey used a federally-facilitated exchange (FFE).[19] Under a FFE, the U.S. Department of Health and Human Services (HHS) handles all Marketplace functions — such as advertising, certifying health plans that meet the required standards for guaranteed coverage (including covering women’s preventative health care, like mammograms), managing enrollment, and determining eligibility — through HealthCare.gov. When using this option, the federal government also collects user fees from states for their services in running HealthCare.gov and managing the Marketplace.[20] Essentially, the Garden State relied on the federal government to provide “one-size-fits-all” health coverage options.

        For the 2020 plan year, New Jersey then transitioned to a state-based exchange on a federal platform (SBE-FP) before fully transitioning to a SBE. Under a SBE-FP, the state government manages Marketplace functions except for eligibility determination and enrollment, which is still done through the HealthCare.gov platform by HHS. The federal government continued to collect user fees for these services.

        From the 2021 plan year forward, New Jersey is using a SBE, which does not require user fees paid to the federal government because it does not use the HealthCare.gov platform. Overall, for the 2021 plan year, 30 states are using federally-facilitated exchanges, 6 states are using SBE-FPs, and 14 states are using SBEs.[21]

        Who will benefit from coverage through the state-based exchange?

        There are hundreds of thousands of uninsured New Jersey residents who stand to benefit from a SBE.[22] Most of these residents are likely eligible for health coverage plans under the SBE, as well as for the new financial assistance programs in the SBE.[23]

        With additional financial support opportunities through new state subsidies, increased funding for the Navigator program which helps people understand their options and enroll, an extended enrollment period, and future options for expanding eligibility, the SBE will be more accessible than New Jersey’s previous exchanges for residents with low incomes and those who may need additional outreach to help them know about and understand the exchange.

        Black and Latinx residents, as well as young adults, make up the largest number of people who may currently be eligible for Marketplace coverage but who have not obtained coverage through the earlier exchanges. This may be due to a lack of knowledge about the exchange or due to inability to afford coverage even after federal financial assistance. Given the expanded benefits of the SBE that will help to address these issues, people of color with low incomes in New Jersey will see the greatest benefits and have the greatest potential for increases in coverage as a group. Additionally, residents who have enrolled in coverage through the exchanges in previous years will gain access to the new state financial assistance and the extended enrollment period.

        During the 2020 plan year’s Open Enrollment Period (OEP), about 246,400 individuals purchased plans on the state exchange through the federal platform (SBE-FP) that New Jersey utilized at that time. Of those enrolling in plans, the majority of people were between the ages of 45 and 64, and white. This indicates an ineffectiveness of previous exchange types to enroll younger working adults, a key demographic that is often more difficult to get covered due to cost barriers and perceptions of not “needing” coverage.[24] In 2019, over 390,000, or over 56 percent of the uninsured population, were adults between the ages 19 and 44.[25] With only 40 percent of the enrollees in last year’s exchange representing these age groups, there remains a need for further affordability, outreach, and enrollment efforts.

        Also worryingly, Black residents were noticeably underrepresented in previous exchanges, only making up 5 percent of enrollees during the 2020 plan year Open Enrollment Period, while representing 16 percent of New Jersey’s uninsured population. Similarly, Latinx residents are underrepresented, making up only 14 percent of enrollees while representing nearly 50 percent of New Jersey’s uninsured population. While some of the uninsured may be undocumented or qualify for other programs, like NJ FamilyCare, the low rates of enrollment indicate a need for improvement in outreach efforts for communities of color. 

        Further, people with low incomes would benefit from the exchange, as many who are uninsured will qualify for subsidized coverage. In 2019, approximately 68 percent of uninsured individuals in New Jersey had incomes that qualified them for subsidies (between 139% and 400% FPL, or between $17,609 and $51,040 for an individual, and between $29,974 and $86,880 for a family of three).[26] Latinx residents are the most represented amongst this group. Based only on income eligibility among uninsured residents (notably, not considering documented status), people of color, and particularly Latinx residents, would see the largest increases in coverage if all who qualified enrolled through the exchange.

         Further, people with low-incomes would benefit from the exchange, as many who are uninsured will qualify for subsidized coverage. In 2019, approximately 68 percent of uninsured individuals in New Jersey had incomes that qualified them for subsidies (between 139% and 400% FPL, or between $17,609 and $51,040 for an individual, and between $29,974 and $86,880 for a family of three).[27] Latinx residents are the most represented amongst this group. Based only on income eligibility among uninsured residents (notably, not considering documented status), people of color, and particularly Latinx residents, would see the largest increases in coverage if all who qualified enrolled through the exchange. 

        Who can buy coverage on a state-based exchange?

        Currently, in order to buy insurance on the SBE, a person must be a U.S. citizen, a national with primary residence in New Jersey, or a documented immigrant for the entire time covered by the health insurance plan.[28] Incarcerated individuals and residents with affordable health insurance coverage available through other means, such as through employment, a spouse’s employment, Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP), cannot purchase coverage through the SBE.[29]

        While undocumented residents cannot purchase coverage through the exchange, certain members of a mixed status household can; this means that, in mixed status households where members have different immigration or citizenship status, a child or spouse may be eligible to enroll even when one or both parents or other members cannot because they have other coverage or are undocumented.[30]

        A state does have the power to submit waivers to the federal government to expand eligibility to undocumented residents within the state’s exchange. These waivers are known as 1332 State Innovation Waivers, and they have to be approved by the Centers for Medicare and Medicaid Services (CMS) to take effect. New Jersey does not currently have this in place, but will have the option to submit waiver applications for this purpose in future plan years.

        What other options do New Jerseyans have to enroll in health insurance coverage?

         The exchange website provides information about eligibility not only for potential financial assistance on the exchange, but also for the state’s other health insurance programs outside the exchange, including NJ FamilyCare, the state’s Medicaid program.

        In order to check eligibility for financial support on the exchange, New Jersey residents can visit GetCoveredNJ (https://nj.gov/getcoverednj/). On the site, consumers can compare potential financial assistance by entering information such as ZIP code, birthdate, income, and information on spouses or dependents. If a person is determined to be eligible to purchase a plan, they can then complete a full application and browse the options for purchase. These options provide information on coverage and final monthly cost after federal and state financial assistance has been taken into account. A plan for 2021 must be purchased by January 31, but Special Enrollment Periods (SEPs) — or times at which a person may become eligible to purchase during the year due to changes in employment and other reasons for loss of coverage — are available throughout the year.

        In addition to the plans and subsidies offered on the SBE, New Jersey residents may qualify for NJ FamilyCare (http://www.njfamilycare.org/). This program has served as an important buffer during the COVID-19 pandemic for many who lost employer-based coverage during the public health crisis.[31] When checking eligibility on GetCoveredNJ, the site will tell individuals whether they may qualify for the NJ FamilyCare program for low-cost coverage.

        The combination of the new SBE and NJ FamilyCare provides opportunities for more New Jerseyans to gain affordable health insurance coverage. As COVID-19 continues to ravage the country, lawmakers need to continue to support and expand these programs to guarantee the best health outcomes for all New Jerseyans.

        How can state lawmakers further strengthen the state exchange?

         New Jersey lawmakers still have opportunities to strengthen the state exchange by addressing challenges faced in other states implementing SBEs. Major challenges for SBEs in other states have resulted from: a lack of sufficient funding; ineffective communication about the SBE; technological difficulties; limitations on eligibility; and an unstable political environment surrounding the ACA. In learning from these lessons, New Jersey can better address issues of racial inequities and discouragement amongst uninsured residents most in need of affordable coverage.

        Some of the key recommendations include:

        Expand Eligibility
        The SBE does not currently address the need for coverage options for undocumented residents living in New Jersey. Approximately 225,000 New Jerseyans live in households with at least one person filing taxes using an Individual Taxpayer Identification Number (ITIN).[32] These numbers are issued to those who are ineligible for a Social Security Number, including undocumented immigrants, as well as to those with certain other documented statuses, such as spouses and children of those on an employment visa. While not all ITIN filers or their family members are undocumented, it is estimated that a significant number are.[33] Additionally, not all undocumented individuals have ITINs, expanding the number of people affected by the narrow eligibility policies guiding ACA exchanges. Extending coverage options to undocumented individuals, and further ensuring that those living in households with undocumented individuals are confident in gaining coverage, is essential for increasing New Jersey’s coverage rate and protecting public health.[34]

        Prioritize Programs that Address Language Barriers and Outreach
        The GetCoveredNJ website is offered in both English and Spanish, with additional assistance available in other languages commonly spoken in New Jersey (such as Chinese, Portuguese, Italian, Tagalog, Korean, Gujarati, Polish, Hindi, and Arabic).[35] A key part of outreach and making sure that residents are getting enrolled will be to ensure that the resources available are meaningfully translated and easily accessible for those residents.[36] If the translations are technically accurate but use jargon or vocabulary that is not used conversationally in a language, the effectiveness of the materials can be weakened. Making sure to include feedback from native speakers will help to address these issues.

        Make the Exchange More Easily Accessible for Those with Seasonal or Inconsistent Income
        Another challenge of the exchanges lies in ensuring ease of eligibility determination and enrollment for individuals and families that may have inconsistent or seasonal income. People with low incomes often face the challenge of “churning,” or the involuntary movement between coverage systems. This can be especially problematic for people whose incomes qualify them for Medicaid, but with temporary boosts in income, such as those from seasonal or gig work, may find themselves with income that qualifies them for Marketplace coverage instead.[37] This movement between coverage options can lead to periods of interrupted coverage and worsening health outcomes.[38] Additionally, the enrollment forms can prove confusing for those whose income is not consistent or easily predicted for the year. Ensuring that enrollment forms are clear and provide detailed instructions for people with seasonal or inconsistent income on how to complete them is important for getting and keeping those individuals covered. Additionally, finding ways to move people more easily between exchanges and Medicaid when their eligibility changes will help to address this issue.

        Anticipate and Plan for Technological Difficulties
        When other states opened their SBEs, the experiences and smoothness of the rollout varied. Much of this depended on how much state authorities anticipated difficulties for consumers and sought to address them early and quickly. Extensive testing of and improvements to the website, as well as channels for customer feedback and clear communication when there is an issue needing to be addressed, were key for those states that were successful.

        Additionally, ensuring that a clearly-marked “no wrong door” enrollment and eligibility system is in place will help to lessen the technological difficulties faced by people seeking to enroll in coverage.[39] A user-friendly and non-repetitive application structure without bias toward a particular program on the exchange website can ease enrollment into the appropriate coverage option, whether it is the Marketplace, NJ FamilyCare, Medicare, or another program. Without creating these easy-to-use application channels, consumers can become frustrated or confused and leave the enrollment process even when they are eligible for affordable coverage.[40] 

        Safeguard Against the Possibility of ACA Overturn
        The future of New Jersey’s SBE is under threat by the ongoing efforts to have the U.S. Supreme Court (SCOTUS) overturn the ACA, as it would deem that everything included in the law, including the model for the exchanges, unconstitutional.[41] If the ACA is overturned, state lawmakers would have to pass a law that re-establishes the guidelines for the state-based exchange in order to continue offering plans in this manner. This could create instability in the insurance Marketplace and leave hundreds of thousands of New Jerseyans stranded without coverage. While New Jersey has already passed laws at the state level on many of the protective aspects of the ACA, such the guarantee for coverage for those with pre-existing conditions and a child’s ability to stay on a parent’s plan until age 26, a plan for the continuation of the exchange at the state level if the ACA is overturned is advisable.

        End Notes

        [1] National Academy of Social Insurance (2011). “Designing an Exchange:  A Toolkit for State Policymakers.” January 2011. Online: https://www.nasi.org/sites/default/files/research/Designing%20an%20Exchange_A%20Toolkit%20for%20State%20Policymakers.pdf

        [2] Sometimes, “Marketplace” is used in place of “health exchange,” with the resulting term being “State-Based Marketplace,” or SBM. In this report, I chose to use “State-Based Exchange” (SBE) because this keeps the terminology consistent with the language used by the New Jersey state government. Additionally: small businesses cannot buy plans directly through New Jersey’s GetCoveredNJ. Instead, small group employers can shop for plans through the Small Business Options Program (SHOP), which is required by the ACA to be set up alongside the exchange. More information can be found here: https://nj.gov/getcoverednj/findanswers/faqs/smallemployer.shtml. Additionally, discussion of SHOP markets and their relation to SBEs can be found at:  Haase, Leif Wellington, David Chase, and Tim Gaudette (2017). “Talking SHOP: Revisiting the Small-Business Marketplaces in California and Colorado.” The Commonwealth Fund. 18 July 2017. Online: https://www.commonwealthfund.org/publications/fund-reports/2017/jul/talking-shop-revisiting-small-business-Marketplaces-california 

        [3] A person’s financial assistance will differ depending on income, number of household members, and location of residency. Additionally, the amount a person pays per month will depend on the plan they choose. Plans are divided into “metals”: Bronze, Silver, Gold, and Platinum. These differ in the way that they split the costs, with Bronze plans having the lowest monthly premiums but the highest costs at the point of service, and Platinum plans having the highest monthly premiums with the lowests costs at the point of service. For more information, see: HealthCare.Gov (2020). “How to pick a health insurance plan: The ‘metal’ categories: Bronze, Silver, Gold & Platinum.” Online: https://www.healthcare.gov/choose-a-plan/plans-categories/

        [4] Anderson, Karen M. and Steve Olson (2015). “Chapter 2: The Potential of the ACA to Reduce Health Disparities.” Roundtable on the Promotion of Health Equity and the Elimination of Health Disparities; Board on Population Health and Public Health Practice. Institute of Medicine; National Academies of Sciences, Engineering, and Medicine. Washington DC: National Academies Press; Schwab, Rachel and Sabrina Corlette (2019). “ACA Marketplace Open Enrollment Numbers Reveal the Impact of State-Level Policy and Operational Choices on Performance.” The Commonwealth Fund. 16 April 2019. Online: https://www.commonwealthfund.org/blog/2019/aca-Marketplace-open-enrollment-numbers-reveal-impact

        [5] National Academy for State Health Policy (2019). “State-based Health Insurance Marketplace Performance.” September 2019. Online:https://www.nashp.org/wp-content/uploads/2019/09/SBM-slides-final_SeptMtgs-9_23_2019.pdf

        [6] Kaiser Family Foundation (2020). “State Health Insurance Marketplace Types, 2021.” Online: https://www.kff.org/health-reform/state-indicator/state-health-insurance-Marketplace-types

        [7] One policy that may be implemented under a potential Biden administration could be an expansion of the open enrollment period on the federal exchanges as well.

        [8] GetCoveredNJ (2020). “What to Expect.” Online: https://nj.gov/getcoverednj/getstarted/expect/index.shtml

        [9] GetCoveredNJ (2020). “About Us.” Online: https://nj.gov/getcoverednj/help/about/

        [10] Texas Health Institute (2016). “Advancing Health Equity in the Health Insurance Marketplace: Results from Connecticut’s Marketplace Health Equity Assessment Tool (M-HEAT).” October 2016. Online: https://www.texashealthinstitute.org/uploads/1/3/5/3/13535548/connecticut_m-heat_final_report_-_october_2016.pdf

        [11] For 2021, the Trump administration has dedicated only $10 million in total for all of the FFE states. Some states received no funding. Pollitz, Karen and Jennifer Tolbert (2020). “Data Note: Limited Navigator Funding for Federal Marketplace States.” Kaiser Family Foundation. 13 October 2020. Online: https://www.kff.org/private-insurance/issue-brief/data-note-further-reductions-in-navigator-funding-for-federal-Marketplace-states/

        [12] Office of Governor Phil Murphy (2020). “Murphy Administration Announces $3.5 Million Investment in State Navigators to Assist Uninsured and Underserved New Jerseyans With ACA Health Insurance Enrollment.” 16 September 2020. Online: https://nj.gov/governor/news/news/562020/approved/20200916a.shtml

        [13] Office of Governor Phil Murphy (2019). “ICYMI: New Jersey Will Provide $2 Million in Navigator Grants & Outreach Funding to Assist New Jerseyans with ACA Enrollment.” 3 October 2019. Online: https://www.nj.gov/governor/news/news/562019/20191003b.shtml; Pollitz, Karen, Jennifer Tolbert, and Maria Diaz (2018). “Data Note: Further Reductions in Navigator

        Funding for Federal Marketplace States.” Kaiser Family Foundation. September 2018. Online: http://files.kff.org/attachment/Data-Note-Further-Reductions-in-Navigator-Funding-for-Federal-Marketplace-States; Stainton, Lilo H. (2017). “NJ Loses Federal Funding to Expand ACA Enrollment.” NJ Spotlight. 12 October 2017. Online: https://www.njspotlight.com/2017/10/17-10-11-nj-loses-federal-funding-to-expand-aca-enrollment/

        [14] Office of Governor Phil Murphy (2020). “Governor Murphy Signs Legislation to Restore a Key Provision of the Affordable Care Act and Lower the Cost of Health Care in New Jersey.” 31 July 2020. Online: https://nj.gov/governor/news/news/562020/approved/20200731a.shtml

        [15] Holom-Trundy, Brittany (2020). “New Jersey Can Act Now to Make Health Care More Affordable: The Health Insurance Assessment Explained.” New Jersey Policy Perspective. 13 July 2020. Online: https://www.njpp.org/publications/explainer/new-jersey-can-act-now-to-make-health-care-more-affordable-the-health-insurance-assessment-explained/

        [16] National Academy for State Health Policy (2019). “State-based Health Insurance Marketplace Performance.” September 2019. Online: https://www.nashp.org/wp-content/uploads/2019/09/SBM-slides-final_SeptMtgs-9_23_2019.pdf

        [17] Lueck, Sarah (2019). “Reinsurance Basics: Considerations as States Look to Reduce Private Market Premiums.” Center on Budget and Policy Priorities. 3 April 2019. Online: https://www.cbpp.org/research/health/reinsurance-basics-considerations-as-states-look-to-reduce-private-market-premiums

        [18] Corlette, Sabrina, Kevin Lucia, Katie Keith, and Olivia Hoppe (2019). “States Seek Greater Control, Cost-Savings by Converting to State-Based Marketplaces.” Urban Institute. 10 October 2019. Online: https://www.rwjf.org/en/library/research/2019/10/states-seek-greater-control-cost-savings-by-converting-to-state-based-Marketplaces.html.

        [19] Kaiser Family Foundation (2020). State Health Insurance Marketplace Types, 2021. Online: https://www.kff.org/health-reform/state-indicator/state-health-insurance-Marketplace-types/

        [20] Schwab, Rachel and JoAnn Volk (2019). “States Looking to Run Their Own Health Insurance Marketplace See Opportunity for Funding, Flexibility.” The Commonwealth Fund. 28 June 2019. Online: https://www.commonwealthfund.org/blog/2019/states-looking-to-run-their-own-health-insurance-Marketplace-see-opportunity.

        [21] Kaiser Family Foundation (2020). “State Health Insurance Marketplace Types, 2021.” Online: https://www.kff.org/health-reform/state-indicator/state-health-insurance-Marketplace-types

        [22]  NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online: http://www.data.census.gov.

        [23] Ibid.

        [24] Munira Z. Gunja, Gabriella N. Aboulafia, and Sara R. Collins (2019). “What Young Adults Should Know About Open Enrollment.” The Commonwealth Fund. 31 October 2019. Online: https://www.commonwealthfund.org/blog/2019/what-young-adults-should-know-about-open-enrollment

        [25] NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online: http://www.data.census.gov.

        [26] NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online: http://www.data.census.gov. Official Federal Poverty Level (FPL) guidelines for 2020 can be found through the U.S. Department of Health and Human Services at: https://aspe.hhs.gov/system/files/aspe-files/107166/2020-percentage-poverty-tool.pdf

        [27] NJPP analysis of U.S. Census Bureau data. U.S. Census Bureau (2020). American Community Survey, 2019 1-Year Estimates. Online: http://www.data.census.gov. Official Federal Poverty Level (FPL) guidelines for 2020 can be found through the U.S. Department of Health and Human Services at: https://aspe.hhs.gov/system/files/aspe-files/107166/2020-percentage-poverty-tool.pdf

        [28] Norris, Louise (2020). “How immigrants can obtain health coverage.” Healthinsurance.org. 18 May 2020. Online: https://www.healthinsurance.org/obamacare/how-immigrants-are-getting-health-coverage/

        [29] In 2021, the Internal Revenue Service (IRS) defines “affordable” coverage as coverage that requires an employee to contribute less than 9.83% of household income. See: Norris, Louise (2020). “Is the IRS changing how much I’ll have to pay for my health insurance next year?” Healthinsurance.org. 15 August 2020. Online: https://www.healthinsurance.org/faqs/is-the-irs-saying-ill-have-to-pay-more-for-my-health-insurance-next-year/

        [30] Kaiser Family Foundation (2020). “FAQ: Can family members in families with mixed immigration status, where some family members are citizens or lawfully present and others are undocumented, enroll in Medicaid or CHIP or receive help buying coverage through the Marketplaces?” Online: https://www.kff.org/faqs/faqs-health-insurance-Marketplace-and-the-aca/can-family-members-in-families-with-mixed-immigration-status-where-some-family-members-are-citizens-or-lawfully-present-and-others-are-undocumented-enroll-in-medicaid-or-chip-or-receive-help-buying/

        [31] Holom-Trundy, Brittany (2020). “COVID-19 Job Loss Leaves More Than 100,000 New Jerseyans Uninsured.” New Jersey Policy Perspective. 6 August 2020. Online: https://www.njpp.org/publications/blog-category/covid-19-job-loss-leaves-more-than-100000-new-jerseyans-uninsured/

        [32] Institute on Taxation and Economic Policy (2020). “Analysis: How the HEROES Act Would Reach ITIN Filers.” 14 May 2020. Online: https://itep.org/analysis-how-the-heroes-act-would-reach-itin-filers/; Kapahi, Vineeta (2020). “Building a More Immigrant Inclusive Tax Code: Expanding the EITC to ITIN Filers.” New Jersey Policy Perspective. 15 June 2020. Online: https://www.njpp.org/publications/report/building-a-more-immigrant-inclusive-tax-code-expanding-the-eitc-to-itin-filers/

        [33] Kolker, Abigail (2020). “Noncitizens and Eligibility for the 2020 Recovery Rebates.” Congressional Research Service. 1 May 2020). Online: https://crsreports.congress.gov/product/pdf/IN/IN11376

        [34] Other states have recognized this same dilemma for undocumented residents and begun taking steps to expand eligibility. For example, California sought to expand coverage through a waiver in 2016, but subsequently withdrew their application when the Trump Administration came into office due to their administration’s anti-immigrantion stance. It is anticipated that these types of efforts to expand eligibility will continue, and New Jersey will be able to learn from the experiences of other states in this process. For information on California’s effort, see Ibarra, Ana B. and Chad Terhune (2017). “California Withdraws Bid To Allow Undocumented To Buy Unsubsidized Plans.” Kaiser Health News. 20 January 2017. Online: https://khn.org/news/california-withdraws-bid-to-allow-undocumented-immigrants-to-buy-unsubsidized-obamacare-plans/

        [35] New Jersey Department of Transportation (2012). “NJ Population by Language Spoken.” Online: https://www.state.nj.us/transportation/business/civilrights/pdf/map_language.pdf

        [36] Texas Health Institute (2016). “Advancing Health Equity in the Health Insurance Marketplace: Results from Connecticut’s Marketplace Health Equity Assessment Tool (M-HEAT).” October 2016. Online: https://www.texashealthinstitute.org/uploads/1/3/5/3/13535548/connecticut_m-heat_final_report_-_october_2016.pdf

        [37] Bergal, Jenni (2014). “Millions Of Lower-Income People Expected To Shift Between Exchanges And Medicaid.” Kaiser Health News. 6 January 2014. Online: https://khn.org/news/low-income-health-insurance-churn-medicaid-exchange/

        [38] Hancock, Jay (2017). “Churning, Confusion And Disruption — The Dark Side Of Marketplace Coverage.” Kaiser Health News. 7 December 2017. Online: https://khn.org/news/churning-confusion-and-disruption-the-dark-side-of-Marketplace-coverage/

        [39] Lueck, Sarah (2020). “Adopting a State-Based Health Insurance Marketplace Poses Risks and Challenges.” Center on Budget and Policy Priorities. 6 February 2020. Online: https://www.cbpp.org/research/health/adopting-a-state-based-health-insurance-Marketplace-poses-risks-and-challenges

        [40] Sprung, Andrew (2020). “Op-Ed: NJ’s new state-run health insurance exchange must learn from the mistakes of others.” NJ Spotlight. 23 October 2020. Online: https://www.njspotlight.com/2020/10/op-ed-njs-new-state-run-health-insurance-exchange-must-learn-from-the-mistakes-of-others/

        [41] The case currently being considered that threatens this is Texas v. California. More information about this case can be found on the SCOTUSblog here: https://www.scotusblog.com/case-files/cases/texas-v-california/

        New Jersey Can Act Now to Make Health Care More Affordable: The Health Insurance Assessment Explained

        Posted on by Brittany Holom-Trundy

        The COVID-19 pandemic is revealing the fragility of our health system: from disparities in providing care to people of color to budget shortfalls that threaten the state’s social safety net. In the midst of these concurrent health and budget crises, New Jersey has the opportunity to expand health coverage by picking up revenue that the federal government is leaving behind through the Health Insurance Assessment (HIA). The HIA would bring in more funding for health care programs, increasing coverage and affordability amongst children and low- and moderate-income families across the state. This explainer answers frequently asked questions about the HIA and how it can improve health care in New Jersey.

         

        What is a Health Insurance Assessment (HIA)?

        The Health Insurance Assessment (HIA) is a federal fee on health insurance companies that was established in 2014 to help fund the Affordable Care Act (ACA). This fee is set to expire on January 1, 2021, giving states the opportunity to take on the assessment on insurance providers and capture funding all without raising insurers’ payments.[1] States that implement their own HIA have the ability to spend the funds however they see fit, providing them the flexibility necessary to meet their own unique health care needs. Governor Phil Murphy first proposed the HIA for New Jersey in his Fiscal Year 2021 Budget.[2]

        How much revenue would a state-level HIA bring into New Jersey?

        The HIA proposed in S2676/A4389 (as amended in committee on Monday, July 27, 2020) is projected to bring in over $224 million in revenue for New Jersey in calendar year 2021.[3] Because the state HIA proposal differs from the existing federal HIA, it will bring in less revenue than if the state had mirrored the federal fee, which would have net the state $567 million in revenue. This lower revenue figure is a result of the state HIA proposal not applying to Medicaid, Medicare Advantage and prescription plans, federal employee and retiree coverage, dental plans, Multiple Employer WelfareArrangements (MEWAs) established before the enactment of the bill, or small-group plans which were included in the federal fee.[4]

        Who would benefit from a state-level HIA?

        With funds directed toward health care, New Jersey’s children, working families, and low- to moderate-income households would benefit from a state-level HIA. Unlike the federal fee, which was not directed toward specific health care costs, a state-level HIA can help provide the funding needed to expand coverage and address existing inequities in access to quality care.[5] This can be accomplished by using the funds to: provide health coverage for all kids; provide subsidies to low-income residents; create a public plan on the ACA market for families with income of less than 400% of the federal poverty level (FPL), which, in 2020, is $68,960 for a family of two or $104,800 for a family of four.[6] The state could also offset high claims through the reinsurance program, which partially reimburses insurance providers for high-cost claims, helping to stabilize the market and decrease plan prices.

        As we have learned during the COVID-19 pandemic, improving access to health care helps to improve public health for all New Jerseyans. By getting more people covered and giving them greater access to quality care, we can reduce the spread and fatalities from infectious diseases like COVID-19 that occur when residents are unable or reluctant to seek health care when needed.

        How would a state-level HIA improve public health and increase affordability?

        In New Jersey, the state-level HIA would generate revenue to improve health care access and affordability through a variety of mechanisms, including subsidies, reinsurance, tax policies, outreach and enrollment efforts, and other efforts to extend coverage to and improve affordability of health insurance for low- and moderate-income families and the uninsured. The funds can only be used for these purposes, as outlined in S2676/A4389.

        The revenue collected could fund initiatives like enrollment efforts for children, so that more affordable coverage options are available to the approximately 80,000 uninsured kids in New Jersey.[7] Revenues could also be used to improve affordability and coverage options for working families, particularly low- and moderate-income families. With revenue from a state-level HIA, New Jersey could provide subsidies to individuals so they can better afford their insurance, create a public plan on the ACA market that will benefit families with income of less than 400% of the federal poverty level (FPL), and/or offset high claims through the reinsurance program. New Jersey should determine how to most effectively use this revenue based on forthcoming affordability studies by the state Department of Banking and Insurance, as mandated by legislation passed in 2019.[8]

        How would a state-level HIA impact insurance providers, and what types of insurance plans would be included?

        For insurance providers, a state-level HIA would not be a new fee. The federal HIA came into effect in 2014.[9] While it was suspended temporarily in 2017 and 2019, the federal HIA is in place for 2020 and was included in the calculations for the 2020 premium rates. By taking action in 2020, New Jersey would be preserving the current assessment, rather than allowing it to lapse.

        The state would redirect the assessment funds currently paid to the federal government by individual insurance and large-group coverage plans back to the state. Medicaid Managed Care Organizations (MCOs) — which contract with the state to provide Medicaid benefits in exchange for payments from the state — small-group plans, MEWAs, and dental plans are currently subject to the expiring federal fee. However, under the proposed state-level assessment, these plans would not be included.

        The state also cannot legally collect this assessment from Medicare plans or federal employee or retiree coverage, which are included in the federal HIA. Finally, the fee will not be collected from self-funded plans, which were exempted from the federal HIA.

        Would a state-level HIA lead to increases in premiums?

        Based on the experiences of other states with their own HIA, New Jersey should not see an overall increase in premiums due to the assessment. This is because it continues the structure of fees that is already in place. Further, increasing affordability and coverage would strengthen and improve New Jersey’s State-Based Health Exchange, which is set to launch in November 2020.[10] An increase in enrollment would help to lower premiums by improving the risk pool; it would also bring more federal money into the state through premium tax credits, a tax credit that the federal government provides to help lower the cost of monthly premiums on the Marketplace for low- and moderate-income individuals.

        Have other states introduced state-level HIAs?

        Other states have shown that a state-level HIA can generate funds to help improve affordability of health insurance for state residents. Maryland and Delaware both enacted state-level HIAs when the federal fee was temporarily suspended in 2019 to provide funds for market stabilization efforts.[11] Delaware’s and Maryland’s programs partially reimburse insurance providers for high-cost claims, which helps to keep plan costs down.[12] New Jersey currently has a reinsurance program in place that could similarly benefit from a portion of the funding through a state-level HIA.

        At least two more states have sought to take advantage of this opportunity for funding affordability measures this year. In June 2020, Colorado became the latest state to enact its own Health Insurance Assessment, which will fund critical measures to make health coverage more affordable. Specifically, the Colorado HIA will provide additional funding for state-subsidized plans for those who are not eligible for premium tax credits or public assistance health care programs, payments to carriers to help lower premiums for those who already receive a premium tax credit, and their reinsurance program. The legislation will particularly help those families who receive assistance but still find health insurance unaffordable, as well as those who are ineligible for premium tax credits under federal law, including those without sufficient documentation.[13] New Mexico introduced a similar bill in February. This legislation proposed creating a Health Care Affordability Fund and using the revenue to decrease premiums for residents across the state.[14]

        Over the last several years, New Jersey has emerged as a national leader in expanding health coverage and keeping insurance affordable amidst ongoing attacks on the Affordable Care Act by the federal government. Establishing a state-level HIA is the natural next step for New Jersey to improve public health and ensure all residents can lead healthy lives.

        End Notes

        [1] Internal Revenue Service, Treasury. 2020. “Affordable Care Act Provision 9010 – Health Insurance Providers Fee.” Online: https://www.irs.gov/businesses/corporations/affordable-care-act-provision-9010. The fee is repealed for all calendar years after December 31, 2020.

        [2] Office of Governor Philip Murphy. 2020. 2021 Budget in Brief. Pg. 26. Can be read online here: http://d31hzlhk6di2h5.cloudfront.net/20200225/ce/30/5e/26/39c12d44bf1af2b6bd2ab34a/BIB_FY2021.pdf

        [3] State of New Jersey, 219th Legislature. 2020. “An Act concerning an assessment on entities authorized to issue health benefits plans and supplementing Title 17B of the New Jersey Statutes.” Online: https://www.njleg.state.nj.us/2020/Bills/S3000/2676_R2.PDF. Note that this estimate was provided by the Department of Banking and Insurance (DOBI). The Office of Legislative Services wrote a fiscal impact note on the bill that estimates $390 million in revenue. This appears to be a possible error, as it is significantly higher than previous estimates that had included the now exempted small-group plans, MEWAS, and dental plans.

        [4] Dorn, Stan. 2020. “A Golden Opportunity for States to Make Health Insurance More Affordable: Rapid Action Required.” The National Center for Coverage Innovation. Families USA. Online: https://familiesusa.org/resources/a-golden-opportunity-for-states-to-make-health-insurance-more-affordable-rapid-action-required/

        [5] The revenues from the federal fee were used to help cover costs of the establishment and expansion of the ACA, but their specific use for affordability purposes is not legally required.

        [6] Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. 2020. “HHS Poverty Guidelines for 2020.” 8 January 2020. Online: https://aspe.hhs.gov/poverty-guidelines. See “A chart with percentages (e.g., 125 percent) of the guidelines (PDF)” on the right of the page.

        [7] Castro, Raymond. 2019. “It’s Time for All Kids Health Coverage.” New Jersey Policy Perspective. Online: https://www.njpp.org/wp-content/uploads/2019/04/NJPP-All-Kids-Coverage-Report-Final-Draft-1.pdf

        [8] The data could come from a study on methods of improving affordability of coverage that was commissioned through New Jersey’s Department of Banking and Insurance (DOBI), which regulates the insurance market in the state. This study was commissioned in the FY 2020 Appropriations Act, which can be found here: https://www.njleg.state.nj.us/2018/Bills/AL19/150_.PDF Please see pg. 28, beginning at line 20: “[T]he Commissioner of Banking and Insurance shall commission an actuarial and/or microsimulation analysis of options for the State to provide more affordable health coverage in the individual market for both consumers who are currently eligible for federal financial assistance and those who are not, while reducing disruptions in coverage affordability for consumers who become ineligible for Medicaid due to an increase in the minimum wage or who will lose federal subsidies in the Marketplace or exceed the income limits for federal subsidies in the Marketplace for other reasons.”

        [9] Internal Revenue Service, Treasury. 2013. “Health Insurance Providers Fee.” Federal Register 78 (230): 71476. Document number 2013-28412, Available online: https://www.federalregister.gov/documents/2013/11/29/2013-28412/health-insurance-providers-fee

        [10] Office of Governor Philip Murphy. 2019. “Governor Murphy Announces New Jersey to Transition to State-Based Exchange.” Online: https://www.nj.gov/governor/news/news/562019/20190628a.shtml

        [11] Levitis, Jason, John-Pierre Cardenas, Steven Costantino. 2020. “Considerations for a State Health Insurer Fee Following Repeal of the Federal 9010 Fee.” State Health & Value Strategies. Available online: https://www.shvs.org/wp-content/uploads/2020/01/FINAL-State-Health-Insurer-Fee-Slide-Deck.pdf

        [12] Delaware’s “The Delaware Health Insurance Individual Market Stabilization Reinsurance Program” (Delaware Code, Title 18, Chapter 87, § 8703) can be found here: https://delcode.delaware.gov/title18/c087/index.shtml. Maryland’s (Insurance Article, §6-. 102.1 Annotated Code of Maryland) can be found here: http://mgaleg.maryland.gov/mgawebsite/laws/StatuteText?article=gin&section=6-102.1&enactments=False&archived=False

        [13] Colorado’s SB20-215 can be found here: https://leg.colorado.gov/bills/sb20-215

        [14] New Mexico’s House Bill 278 can be found here: https://www.nmlegis.gov/Legislation/Legislation?Chamber=H&LegType=B&LegNo=278&year=20

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