Report Archives - New Jersey Policy Perspective

A Safety Net in Retreat: An Obstacle Course Known as TANF

Posted on April 23, 2026 by Tonanziht Aguas

New Jersey thrives when every resident has their basic needs met. A pathway to achieve this is through reform of Work First New Jersey (WFNJ). WFNJ is the state’s umbrella program for cash assistance and job-related supports, covering three distinct components: the Temporary Assistance for Needy Families (TANF) program for families with children, General Assistance for adults without dependent children, and Emergency Assistance for households in crisis.^[1]

The largest of the three is the TANF program, intended to lift families out of poverty and provide support as parents search for employment and build toward economic stability.^[2] Yet, over time, this program has fallen short of that goal. Stagnant benefits, outdated eligibility rules, and a design that penalizes recipients have left families struggling to secure housing, maintain food security, and access the supports necessary for long-term economic stability.^[3]

Gov. Mikie Sherrill’s administration and the legislature have an opportunity to reexamine how the state supports families with the lowest incomes. Put simply, the TANF program has not kept pace with the realities of life in the Garden State. Benefit amounts have lost more than a third of their purchasing power since 1998.^[4] Eligibility rules make it difficult for families to access, save, and gradually exit the program. And because poverty in New Jersey is disproportionately experienced by Black and Hispanic/Latinx households, TANF’s restrictive rules and outdated benefit amounts have their largest consequences on the very communities already facing the steepest economic barriers.^[5] This is true both for many families who manage to enroll in TANF, and for those who are shut out. This exclusion is a legacy of the racialized narratives that originally shaped TANF’s assumptions about who is “deserving” of help.^[6]

Yet TANF is a cornerstone of New Jersey’s safety net. When adequately designed and funded, cash assistance provides families with financial stability and flexibility, improves children’s health and educational outcomes, and generates long-term returns that benefit entire communities.^[7]

This report examines TANF’s gradual decline over 30 years and makes the case for the following reforms to strengthen the program:

Raising benefit levels, indexing them to inflation, and directing more TANF funding toward direct cash assistance
Updating eligibility thresholds and time limits to reflect today’s economic realities
Aligning work requirements with lived experiences and needs

Nearly Three Decades of Decline

TANF’s decline is the result of deliberate policy decisions. New Jersey set that trajectory beginning in 1997 by adopting rules stricter than federal law required. In the decades since, lawmakers have repeatedly chosen to leave those rules in place, even as the cost of living has soared and need has grown. The result is a program in steady retreat across three measures: the purchasing power of the TANF grant, the number of families TANF reaches, and the adequacy of the program’s design.

Benefits That Buy Less Each Year

Monthly grant amounts in New Jersey vary based on factors such as family size, income, and legal status, but to convey the scale of its growing shortfall, consider a family of three receiving the maximum benefit: $559 a month, or $6,708 a year in 2026.^[8] By contrast, the original 1998 grant of $424 a month, worth about $850 in 2026 dollars, provided far more support than today’s benefit.^[9]

Adjusted for inflation, today’s grant has lost more than one-third of its value.^[10] What once covered a month’s groceries with some money left over for rent or utilities now barely covers food alone. For context, an analysis on typical household costs finds that a New Jersey family of three spends almost $10,300 a year on food, nearly $3,600 more than the entire annual TANF grant.^[11]

The gap between what families receive and what they need to survive continues to widen. The 2026 federal poverty level (FPL) for a family of three is $27,320, yet TANF’s annual benefit amount is less than a quarter of that.^[12] A family of three needs income closer to $80,000, roughly 300 percent of the FPL, to cover basic necessities without making trade-offs between essentials.^[13] Most families receive less than the maximum grant, so what TANF provides falls even further short of what families need. The tens of thousands of New Jerseyans living in persistent and deep poverty (income below 50 percent of the FPL) feel this shortfall most profoundly.^[14]

The latest meaningful adjustment to TANF’s cash assistance came in 2019-2020, when maximum monthly grant levels increased. For a family of three, this meant an increase from $424 to $559.^[15] That increase was meaningful, but it was a one‑time event that partially restored the value TANF had lost over the prior two decades of inflation. Since then, the grant has continued to fall behind New Jersey’s rapidly rising housing, food, and transportation costs.^[16]

A one-off increase temporarily slows the erosion of TANF’s value but does not reverse it. A stagnant monthly grant is not a solution. In the seven years since that increase, families have had to stretch already-thin budgets even further, likely giving up other basic needs to make ends meet.

A Safety Net That Reaches Fewer Families

TANF serves fewer families today than it did when it first rolled out, leaving more families without the cash assistance the program was created to provide. But a shrinking TANF caseload is not evidence of reduced need — it is the result of policy decisions that have steadily narrowed who can get assistance.

In 2025, TANF served an average of 26,700 people across New Jersey’s 21 counties, a sharp drop from more than 31,300 the year before, according to the latest Current Program Statistics report.^[17] This decline does not signal less poverty. In fact, poverty in New Jersey remains widespread and entrenched: in 2024, roughly 860,000 residents lived below the federal poverty level.^[18] The shrinking caseload instead reflects how difficult the program has become to access and remain on.

Before TANF replaced its predecessor, Aid to Families with Dependent Children (AFDC), New Jersey assisted far more families living below the FPL — 72 per 100 families living in poverty, well above the national average.^[19] By 2022-2023, that number had fallen to just 11 families per 100, far below the national average of 20. If TANF reached the same number of families in poverty that AFDC had, an estimated 98,000 more families would be receiving support now.^[20] Tens of thousands of families who would have qualified for TANF were, and continue to be, excluded by design.

What that retreat has meant for children in particular comes through most clearly in the numbers. NJPP analysis finds that TANF’s shrinking caseload has stripped away assistance that would have supported thousands more children statewide, a cumulative loss built up over years of declining reach.^[21]

The steepest declines are concentrated in high‑poverty counties such as Camden, Essex, and Hudson, areas where Black and Hispanic/Latinx communities also make up significant shares of the population.

The program’s contraction has fallen hardest on the very communities that face the highest barriers to economic opportunity, a pattern rooted in long‑standing racial inequities in income, employment, and wealth that make Black and Hispanic/Latinx families more likely to experience deep poverty and need safety net programs like TANF to stay afloat.^[22]

These inequities are visible both in who is likely to need assistance and in who is most affected when TANF reaches too few families. Many families living in poverty in New Jersey are led by women and people of color, and the families who do receive TANF reflect this as well. In Fiscal Year 2023, 47.8 percent of TANF recipients were Black and 31.9 percent were Hispanic/Latinx.^[23] When TANF reaches fewer families overall, it disproportionately leaves these communities without the assistance they need to advance their economic security. The issue is not just about who enrolls, but also who is systematically shut out.

New Jersey has a policy history that explains how these inequities became embedded in the program. For example, the state was the first in the nation to adopt a “family cap” policy, which denied additional cash assistance to parents who had another child while receiving TANF.^[24] Many of New Jersey’s TANF policies continue to be punitive and are rooted in racialized assumptions of who is “deserving” of help, frame a child’s access to help as dependent on the mother’s “character”, and depict and reinforce stereotypes of Black women and other women of color that have eroded public support for assistance and paved the way for policies centered on work and personal responsibility, regardless of economic challenges.^[25] Although the family cap was repealed in 2020, its underlying racial assumptions still shape key features of TANF today, including strict work requirements, harsh sanctions, and narrow eligibility rules.

Without intentional reform to correct these issues, TANF’s restrictive design will continue to reproduce them. Strengthening the program is economically rational. It is also essential to ensuring all families and children who face steep barriers are not systematically excluded from the support they need to reach stability.

A Design That Stops Families at the Starting Line

Low benefits and a declining reach are just some parts of the problem. TANF’s design makes it difficult for families to get ahead in many other ways. When TANF was created, New Jersey adopted rules that went further than federal law required. The state imposed 35 hours of work activity per week instead of the federal 20 to 30 hours, limited work exemptions for parents of infants to just three months instead of the federal allowance of up to 12, and layered on complex application processes and administrative hurdles.^[26] Over time, these restrictive policies, compounded by understaffing and outdated administrative systems, transformed a safety net into what many families experience as an obstacle course.

A major barrier comes from how the program treats earnings, which determines a family’s monthly grant. TANF uses a strict income limit to determine whether a family still qualifies for help. With the exception of the first month on TANF, a significant portion of income earned every month is counted right away against a fixed cap. Even a small raise or a few extra work hours can push a family over that limit, causing their cash assistance to drop sharply or end altogether. In essence, this “benefits cliff” leaves families worse-off for trying to earn a little more.^[27] More generous income‑disregard policies, which allow parents to keep some of their earnings out of the eligibility calculation for a longer period of time, would give families the breathing room to increase their income without immediately losing the support they still need.

TANF’s structure also limits how long families can receive help. Federal law caps assistance at 60 months (or five years) over a lifetime, and New Jersey adheres to that limit. In 2024, 321 families had their cases closed solely because they reached this lifetime limit. If a family remains on TANF all the way to month 60, it is likely that family has not reached stability by month 61, yet the program cuts them off anyway.^[28] This underscores how arbitrary the five‑year cap is, especially given that many families face circumstances that cannot be resolved within such a rigid timeframe, including limited education, disabilities, chronic health needs, and caregiving responsibilities.^[29] The program further assumes nearly any job will lift families out of poverty. Yet even with New Jersey’s strong minimum wage, a family of three relying on full-time work plus the maximum monthly grant still falls short of what is required to cover basic expenses like rent, food, utilities, and transportation.^[30]

These design choices are negatively reinforced by how the state allocates its TANF dollars.^[31] New Jersey has broad flexibility in how it spends its federal block grant and invests state funds in the TANF program, yet in 2023 directed only five percent of TANF funding toward cash assistance.^[32] A significant share of funding went to programs like pre‑K, child care, and refundable tax credits, investments that strengthen long‑term economic security but do not replace the predictable, month‑to‑month income families need to keep a roof overhead or cover daily essentials. When so little of the block grant is dedicated to monthly cash assistance, TANF cannot function as the first‑line support it was designed to be. Instead, families encounter a system that offers help far too late. Help comes during the next tax filing season if they earn enough to file or when a child finally reaches a certain age. It is not available when they are standing at the starting line trying to regain their footing.

What New Jersey Should Do Next

The shortcomings described above do not operate independently. They compound each other in ways that steadily weaken the program’s ability to lift families out of poverty. New Jersey must take the lead in protecting families from economic hardship through a stronger, more modern TANF — one that reflects today’s economic realities and provides families with the stability required to build a secure future. New Jersey has both the capacity and the responsibility to act on the following core reforms: raising benefit levels and indexing them to inflation, updating eligibility thresholds and time limits to reflect today’s economic realities, and aligning work requirements with federal standards and lived experience.

Raising Benefit Levels to Reflect Real Costs

The most urgent reform is raising the grant. Benefits should be increased to at least 50 percent of the federal poverty level. In 2026, that means a monthly grant of roughly $1,138, compared to the current maximum of $559 — about $6.20 per day per person for a family of three. New Jersey should also adopt an automatic cost-of-living adjustment (COLA) so that benefits keep pace with inflation without requiring a legislative act every year.^[33] Without a COLA, any increase will lose value too quickly.

In alignment with this, New Jersey should direct a substantially greater share of its TANF funding toward cash assistance. In 2023, the state diverted most TANF funds away from cash assistance, when those dollars should go directly to families.^[34] While TANF’s flexibility allows states to fund a wide range of programs, too few dollars currently reach families who need immediate support in the form of a monthly grant. Prioritizing cash assistance would ensure that TANF fulfills its core purpose: helping families meet basic needs during periods of financial instability.

Updating Eligibility Rules and Limits

New Jersey must update its eligibility rules and strengthen the pathways that allow families to enter, remain, and gradually transition off TANF. This includes a higher asset and income limit, removing state-level restrictions that prevent families from accessing the full federal 60-month lifetime limit, prioritizing stability, and eliminating full family sanctions if work requirements are not fully met. All are changes that would better reflect the realities of low‑wage work, caregiving, and economic volatility.

At the same time, expanding income disregards — allowing families to keep more of their earnings when applying for TANF and while participating without losing eligibility, and for a longer period — would allow families to build earnings steadily, maintain housing and work supports, and exit TANF with greater stability.^[35]

Finally, simplifying application processes and addressing chronic administrative understaffing, including reducing documentation burdens and improving access, would remove barriers that likely discourage eligible families from accessing or maintaining support.^[36] Together, these changes would help reverse the steep decline in caseloads and ensure that assistance reaches families experiencing the deepest levels of poverty.

Aligning Work Requirements with Economic Reality

New Jersey’s work requirements go beyond those set by the federal government, likely pushing families out of the program when they cannot meet rigid participation rules and work requirements.^[37] Federal TANF guidelines generally require 20 hours per week of participation in a work activity, job, or a combination of both for single parents with children under age six, and 30 hours per week for those with older children.^[38] New Jersey, by contrast, requires 35 hours per week for most parents — a threshold that is difficult to meet for families dealing with unstable jobs, unpredictable schedules, limited child care, or transportation barriers.^[39]

Bringing state rules in line with federal standards would likely reduce unnecessary case closures and better reflect the realities of low‑wage work. Just as important, work activity requirements should recognize that not all jobs offer a path out of poverty. Treating a broader range of education, training, and credential‑building programs as core tools that may fully, not just partially, meet work activities would ensure that TANF supports long‑term stability and economic mobility rather than penalizing families for circumstances beyond their control.

A Call to Action

New Jersey lawmakers must reject the status quo that leaves families, especially children, without the resources they need to survive, let alone thrive. Strengthening TANF through reforms, including higher benefit levels, fairer eligibility rules, and updated work requirements, is essential to protecting the hundreds of thousands of residents living in or close to deep poverty. These reforms would not only stabilize families today but also reduce long-term costs associated with housing instability, food insecurity, and poor health outcomes — and would do so without creating new programs or new bureaucracy.

Lawmakers should enact comprehensive TANF reforms in the current legislative session to reach the families this program was designed to serve.

End Notes

^[1] Mercer County Board of Social Services, Cash Assistance, Accessed Mar. 24, 2026.

^[2] New Jersey Department of Human Services, Work First New Jersey, Jan. 20, 2026.

^[3] Holom-Trundy, B., Outdated and Ineffective: Why New Jersey Needs to Update Its Top Anti-Poverty Program, New Jersey Policy Perspective, May 22, 2025.

^[4] 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.

^[5] Aguas, T., Census 2024: Economic Gains Bypass Many New Jersey Communities, New Jersey Policy Perspective, Oct. 21, 2025.

^[6] Dalaker, J., An Introduction to Poverty Measurement, Library of Congress, Sep. 16, 2024. Administration for Children & Families, Characteristics and Financial Circumstances of TANF Recipients, Fiscal Year 2023, Table 10, Oct. 3, 2024. Floyd, Ife, et al., TANF Policies Reflect Racist Legacy of Cash Assistance, Center on Budget and Policy Priorities, Aug. 4, 2021.

^[7] 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.

^[8] 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.

^[9] NJPP analysis of Bureau of Labor Statistics Consumer Price Index Calculator data to consider inflation and Welfare Rules Database on TANF monthly amount for a family the size of three.

^[10] 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.

^[11] Massachusetts Institute of Technology, Living Wage Calculation for New Jersey, Feb. 28, 2026.

^[12] 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

^[13] Legal Services of New Jersey, New Jersey True Poverty Tracker: A Report on Populations Experiencing Deprivation in New Jersey, Sep. 2022.

^[14] University of California, Davis, Center for Poverty and Inequality Research, What is “deep poverty”?, Oct. 30, 2025.

^[15] 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.

^[16] Holom-Trundy, B., Outdated and Ineffective: Why New Jersey Needs to Update Its Top Anti-Poverty Program, New Jersey Policy Perspective, May 22, 2025.

^[17] NJ Department of Human Services, Current Program Statistics – December 2025, Table 1, Mar. 2026.

^[18] Aguas, T., Census 2024: Economic Gains Bypass Many New Jersey Communities, New Jersey Policy Perspective, Oct. 21, 2025.

^[19] Center on Budget and Policy Priorities, Trends in State TANF-to-Poverty Ratios, Oct. 1, 2025.

^[20] Center on Budget and Policy Priorities, TANF State-by-State Fact Sheets – New Jersey, Oct. 1, 2025.

^[21] NJPP analysis of ACNJ 1998 Kids Count data and Division of Family Development 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

^[22] Castro, R., Promoting Equal Opportunities for Children Living in Poverty, Appendix Table, New Jersey Policy Perspective, Apr. 2020. NJ Department of Human Services, Current Program Statistics – June 2019, Jan. 2026. NJ Department of Human Services, Current Program Statistics – June 202 5, Jan. 2026. Aguas, T., Census 2024: Economic Gains Bypass Many New Jersey Communities, New Jersey Policy Perspective, Oct. 21, 2025.

^[23] Administration for Children & Families, Characteristics and Financial Circumstances of TANF Recipients, Fiscal Year 2023, Table 10, Oct. 3, 2024. Aguas, T., Census 2024: Economic Gains Bypass Many New Jersey Communities, New Jersey Policy Perspective, Oct. 21, 2025.

^[24] Covert, B., New Jersey, Birthplace of Welfare Family Caps, Has Finally Repealed Them, TalkPoverty, Oct. 16, 2020.

^[25] 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.

^[26] Castro, R., TANF at 23: Reform is Necessary to Break the Cycle of Poverty, New Jersey Policy Perspective, Aug. 22, 2019. National Center for Children in Poverty, A 50-State Comparison of TANF Policy Settings Linked to Child and Family Protection, Mar. 24, 2025. Holom-Trundy, B., Understaffed and Underfunded: Barriers to Effective Anti-Poverty Assistance, New Jersey Policy Perspective, Nov. 25, 2024.

^[27] American Public Human Services Association, Seven Ways to Improve TANF and Help Families Advance, Aug. 22, 2022.

^[28] NJ Division of Family Development, 2024 Quarterly Progress Reports, Work First New Jersey, Accessed Mar. 24, 2026.

^[29] Castro, R., TANF at 23: Reform is Necessary to Break the Cycle of Poverty, New Jersey Policy Perspective, Aug. 22, 2019. National Center for Children in Poverty, A 50-State Comparison of TANF Policy Settings Linked to Child and Family Protection, Mar. 24, 2025.

^[30] Aguas, T., What Could $0.43 Offer You?…NJ Minimum Wage Just Went Up!, Princeton Perspectives, Jan. 2026.

^[31] NJPP analysis of New Jersey Office of Management and Budget, BUDGET IN BRIEF – Summary of Budget Recommendations FISCAL YEAR 2026, p. 95, Feb. 2025. Congressional Research Service, The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History, Jan. 6, 2025.

^[32] Center on Budget and Policy Priorities, New Jersey TANF Spending, Jan. 16, 2026.

^[33] 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.

^[34] Center on Budget and Policy Priorities, New Jersey TANF Spending, Jan. 16, 2026.

^[35] National Center for Children in Poverty, A 50-State Comparison of TANF Policy Settings Linked to Child and Family Protection, Mar. 24, 2025.

^[36] Holom-Trundy, B., Understaffed and Underfunded: Barriers to Effective Anti-Poverty Assistance, New Jersey Policy Perspective, Nov. 25, 2024.

^[37] 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.

^[38] Library of Congress, The Temporary Assistance for Needy Families (TANF) Work Standard and How States Met It, Feb. 18, 2026.

^[39] Under Work First New Jersey rules, parents with infants under three months old may receive a temporary deferral from work participation requirements. After this period, parents are generally expected to engage in approved work activities unless they qualify for another exemption (such as a documented medical condition or caregiving need). These deferrals do not eliminate program obligations but temporarily pause work requirements during the postpartum period. See for example: Work First New Jersey, Work First New Jersey Handbook, Aug. 2019. Justia Regulations, NJ Admin Code 10:90-4.10, Jun. 16, 2025.

Fool’s Gold: The Hidden Costs of AI Data Centers for New Jersey

Posted on March 31, 2026March 30, 2026 by Alex Ambrose

Introduction

Robust, responsible economic development must ensure businesses bear the costs they create, protect the environment, and uphold sound fiscal policy so that state tax dollars do not subsidize private profits. Data centers and the technological products they support may seem exciting and new, but they also impose costs on local communities and the state as a whole. As with prior economic development booms, from warehouses to shopping malls, an accurate accounting of the hidden costs of these buildings can empower policymakers to make better decisions and protect residents.

Behind the promises of jobs and economic growth, the dramatic expansion of data centers has harmed states and communities: these facilities use large amounts of energy, do not deliver meaningful long-term benefits, and cause the state to lose money from subsidies and credits. The growth in artificial intelligence (AI) products has driven rapid growth in data centers, but that growth strains local communities and infrastructure.^[1]

New Jersey residents and small businesses are already paying more for electricity because of data center energy consumption. Data centers were the main driver of the 20 percent jump in electric bills that New Jerseyans experienced in June 2025.^[2] And with more data center demand pushing construction across the country, New Jersey will see increased exposure to the risks associated with data centers.

To address these hidden risks to the state’s communities and residents, utility costs, and fiscal stability, NJPP recommends the following:

Create a standard definition of a data center for the purposes of state regulation.
Build strong guardrails for data center companies around cost sharing, transparency, and energy resource requirements.
Standardize energy load forecasting.
Remove or restrict data center subsidies.

The Basics of Data Centers

When a user types a prompt into an AI tool, a data center’s computers use an enormous amount of computing power to generate the tool’s response. What may appear to the user to be magic has very real costs in electricity, water, and infrastructure. At its core, a data center is just a different kind of industrial or commercial facility, designed to maximize profits for its owners and operators. Understanding the costs data centers impose on communities and the reality of their operations can help policymakers develop laws and regulations that protect residents and the places they live.

What is a data center?

Simply put, a data center is a big room filled with computers. As more computing power is needed to conduct operations for artificial intelligence programs, more of these rooms are needed to keep up with demand, with more resource-intensive computers and all the infrastructure needed to run them, including electricity to power the computers and water for their cooling needs.^[3] As a result, a medium-sized data center can consume more than 100 million gallons of water per year, roughly as much as a small town.^[4]

Because definitions of a data center can include everything from a small server room to a huge warehouse, information on data centers can be difficult to obtain. Different states use different definitions of data centers for regulatory purposes. Some simply identify “large load customers,” defining a facility that needs a certain amount of energy (say, 100 megawatts) as a “large load customer,” without specifying that it must be a data center.^[5] For certain tax exemptions, states may have different definitions, which might include specific industry codes, capital investment minimums, or jobs created.^[6]

For the purposes of this report, NJPP uses a broad definition of “data centers” that includes a wide range of facilities designed to contain computing infrastructure. The rapid growth in data centers is driven by the computing demands of AI products, sometimes leading to the shorthand of “AI data centers” to describe newer, larger buildings.

Where are data centers in New Jersey and where are they planned?

New Jersey currently has 48 data centers, with another 12 announced or under construction, according to Aterio, a research firm that tracks the industry.^[7] Different publications and firms use different definitions for what constitutes a data center, and no universal database exists. Aterio’s count includes small, midsize, and “hyperscale” facilities categorized by power consumption and public-facing descriptions such as utility filings, public investor statements, and press releases.

Companies decide where to locate or “site” their facility based on a number of factors. Because data centers often require substantial space commitments, they tend to be located outside of denser urban or suburban areas, with new proposed sites in New Jersey in communities such as Vineland, Moorestown, and Clinton.^[8] Companies also consider zoning, access to a high-quality network, and the ability of the utility to meet their energy needs; but one of the biggest factors is choosing a place where there are previously developed facilities.^[9] This means data centers tend to be concentrated in one area, further straining local grids and communities. Loudoun County, Virginia has the highest concentration of data centers in the world, where new data centers are being constructed near schools, residential neighborhoods, and retirement communities, consuming enormous amounts of resources in the process.^[10]

How much energy and water does a data center use?

Data centers use a significant amount of energy, but because of a lack of transparency in energy reporting, exact data is unavailable and the energy usage of data centers can vary widely. A typical large data center that focuses on AI uses as much energy as 100,000 households.^[11] However, some larger ones that are currently under construction across the country could use 20 times that much energy.^[12] In New Jersey, estimates project nearly 10 percent of New Jersey’s entire electrical usage will go to data centers by 2030, or the equivalent of the energy usage of the entire state of Rhode Island.^[13]

In fact, in the next several years, data center energy consumption will grow four times faster than total consumption from all other sectors, and the United States is projected to be the global leader in that explosive growth.^[14] According to New Jersey’s regional grid operator PJM, AI data centers accounted for nearly 70 percent of the increase in demand during the 2025/26 capacity auction — the same auction that resulted in a 20 percent increase in electric bills for New Jersey residents.^[15]

Approximately 60 percent of the energy a data center uses goes to powering the servers, while the rest goes toward cooling systems.^[16] These cooling systems demand large amounts of both electricity and water. In 2024, large AI data centers across the United States consumed about 14 billion gallons of water^[17] — a number that could double by 2028.^[18]

Precise water usage figures are difficult to verify because data center companies are not required to report them publicly. This lack of transparency is a problem for a state that has experienced several droughts in recent years, including the 2024-25 drought that resulted in crop losses and increased wildfire risk.^[19] Any further strain on the state’s water resources could threaten its economic and environmental well-being.

What other costs do data centers impose on ratepayers?

Electricity rates are set by the utility providers in New Jersey and approved by the Board of Public Utilities.^[20] Yet there are currently no mechanisms in place to protect everyday ratepayers, such as families and small businesses, from higher costs due to data center buildout. Experts find that despite utility companies saying they keep data center costs separate, these ratepayers are essentially subsidizing big tech companies’ data center projects through higher electricity bills.^[21] Aside from the increase in electricity demand, data centers also often require upgrades to transmission infrastructure, and those costs are already being passed on to households and local businesses through increases in their electric bills.^[22] If a data center company closes its facility, ratepayers can be left on the hook to pay for those upgrades without strong guardrails in place.

What kinds of jobs do data centers produce?

Data center construction, like any large building project, creates a short-term increase in construction jobs. But once the building is complete, relatively few jobs remain, as the data center is largely space for computers and their cooling and power infrastructure. The limited empirical research has shown no clear evidence of an association between data center development and local tech job creation.^[23] Industry estimates place about 50 jobs in a 250,000 square-foot facility — roughly 5,000 square feet per job.^[24] By comparison, warehouses generate one job for every 600 square feet, while offices provide one job for every 190.^[25] A Brookings Institution report summarizes the existing research: data center development has produced mostly short-term construction jobs in recent years and relatively little long-term, high-value tech activity or large-scale employment.^[26]

How Policymakers are Responding to Data Centers

As data center growth has rapidly accelerated, policymakers face a shifting landscape and have been slow to advance policies that address its rising costs. From electrical and water usage to economic development credits, the industry has outpaced policy constraints and regulation.

What makes data centers challenging for state and local policymakers?

Data centers are challenging for state and local policymakers in part because of a lack of transparency in the development process. One major issue is with predicting load growth, or how much electricity a region will need in the future. While it may seem that planning for higher energy use than is needed is a good thing, over-budgeting by too large a margin can artificially drive up costs and continue to increase ratepayer bills. Currently, load growth in New Jersey and surrounding states is predicted by each utility reporting to PJM how much energy it expects it will need in the future. However, this process is not standardized and utility companies often report projects at different stages of development.^[27] The demand forecasts that PJM receives may be double- or even triple-counting data center projects because companies will often put in multiple bids for a single project and pull out of all but one once they have chosen their site.^[28]

Forecasts through 2030 show demand six times higher than just a few years ago.^[29] While there are several factors that contribute to this jump, including manufacturing and electrification, the main driver of this increase in expected demand is data centers.^[30] Without a standard system that ensures large load projects like data centers are only counted once, forecasts will remain inflated, driving up costs further. And if policymakers continue to use new and existing oil, coal, and gas plants to meet demand that may never materialize, New Jersey could be locked into using these less reliable, more expensive, and more polluting power plants for decades to come.^[31]

How do existing state, regional, and federal policies address AI data centers?

Recent advances in hardware have led to an explosion in the expected development of AI data centers.^[32] AI requires dramatically more processing power than traditional computing, driving the skyrocketing demand. U.S. Department of Energy research projects up to 12 percent of total nationwide electricity going to data centers by 2028, or roughly five and a half times what New Jersey uses in a year.^[33]

Lawmakers have been unable to keep pace with the rapid growth of data centers, and the regional grid operator PJM has failed to act to protect ratepayers.^[34] During the December 2025 capacity auction, existing and planned resources fell short of the reserve needed for grid reliability.^[35] This means that if nothing else changes, the region could soon face rolling blackouts on the hottest and coldest days of the year.

PJM recently attempted to adopt policies to address data centers through an expedited decision-making process, but could not secure enough votes on any single proposal.^[36] Instead, the board issued a letter outlining six actions it plans to take; but the response falls short of what is needed to hold data centers accountable, protect ratepayers from future increases, and prevent further air pollution across the region.^[37]

How do data centers affect environmental justice communities?

On top of higher utility costs, the increase in demand from data centers is delaying the transition to renewable energy, risking local resident health and climate goals. Decision makers, including PJM and the White House, are delaying closures of fossil fuel plants and considering reviving retired ones to meet growing demand.^[38] More than half of all coal and gas plants in the PJM region are within a mile of an environmental justice community, which means residents there are not only facing higher bills, but continuing to breathe more polluted air than in other areas.^[39]

Using a large generative AI model can produce as much air pollution as more than 10,000 round trips by car between Los Angeles and New York City — and a single model can draw power from multiple data centers.^[40] Experts also found that in 2023, air pollution attributed to data centers in the United States caused about $6 billion in public health damages, and that number could increase up to $20 billion per year if lawmakers continue business as usual.^[41] For comparison, vehicle emissions in 2016 alone caused $12 billion in health damages for New Jersey.^[42] Any increase could be devastating to the health of every state resident.

Data centers have worsened health outcomes for surrounding communities. One facility outside the PJM region in Tennessee runs without pollution controls due to a federal loophole; local residents report that the increase in emissions has made their existing conditions, like asthma, even worse.^[43] In New Jersey, a proposed data center in Vineland plans to use diesel backup generators, which would increase local air pollution in a community already suffering from worse health outcomes.^[44] A 2022 report found that residents there experience asthma, heart disease, and lung cancer at rates higher than the state average — all conditions worsened by diesel exhaust.^[45] Vineland residents have also reported ongoing noise from construction, which can cause permanent hearing damage.^[46]

How are states subsidizing and supporting data center growth?

Seeking economic development, many states have rolled out corporate subsidy and tax benefit programs for data centers.

Most states have focused on reductions in sales taxes, particularly those with limited or no taxes on corporate profits. Other states have exemptions on electricity taxes, while others offer property tax reductions.^[47] New Jersey’s economic development tax credit program provides tax benefits for data center construction.

The Next New Jersey program allows artificial intelligence or “AI-related” businesses to apply for tax credits of up to $250 million to cover construction, building, or employment-related costs, with a total cap of $500 million in credits.^[48]

To define what qualifies as an “AI data center,” the law requires that a facility must handle AI tasks and lists the types of services the facility offers and the systems it houses — namely computing systems and the computers’ support infrastructure.^[49] This definition captures a broad range of potential facilities, while not clarifying their size, electrical and water usage, and environmental impact.

Eligibility criteria include:

At least 50 percent of the business’s employees are engaged in “artificial intelligence-related activities” or 50 percent of the business’s revenues come from “artificial intelligence-related activities”;
At least $100 million in capital investment at the facility; and
At least 100 new full-time jobs in New Jersey (construction, building services, etc. may count, but only up to 50 percent of employment).^[50]

In addition to Next New Jersey, data centers can qualify for subsidies that apply to all industries, such as the Emerge and Aspire economic development tax credit programs, which create incentives for businesses to locate in New Jersey.^[51]

How much do data center subsidies cost states?

As the data center industry has grown, so have the costs of these subsidies for states. Incentives that seem small-scale can quickly balloon as the boom in construction clusters in certain areas, leading to substantial budget instability.^[52] At least 10 states have lost more than $100 million in data center subsidies.^[53] Virginia is a dramatic example, with its sales tax exemption costing the state $1.6 billion^[54] — more than 20 percent of its total sales tax revenue of $7.6 billion.^[55] Illinois has seen similar losses, with nearly $1 billion drained from its state budget.^[56]

Because of these rapidly rising costs, some states have begun pulling back their subsidies for data centers, including Minnesota, which removed its electricity sales tax exemption.^[57]

Currently, New Jersey’s data center tax credit does not anticipate revenue costs in Fiscal Year 2027, though the program is relatively new and has not yet issued any credits.^[58]

Solutions for Policymakers to Protect New Jerseyans

The problems data centers create are not going away, and there are many lessons that both New Jersey and PJM can learn from other states and regions. While experts predict future demand could continue to explode and drive up costs, good policy could be the difference between modest increases with no additional pollution and higher costs with higher pollution.

The following are proposals to mitigate the hidden costs of data centers:

1. Create a standard definition of a data center for the purposes of regulation.

New Jersey’s current definition of an “AI data center” for the purposes of administering the Next New Jersey tax credit program does not effectively capture the broad range of facilities, nor does it assist in regulation of their electrical, water, or environmental costs to communities.^[59] NJPP recommends creating a standard statutory definition of a data center for specific regulatory purposes (such as electrical and water usage) to ensure that regulations are consistently applied to this class of buildings and the costs associated with them.

2. Build strong guardrails for data center companies around cost sharing, transparency, and energy resource requirements.

Data centers are driving up electricity prices for families and small businesses, and lawmakers can require them to pay more to offset those increases — but as it stands right now, there are no safeguards in place. At the end of his term, Gov. Murphy refused to sign a bill that would have created a new rate for data centers, charging them more for their energy usage to help offset the increases on household and small business energy bills.^[60] New Jersey would not be the first state to do this – at least 33 other states have either proposed or implemented different rate structures for large load customers including data centers.^[61] In fact, Minnesota enacted a fee on data centers with funds going towards energy efficiency for low-income residents.^[62] A rate structure such as this ensures that families and small businesses are not paying more for their electricity and instead puts the cost on the companies that are causing rates to increase. It also incentivizes energy efficiency and other innovative ways to reduce energy use, benefiting both the data center company and the state’s residents.

Second, New Jersey can join other states in requiring data centers to report their energy and water usage to the state’s Board of Public Utilities. By requiring more transparency, both lawmakers and community members can make informed decisions about future policy.

Finally, lawmakers can require data center companies to bring their own generation, specifically clean energy, if they want to build data centers in the state. Other states have learned hard lessons about what happens when a data center company is left unregulated and can run polluting energy sources unchecked, as in Tennessee, where gas turbine pollution has been a problem. New Jersey can set the standard now to protect energy affordability and cleaner air in the future.

3. Standardize load forecasting.

Because AI data centers are an emerging technology, and the idea of large load projects “shopping around” in multiple jurisdictions is a new problem, policies have not yet standardized how utilities and states report their future energy needs to entities such as PJM. Standardizing load forecasting can be done at the state level; it is even more powerful at the regional level, so each utility uses the same protocols to report its energy needs. While PJM has failed to address this issue, the BPU can work with PJM and utilities to reduce duplication of projects and ensure load forecasting is as accurate as possible in New Jersey. This will also reduce the need to keep older coal, oil, and gas plants online, protecting New Jerseyans and the entire PJM region from more air pollution. Additionally, the state and PJM can consider policies that will ensure any necessary blackouts during peak energy days prioritize families and small businesses over data centers.

4. Remove or restrict data center subsidies.

As the state approaches a substantial budget gap, programs that provide subsidies to private corporations need reevaluation.^[63] Many states are already reevaluating these subsidies, and New Jersey’s relatively new program has yet to issue an approved credit, providing time to reduce its cost before substantial revenue losses occur.^[64] Given the substantial hidden costs of these centers, reducing these incentives or increasing restrictions on their use may help alleviate the burden on communities and the state budget. National experts also have proposed guardrails in the absence of full repeal that can limit the negative impact of these subsidies on communities and their budgets, including lowering the duration and amount of subsidies, prohibiting non-disclosure agreements, requiring public listing of all recipients and applicants, and requiring community benefits agreements in line with other tax incentive programs.^[65]

Conclusion

Because of AI data centers, communities are facing higher costs, a more unreliable grid, more pollution, and a lack of transparency that makes holding these companies accountable nearly impossible. New Jersey’s families and small businesses are already paying to subsidize them through higher electric bills. But these problems can be solved. The future of New Jersey’s affordable clean energy, along with its economic and environmental well-being, hinges on lawmakers prioritizing everyday New Jerseyans over for-profit technology companies. The path forward is clear: stronger rules, cleaner energy, and a commitment to putting people before corporate profits.

End Notes

^[1] Leppert, R. What we know about energy use at U.S. data centers amid the AI boom. Pew Research Center. Oct. 24, 2025.

^[2] Chavin, Sabine, et al. Tackling the PJM Cost Crisis. Evergreen Collaborative. Apr. 15, 2025. p.2.

^[3] Metz, C. et al. “How A.I. Is Changing the Way the World Builds Computers,” New York Times. Mar. 16, 2025.

^[4] Yanez-Barnuevo, M. Data Centers and Water Consumption. Environmental and Energy Study Institute. June 25, 2025.

^[5] Utah Code Sec. 54-26-101 (2025).

^[6] Compare N.C. Stat. Sec. 105-164.3(47) (2025) (defining data center as “a facility that provides infrastructure for hosting or data processing services and that has power and cooling systems that are created and maintained to be concurrently maintainable and to include redundant capacity components and multiple distribution paths serving the computer equipment at the facility”) with Ga. Rules and Regulations Rule 560-12-2-.117 (2025) (requiring that a “high-technology data center” “power, cool, secure, and connect” computer equipment, as well as certain investment thresholds).

^[7] Aterio. US Data Centers Dashboard. Feb. 2026.

^[8] FracTracker Alliance. Data Centers Identified by FracTracker Alliance. 2025.

^[9] Leppert, R. What we know about energy use at U.S. data centers amid the AI boom. Pew Research Center. Oct. 24, 2025.

^[10] Chen, A. “A.I. Is on the Rise, and So Is the Environmental Impact of the Data Centers That Drive It.” Smithsonian Magazine. Sept. 29, 2025.

^[11] Copley, M. “Data centers are booming. But there are big energy and environmental risks.” NPR. Oct. 14, 2025.

^[12] Leppert, R. What we know about energy use at U.S. data centers amid the AI boom. Pew Research Center. Oct. 24, 2025.

^[13] Blanford, G. et al. Powering Intelligence 2026: Updated Scenarios of U.S. Data Center Electricity Use and Power Strategies. Electric Power Research Institute. 2026.

NJPP analysis of U.S. EIA data. See table C1. p.3.

^[14] Ibid. See “Energy Demand from AI”

^[15] Ambrose, A. Why Are New Jersey’s Electricity Bills Going Up, and What Does PJM Have to Do With It? New Jersey Policy Perspective. (2025).

^[16] Leppert, R. What we know about energy use at U.S. data centers amid the AI boom. Pew Research Center. Oct. 24, 2025.

^[17] Leppert, R. What we know about energy use at U.S. data centers amid the AI boom. Pew Research Center. Oct. 24, 2025.

^[18] Ibid.

^[19] National Integrated Drought Information System. New Jersey conditions. National Oceanic and Atmospheric Administration Accessed March 2026.

^[20] New Jersey Board of Public Utilities. About NJBPU. Access Mar. 2026.

^[21] Martin, E. and Peskoe, A. Extracting Profits from the Public: How Utility Ratepayers Are Paying for Big Tech’s Power. p.1.

^[22] Ibid. p.15.

^[23] Gargano, A. & Giacoletti, M. Subsidizing the Cloud: U.S. State Incentives to Data Centers. SSRN Working Paper No. 5881105. Feb. 2026. P. 39.

^[24] Joint Legislative Audit and Review Commission. Report to the Governor and the General Assembly of Virginia: Data Centers in Virginia, 2024. Dec. 9, 2024. P. i.

^[25] Fuller, S. NAIOP Research Foundation. Economic Impacts of Commercial Real Estate, 2021 Edition. 2021. P. 17.

^[26] Goetzel, D. et al. Turning the data center boom into long-term, local prosperity. Brookings Institution. Feb. 5, 2026.

^[27] National Association of Regulatory Utility Commissioners. Forecasting Load Growth: Assumptions and Risks, February 10, 2025. p.2.

^[28] Ibid.

^[29] Wilson, J.D. et al. Power Demand Forecasts Revised Up for Third Year Running, Led by Data Centers. Grid Strategies. Nov. 2025. p.3.

^[30] Ibid.

^[31] Goldsmith, I. and Byrum, Z. Powering the US Data Center Boom: Why Forecasting Can Be So Tricky. World Resources Institute. Sept. 17, 2025.

^[32] Shehabi, A. et al. 2024 United States Data Center Energy

Usage Report. Berkeley Lab, Energy Analysis & Environmental Impacts Division. December 2024. P. 6.

^[33] Shehabi, A. et al. 2024 United States Data Center Energy

NJPP analysis of U.S. EIA data.

Usage Report. Berkeley Lab, Energy Analysis & Environmental Impacts Division. December 2024. P. 5-6.

^[34] Ambrose, A. Why Are New Jersey’s Electricity Bills Going Up, and What Does PJM Have to Do With It? New Jersey Policy Perspective. (2025).

^[35] Hanawa, A. PJM’s 2027/2028 Base Residual Auction results: demand response prices climb for the third straight year. Enel North America. Dec. 22, 2025.

^[36] Howland, E. “PJM stakeholders fail to agree on data center interconnection rules.” Utility Dive. Nov. 20, 2025.

Brandon, E. CUB Q&A: PJM’s Critical Issue Fast Path (CIFP) Policy Proposals on Data Centers. Citizens Utility Board. Nov. 13, 2025.

^[37] Mills. D. Board Decisional Letter on Critical Issue Fast Path – Large Load Additions. PJM Interconnection, LLC. Jan. 16, 2026;

Yelda, R. PJM Board Announces Final Proposal to Address Data Center Demand. NRDC. Jan. 16, 2026.

^[38] Yelda, R. PJM Board Announces Final Proposal to Address Data Center Demand. NRDC. Jan. 16, 2026.

Ebbs, S. Trump’s cozy deal with Big Tech promotes empty promises to tackle energy affordability. Southern Environmental Law Center. Mar. 4, 2026.

^[39] Castigliego, J.R., et al. PJM’s Capacity Market: Clearing Prices, Power Plants, and Environmental Justice. Oct. 2021. p.i.

^[40] Han, Y. et al. The Unpaid Toll: Quantifying and Addressing the Public Health Impact of Data Centers. Cornell University.

^[41] Ibid.

^[42] University of North Carolina Institute for the Environment. New study identifies leading source of health damages from vehicle pollution in 12 states and Washington, D.C. Jun. 8, 2021.

^[43] Wittenberg, A. ‘How come I can’t breathe?’: Musk’s data company draws a backlash in Memphis. Politico. May 6, 2025.

^[44] New Jersey Environmental Justice Alliance. Vineland Case Study. Accessed March 2026.

New Jersey Department of Health. Healthy Community Planning Report, Vineland, Cumberland County. 2022. P.6.

^[45] New Jersey Department of Health. Healthy Community Planning Report, Vineland, Cumberland County. 2022. P.6.

U.S. Environmental Protection Agency. Learn About Impacts of Diesel Exhaust and the Diesel Emissions Reduction Act. Accessed Mar. 2026.

^[46] Corin, C. Residents raise concerns about humming noise near South Jersey data center. 6abc. Mar. 12, 2026.

Pavlinich, E.J. The Dangers of Data Centers. Environmental Health Project. Feb. 27, 2026.

^[47] N.C. Gen. Stat. § 105-164.13(55) (electricity exemptions); Fitzgerald, M. “Data center tax breaks are on the chopping block in some states.” Stateline. Feb. 24, 2026.

^[48] P.L. 2024, c.49 (“a scalable facility specifically to handle the demanding computational needs of artificial intelligence applications, designed for tasks like machine learning training, deep learning algorithms, and complex data analysis utilizing purpose-built processing units, whose services are the storage, management, and processing of digital data; that is used to house: computer and network systems, including, but not limited to, associated components such as servers, network equipment and appliances, telecommunications, and data storage systems . . . .”)

^[49] N.J. Annotated Code Sec. 19:31CC-1.2 (2026).

^[50] P.L. 2024, c.49

^[51] NJ Economic Development Authority. Emerge Program: At a Glance. Aug. 2025; NJ Economic Development Authority. Aspire Overview. Feb. 2025.

^[52] LeRoy G. & Tarczynska, K. Cloudy with a Loss of Spending Control: How Data Centers Are Endangering State Budgets. Good Jobs First. Feb. 2025.

^[53] LeRoy G. & Tarczynska, K. Cloudy with a Loss of Spending Control: How Data Centers Are Endangering State Budgets. Good Jobs First. Feb. 2025.

^[54] Report of the Comptroller to the Governor of Virginia. An Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2025. Dec. 15, 2025. P. 191.

^[55] Report of the Comptroller to the Governor of Virginia. An Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2025. Dec. 15, 2025. P. 31

^[56] Illinois Department of Commerce & Economic Opportunity. Data Center Investment Program: 2024 Annual Report. 2025.

^[57] Griffith, M. “Minnesota lawmakers extend tax breaks for Big Tech data centers.” Minnesota Reformer. Jun. 11, 2025.

^[58] State of New Jersey. Tax Expenditure Report Fiscal Year 2027. Mar. 10, 2026. Pp. 11, 85.

^[59] N.J. Annotated Code Sec. 19:31CC-1.2 (2026).

^[60] Office of Governor Phil Murphy. Governor Murphy Takes Action on Legislation. Jan. 20, 2026.

^[61] Smart Electric Power Alliance. Database of Emerging Large-Load Tariffs. Accessed March 2026.

^[62] M.N. HF 16. Data center regulatory bill. 94th Legislature. Enacted Jun. 14, 2025.

^[63] Biryukov, N. “Gov. Sherrill provides grim outlook on state finances ahead of budget speech.” New Jersey Monitor. Feb. 26, 2026.

^[64] Fitzgerald, M. “Data center tax breaks are on the chopping block in some states.” Stateline. Feb. 24, 2026.

^[65] Tarczynska, K. Data Centers: Key Reforms for State Subsidy Legislation. Good Jobs First. Sept. 23, 2025.

How Gov. Sherrill’s Fiscal Year 2027 Budget Measures Up

Posted on March 11, 2026March 11, 2026 by Tonanziht Aguas

Before the Governor’s budget address for Fiscal Year 2027, New Jersey Policy Perspective produced a preview of the proposal, identifying key priorities to advance economic, social, and racial justice.

The report outlines three core priorities for the FY 2027 budget:

Guard fiscal responsibility, including reducing the multi-billion-dollar structural deficit and raising revenue from the wealthy.
Open the door to opportunity by protecting immigrants, expanding family tax credits, and improving health coverage.
Protect critical investments, including clean energy infrastructure and NJ Transit funding, to help make life more affordable in New Jersey.

With the release of the governor’s Budget in Brief, the budget met some key benchmarks but fell short elsewhere.

(All citations refer to the Fiscal Year 2027 Budget in Brief unless otherwise noted.)

NJPP FY27 Budget Priority

Was it included in the budget?

Maintaining cash reserves and reducing deficits	Yes. A structural deficit of $1.67 billion remains, substantially lower than original projections of more than $3 billion (BIB p. 8). The FY 2027 budget proposal recognizes the need for long-term solutions to close the structural deficit, including nearly $2 billion in proposed reductions in expenditures and $700 million in additional revenue (BIB pp. 4, 48, 50-53). Projected cash reserves will be reduced to $5.4 billion from $7.3 billion at the end of this fiscal year (BIB p. 8).
Fully funding pensions and schools	Yes. Governor Sherrill continues Governor Murphy’s commitment to fully funding the pension and school funding formulas (BIB pp. 15, 11). School funding changes include a six percent cap on funding increases, and a three percent cap on decreases (BIB p. 19).
Raising new revenues from the wealthy	Partially Included. Governor Sherrill’s budget includes new revenues from closing loopholes in corporate and business taxes (BIB pp. 48, 50-53). These increases are a good first step, but more revenue remains untapped from big corporations and wealthy individuals.
Adjusting Stay NJ to control costs	Yes. The budget proposal includes changes to Stay NJ that reduce the income cap from $500,000 to $250,000 and reduce the maximum benefit from $6,500 to $4,000, saving more than $500 million that would otherwise go to wealthier homeowners (BIB pp. 11, 59).
Services for immigrants	Partially included. The budget proposes continued funding for Cover All Kids, which provides health insurance for children regardless of immigration status (BIB p. 26). It also includes continued funding for language access, deportation defense, and the Office of New Americans.
Expanding and improving family tax credits	No. The Governor’s budget maintains the Child Tax Credit and Earned Income Tax Credit at current eligibility and benefit amounts (BIB p. 5).
Increasing the WorkFirst NJ grant	No. The budget proposal does not increase the grant amount for very-low income families receiving WorkFirst New Jersey, despite the amount being frozen for more than seven years of high inflation.
Expanding affordable insurance options	No. While current health care options are maintained, the budget includes no additional coverage programs or affordability support to address lost federal subsidies on the GetCovered NJ marketplace or residents who lose Medicaid coverage due to work requirements beginning in 2027 (BIB pp. 26-27).
Reducing or eliminating costs for people involved in the criminal legal system	No. The budget does not propose funding to reduce or eliminate the cost of prison communication fees, municipal public defenders, or other burdens placed on families as a result of the criminal legal system.
Preserving Clean Energy Fund and RGGI funding for clean energy infrastructure	No. The budget continues to raid the Clean Energy Fund at similar levels to the FY 2026 budget, diverting money for energy affordability and energy infrastructure towards both the general fund and filling NJ Transit budget holes (BIB pp. 74, 81). No information was provided about Regional Greenhouse Gas Initiative funding.
Maintaining the Corporate Transit Fee and committing it to transit	Partially included. The budget continues to dedicate the Corporate Transit Fee (CTF) to transit, and while it appears the state subsidy for NJ Transit has increased, this increase offsets a shortfall in CTF (BIB p. 40). The overall state budget allocation for NJ Transit remains at a low level, similar to previous years.

With only the Budget in Brief available at the moment, more detailed analysis will depend on the full budget details. Some programs mentioned in the budget address do not yet have specific revenues or spending items associated with them, such as the Governor’s proposed utility affordability initiative. Additionally, the proposed $2 billion in cuts may fall on communities or programs in need. More detail is needed to identify which programs will be affected.

The Governor’s budget provides an encouraging start toward a sustainable fiscal future. But spending cuts alone cannot protect residents or strengthen state investments that communities depend on. Building a stronger New Jersey will require stronger revenues, especially from asking wealthy individuals and large corporations to contribute more through a fair tax system. NJPP looks forward to a final Fiscal Year 2027 budget that better supports working families looking for opportunity, while ensuring the wealthy and powerful pay their fair share.

What to Look for in the New Jersey Budget for Fiscal Year 2027

Posted on March 3, 2026 by Peter Chen

How NJPP will evaluate Governor Sherrill’s first budget proposal

As Governor Mikie Sherrill prepares her first budget, New Jersey faces economic and budgetary headwinds, including:

increased costs for housing, utilities, and health care for residents,
instability and costs shifting from the federal government, and
cost pressures on government services, notably employee health care costs.^[i]

New Jersey continues to face significant economic challenges. One in nine children in the state live in poverty, and many households face rising costs for housing, health care, and other necessities. The Fiscal Year (FY) 2027 budget will shape the state’s response and determine how much support residents receive.^[ii]

As the Governor already laid out in a pre-budget press conference on February 26, the state begins the FY 2027 budget process with notable fiscal constraints.^[iii] New Jersey faces an existing $1.5 billion structural deficit, along with growing cost pressures in future years, including expanding costs for the Stay NJ program and looming federal cuts.^[iv] Without additional revenues, these constraints will limit the scope of new investments in the FY 2027 budget.

In her inaugural address, Governor Sherrill pledged to “open doors to opportunity across our state.” The Governor has emphasized the need to address structural budget gaps and strengthen long-term fiscal planning.^[v] The FY 2027 budget will require difficult trade-offs between expanding affordability for low- and moderate-income residents, maintaining essential services, and ensuring fiscal stability and sufficient revenues to fund those services.

The benchmarks below outline the criteria NJPP will use to evaluate how well the Governor’s budget addresses these economic pressures and fiscal challenges while aligning with the values of expanding opportunity for all.

Guard Fiscal Responsibility

Maintaining cash reserves and reducing deficits

The state’s best defense against economic instability is robust cash reserves to deploy during a recession or unanticipated federal cuts.^[vi] The state’s cash reserves are currently reduced by the roughly $1.5 billion structural deficit.^[vii] Given unpredictable federal actions, maintaining the state’s savings can ensure that funding for programs such as child care, transportation, and health insurance remains predictable and stable. Dipping into the state’s savings to patch a budget hole would make the state more vulnerable should recession or further federal cuts arrive.

Fully funding pensions and schools

Governor Sherrill will inherit Governor Murphy’s legacy of a fully funded pension and school funding formula, which raised the state’s credit rating and strengthened fiscal stability.^[viii] Governor Sherrill’s budget should maintain the state’s existing commitments to retirees and its nationally recognized public school system.

Raising new revenues from the wealthy

The structural deficit means the state has less revenue than it commits to investments and programs. Addressing the affordability crisis in New Jersey will require new revenue, and the Governor’s budget proposal should ask the wealthiest individuals and corporations to pay their fair share.^[ix] While middle-class and working-class families struggle with daily costs, the wealth of the world’s wealthiest individuals and corporations has continued to increase, even as they receive disproportionate benefits from the 2025 federal tax bill.^[x]

Adjusting Stay NJ to control costs

The cost of the Stay NJ subsidy for homeowners age 65 and over will grow this year by nearly $1 billion.^[xi] Reducing the income cap from $500,000 and reducing the maximum benefit from $6,500 would help ensure that only seniors at risk of housing insecurity receive benefits.^[xii] Without these changes, program costs could expand the structural deficit further.

Open the Door to Opportunity

Protecting immigrants

As federal attacks on immigrants increase, preserving funding for New Jersey’s programs assisting its immigrant residents is increasingly important. Keeping the door of opportunity open for New Jersey’s immigrant population, who make up more than 1 in 5 residents,^[xiii] requires sustained funding for critical programs, including:

Cover All Kids health insurance coverage for all children regardless of immigration status
Detention and deportation defense legal assistance
Legal representation for children and youth, and
Office of New Americans coordination to connect immigrant residents to services such as child care and job training.

Expanding and improving family tax credits

One tool to improve family affordability in New Jersey was included in Governor Sherrill’s campaign platform: expanding the Child Tax Credit and Earned Income Tax Credit to put more money in family pockets.^[xiv] Providing more money to families directly can help them address needs and cover household costs. Expanding eligibility to more children and increasing credit amounts for recipients will build on these successful programs and bring opportunity to more families across the state.^[xv]

Increasing the WorkFirst NJ grant

The state’s high cost of living hits hardest for its lowest-income residents. Yet grants from the state’s cash assistance program, WorkFirst New Jersey, total less than $6,800 for a family of three annually.^[xvi] Put another way, a 65-year-old dentist with a $450,000 salary could receive almost as much in state assistance through Stay NJ ($6,500) as a single mom with two kids earning $15,000 as a janitor through WorkFirst New Jersey. The budget should increase grant levels and establish an automatic adjustment that aligns with New Jersey’s actual cost of living.

Expanding affordable insurance options

Federal work requirements for Medicaid, coupled with the loss of Affordable Care Act subsidies for people purchasing health insurance on the state exchange, could leave hundreds of thousands of residents uninsured.^[xvii] New Jersey should not reverse its decade of progress in reducing the number of uninsured residents.^[xviii] The budget should include funding to expand coverage options for residents left behind by federal cuts, including:

Developing a buy-in option for NJ FamilyCare plans on the exchange with subsidized premiums,
Expanding the state’s existing subsidy program on the GetCovered NJ marketplace to partially replace subsidies lost from the federal level, and
Fully funding existing coverage expansion programs such as Cover All Kids.

Reducing or eliminating costs for people involved in the criminal legal system

New Jersey has made progress in reducing fines and fees across the criminal legal system, but more can be done to reduce the financial harm to people who interact with courts and law enforcement. Many of these fees are counterproductive, such as fees for municipal public defenders and the high costs to communicate with people in incarceration.^[xix] Ending these fees can lift burdens on people involved in criminal legal proceedings, with relatively little cost to the state budget.

Protect Critical Investments

Preserving Clean Energy Fund and RGGI funding for clean energy infrastructure

Governor Sherrill has proposed ambitious targets for expanding solar power, storage, and clean energy production in the state, with a focus on reducing utility bills.^[xx] Achieving these goals requires preserving dedicated funding for building clean energy infrastructure, such as the Clean Energy Fund and Regional Greenhouse Gas Initiative funds.^[xxi] These funds support the development of new clean energy projects and increase energy efficiency, reducing costs in the medium and long term. Redirecting these funds to pay for short-term utility relief would undermine long-term affordability.

Maintaining the Corporate Transit Fee and committing it to transit

The state’s landmark Corporate Transit Fee provided New Jersey Transit with a dedicated revenue source for the first time in its history, ensuring that very large corporations pay for the infrastructure that generates their profits.^[xxii] This money is not constitutionally dedicated to New Jersey Transit, and it could be redirected to patch other budget holes. Additionally, the state subsidy for NJ Transit has consistently fallen over the past few budgets, leaving the agency with less funding.^[xxiii] The Governor’s budget should increase the state subsidy as well as preserve the Corporate Transit Fee’s dedication for the state’s transit system.

What We Want to Learn More About

Utility affordability

The Governor has signaled her commitment to reducing utility bills for New Jerseyans. How the state will achieve this goal is not yet clear, and the budget proposal will reveal whether state funding will pay directly for ratepayer relief or invest in clean energy and energy efficiency to make energy more affordable. As noted above, it is critical that short-term funding to reduce utility bills not come from long-term investments in energy infrastructure.

Addressing lost federal funding

The major uncertainty facing this budget is the federal government’s chaotic and unpredictable funding decisions. States already face administrative costs being shifted onto them by the HR 1 federal tax bill.^[xxiv] Now, New Jersey must also contend with refusals to release funding that has already been approved, ranging from the child care system to the Gateway Tunnel.^[xxv] The state budget may need to include contingency funds to replace federal funds that are frozen or delayed due to litigation.

End Notes

^[i] National Low Income Housing Coalition. Out of Reach Report: New Jersey. 2025; Ambrose, A. Why Are New Jersey’s Electricity Bills Going Up, and What Does PJM Have to Do With It? New Jersey Policy Perspective. May 29, 2025; New Jersey Department of Health, New Reports Reveal the Complexity of New Jersey’s Rising Health Care Costs, Jan. 9, 2026; Chen, P. Five Budget Time Bombs Facing the Next Governor. New Jersey Policy Perspective. Jan. 15, 2026.

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

^[iii] Biryukov, N. “Gov. Sherrill provides grim outlook on state finances ahead of budget speech.” New Jersey Monitor. Feb. 26, 2026.

^[iv] Chen, P. Five Budget Time Bombs Facing the Next Governor. New Jersey Policy Perspective. Jan. 15, 2026.

^[v] Johnson, B. “N.J. Gov. Mikie Sherrill talks with us about Trump, ICE, spending, and more | Mikie’s World.” NJ Advance Media. Jan. 31, 2026.

^[vi] Chen, P. “Best Defense Against Federal Chaos? A Bigger Savings Account.” New Jersey Globe. Jun. 18, 2025.

^[vii] New Jersey Legislature. FY 2026 Appropriations Act Scoresheet. July 2, 2025.

^[viii] Biryukov, N. “S&P gives NJ third credit rating increase under Governor Murphy.” New Jersey Monitor. Aug. 12, 2025.

^[ix] Chen, P. Fair and Square: Changing New Jersey’s Tax Code to Promote Equity and Fiscal Responsibility. New Jersey Policy Perspective. Nov. 14, 2024.

^[x] Husak, C. 7 Ways the Big Beautiful Bill Cuts Taxes for the Rich. Center for American Progress. Nov. 20, 2025. Bovino, B.A., Schoeppner, M. The K-Economy in 2026: Same story, new amplifiers. US Bank Economic Commentary. Jan. 7, 2026.

^[xi] Chen, P. Five Budget Time Bombs Facing the Next Governor. New Jersey Policy Perspective. Jan. 15, 2026.

^[xii] Chen, P. Course Correction: Preserving Senior Housing Affordability While Cutting Costs. New Jersey Policy Perspective. Jun 17, 2025.

^[xiii] U.S. Census Bureau. “Selected Social Characteristics in the United States.” American Community Survey, ACS 5-Year Estimates Data Profiles, Table DP02, . Accessed on 1 Feb 2026.

^[xiv] Mikie Sherrill for New Jersey. The Affordability Agenda: Lowering costs and building opportunity for New Jersey Families. Oct. 2, 2025. P. 5. (PDF on file with author)

^[xv] Chen, P. Boost Family Tax Credits to Boost Affordability. New Jersey Policy Perspective. Feb. 5, 2025.

^[xvi] Holom-Trundy, B. Outdated and Ineffective: Why New Jersey Needs to Update Its Top Anti-Poverty Program. New Jersey Policy Perspective. May 22, 2024.

^[xvii] Murphy, N. et al. The One Big Beautiful Bill Act Will Increase the Number of Americans Without Health Coverage in Every State and Congressional District. Center for American Progress. Sep. 5, 2025. Tbl. 1.

^[xviii] Holom-Trundy, B. Mind the Gap: Keeping New Jerseyans Covered in the Face of Federal Cuts. New Jersey Policy Perspective. February 6, 2026.

^[xix] Ubel, M. End Predatory Prison Communication Fees. New Jersey Policy Perspective. Jan. 15, 2025.

^[xx] Phillips, S. “N.J. Gov. Mikie Sherrill issues state of emergency on energy costs: Here’s what to know.” WHYY News. Jan. 23, 2026.

^[xxi] Ambrose, A. Stop the Raids: The Clean Energy Fund Should Fund Clean Energy. New Jersey Policy Perspective. Jan. 12, 2023.

^[xxii] Ambrose, A. Corporate Transit Fee Should Only Go to NJ Transit. New Jersey Policy Perspective. Jan. 28, 2025.

^[xxiii] Ambrose, A. & Chen, P. Getting Back on Track: Fully Fund NJ Transit by Taxing Big Corporations. New Jersey Policy Perspective. Sep. 27, 2023.

^[xxiv] Bergh, K. & Rosenbaum, D. Congressional Delay of SNAP Cost Shift Urgently Needed to Protect Food Assistance for Low-Income Families. Center on Budget and Policy Priorities. Jan. 8, 2026.

^[xxv] Higgs, L. “U.S. Appeals Court orders Trump administration to release Gateway funds.” NJ Advance Media. Feb. 12, 2026; Montague, Z. & Kim, M. “Judge Blocks Trump Officials From Freezing Billions in Social Services Funds.” New York Times. Jan. 9, 2026.

Mind the Gap: Keeping New Jerseyans Covered in the Face of Federal Cuts

Posted on February 6, 2026February 6, 2026 by Brittany Holom-Trundy

More than 727,000 New Jerseyans — roughly 1 in 13 residents — face daily life without health insurance.^[1] That number is about to grow dramatically.

Congress is stripping coverage from hundreds of thousands more residents by eliminating subsidies, imposing new Medicaid work requirements, and creating unnecessary paperwork barriers.^[2] These actions will reverse a decade of progress in expanding health coverage and leave working families without access to medical care.

Health insurance is not optional for a thriving New Jersey. Coverage reduces debt, improves health outcomes, and allows families to plan for their futures.^[3] It improves public health through preventive care and reduces costs for hospitals and the state.^[4] Yet continued gaps in coverage options and rising costs keep quality health coverage out of reach for many working families.

Without immediate state action to counter federal cuts, hundreds of thousands more New Jerseyans will lose coverage. State leaders must act now to protect residents by providing increased financial assistance, expanding coverage options, and standardizing outreach across counties.

Congress Is Stripping Coverage Through Four Major Actions

Through the recently enacted "One Big Beautiful Bill Act" (H.R. 1), federal lawmakers are dismantling health coverage supports with actions that will devastate New Jersey families. These actions will strip coverage from working people, increase medical debt, and push families into crisis, directly contradicting the hard-won lessons of the COVID-19 pandemic about the importance of accessible, affordable health care.^[5]

Enhanced subsidies have expired. Congress allowed enhanced federal subsidies on health insurance marketplaces to expire, pulling $500 million in assistance out of New Jersey residents alone.^[6] Without these subsidies, many working families will no longer be able to afford marketplace plans through GetCovered NJ.

New work requirements will kick eligible people off coverage. Starting in 2027, federal law will require adult Medicaid enrollees ages 19 to 64 to complete 80 hours of work or community service each month — or lose coverage.^[7] Evidence from Arkansas shows that work requirements don’t increase employment, they cause mass coverage losses because people cannot navigate complex reporting systems. New Jersey families will lose coverage not because they are ineligible, but because paperwork barriers block access to care.^[8]

Increased paperwork requirements create barriers to coverage. Adults enrolled through Medicaid expansion must now submit paperwork proving they still qualify every six months instead of once a year.^[9] This will cause eligible people to lose coverage simply because they miss paperwork deadlines. Recent coverage losses when pandemic protections ended revealed that thousands of New Jerseyans lost coverage not because they were ineligible but because they could not navigate the system.^[10]

Immigrant coverage is being eliminated. Federal lawmakers are eliminating affordable coverage options that immigrants previously relied on through provisions of H.R. 1, the “One Big Beautiful Bill Act.”^[11] This will increase the already severe barriers that immigrant residents face in accessing health coverage.

Impact on New Jersey

These federal actions threaten to:

Strip coverage from hundreds of thousands of residents
Eliminate $500 million in marketplace subsidies
Create paperwork barriers that will cause massive coverage losses among eligible Medicaid enrollees
Further increase the uninsured rate among immigrant communities already facing the highest barriers

With federal support disappearing, state leaders must stabilize access and protect residents and their futures.

Working Families and Immigrants Face the Highest Barriers

Gaps in the health care system leave hundreds of thousands of New Jerseyans without coverage. Eligibility limits, bureaucratic barriers, and lack of information about programs prevent many residents from enrolling in coverage they need and can afford.^[12]

Most Uninsured New Jerseyans Work — But Employers Don't Provide Coverage

Most uninsured New Jerseyans have jobs but their employers do not provide health coverage. They work as retail cashiers, farm workers, construction workers, and social service workers; the same jobs considered "essential" during the COVID-19 pandemic.^[13]

Immigrants and residents working low-wage, temporary, or seasonal jobs struggle the most to enroll in coverage.^[14] These barriers perpetuate racial and income inequities in coverage, reflecting the ongoing effects of historical racism, xenophobia, and discrimination.^[15]

Racial Inequities Persist Due to Historical Racism

Because of historical racism, Black and Latinx/Hispanic residents are more likely to work in industries and jobs that do not provide coverage.^[16] This worsens racial inequities in coverage.^[17] The jobs most likely to lack coverage are also the jobs that Black and Latinx/Hispanic workers are disproportionately employed in due to discriminatory hiring practices and occupational segregation.

Immigrants Face the Highest Barriers to Coverage

Immigrants face the highest barriers to coverage of any group. They qualify for fewer programs than citizens, and the programs they can access offer less financial help.

New Jerseyans who are not citizens are nearly nine times more likely to be uninsured than native-born citizens and nearly five times more likely to be uninsured than naturalized citizens.^[18]

Immigrants are overrepresented among the uninsured because they have so few affordable coverage options, especially those living on low incomes. Even in counties with strong outreach and low uninsured rates overall, immigrants remain ineligible for programs or face significant obstacles to purchasing affordable coverage.

Without affordable coverage options, immigrant residents who cannot pay expensive premiums on their own are left uninsured. Strong outreach efforts are critical to connecting eligible immigrants with coverage by addressing language barriers, providing information, and building trust.^[19] This is especially important when federal policies threaten immigrant communities more broadly.^[20]

With Federal Policy Changes, Health Coverage Options for Immigrants are Disappearing

Working-Age Adults Are Most Affected

Working-age adults face the highest barriers to coverage. Four out of every five uninsured residents across all counties are working-age adults. Seniors make up the smallest proportion of uninsured residents.^[21] Medicare coverage ensures they are the least likely to struggle with access.^[22]

While these coverage gaps reflect national problems, state leaders can address them by protecting residents through policy action.

The ACA Proves State Action Can Expand Coverage

The Affordable Care Act transformed health coverage in New Jersey. Since 2014, when the law's major provisions took effect, 515,000 more residents gained insurance — coverage that protects their health and financial security.^[23]

Two provisions drove this progress: the creation of GetCovered NJ, the state health insurance marketplace, and the expansion of Medicaid to cover more adults with low incomes.

Improvements in Affordable Coverage Options Have Reduced the Number of Uninsured New Jerseyans

GetCovered NJ Enrollment Has More Than Tripled

GetCovered NJ serves residents who cannot get affordable insurance through their jobs and do not qualify for Medicaid. The marketplace allows them to purchase coverage with financial help from the state and federal government.^[24]

Since 2014, enrollment has more than tripled — from 161,775 in the first year to 513,217 in 2025.^[25] The marketplace now provides essential coverage to more than 350,000 additional New Jerseyans.^[26]

Fast Facts: New Jersey’s Uninsured Residents

3 of every 4 uninsured residents who are working-age are employed at least part-time.Residents with incomes below 100% of the federal poverty level are nearly 5 times more likely to be uninsured than those with higher incomes.

1 of every 3 uninsured residents work in industries with more low-wage and temporary jobs, such as construction or arts, entertainment, accommodation, or food services.

1 of every 9 uninsured residents work in the essential services of education, health care, and social assistance.

Hispanic/Latinx residents are 6 times more likely to be uninsured than non-Hispanic/Latinx white residents.

Black residents are over twice as likely to be uninsured as non-Hispanic/Latinx white residents.

Source: NJPP Analysis of U.S. Census Bureau, American Community Survey - 2024 5-Year Estimates, Tables S2701 and S2702.

Medicaid Expansion Closed the Coverage Gap

Medicaid expansion brought coverage to nearly 390,000 New Jerseyans who previously fell through the cracks.^[27] These residents — adults with incomes up to 138 percent of the federal poverty level ($22,025 per year for a single adult in 2026) — earn too much to qualify for traditional Medicaid but too little to afford coverage on their own, especially with limited financial help.^[28]

Their jobs do not offer health insurance, and their paychecks leave little room for premiums. Medicaid expansion closed this gap, providing quality coverage to residents working hard to get by.

Progress Is Now Threatened by Federal Cuts

Despite these improvements, residents living on low incomes and immigrants continue to face barriers to affordable health insurance. Now, federal lawmakers are withdrawing support from programs that serve families with the fewest resources, threatening to leave even more people without coverage.^[29]

The ACA’s success shows that policy solutions work when properly funded and implemented. State leaders must build on this progress by countering federal cuts with state action.

State Leaders Must Counter Federal Cuts

New Jersey leaders must continue to adequately fund existing programs like Cover All Kids and take these additional actions to protect residents from federal cuts:

Expand State Subsidies on the GetCovered NJ Marketplace

The elimination of the protections provided during the COVID-19 pandemic — including enhanced premium tax credits on the health insurance marketplaces and fewer administrative barriers for continuous coverage — has set health coverage back in direct contradiction to the lessons learned during that crisis.^[30]

By expanding state subsidies — the New Jersey Health Plan Savings — already provided through GetCovered NJ, the gaps created by federal cuts can be filled with a reliable funding source, ensuring that residents can continue to afford plans through the marketplace.^[31] In recent years, the state spent $215 million in funds raised through a state assessment paid by health insurance companies on these subsidies to help lower the cost of plans for residents. Dedicating more state funds toward these subsidies can help to fill some of the gap left by the expected loss of $500 million in federal assistance.^[32]

Improve Data Sharing and Enrollment Systems to Prevent Paperwork-Driven Coverage Loss

Beginning in 2027, adult Medicaid enrollees aged 19 to 64 will be required to complete 80 hours of “community engagement,” defined as qualifying work or community service unless enrolled in certain educational programs. If they do not meet the requirement and do not qualify for an exemption, they will lose coverage.^[33] Additionally, many of those same enrollees — those adults enrolled through the ACA Medicaid expansion — will now be required to submit redetermination paperwork every 6 months, rather than once a year.^[34] Both of these requirements increase the likelihood that people will lose coverage simply due to administrative barriers.^[35]

The state must take immediate action to invest in cross-departmental data sharing to reduce the paperwork required of residents with low incomes to receive all of the support for which they are eligible. Additionally, improving the accessibility of programs dealing with enrollment and reporting in order to ensure that the paperwork is as easy to understand, fill out, and submit as possible will help to reduce the number of people who struggle to complete the requirements.^[36] The recent massive coverage losses during the Medicaid unwinding — when the state had to reevaluate all Medicaid enrollees’ eligibility as pandemic protections were removed — emphasized the communication gaps and paperwork system barriers that residents face to maintain coverage.^[37] Improvements to these systems are critical for protecting New Jerseyans.^[38]

Establish a State Government-Backed Insurance Plan to Close Coverage Gaps

When people cannot afford health insurance, they go without coverage to pay rent, keep the lights on, and put food on the table.^[39] Without immediate health concerns, these needs feel more urgent. No one should face this choice, yet it is the reality for many New Jerseyans because gaps in coverage options define the state's health care system.

Currently, every affordable coverage option in the state, except NJ FamilyCare for children, limits eligibility based on immigration status or other factors. Many people cannot even buy into Medicaid, CHIP, or marketplace coverage by paying a reasonable premium — they are simply shut out.

State leaders should establish a government-backed health insurance plan — a “public option” — open to all residents regardless of age or immigration status. This would provide affordable coverage to residents who have limited or no options in the current system. A well-designed public option can also reduce costs system-wide and improve affordability for everyone.^[40]

Ensure Equal Access to Enrollment Across Counties

County social services boards help residents enroll in coverage, but their staffing and outreach vary widely.^[41] In counties where leaders refuse to commit resources, fewer eligible residents get enrolled.

The state should strengthen oversight of county boards and require better pay and benefits to attract qualified staff. These steps would reduce gaps between counties and help more New Jerseyans get covered.

Adequate staffing allows county workers to conduct targeted outreach to communities that face the highest barriers to enrollment, including immigrant communities that need language assistance and trust-building efforts.^[42] This is especially true when exclusionary policies threaten immigrant communities more broadly.^[43] When counties lack resources, these critical outreach efforts simply do not happen.

Conclusion

New Jersey has made remarkable progress expanding health coverage over the past decade. The Affordable Care Act brought insurance to more than half a million residents who previously went without. GetCovered NJ and Medicaid expansion closed critical gaps in the system.

Federal cuts now threaten to reverse this progress. Enhanced subsidies have expired, new work requirements will create paperwork barriers, and immigrants are losing access to affordable options. Without state action, thousands more New Jerseyans will lose coverage.

State leaders have the power to protect residents and their families. By increasing state subsidies, fixing broken enrollment systems, creating a public option, and ensuring equal county access to enrollment support, New Jersey can counter federal cuts and continue expanding coverage to those who need it most.

The choice is clear: act now to protect New Jerseyans, or watch a decade of progress disappear.

The stakes are clear. Will state leaders act to protect residents, or will they allow federal cuts to strip coverage from hundreds of thousands of working families?

End Notes

^[1] U.S. Census Bureau, American Community Survey -- 2024 1-Year Estimates, Table S2701, 2025. The 1-year estimate, rather than the 5-year estimate, is provided here to give the most current picture of the number of uninsured in light of the significant changes that have happened through the Medicaid unwinding and other point-in-time effects.

^[2] For a full timeline of the federal cuts affecting New Jersey, see: Ambrose, A., Chen, P., Holom-Trundy, B., and Ubel, M., State Lawmakers Should Protect Residents from Federal Cuts to Vital Services, New Jersey Policy Perspective, Aug. 2025.

^[3] McGough, M., State-Based Efforts Will Provide Limited Relief from Enhanced Tax Credit Expiration, KFF, Jan. 2026. New Jersey Department of Banking and Insurance, Impact of Proposed Congressional Reconciliation Bill Package on New Jersey Residents Enrolled in Health Coverage Through Get Covered New Jersey, Jun. 2025.

^[4] New Jersey Department of Human Services, Statement from Human Services Commissioner Sarah Adelman, Jul. 2025.

^[5] Holom-Trundy, B., Beyond the Pandemic: New Data Reveals Growing Health Insurance Coverage Gaps, New Jersey Policy Perspective, Sep. 2024. Buettgens, M., et al., 4.8 Million People Will Lose Coverage in 2026 If Enhanced Premium Tax Credits Expire, Urban Institute, Sep. 2025. Lo, J., et al., ACA Marketplace Premium Payments Would More than Double on Average Next Year if Enhanced Premium Tax Credits Expire, KFF, Sep. 2025.

^[6] McGough, M., State-Based Efforts Will Provide Limited Relief from Enhanced Tax Credit Expiration, KFF, Jan. 2026.; New Jersey Department of Banking and Insurance, DOBI Response to OLS Questions on FY 2026 Budget, Jun. 2025. Biryukov, N., Rates on NJ health insurance marketplace to skyrocket, state regulator warns, New Jersey Monitor, Oct. 2025.

^[7] Centers for Medicare & Medicaid Services, Bulletin on Section 71119 of the “Working Families Tax Cut” Legislation, Public Law 119-21: Requirements for States to Establish Medicaid Community Engagement Requirements for Certain Individuals, Dec. 2025.

^[8] Sommers, B.D., Goldman, A.L., Blendon, R.J., Orav, J., and Epstein, A.M., Medicaid Work Requirements — Results from the First Year in Arkansas, The New England Journal of Medicine, v. 381, no. 11, Jun. 2019. Medicaid and CHIP Payment and Access Commission (MACPAC), An Updated Look at Rates of Churn and Continuous Coverage in Medicaid and CHIP, Oct. 2021.

^[9] KFF, Health Provisions in the 2025 Federal Budget Reconciliation Bill, Jul. 2025.

^[10] New Jersey Department of Human Services, Stay Covered NJ Renewal Data, Jun. 2024.

^[11] Stainton, L., Thousands of legal immigrants in NJ could be thrown off Medicaid, NJ Spotlight News, Jul. 2025.

^[12] For eligibility limitations, see the NJ FamilyCare website: New Jersey Department of Human Services, NJ FamilyCare - Who is Eligible? and NJ Familycare - Immigrant Information, 2025. For the estimate of the loss due to recent federal changes, see: New Jersey Department of Human Services, Statement from Human Services Commissioner Sarah Adelman on Impact of Medicaid and SNAP Cuts on NJ, Jul. 2025. Imperato, N. and Doobay, K., Evaluating the Policy Implications and Impact of Health Insurance Literacy Initiatives, New Jersey State Policy Lab, Rutgers University, 2025.

^[13] National Conference of State Legislatures, COVID-19: Essential Workers in the States, Jan. 2021.

^[14] NJPP Analysis of U.S. Census Bureau, American Community Survey – 2024 5-Year Estimates, Tables S2701 and S2702, 2025.

^[15] Holom-Trundy, B., Unprecedented and Unequal: Racial Inequities in the COVID-19 Pandemic, New Jersey Policy Perspective, Oct. 2020. Ndugga, N., Pillai, D., Hill, L., & Artiga, S., Race, Inequality, and Health, In Altman, Drew (Editor), Health Policy 101, KFF, Oct. 2025. Philbin, M., et al. State-Level Immigration and Immigrant-Focused Policies as Drivers of Latino Health Disparities in the United States, Social Science & Medicine, v. 199, pp. 29-38, 2018.

^[16] Yearby, R., Clark, B., and Figueroa, J.F., Structural Racism in Historical and Modern US Health Care Policy, Health Affairs, Feb. 2022.

^[17] Holom-Trundy, B., Unprecedented and Unequal: Racial Inequities in the COVID-19 Pandemic, New Jersey Policy Perspective, Oct. 2020.

^[18] NJPP Analysis of U.S. Census Bureau, American Community Survey -- 2024 5-Year Estimates, Table S2701, 2025.

^[19] Clemente, I., and Casau, A., Covering All Kids: Strategies to Connect Children of Undocumented Status to Health Care Coverage, Center for Health Care Strategies, Feb. 2023.

^[20] Novak, N.L., Kline, N., LeBrón, A.M.W., Lopez, W., Michelen, M., De Trinidad Young, M-E., Mitigating The Health Impacts Of Exclusionary Immigration Policies: An Evidence Review, Health Affairs Health Policy Brief, Nov. 2025.

^[21] NJPP Analysis of U.S. Census Bureau, American Community Survey -- 2024 5-Year Estimates, Table 2701, 2025.

^[22] Telesford, I., Winger, A., and Rae, M., Beyond Cost, What Barriers to Health Care do Consumers Face?, Peterson-KFF Health System Tracker, Aug. 2024.

^[23] NJPP Analysis of U.S. Census Bureau, American Community Survey – 2010-2024 1-Year Estimates, Table S2701, 2025. The 1-year estimates were used for this comparison because the purpose was to compare two single points in time rather than an overall trend.

^[24] New Jersey Department of Banking and Insurance, GetCovered NJ, 2025.

^[25] KFF, Marketplace Enrollment, 2014-2025, 2025. Note that "marketplace" here refers to New Jersey's enrollment through the federally-run marketplace on HealthCare.Gov from 2014-2020 and then to the state-based marketplace, GetCovered NJ, from 2021 to today. New Jersey passed legislation in 2019 to create the state-based marketplace. See Office of Governor Phil Murphy, Governor Murphy Announces Launch of New State-Based Health Insurance Marketplace, Get Covered New Jersey, Oct. 2020. Holom-Trundy, B., GetCoveredNJ: How New Jersey’s State-Based Exchange Will Make Health Coverage More Affordable, New Jersey Policy Perspective, Nov. 2020.

^[26] NJPP Analysis of KFF, Marketplace Enrollment, 2014-2025, 2025.The 2026 enrollment period is currently underway at the time of writing; it is on track to have enrollment numbers even higher than 2025. However, more enrollees are choosing lower level plans due to cost. See GetCovered NJ’s 2026 Open Enrollment Update, Week 9 Snapshot.

^[27] NJPP Analysis of New Jersey Office of Management and Budget, Governor's FY 2026 Budget, Detailed Budget, p. D-209, Mar. 2025. Note that only the category "Expansion Childless Adults" is included here because some parents were covered through NJ FamilyCare prior to the Affordable Care Act's Medicaid expansion.

^[28] N.J.A.C. 10:74-1.4, see definition of "NJ FamilyCare Alternative Benefit Plan (ABP)." U.S. Department of Health and Human Services, 2026 Poverty Guidelines: 48 Contiguous States (all states except Alaska and Hawaii), 2026.

^[29] KFF, Health Provisions in the 2025 Federal Budget Reconciliation Law, Aug. 2025. Ambrose, A., Chen, P., Holom-Trundy, B., and Ubel, M., State Lawmakers Should Protect Residents from Federal Cuts to Vital Services, New Jersey Policy Perspective, Aug. 2025.

^[30] Holom-Trundy, B., Beyond the Pandemic: New Data Reveals Growing Health Insurance Coverage Gaps, New Jersey Policy Perspective, Sep. 2024. Buettgens, M., et al., 4.8 Million People Will Lose Coverage in 2026 If Enhanced Premium Tax Credits Expire, Urban Institute, Sep. 2025. Lo, J., et al., ACA Marketplace Premium Payments Would More than Double on Average Next Year if Enhanced Premium Tax Credits Expire, KFF, Sep. 2025.

^[31] New Jersey Department of Banking and Insurance, Lower Your Monthly Premiums with the NJ Health Plan Savings, GetCovered NJ, 2025.

^[32] New Jersey Department of Banking and Insurance, DOBI Response to OLS Questions on FY 2026 Budget, Jun. 2025. Biryukov, N., Rates on NJ health insurance marketplace to skyrocket, state regulator warns, New Jersey Monitor, Oct. 2025.

^[33] Centers for Medicare & Medicaid Services, Bulletin on Section 71119 of the “Working Families Tax Cut” Legislation, Public Law 119-21: Requirements for States to Establish Medicaid Community Engagement Requirements for Certain Individuals, Dec. 2025.

^[34] KFF, Health Provisions in the 2025 Federal Budget Reconciliation Bill, Jul. 2025.

^[35] Sommers, B.D., Goldman, A.L., Blendon, R.J., Orav, J., and Epstein, A.M., Medicaid Work Requirements — Results from the First Year in Arkansas, The New England Journal of Medicine, v. 381, no. 11, Jun. 2019. Medicaid and CHIP Payment and Access Commission (MACPAC), An Updated Look at Rates of Churn and Continuous Coverage in Medicaid and CHIP, Oct. 2021.

^[36] Wagner, J., Singleton, S., and Stewart, M., A Guide to Reducing Coverage Losses Through Effective Implementation of Medicaid’s New Work Requirement, Center on Budget and Policy Priorities, Nov. 2025. Diana, A., et al., Challenges with Implementing Work Requirements: Findings from a Survey of State Medicaid Programs, KFF, Oct. 2025.

^[37] New Jersey Department of Human Services, Stay Covered NJ Renewal Data, Jun. 2024.

^[38] New Jersey Department of Human Services, Meeting of the Medical Assistance Advisory Council - January 2026 Presentation, Jan. 2026.

^[39] While the approach to bills differ across individuals and families and their needs, people who are struggling to pay bills each month are more likely to say that they are worried about paying utilities, food, and rent than they are about paying for health coverage. As ability to pay for bills increases, the health care costs become the focus, demonstrating a shift in priorities and needs: Montero, A., Kearney, A., Valdes, I., Kirzinger, A., and Hamel, L., KFF Health Tracking Poll: Economic Views and Experiences of Adults Who Struggle Financially, KFF, Feb. 2024. Additionally, those who are uninsured are more likely to report challenges affording health care costs: Sparks, G., Lopes, L, Montero, A., Presiado, M., and Hamel, L., Americans’ Challenges with Health Care Costs, KFF, Dec. 2025. Most people who are uninsured report that they do not have coverage due to the high cost: See Figure 7 in Tolbert, J., Bell, C., Cervantes, S. and Singh, R., The Uninsured Population and Health Coverage. In Altman, D. (Editor), Health Policy 101, KFF, Oct. 2025.

^[40] Monahan, C.H., Stovicek, N., and Giovannelli, J., State Public Option Plans Are Making Progress on Reducing Consumer Costs, To the Point (blog), The Commonwealth Fund, Nov. 2023. King, J. S., Gudiksen, K.L., and Brown, E.C., Are State Public Option Health Plans Worth It?, Harvard Journal on Legislation, v. 59, pp. 145-219, 2022.

^[41] Holom-Trundy, B., Understaffed and Underfunded: Barriers to Effective Anti-Poverty Assistance, New Jersey Policy Perspective, Nov. 2024.

^[42] Clemente, I., and Casau, A., Covering All Kids: Strategies to Connect Children of Undocumented Status to Health Care Coverage, Center for Health Care Strategies, Feb. 2023.

^[43] Novak, N.L., Kline, N., LeBrón, A.M.W., Lopez, W., Michelen, M., De Trinidad Young, M-E., Mitigating The Health Impacts Of Exclusionary Immigration Policies: An Evidence Review, Health Affairs Health Policy Brief, Nov. 2025.

Five Budget Time Bombs Facing the Next Governor

Posted on January 15, 2026January 14, 2026 by Peter Chen

Governor-elect Mikie Sherrill is going to inherit a budget full of hidden dangers. On the surface, the state’s finances appear healthy: historic cash reserves, an improved credit rating, and on-target revenues. But beneath these gains lie budget time bombs that threaten the state’s fiscal stability and any new spending proposals.^[1]

At a time when low- and middle-income families face rising costs and housing shortages, each of these time bombs will limit the state’s options for addressing residents’ needs.^[2] These risks come on top of economic uncertainty, including a potential recession, which would reduce revenues and increase state costs.^[3]

1. Existing structural deficit

Responsible budgeting requires sufficient revenue to fund schools, health care, and other essential services. In Fiscal Year (FY) 2026, New Jersey will generate $1.5 billion less in revenue than it needs to cover expenses.^[4] As a result, the state will have to spend down its cash reserves, which have fallen each year from $10 billion in FY 2024 to less than $7 billion projected for FY 2026.^[5] This imbalance means Governor-elect Sherrill will need to raise revenues or cut services simply to keep the state from going deeper into deficit.

Several factors drive this shortfall. State spending on property tax relief programs has grown from less than $1 billion to more than $4 billion in FY 2026, with future increases in Stay NJ (see below).^[6] Expansions to economic development tax credits also reduce revenues. These credits give state tax dollars to corporations such as film studios or AI data centers for operations in New Jersey and remove billions in expected revenues.^[7] Other increases in funding are mandatory to meet the state’s obligations to its pension funds and schools.^[8]

NJPP has long advocated for increased progressive revenues to help close this gap.^[9]

2. Ballooning Stay NJ costs

Housing affordability is a concern for seniors on fixed incomes. But Stay NJ, a new homeowner tax credit, threatens to dramatically increase the FY 2027 budget without targeting those who need help most. Stay NJ provides credits to homeowning seniors over age 65 with incomes up to $500,000.^[10] In FY 2026, Stay NJ required only $280 million in state appropriations, despite an annual estimated cost of $1.2 billion.^[11]

The cost was artificially low for two reasons:

The state had saved $320 million from prior years; and
FY 2026 only covers one half of calendar year 2026, meaning only half a year’s worth of payments will go out.

In FY 2027 neither condition will exist. The full $1.2 billion cost of the program will come due with no additional funding source.^[12]

NJPP has identified potential savings by capping income for Stay NJ recipients to limit the program to seniors in need, rather than wealthy households.^[13] These changes would reduce the program cost by more than $500 million.

Without reform, the Sherrill administration and legislature will face more than $900 million in additional Stay NJ costs in FY 2027.

3. School funding costs beyond inflation

New state requirements on schools have increased per-pupil funding needed to meet “adequacy,” the state’s standard for a thorough and efficient education.^[14] Beyond these existing changes, voices from across the political spectrum have called for updating the school funding formula to more accurately reflect the cost of state standards and educating students from low-income families and who are multilingual learners.^[15]

School funding represents the largest single expenditure in the state budget, with formula payments totaling $12 billion.^[16] Even small changes in funding per pupil can result in large cost increases for the state.

School safety and mental health requirements are driving costs higher. The state’s 2026 Education Adequacy Report outlines changes that will increase funding needs.^[17] Rising school safety concerns and concerns about youth mental health have driven the need for $14,972 in per-pupil funding for elementary students, an increase of more than seven percent from FY 2025 and 20 percent from FY 2023.^[18] These increases fund one security guard per elementary school and mental health support for students.^[19] Although these costs were included in the FY 2026 school aid calculations, many districts hit the six percent cap on aid increases, pushing additional costs to FY 2027.^[20]

4. Loss of remaining pandemic-era funding

The fiscal cliff of expiring federal pandemic-era funding is creating funding gaps that the state will need to cover. For example, the expiration of federal funding for New Jersey Transit led to an enormous projected deficit that required the creation of the Corporate Transit Fee.^[21]

Programs ranging from infrastructure to child care will lose federal funds when funding expires at the end of 2026.^[22] These expirations have real effects, as the state’s child care subsidy programs were temporarily closed to new enrollees due to lack of funding and only recently began accepting new applications.^[23]

New Jersey has also exhausted the last of its Debt Defeasance and Prevention Fund, a $10 billion reserve created to refinance high-interest debt during the pandemic.^[24] The state used the fund for debt retirement and new capital improvement projects. But the state budget also transferred $1.1 billion to patch the structural deficit.^[25]

With the fund empty, that revenue will not be available in future years, limiting the
state’s options.

5. Increasingly expensive state health benefits

The State Health Benefits Program provides health insurance for state and local government employees, with costs shared by employees and employers.^[26] State actuarial reports recommend premium increases that would raise costs by 20 percent or more.^[27] Even if proposed savings materialize, the state budget will face employee health benefit cost increases above inflation.^[28]

Health benefits for active state employees and higher education employees cost $2.0 billion annually. Even small percentage increases can have large budget effects: a 10 percent increase in FY 2026 raised costs by over $180 million.^[29]

Local government health plans face even steeper increases, creating potential state liability.^[30] Although local government costs are not the state’s direct responsibility, problems with the local government health plan have previously required a temporary state bailout.^[31]

One big unknown: the impact of federal cuts

Federal cuts present the largest uncertainty to the state’s budget. Some costs will fall to the state, even if the exact amount is unknown. For example, the state will have to implement a work requirement program for Medicaid by January 2026, which will require substantial appropriations and infrastructure.^[32]

The state will also pay an additional $90 million in administrative costs for SNAP, with $78 million of those costs covered by counties, which administer SNAP in New Jersey.^[33]

The Department of Human Services estimates that reductions in federal funding and federal restrictions on state health care revenues will result in $360 million in annual lost funding.^[34] These policies will also force more residents to lose health care coverage. The result: a $3.3 billion annual cut in funding to hospitals and public health, which the state may have to backfill through charity care or other means.^[35]

Beyond the tax and budget bill, the state faces decisions about whether to backfill federal cuts in other priorities. Keeping New Jersey at the forefront of scientific research may require state investment in cancelled federal biomedical research projects.^[36] Delays in funding the Gateway tunnel project may lead to cost overruns and harm New Jersey’s economic growth.^[37]

Conclusion

Governor Sherrill will inherit a budget full of time bombs. Despite steps by the Murphy administration to correct for the fiscal shortsightedness of past administrations by fully funding schools and pensions, the FY 2027 budget will face serious revenue shortfalls absent new revenues or drastic cuts. Depleting the state’s limited cash reserves will only deepen the crisis in future years.

There are solutions. NJPP has identified key revenue raisers that focus on concentrated wealth in individuals and large corporations.^[38] Expensive tax credit programs that overwhelmingly benefit the already-wealthy can be reduced to increase revenue. New revenue, such as a wealth proceeds tax on net investment income, would also generate funds from wealthy individuals.^[39]

Without new revenues, these budget time bombs will make maintaining current funding difficult, let alone any new initiatives the next governor may propose.

End Notes

[1] Ambrose, A. et al. New Jersey Policy Perspective. Sleepwalking Into Catastrophe. July 8, 2025.

[2] O’Dea, Colleen. NJ Spotlight News. NJ’s housing costs are skyrocketing. What will the next governor do? Oct. 20, 2025.

[3] Foster, S. Bankrate. The U.S. economy is slowing — and the nation’s top economists don’t expect it to improve much over the next year. Oct. 23, 2025.

[4] New Jersey Legislature. FY 2026 Appropriations Act Scoresheet. July 2, 2025.

[5] Total opening balance was $10.282 billion in FY 2024. New Jersey Legislature. FY 2024 Appropriations Act Scoresheet. July 19, 2023. Closing unreserved balance in FY 2026 is projected for $6.7 billion. New Jersey Legislature. FY 2026 Appropriations Act Scoresheet. July 2, 2025.

[6] Murphy, P., The State of New Jersey Budget in Brief, Summary of Budget Recommendations Fiscal Year 2026, Feb. 2025, pp. 12-13.

[7] State of New Jersey. Tax Expenditure Report, Fiscal Year 2026. 2025. pp. 10-11.

[8] The pension fund actuarial determined contribution has continued to increase. See New Jersey Legislature Office of Legislative Services. Analysis of the New Jersey Budget Interdepartmental Accounts Fiscal Year 2025-2026. May 2025. P. 6. School funding payments are adjusted by inflation and the Education Adequacy Report discussed below.

[9] Chen, P. New Jersey Policy Perspective. Fair and Square: Changing New Jersey’s Tax Code to Promote Equity and Fiscal Responsibility. Nov. 14, 2024.

[10] Pub. L. 2024, c. 88.

[11] S. 2026 (2025) pp. 280-282. Murphy, P. The State of New Jersey Budget in Brief, Summary of Budget Recommendations Fiscal Year 2026. Feb. 2025. pp. 12-13.

[12] Sobko, K. NorthJersey.com. Could federal budget chaos upend StayNJ property tax program for NJ seniors? (“Treasury officials confirmed there is no “buildup plan” for fiscal year 2027, estimated to cost $1.2 billion annually.”)

[13] Chen, P. New Jersey Policy Perspective. Course Correction: Preserving Senior Housing Affordability While Cutting Costs. Jun. 17, 2025.

[14] N.J. Stat. 18A:7F-46 (2025).

[15] Weber, M. New Jersey Policy Perspective. Resetting School Funding for New Jersey’s Next Decade. Oct. 24, 2025; Kudisch, B. NJ.com. Give N.J. schools more money to teach undocumented immigrants, county says. Feb. 16, 2025.

[16] Murphy, P. The State of New Jersey Budget in Brief, Summary of Budget Recommendations Fiscal Year 2026. Feb. 2025. pp. 15.

[17] New Jersey Dep’t of Education. FY2026 Education Adequacy Report. 2025.

[18] New Jersey Dep’t of Education. FY2026 Education Adequacy Report. 2025. pp. 4-5.

[19] New Jersey Dep’t of Education. FY2026 Education Adequacy Report. 2025. pp. 4-5.

[20] Kausch, K. & Kudisch, B. NJ.com. N.J. is pouring $12B into schools this year. See if your district is a winner — or facing cuts. Sep. 3, 2025.

[21] Reitmeyer, J. NJ Spotlight News. NJ Transit strike halted but financial questions remain. May 20, 2025.

[22] For a full list of spending, see New Jersey Recovery Plan, State and Local Fiscal Recovery Funds, 2025 Report.

[23] New Jersey Dep’t of Human Services, Division of Family Development. Child Care Assistance Program – Important Update. July 2025.

[24] Reitmeyer, J. NJ Spotlight News. Special reserve fund, set up to ease NJ’s bonded debt, runs dry. Aug. 11, 2025.

[25] Reitmeyer, J. NJ Spotlight News. Special reserve fund, set up to ease NJ’s bonded debt, runs dry. Aug. 11, 2025.

[26] New Jersey Division of Pensions and Benefits. Summary Program Description Guidebook For the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP). Sept. 2025.

[27] New Jersey Dep’t of the Treasury. Press Release: AON Releases Recommended Rate Increases for State Health Benefits Plans for Plan Year 2026. Jul. 9, 2025.

[28] See Memorandum of Agreement between the Unions and the State of New Jersey. Sept. 4, 2025.

[29] New Jersey Legislature, Office of Legislative Services. Analysis of the New Jersey Budget: Interdepartmental Accounts. May 2025. pp. 25-27.

[30] New Jersey Dep’t of the Treasury. Structural and Financial Challenges in the State Health Benefits Program for Local Government. May 2025.

[31] P.L. 2024, c. 86.

[32] Hinton, E., Diana, A., and Rudowitz, R. KFF. A Closer Look at the Work Requirement Provisions in the 2025 Federal Budget Reconciliation Law. July 30, 2025.

[33] Department of Human Services, Division of Family Development. 2025 House Budget Bill Implications for the New Jersey Supplemental Nutrition Assistance Program (NJ SNAP). June 2025. P. 6.

[34] New Jersey Dep’t of Human Services, Statement from Human Services Commissioner Sarah Adelman on Impact of Medicaid and SNAP Cuts on NJ. July 3, 2025.

[35] New Jersey Dep’t of Human Services, Statement from Human Services Commissioner Sarah Adelman on Impact of Medicaid and SNAP Cuts on NJ. July 3, 2025.

[36] Stainton, L. NJ Spotlight News. Fears of Devastation Across NJ Health, Scientific Research if Trump Cuts Proceed. Feb. 12, 2025.

[37] Biryukov, N. New Jersey Monitor. Trump administration delays massive Hudson River rail project. Oct. 1, 2025.

[38] Chen, P. New Jersey Policy Perspective. Fair and Square: Changing New Jersey’s Tax Code to Promote Equity and Fiscal Responsibility. Nov. 14, 2024.

[39] Austin, S. and Davis, C. Institute on Taxation and Economic Policy. The Wealth Proceeds Tax: A Simple Way for States to Tax the Wealthy. Oct. 30, 2025.

Millions of New Jerseyans at Risk from Hazardous Materials Transported by Rail

Posted on November 25, 2025November 25, 2025 by Alex Ambrose

More than 3.6 million New Jerseyans live within the evacuation zone of a hazardous materials train route — yet the state lacks basic safety rules and transparency measures.^[1]

New Jersey faces unique threats from trains carrying hazardous materials because of its dense population.^[2] While freight rail is considered one of the safest ways to transport hazardous materials, it still poses risks to human and environmental health.^[3] The 2023 East Palestine, Ohio and the 2012 Paulsboro, New Jersey derailments show the dangers posed by toxic cargo that immediately harm surrounding areas.^[4] Rollbacks of labor, safety, and rail regulations can make these disasters worse.

Unlike neighboring states, New Jersey has resisted efforts to increase safety and has restricted public information about train routes carrying hazardous materials and the type and amount of dangerous cargo. The federal government has stalled in creating policies to make hazmat transportation safer, so state lawmakers must act. To protect rail workers and reduce risks to the public, New Jersey should update its hazmat freight rail policies, especially regarding safety and transparency, to protect the millions of residents who live in harm’s way.

Hazardous Materials Endanger New Jersey Residents’ Health and Environment

For many New Jerseyans, the threat of a hazmat rail incident is real, not theoretical. In 2024, New Jersey had 55 rail incidents, far more than the previous year.^[5] Five of those incidents involved hazardous materials where toxic chemicals spilled or were vented.^[6]

Exposure to hazardous materials (hazmat) released during a derailment can have short- and long-term health risks. Hazmat is defined as any material that when transported, may pose an unreasonable risk to health and safety or property.^[7] This includes chemicals that can poison the air and water, cause fires and explosions, or damage vital organs with long-term exposure. The federal government defines hundreds of chemicals as hazmat, including vinyl chloride, one of the materials released from the derailed trains in East Palestine and Paulsboro.^[8] The gas poses a threat to human health — including long-term risks of damage to vital organs — and is highly flammable, reactive, and an explosion hazard.^[9] The U.S. Department of Health and Human Services, the U.S. Environmental Protection Agency, and the International Agency for Research on Cancer have all classified vinyl chloride as a human carcinogen.^[10]

The 2012 derailment of a freight train in Paulsboro, New Jersey demonstrates the risk New Jerseyans face with hazmat. While crossing a bridge, the conductor of a Conrail freight train incorrectly determined it was safe to proceed despite the red signal indicating danger.^[11] Four freight cars fell into the creek. One punctured and released 23,000 gallons of vinyl chloride into the water and air.^[12]

A toxic vapor cloud spread over the town and town officials failed to immediately evacuate residents. Many still report long-term health issues from exposure to the chemical and inadequate warning from town officials.^[13] A Centers for Disease Control and Prevention (CDC) study found that most first responders did not use breathing protection, and only a quarter had specific hazardous response training despite stating they felt they had received sufficient instruction.^[14] The study concluded that changes to safety procedures were needed to improve risk assessment for first responders.^[15] However, no state or federal agency has conducted a long-term evaluation of the health effects on Paulsboro residents and emergency personnel — meaning we still don’t know the full cost of that disaster more than a decade later.

Despite the devastating impacts of these incidents, New Jersey has not made significant improvements to rail safety policies since the 2012 Paulsboro incident. While the East Palestine derailment and explosion educated many on the dangers of hazmat — even prompting bipartisan proposals in Congress to improve rail safety — the proposal has not moved forward.^[16]

Over One-Third of New Jersey Residents Live Near Hazmat Rail Lines

Without increased safety measures, a significant portion of New Jersey’s population remains at risk during a hazmat rail incident. With about 1,000 miles of freight rail lines in New Jersey, the threat to homes, schools, hospitals, and businesses is widespread.^[17] More than one-third of New Jersey’s residents, or over 3.6 million people, live in a potential evacuation zone.^[18] An evacuation zone for the most common types of hazmat, including vinyl chloride, extends half a mile on each side of a freight rail line.^[19] However, this is the minimum requirement for large spills, and a fire would necessitate an evacuation zone of at least one mile.^[20]

The counties with the largest at-risk populations are Hudson and Bergen counties, each with nearly half a million residents living within an evacuation zone.^[21] That’s nearly 70 percent of the population in Hudson County and around 50 percent of the population in Bergen County. People in these counties face particular risk because these are the densest counties in the state. Despite having fewer residents in the evacuation zone, rural communities are less likely to be equipped for a hazmat rail incident, posing a different kind of danger for residents and first responders.^[22]

The statewide evacuation zone for all freight lines includes 1,306 schools, 119 hospitals, 170 long-term care facilities, and 9 airports, including Newark Liberty International.^[23] Should an incident occur near any of these facilities, it would disrupt access to emergency care, put young students at risk, and cause major delays and disruptions for transportation and emergency response efforts.

Shortfalls in Federal and State Law Leave Residents Vulnerable

While the safety of New Jersey should remain a top priority, lawmakers at both the state and federal levels have failed to address dangerous shortfalls in hazmat rail policy. The federal Emergency Planning and Community Right-to-Know Act (EPCRA) grants public access to information about the location, amounts, and types of hazmat stored at stationary facilities.^[24] This information is published on the New Jersey Department of Environmental Protection’s website and updated regularly.^[25] Yet efforts to require federal or New Jersey lawmakers to grant public access to mobile sources of hazmat, such as freight rail trains, have not been successful.

Federal initiatives to increase rail safety and transparency have fallen short. In 2014, the federal government proposed a suite of safety regulations to create stronger requirements for trains carrying flammable liquids.^[26] However, the rail industry criticized the proposal, and the final rule was narrowed to apply only to crude oil and ethanol while exempting other chemicals.^[27] In 2018, the Trump administration repealed that rule.^[28] The second Trump administration continues to propose rollbacks to rail safety rules, worrying rail workers and creating the potential for even more dangerous conditions for New Jersey residents.^[29]

Corporate Lobbying Against Safety Regulations Stalls Progress

Despite safety concerns, corporate lobbyists from wealthy freight companies have repeatedly blocked state-level reforms. After CSX lobbied his administration, Governor Christie vetoed a 2017 bill that would have required corporations to develop hazmat response plans and to publicly disclose freight train routes, citing national security risks.^[30] Yet there is little evidence that transparency increases the likelihood of a security breach.

Restricting this information leaves first responders and communities unprepared for potential disasters.^[31] After the East Palestine derailment, the National Transportation Safety Board reaffirmed that communities have the right to know what chemicals are moving through their neighborhoods — information critical for local emergency response.^[32] ^[33] Still, efforts to revive similar transparency laws in New Jersey have faced the same corporate opposition, even as calls for reform continue to grow.^[34]

Corporations are unlikely to voluntarily increase safety measures. Between 2010 and 2021, the seven biggest railroad corporations spent 33 percent more on stock buybacks, cash distributions, and dividends compared to infrastructure investments.^[35] However, when corporations invest more in safety, incidents can decline. Four of the top five largest freight rail corporations reported an increase in incidents in the first 10 months of 2023.^[36] But Norfolk Southern, which increased its investments in infrastructure and safety upgrades after East Palestine, reported a decrease in incidents.^[37]

The pattern is clear: Without state action, corporate interests will continue to block safety improvements while millions of residents remain at risk. New Jersey cannot wait for federal action or voluntary corporate responsibility.

Lawmakers Must Act to Protect New Jersey Residents

With inconsistent progress on federal safety measures, states must act to protect their residents. New Jersey needs strong safety and transparency measures to ensure that residents, first responders, and communities can prepare for and respond to hazmat rail incidents. New Jersey lawmakers should pass laws requiring the following measures to reduce risks to residents, many of which have been proposed at the federal level or by other states.^[38] These policies cost the state very little to implement because freight rail companies — not taxpayers — would bear the costs. In fact, preventing major derailments can save more than these safety measures cost. The East Palestine cleanup alone has cost Norfolk Southern hundreds of millions of dollars.^[39]

Increase Transparency: Grant public access to hazmat cargo information while implementing safeguards against security risks.

Allowing reasonable public access to cargo information for communities near freight rail lines will bring New Jersey in line with neighboring states and bring freight rail hazmat in line with stationary sources of hazardous materials, which are already required to be public under the federal EPCRA. A proposed compromise is to allow access to a list of past cargo and their components published by the NJ Department of Environmental Protection (DEP) after a reasonable amount of time. Additionally, bridge inspection reports, which the NJ Department of Transportation generates based on inspections of bridge integrity and appraisal, should be sent to NJ DEP, the agency responsible for hazmat control. For example, the bridge in Paulsboro was known to be malfunctioning, yet the rail company that owned it failed to address it.^[40] By sharing these reports, agencies can break down regulatory siloes and work together to create more transparency and higher standards for rail safety.

Mandate Safety Upgrades: Require rail companies to upgrade safety technologies such as wayside defect detectors, maintain a minimum two-person crew on all hazmat freight trains, and restrict train length to reduce derailment risks.

Increasing the frequency of wayside defect detectors, which are devices placed alongside rail lines to detect issues with train equipment, has been shown to increase safety and reduce dangerous incidents.^[41] However, there are no current federal laws requiring the use of these detectors. Additionally, requiring a two-person crew allows for flexible sharing of responsibilities and increases the likelihood of catching a problem. While this is currently a federal rule, it is not yet a law and could be rolled back.^[42] Restricting train length reduces its total weight, lowering the likelihood of a derailment, while also reducing the overall amount of hazmat carried by the train. Longer trains are more likely to derail and should only be used if emergency response systems are capable of dealing with a derailment.^[43]

Strengthen First Responder Training: Mandate specialized training for emergency personnel in communities along freight lines, ensuring they can respond effectively to hazmat incidents.

Requiring the owners and operators of freight rail companies to provide specialized training for first responders in areas near freight rail lines will improve responses if and when an incident occurs. As shown in the Paulsboro derailment, first responders had a clear gap in understanding the risk of not using breathing protection. And officials did not order an immediate evacuation of the area affected by the cloud of vinyl chloride. Helping first responders prepare for any kind of incident also helps civilians. The better equipped first responders are, the more likely they will be able to limit damage and protect their community.

Ensure Financial Accountability: Require freight companies to demonstrate financial responsibility for disaster response, preventing communities from bearing the costs of corporate negligence.

Without strict policies requiring freight rail corporations to prove they can pay, taxpayers may have to bear the burden of paying to clean up after an incident.^[44] After the East Palestine and Paulsboro derailments, the freight companies paid for the entire cost of the cleanup and emergency response.^[45] This requirement must be written into law, and corporations must provide the government with proof of financial ability to pay for disaster response and cleanup before an incident occurs.

Conclusion

New Jersey lawmakers must reject corporate lobbying efforts that put profit over public safety. Transparency, improved emergency preparedness, stronger safety policies, and stricter corporate accountability are essential to protect the 3.6 million residents living in potential hazmat rail evacuation zones. Lawmakers need multiple layers of safety to both prevent incidents and to ensure that if an incident does occur, the damage is limited. Strengthening regulations will not only enhance public safety but also prevent future derailments from becoming full-scale disasters.

New Jersey lawmakers should pass comprehensive hazmat rail safety legislation in the current session — before the next derailment puts communities at risk.

End Notes

[1] NJPP Analysis of 2020 U.S. Census Data and New Jersey freight rail lines. 2020 U.S. Census Data was used because it is the most recent available data down to census block level.

[2] United States Census Bureau, 2024 Highest Density States Table.

[3] U.S. Department of Transportation Federal Railroad Administration. Hazardous Materials Transportation.

[4] National Transportation Safety Board. Failed Wheel Bearing Cause Norfolk Southern Train Derailment in East Palestine, Ohio. June 25, 2024.

National Transportation Safety Board. Conrail Train Derailment with Vinyl Chloride Release, Paulsboro, New Jersey, November 30, 2012. July 29, 2014.

[5] See New Jersey data at Federal Railroad Administration’s Office of Safety Analysis accident database.

[6] See New Jersey data for 2024 at PHMSA’s incident database.

[7] U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration. Federal Hazmat Law. p. 2.

[8] 49 CFR § 172.101. Hazardous Materials Table.

[9] New Jersey Department of Health. Hazardous Substance Fact Sheet: Vinyl Chloride. Oct. 2015.

[10] Agency for Toxic Substances and Disease Registry. Vinyl Chloride – ToxFAQs™.

[11] National Transportation Safety Board. Conrail Train Derailment with Vinyl Chloride Release, Paulsboro, New Jersey, November 30, 2012. Jul. 29, 2014. p.2.

[12]National Oceanic and Atmospheric Administration. A Train Derails in Paulsboro, N.J., Releasing 23,000 Gallons of Vinyl Chloride Gas. Dec. 17, 2012.

[13] Read, Zoë. A decade after Paulsboro, N.J. train derailment, questions linger over rail safety and public health. WHYY. Apr. 6, 2023.

[14] Centers for Disease Control and Prevention. NIOSH Technical Assistance Report: Assessment of Emergency Responders Following Vinyl Chloride Release from a Train Derailment—New Jersey, 2012. Dec. 2013. p.13.

[15] Centers for Disease Control and Prevention. NIOSH Technical Assistance Report: Assessment of Emergency Responders Following Vinyl Chloride Release from a Train Derailment—New Jersey, 2012. Dec. 2013. p.13.

[16] Railway Safety Act of 2023, S.576, 118^th Congress.

[17] New Jersey Department of Transportation. Freight Rail Strategic Plan. Jun. 2014. p.ES-2.

[18] NJPP Analysis of 2020 U.S. Census Data and New Jersey freight rail lines. 2020 U.S. Census Data was used because it is the most recent available data down to census block level.

[19] U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration. 2024 Emergency Response Guidebook. pp.30, 162.

[20] U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration. 2024 Emergency Response Guidebook. pp.30, 162.

[21] NJPP Analysis of 2020 U.S. Census data and New Jersey freight rail lines. 2020 U.S. Census Data was used because it is the most recent available data down to census block level.

[22] Junod, Anne N. Urban Institute. Why Hazardous Train Derailments Happen, Who Pays, and How to Prevent Them. Feb. 22, 2023.

[23] NJPP Analysis of NJGIN Open Data: Hospitals of NJ, Long Term Care Facilities of New Jersey, New Jersey Aviation Facilities, and School Point Locations of NJ.

[24] United States Environmental Protection Agency. Hazardous Chemical Inventory Reporting. Accessed Oct. 2025.

[25] New Jersey Department of Environmental Protection. How to Get Community Right to Know Information. Accessed Sept, 2025.

[26] Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable Trains. Vol 79, No. 148, Fed. Reg. 45016. Proposed Aug. 1, 2014.

[27] Wolfe, K. A. and Schor, E. Politico. DOT issues final rules on flammable oil trains. May 1, 2015.

U.S. Department of Transportation. DOT Announces Final Rule to Strengthen Safe Transportation of Flammable Liquids by Rail. May 1, 2015.

[28] U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration. PHMSA Rescinds ECP Brake Mandate After RIA Finds Costs Outweigh Benefits. Sept. 24, 2018.

[29] Gallagher, John. Freight Waves. Rail unions warn DOT rollbacks could jeopardize train safety. Jun. 24, 2025.

[30] Tate, Curtis. NorthJersey.com. CSX lobbied Christie officials before he vetoed oil-train bill. Aug. 11, 2017.

[31] NorthJersey.com. Editorial: Oil train veto leaves New Jerseyans at risk. Jul. 17, 2017.

[32] Fischler, Jacob. New Jersey Monitor. Priorities for rail safety bill debated in U.S. Senate hearing with Norfolk Southern CEO. Mar. 23, 2023.

[33] Fischler, Jacob. New Jersey Monitor. Priorities for rail safety bill debated in U.S. Senate hearing with Norfolk Southern CEO. Mar. 23, 2023.

[34] Weinberg, Loretta. NJ.com. We need protection from the ‘bombs’ that rumble through New Jersey. Jul, 14, 2022.

[35] Rowland, Darrel. ABC6. Norfolk Southern plied Ohio politicians with campaign cash, extensive lobbying. Feb. 20, 2023.

[36] Eavis, Peter. New York Times. Since Ohio Train Derailment, Accidents Have Gone Up, Not Down. Jan. 28, 2024.

[37] Eavis, Peter. New York Times. Since Ohio Train Derailment, Accidents Have Gone Up, Not Down. Jan. 28, 2024.

[38] Evans, Nick. Ohio Capital Journal. Bipartisan rail safety bill headed for U.S. Senate Vote. May 12, 2023.

New York State Senate. Senate Passes Comprehensive Rail Safety Legislation in Light of Recent National Train Disasters. May 23, 2023.

Williams, David O. Colorado Newsline. New rail safety office could add protections for Colorado residents and environment. May 9, 2024.

Caruso, Stephen. Spotlight PA. A train safety bill inspired by the East Palestine derailment faces tough odds in the Pa. legislature. June 12, 2023.

[39] Guillen, Alex and Marquette, Chris. Politico. “Norfolk Southern to pay over $500M for cleanup, rail safety after East Palestine derailment.” May 23, 2024.

[40] National Safety Transportation Board. “Conrail Freight Train Derailment with Vinyl Chloride Release.” Accessed Nov. 2025.

[41] U.S. Department of Transportation Federal Railroad Administration. Effectiveness of Wayside Detector Technologies on Train Operation Safety. May 2022.

[42] Federal Railroad Administration Office of Railroad Safety. Compliance Guide for Train Crew Size Safety Requirements. May 2024. p.7.

[43] Madsen, P. M., et al. Risk Analysis. The relationship between freight train length and the risk of derailment. Nov. 2024. P.1.

Verma, M. Transportation research part C: emerging technologies, 19(5). Railroad transportation of dangerous goods: A conditional exposure approach to minimize transport risk. Aug 2011. p.801.

[44] Junod, Anne N. Why Hazardous Train Derailments Happen, Who Pays, and How to Prevent Them. Feb. 22, 2023.

[45] U.S. Environmental Protection Agency. EPA Orders Norfolk Southern to Conduct All Cleanup Actions Associated with the East Palestine Train Derailment. Feb. 21, 2023.

Walsh, Jim. Courier Post. Conrail sues insurers over losses from 2012 Paulsboro derailment. Dec. 1, 2017.

Gutted: New Jersey’s Shrinking Public Workforce

Posted on November 10, 2025November 10, 2025 by Peter Chen

New Jersey has cut its state workforce by more than 25 percent since 2006, eliminating nearly 20,000 positions even as the state’s population has grown.^[1] This can have concrete consequences for New Jersey residents, including longer wait times at government offices, delayed benefits, fewer inspectors for nursing homes and polluting factories, and less oversight of how schools and local governments spend public dollars.

While state government employment nationwide has increased by more than 4 percent since January 2020, New Jersey has cut 3 percent of its workforce over the same period.^[2]

State policymakers have slashed positions across nearly every department, including child welfare, transportation, agriculture, and law enforcement. These departments all employ far fewer people than earlier in the century. Despite an influx of federal pandemic-related aid, New Jersey’s public sector workforce has still not rebounded, continuing a trend that New Jersey Policy Perspective previously documented in 2020.^[3]

This decline runs counter to the national trend of steady growth and recovery from recession-related cuts.^[4]

The cuts extend beyond state workers. Local government employment, including public school teachers and municipal service workers, has also fallen sharply. The state now employs 15 percent fewer public servants per resident than historical levels across all levels of government, gutting the capacity of government to respond effectively to residents’ needs.

What Workforce Cuts Mean for New Jersey Residents

Fewer public servants means worse service and higher costs. When staffing falls, backlogs grow, productivity drops, and waste increases. Residents face larger class sizes, longer waits for trash pickup, delays in business license approvals, and backlogs at motor vehicle offices.

Research confirms these problems:

Tax enforcement: Cutting tax enforcement staff costs the state money. For every dollar invested in tax enforcement personnel, states typically collect multiple dollars in previously uncollected taxes.^[5] (NJPP has highlighted increasing the tax enforcement workforce as a key revenue opportunity for New Jersey.^[6])
Transportation infrastructure: Staff cuts at state transportation departments have led to lost expertise and poor cost analysis, driving up the price of roads, bridges, and transit projects.^[7]
Social services: In New Jersey, workforce cuts at county social service agencies mean caseworkers juggle more clients, and families wait longer for help.^[8]

A government that works effectively is a government that has enough human capacity to meet its residents’ needs. Lawmakers from both parties have complained about long wait times for unemployment and tax assistance.^[9] But complaints alone will not fix the problem. Addressing wait times and backlogs requires hiring enough workers to meet demand.

How to Rebuild New Jersey’s Public Workforce

Rebuilding the state workforce requires competitive pay and benefits. Public-sector workers generally earn less than private-sector employees with similar education and experience.^[10] New Jersey currently has more than 2,000 funded positions sitting empty because the state cannot attract qualified candidates.^[11]

State policymakers should:

Prioritize hiring to fill these positions
Identify incentives to attract skilled candidates
Ensure that the state has enough revenue to fund a more robust state workforce

The myth of “Big Government” in New Jersey ignores the reality: the state has cut its public workforce to dangerous levels. More residents and fewer public servants equal longer wait times, less oversight, and wasted taxpayer dollars.

New Jersey residents deserve better. Policymakers must invest in rebuilding the state workforce to adequate levels. Only then can state government effectively serve the people of New Jersey.

End Notes

^[1] New Jersey Civil Service Commission, State Government 2024 Workforce Profile, 2025, p. 3; New Jersey Department of Personnel, State Government 2006 Workforce Profile, 2007, p. 3. U.S. Census Bureau, Resident Population in New Jersey [NJPOP], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/NJPOP, October 28, 2025.

^[2] U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001], retrieved from FRED, Federal Reserve Bank of St. Louis, Oct. 28, 2025. U.S. Bureau of Labor Statistics and Federal Reserve Bank of St. Louis, All Employees: Government: State Government in New Jersey [SMS34000009092000001], retrieved from FRED, Federal Reserve Bank of St. Louis, Oct. 28, 2025. Graph available here.

^[3] Reynertson, S., New Jersey Policy Perspective. Years of Disinvestment Hamper New Jersey’s Pandemic Response. Apr. 20, 2020.

^[4] U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001], retrieved from FRED, Federal Reserve Bank of St. Louis, Sept. 26, 2025.

^[5] Yale Budget Lab. The Revenue and Distributional Effects of IRS Funding. Apr. 24, 2025.

^[6] Chen, P., New Jersey Policy Perspective. Fair and Square: Changing New Jersey’s Tax Code to Promote Equity and Fiscal Responsibility. Nov. 14, 2024.

^[7] Liscow, Z. et al. State Capacity and Infrastructure Costs. Yale Law & Econ. Research Paper. Aug. 23, 2025.

^[8] Holom-Trundy, B., New Jersey Policy Perspective. Understaffed and Underfunded: Barriers to Effective Anti-Poverty Assistance. Nov. 25, 2024.

^[9] Price Mueller, K., NJ.com. Is anyone out there? We made 100 calls to state helplines to see who answered the phone. Jul. 21, 2025.

^[10] Morrissey, M. & Sherer, J., Economic Policy Institute. The public-sector pay gap is widening. Unions help shrink it. Aug. 29, 2024.

^[11] State of New Jersey. Governor’s FY 2026 Budget, Detailed Budget. March 2025. Pp. H-13 to H-14. State of New Jersey. Governor’s FY 2025 Budget, Detailed Budget. March 2024. Pp. H-13 to H-14.

The $200 Barrier to Justice: Why NJ Must Eliminate Municipal Public Defender Fees

Posted on October 31, 2025October 31, 2025 by Marleina Ubel

By Marleina Ubel with additional research by Dash Barany and Lauren Aung

What You Need to Know:

Up to $200 fees block access to public defenders in municipal courts
90 percent of New Jersey defendants cannot afford attorneys
No evidence that public defender fees generate substantial revenue for municipalities
Black and Latinx/Hispanic residents are disproportionately harmed
New Jersey must eliminate these fees immediately

Everyone has the constitutional right to a lawyer when accused of a crime, but for many in New Jersey, that right is behind a paywall. In 2023, after extensive research from NJPP, Governor Murphy signed a law eliminating public defender fees for felony cases.^[i] In New Jersey, lawyers from the state Office of the Public Defender (OPD) represent people facing felony charges, also known as indictable offenses. Yet people who need a public defender in municipal court can still be required to pay application fees.

Under current state law, people who cannot afford an attorney may be required to pay up to $200 to apply for a municipal public defender.^[ii] These charges push low-income residents into debt and pressure them to give up their right to counsel to avoid financial strain. As politicians increasingly threaten to use criminal prosecution as a political weapon, the right to strong and accessible defense counsel becomes even more critical. New Jersey must eliminate these fees.

What the Law Says — and Who It Harms

New Jersey statute allows, but does not require, municipalities to charge up to $200 to apply for the “privilege” of accessing one’s constitutional right to an attorney.^[iii] The majority of municipalities attempt to collect this fee.^[iv] Judges may waive the fee, but only if they find significant evidence that the cost would be an unreasonable burden on the applicant — a process that is far from simple.^[v] Defendants must prove that paying would cause financial hardship, often by submitting extensive personal financial documents. This process can be confusing, humiliating, and ultimately a barrier to exercising their constitutional right to counsel.^[vi]

The consequences of these fees are severe. They deepen poverty and trap people in cycles of court debt and ongoing legal system involvement. People experiencing financial hardship are more likely to face criminal charges or incarceration.^[vii] This reality also plays out in New Jersey courts, where approximately 90 percent of defendants are indigent.^[viii] This means the vast majority of New Jerseyans facing charges are harmed by public defender fees. In most cases, families or loved ones also carry the burden of court debt. Of those, 83 percent are women.^[ix] Because women are more likely to be caregivers, the harm extends to children and other vulnerable family members, spreading well beyond the individual defendant.

These burdens fall hardest on Black and Latinx/Hispanic New Jerseyans, who are more likely to experience financial hardship due to historic and systemic inequities. In 2023, 53 percent of Black households and 52 percent of Latinx/Hispanic households in New Jersey did not make enough money to meet basic needs.^[x] At the same time, Black residents are more than 12 times as likely to be charged and convicted as white residents.^[xi] As a result, Black and Latinx/Hispanic New Jerseyans are overrepresented among defendants who cannot afford an attorney and are disproportionately harmed by public defender fees.

New Jersey’s own Supreme Court Committee on Municipal Court Operations, Fines, and Fees warned in 2019 that these charges “can be financially devastating on defendants, have a disproportionately negative impact on the poor, and often become the starting point for a perpetual cycle of court involvement for defendants with limited resources.”^[xii]

Minimal Returns, Hidden Costs

While the financial burden on New Jerseyans who cannot afford an attorney is substantial, the cash returns for municipalities are minimal. Unsurprisingly, New Jersey collects a low percentage of legal financial obligations imposed by the court. A study by the New Jersey Criminal Sentencing and Disposition Commission (CDSC) found that only about 20 percent of all legal financial obligations imposed on people on probation are collected, including public defender fees.^[xiii] Because defendants applying for public defenders have already shown they cannot afford to pay, those returns are likely even smaller. For example, in East Orange, the city collected $3,523 in public defender fees in 2024, out of a $182.4 million budget. This is a mere 0.002 percent of the municipal budget.^[xiv]

There are also hidden administrative costs associated with debt collection. The system incurs additional, often untracked administrative expenses related to collections and enforcement, creating an inefficient system that costs more than it generates.^[xv] Nationally, collecting public defense fees costs more than 95 percent of what is collected.^[xvi] New Jersey’s own CDSC report also suggests that the state’s collection system costs more to run than it collects.^[xvii]

A lack of transparency and accessible data makes it difficult for the public to understand how this system works or how fees are applied. This is even true for those who need representation from a public defender. People may not realize there is a fee until they receive notice of debt.^[xviii]

Recommendation: No Paywall on Justice

New Jersey must guarantee that the constitutional right to counsel is truly free and accessible, especially as the criminal legal system becomes increasingly weaponized to target people of color.^[xix] This reform would complete the work the state started in 2023 when it eliminated public defender fees for felony cases. Municipal court defendants deserve the same access to justice. That means eliminating all municipal public defender application fees and ensuring public defense is funded through sustainable, equitable public investments.

In many places, access to public defenders is free for those who qualify. Municipalities like Jersey City have already led the way. Neighboring states such as New York and Pennsylvania recognize that no one should have to choose between taking on debt or defending their rights.

Ending these fees is about living up to constitutional promises. It’s about dismantling barriers that disproportionately harm Black and Latinx/Hispanic residents and closing long-standing racial and economic gaps in the legal system. Justice should be available to everyone, not only to those who can afford it.

The New Jersey Legislature must pass legislation prohibiting municipalities from charging public defender application fees. This requires:

Amending N.J. Stat. 2B:24-17(a) to eliminate fee authorization
Ensuring state funding covers municipal public defender costs
Requiring transparency in public defender access and outcomes

End Notes

^[i] Ubel, M. The High Cost of “Free” Representation: Why New Jersey Should Eliminate Public Defender Fees. New Jersey Policy Perspective. October 24, 2022; Ubel, M. It’s Time for New Jersey to Eliminate Public Defender Fees. New Jersey Policy Perspective. June 27, 2023; Office of Governor Phil Murphy. Governor Murphy Signs Bill Eliminating Public Defender Service Fees. June 30, 2023.

^[ii] NJ Rev Stat. 2B:24-17(a) (2024)

^[iii] NJ Rev Stat. 2B:24-17(a) (2024)

^[iv] NJPP Analysis, Personal Communication, Phone Calls to Municipal Courts. [Oct 2024 – Sept 2025].

^[v] NJ Rev Stat. 2B:24-17(a) (2024)

^[vi] Supreme Court Committee on Diversity, Inclusion, and Community Engagement. 2023 – 2025 Report. Jan. 14, 2025. pg.16

^[vii] Rabuy, B. and Kopf, D. Prisons of Poverty: Uncovering the pre-incarceration incomes of the imprisoned. Prison Policy Initiative. Jul. 9, 2015

^[viii] The New Jersey statute defines an indigent defendant as “a person who is formally charged with the commission of an indictable offense, and who does not have the present financial ability to secure competent legal representation, and to provide all other necessary expenses of representation” (2A:158A-2). An indigent defendant is a person who does not have the resources to pay for counsel; New Jersey Criminal Sentencing & Disposition Commission. March 2023 Report. Mar. 2023. Pg. 18.

^[ix] deVuono-powell, S., Schweidler, C., Walters, A., and Zohrabi, A. Who Pays? The True Cost of Incarceration on Families. Ella Baker Center, Forward Together, Research Action Design. Sep. 15, 2015.

^[x] United for ALICE. The State of ALICE in New Jersey: 2025 Update on Financial Hardship. United Ways of New Jersey. 2025. Pg. 3.

^[xi] Nellis, A. The Color of Justice: Racial and Ethnic Disparity in State Prisons. The Sentencing Project. Oct. 2021. Pg. 10.

^[xii] New Jersey Courts. Report Of The Supreme Court Committee On Municipal Court Operations, Fines, and Fees. Administrative Office of the Courts. Jun. 2018. Pg. 15.

^[xiii] New Jersey Criminal Sentencing & Disposition Commission. March 2023 Report. Mar. 2023. Pg. 16.

^[xiv] NJPP Analysis, Personal Communication. Jul. 2025. On file with author; City of East Orange. 2024 Municipal Budget. April 2024. Pg. 1.

^[xv] Beeman, M. et al. At What Cost? Findings from an Examination into the Imposition of Public Defense System Fees. National Legal Aid & Defender Association. Jul. 2022.

^[xvi] Beeman, M. et al. At What Cost? Findings from an Examination into the Imposition of Public Defense System Fees. National Legal Aid & Defender Association. Jul. 2022. Pg. 7

^[xvii] New Jersey Criminal Sentencing & Disposition Commission. March 2023 Report. Mar. 2023. Pg. 18.

^[xviii] National Legal Aid & Defender Association (NLADA). Forthcoming report. Contact author for more information.

^[xix] Ghandnoosh, N. One in Five: Disparities in Crime and Policing, The Sentencing Project. Nov. 2023.

Resetting School Funding for New Jersey’s Next Decade

Posted on October 29, 2025 by Mark Weber

Based on Estimating the Costs of an Adequate Education in New Jersey^[1] by Dr. Bruce D. Baker, University of Miami.

Key Findings

New Jersey’s school funding formula shortchanges schools serving students from low-income families by about $5,300 per student.
This underfunding leaves 80 percent of Black and Latinx/Hispanic students in schools without enough resources.
Fixing the formula would cost about $3.5 billion each year but would close opportunity gaps and fulfill the state’s constitutional obligation.
This investment would bring school spending in line with levels before the 2008 recession, measured as a share of the state’s economy.

Every New Jersey student deserves access to quality education, no matter their income, race, gender, or disability. But a Black high school student, enrolled in a high-poverty district and in crisis, will have less access to a mental health professional than students in more affluent districts.^[2] And a first-grader who speaks Spanish at home may have larger class sizes than students in nearby wealthier towns, preventing her from learning English as fast as she could.^[3]

To deliver on the promise of a quality education, schools need enough funding to help students meet the state’s academic standards.^[4] However, many New Jersey school districts, especially those in high-poverty communities, lack the resources they need to provide all students with an education that meets the state’s new, higher standards.^[5] The state can fix this problem by increasing funding for school districts so they have the resources they need to educate their students properly.

This summary highlights key findings from Estimating the Costs of an Adequate Education in New Jersey by Dr. Bruce D. Baker.

A new report shows how New Jersey’s current school funding system falls short and outlines steps to fix it. The report provides a road map to guide the state toward properly funding its schools, as required by the New Jersey Constitution.

The report shows:

New Jersey ranks among the top states on national tests when looking at average student performance. This success stems largely from the state’s strong commitment to funding many of its schools adequately. Unfortunately, a large gap remains between test scores of students from low-income families and their wealthier peers.
Schools serving more students in poverty or English Language Learners (ELL) are not getting enough funding to close this opportunity gap.
This funding shortfall comes from problems with the state’s school funding formula. The current formula uses outdated assumptions to determine how much extra funding a district receives for each student who qualifies for free or reduced-price lunch, a measure of economic need.
Under the current school funding system, most Black and Latinx/Hispanic students attend schools that lack the resources they need, seriously harming their educational opportunities.
Fixing the formula to properly fund schools serving students from low-income families would cost about $3.5 billion; this would only be a nine percent increase in the total budgeted spending of New Jersey school districts for 2025-26.^[6] This investment would bring total school spending close to what New Jersey spent before the 2008 recession, measured as a share of the state’s economy.^[7]

High Test Scores for New Jersey Students, But an Opportunity Gap Remains

New Jersey ranks among the top states for school funding, spending a larger share of its economy on education than most states (see table below). However, like the rest of the nation, New Jersey’s funding dropped over recent years, with a temporary increase during the pandemic.^[8] This pattern shows that the state can afford to increase school funding, climbing back to the funding levels it had before the 2008 recession.

New Jersey’s Strong Funding Yields High Test Scores

New Jersey’s strong school funding has resulted in higher test scores compared to other states, even after the nationwide drop in test scores following the Covid pandemic. For example, math scores in Grade 8 remain among the highest in the nation, even after the drop following the pandemic.

While this success should be celebrated, we must remember that these test scores are averages: many students score higher than average, but many score below. Students in poverty continue to fall behind their peers. For example: while average Grade 8 math scores in New Jersey are high, the scores for economically disadvantaged students have consistently been below those of their more affluent peers.

These persistent gaps exist because schools serving students from low-income families lack the resources they need. Closing the opportunity gap between more and less affluent students should be a key goal of the state. That can happen only when all schools are funded properly.

Schools Serving Students Facing Economic Challenges Aren’t Getting Enough Funding

Why Additional Funding Matters

Students from low-income families need additional support to succeed in school. Smaller class sizes, trained education specialists, targeted programs, classroom supports, and extra services all require additional funding. Without these resources, students from low-income families will not have educational opportunities that equal their classmates from higher-income families.^[9]

How the Formula Should Work

New Jersey’s school funding formula is based on providing additional funding for students if they qualify for free or reduced-price lunch (a measure of poverty), or if they speak English as a second language at home.^[10]

In theory, the school funding formula should provide significantly more money to schools serving more students in poverty. The formula includes extra funding for students who qualify for free or reduced-price lunch (FRPL), providing an additional 47 to 57 percent more funding per pupil. English Language Learners also receive an extra 50 percent more funding.

How the Formula Actually Works

In reality, the funding difference between high- and low-poverty schools is far too small. For every 10-percentage point increase in students qualifying for free and reduced-price lunch, schools spend only about $300 more per pupil on average. The same increase in English Language Learners results in about $400 more spending per pupil on average.^[11]

Currently, for each student who qualifies for free or reduced-price lunch, schools receive only 21 percent more funding than they receive for a student who doesn’t qualify. This is far less than the 47 to 57 percent the formula intends. It’s also less than what the data says is needed to achieve rigorous outcomes.^[12]

Changing the Funding Formula to Get More Money Where It Is Needed

The report uses actual data on school spending, student characteristics, and test outcomes to calculate what funding is needed for all students to achieve strong results on state tests. The report calculates how much funding would raise the statewide test scores by an amount equal to the current gap between students from the wealthiest and poorest families.^[13]

To meet this goal, schools should receive much more funding for each student from a low-income family.^[14] Currently, New Jersey schools spend an average of $2,960 more per student who qualifies for free or reduced-price lunch. To reach higher standards for all students, this amount should increase by $5,290 to a total of $8,880 per student.^[15]

What Proper Funding Would Provide

The additional $5,290 per student from a low-income family would allow schools to:

Reduce class sizes so teachers can give each student more attention
Hire reading specialists and math coaches to help struggling students
Provide after-school tutoring and summer programs to prevent learning loss
Offer counselors and social workers to address barriers to learning that happen outside the classroom
Update textbooks, technology, and facilities to create better learning environments

Many of these resources are standard in schools serving wealthier students but often missing in schools serving low-income communities.

Students of Color Are More Likely to Be in Schools Without Enough Funding

New Jersey’s current school funding system severely disadvantages students of color. The majority of Black and Latinx/Hispanic students attend schools that lack adequate funding.^[16] As a result, outcomes for these students suffer: Black and Latinx/Hispanic students have less access to advanced courses, experienced teachers, updated technology, and support services. These resource gaps directly limit their educational opportunities and future economic prospects. This racial and ethnic imbalance must be addressed by reforming the state’s school funding formula.

Put another way: a Black or Latinx/Hispanic student in New Jersey has about a four in five chance of attending an underfunded school, while a white student has about a one in two chance. This difference reflects decades of policy decisions that have systematically underinvested in communities of color.^[17]

Closing the Gap Costs $3.5 Billion, But NJ Can Afford It

Funding schools serving students in poverty properly requires tripling the additional funding these schools currently receive for each student from a low-income family who is enrolled.^[18] With approximately 586,000 students who qualify for free or reduced-price lunch, the total investment would be about $3.5 billion each year.^[19] To put this into perspective, New Jersey’s total state budget for fiscal year 2025 is about $59 billion.

This improvement represents about four-tenths of a percentage point of the state’s total economy.^[20] Total K-12 spending would remain in line with levels before the Great Recession of 2008.^[21]

More analysis will help figure out the exact formula changes needed. Until then, New Jersey policymakers must move urgently to take the following steps:

Change the current formula to increase the additional per-student funding for students from low-income families. Currently, each low-income student enrolled in a district raises per pupil spending $2,960; this amount should be increased to $8,880. This amount can be adjusted after conducting additional research.
Keep this higher funding level over the long term.
Remove the sliding scale that provides different amounts based on district poverty concentration.

The path forward is clear: New Jersey must return to previous levels of funding to fulfill its constitutional mandate to provide all students with an education that prepares them to succeed.

End Notes

[1] Baker, B.D. Estimating the Costs of an Adequate Education in New Jersey. Trenton, NJ: New Jersey Policy Perspective. 2025.

[2] Weber, M. A. New Jersey’s Black Students Suffer a Decline in Access to School Mental Health Staff. New Jersey Policy Perspective.

[3] Weber, M.A. The Consequences of School Underfunding. New Jersey Policy Perspective.

[4] Baker, B. D., & Knight, D. Does money matter in education? Washington, DC: Albert Shanker Institute. 2025.

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

[6] Total expenditures for 2025-26 based on “Expenditures Net of Transfers” from the NJDOE’s User Friendly Budgets. https://www.nj.gov/education/budget/ufb/

[7] Baker, B.D. Estimating the Costs of an Adequate Education in New Jersey. Trenton, NJ: New Jersey Policy Perspective. 2025. p. 3.

[8] Baker, B.D., Di Carlo, M, & Weber, M.A. The Adequacy and Fairness of State School Finance Systems (7th edition), p. 8-11. Washington, D.C.: The Shanker Institute. 2025.

[9] Baker, B. D., & Knight, D. Does money matter in education? Washington, DC: Albert Shanker Institute. 2025.

[10] For an in-depth discussion of the School Funding Reform Act’s (SFRA) funding formula, see: Baker, B.D., & Weber, M.A. Unlocking Academic Success: Revitalizing New Jersey’s School Funding Formula for Student Achievement. 2023.

[11] Baker, B.D. Estimating the Costs of an Adequate Education in New Jersey. Trenton, NJ: New Jersey Policy Perspective. 2025. p. 26. Table 3, “spend_2” shows the model estimate for increases in spending; the figures are divided by 10 to show the increase in spending given a 10-percentage point increase in either FRPL or ELL students.

[12] Regarding the difference between the implicit FRPL weight and the School Funding Reform Act (SFRA) formula weight: Many affluent districts spend well above the adequacy target set in the SFRA formula. The implicit weight is based on the actual differences in spending between districts: if districts with fewer FRPL students spend more than their adequacy target, the implicit FRPL weight will decrease to a level below the weight used in the SFRA formula. Put simply: the implicit weight is lower than the formula weight because low-FRPL districts spend more than their SFRA adequacy amount. It is also possible some high-FRPL districts are not spending what the formula says they should, possibly because they aren’t receiving all the local or state revenue the formula says they should receive. Further research is needed to determine the exact causes of this discrepancy.

[13] Baker, B.D. Estimating the Costs of an Adequate Education in New Jersey. Trenton, NJ: New Jersey Policy Perspective. 2025. p. 28. Formally, the report’s desired outcome is to raise the average state test score 1.0 standard deviations (1.0 SD). Several studies have found the achievement gap between 90^th percentile household income students and 10^th percentile household income students is on the order of 1.0 SD. (Reardon, S.F. The Economic Achievement Gap in the US, 1960-2020:Reconciling Recent Empirical Findings. CEPA Working Paper No. 21.09. 2021. Retrieved from Stanford Center for Education Policy Analysis) The increase in funding would be due to raising the free and reduced-price lunch weight; consequently, the additional funding would be concentrated in higher-poverty districts, as would be the ensuing increase in test scores. Raising the average state test score by 1.0 SD would, therefore, be closing the opportunity gap.

[14] The School Funding Reform Act (SFRA) formula weights FRPL students between 0.47 and 0.57 based on the concentration of economic disadvantage in their school district: more concentrated disadvantage leads to a higher weight. The report’s analysis suggests this sliding scale should be replaced with a single, higher weight for all FRPL students.

[15] Baker, B.D. Estimating the Costs of an Adequate Education in New Jersey. Trenton, NJ: New Jersey Policy Perspective. 2025. Table 3, p. 26 (spending model “spend_2”). The calculation here takes the ratio of the estimated weight to the implicit weight (0.63 / 0.21 = 3.0) and multiplies that by the “actual” spending found in the model estimate.

[16] Baker, B.D. Estimating the Costs of an Adequate Education in New Jersey, Trenton, NJ: New Jersey Policy Perspective. 2025. pp. 29-30.

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

[18] “Tripling” the weight means tripling the actual extra amount spent on a student in economic disadvantage over what is currently spent. The amount the weight would need to be changed in the SFRA formula to achieve this result would likely be different.

[19] NJDOE Fall Enrollment Reports, 2024-25.

[20] Bureau of Economic Analysis, “GDP by State.”

[21] As the table above shows, spending on K-12 education was 4.6% in 2020, 4.2% in 2021, and 5.0% in 2022 (the latest figure available). The wide swings in the latest years are due to effects from the pandemic; it is likely the effort figure will drop in 2023. Yet even if it doesn’t, a 0.4 percentage point increase still puts the effort figure near where it was before the Great Recession.