The basics:

• Toms River board of ed votes down FY 2025-26 budget amid state pressure
• District cites $175M in lost aid under S2 school funding formula
• NJDOE imposed 12.9% tax hike after board’s refusal to approve budget
• District may pursue Chapter 9 bankruptcy to avoid further tax burden

An intensifying budget standoff between the state education department and one of New Jersey’s largest school districts has come to a head.

NJBIZ has reported on how implementation of the revised school funding formula (S2 – signed into law in 2018) has led to some dissatisfaction with districts that are most impacted, such as Toms River Regional Schools; which has lost about $175 million in state aid in recent years.

To bridge the gap, the district laid off more than 250 staff members, reduced its supply budget, increased class sizes, sold its administration building and other property, increased taxes and more. With more than 14,500 students, 18 schools comprise Toms River Schools.

The state counters, saying that districts such as Toms River and others were getting too much in state aid while others were severely underfunded. It says this revised formula corrects that.

The issue has become a flashpoint in these communities – as well as a major issue in Trenton and on the campaign trail. And its one that has led to tough choices for towns like Toms River.

‘Enough is enough’

Things came to a head at a June 30 meeting. The Toms River Regional Schools Board of Education voted unanimously not to approve its fiscal year 2025-26 budget. The spending plan would include a nearly 13% tax hike. The move came after the NJDOE warned the BOE must pass a budget or cease all operations.

At that meeting, officials also announced the district’s intention to pursue Chapter 9 bankruptcy.

“After numerous attempts by the Toms River Regional Schools Board of Education and district leadership to finalize the Fiscal Year 2026 budget, the board has formally rejected the State Department of Education‘s directive to delay student programming and services – even as the district faces potential bankruptcy,” said Toms River Regional Board of Education President Ashley Lamb in a statement at that meeting.

“We cannot and will not acquiesce to the State Department of Education’s direction without severely undercutting an educational system that our taxpayers deserve. Our district has already endured devastating cuts. We’ve lost over 250 teacher and staff positions – and seen class sizes increase to critical levels. Enough is enough.”

Talking taxes

Lamb said that to meet the state’s demands, Toms River would have to impose that aforementioned tax levy – on top of a 9.3% increase last year. That would bring the two-year total to more than 22%

“This is unconscionable, especially when the state’s own flawed funding formula has created this crisis by underfunding our district by $107 million,” said Lamb. “This board has a fiduciary duty to our taxpayers and will not subject them to punitive tax increases created by the state’s funding failures.”

This board has a fiduciary duty to our taxpayers and will not subject them to punitive tax increases created by the state’s funding failures.
– Ashley Lamb, Toms River Regional Board of Education president

Just before the holiday, the NJDOE announced July 3 that it adopted the FY 2025-26 for TRRS. The department says it is the same tentative plan the township submitted May 13 and NJDOE approved. It includes a 12.9% tax levy increase.

“The Department’s action was compelled by the Board’s failure to adopt its final budget by the start of the fiscal year, a marked violation of several statutory and regulatory requirements,” the NJDOE said in a July 3 statement.

“Adopting a district budget requires innumerable complex, and sometimes emotional, decisions regarding the allocation of resources to ensure that all students receive the educational services they deserve. While the Department acknowledges the difficulty inherent in school district budgeting decisions, the state and the public hold their school district leaders to the highest standards and expect them to rise to this challenge.”

Adopting a district budget requires innumerable complex, and sometimes emotional, decisions regarding the allocation of resources to ensure that all students receive the educational services they deserve.
– NJ Department of Education

A ‘troubling pattern’

The NJDOE said that this is not only an expectation – but required under state law.

“The weight of these decisions only affirms – not excuses – the importance of every district leader to deliver upon this most fundamental obligation,” the statement continued. “On this vital measure, the Board has fallen short, despite having been afforded extended opportunities to deliberate, revise, and adopt a budget acceptable to the Board.

“Now, with summer programs and other student services set to begin next week, the Department must step in and act accordingly.”

Noting that the action of the state adopting a district budget is rare, the NJDOE says it marks the second consecutive year it has been forced to adopt Toms River Regional Schools’ budget.

“This troubling pattern indicates deeper and systemic concerns about the ability of the Board and district administrators to meet their most basic responsibilities,” the statement said. “As such, the Department has no choice but to take additional steps to safeguard district students and the school community’s public trust from further risk.”

Pointing fingers

In response to the NJDOE action and statement, TRRS shot back with a scathing statement of its own July 7.

Budget details

In addition to fully funding the school formula, find out here what else was included in the recently passed $58.8 billion fiscal year 2026 budget bill.

“On Thursday, July 3, the New Jersey Department of Education, following our intention to pursue Chapter 9 bankruptcy due to the $22.3-million budget deficit caused by the NJDOE itself, announced it is passing our proposed 2025-2026 budget by imposing a 12.9-percent tax increase which our school board had outright rejected,” TRRS said in a July 7 statement. “In its public statement noting our refusal to acquiesce to their demands, the NJDOE wrote about TRRS that a ‘troubling pattern indicates deeper and systemic concerns about the ability of the Board and district administrators to meet their most basic responsibilities.’

“It is truly ironic for a state department unwilling to disclose its tragically-flawed funding formula to have ‘deep concerns’ about the most efficient, effective, and transparent large public school district in New Jersey. They are angry because they tried and failed to strong-arm our board into approving a massive tax increase two years in a row, so that the board would be responsible for it rather than the actual responsible party: the NJDOE, which 100% caused the revenue shortfall with their secret, politically-driven formula for the distribution of state aid, and imposition of a massive tax increase on our citizens. Twice.

“In Toms River, we get taxes imposed while our neighbors get loans – thereby saving their taxpayers. Why? ‘That’ is something that warrants ‘deep concerns.’”

Trouble ahead?

The TRRS statement continued railing against the school funding formula. TRRS also defended itself for running efficient operations and meeting deadlines. Meanwhile, it stressed rejecting the budget because it did not want to overburden taxpayers.

“At our June 30 special board meeting, we announced that rather than pass a budget that imposed more taxes on our residents, we were exploring filing for bankruptcy,” the TRRS statement continued. “This strategic move combined with its inherent defiance of the NJDOE’s wishes was an affront to them, and they responded by imposing the tax hike on our residents. If the state had to disallow our district from pursuing bankruptcy, it is fine with risking personal potential bankruptcies of our 100k-plus residents.”

TRRS say it is clearly not fine with that.

“So now our funding fight shifts from being on behalf of our students to on behalf of our taxpayers. It’s safe to say, after seven long years of a clearly unjust and secret funding formula, we’re sensing a troubling pattern that indicates deeper and systemic concerns about the ability of the state to meet its most basic responsibilities.”