Opening the Door to Opportunity with Family Tax Credits

Posted on February 17, 2026February 17, 2026 by Peter Chen

Thousands more New Jersey families could afford child care, groceries, and rent if state lawmakers expand two proven tax credits: the Child Tax Credit and the Earned Income Tax Credit.

Governor Sherrill opened her governorship with a call to keep “the door to opportunity open” for New Jersey families. Expanding these credits would deliver on that promise by putting money directly in families’ hands to help cover the cost of raising children – which the governor recognized by placing Child Tax Credit and Earned Income Tax Credit expansion in her campaign platform.

The Child Tax Credit and Earned Income Tax Credit have already put thousands of dollars back into New Jersey family bank accounts, reducing poverty and helping cover the cost of raising children. But these programs still leave out many households, due to child age, tax filer citizenship, or other eligibility requirements.

New Jersey Policy Perspective (NJPP) proposes common-sense changes that would assist New Jersey families directly by putting cash in their pockets. If Governor Sherrill wants to address affordability, expanding these credits is one of the more effective ways to help families meet everyday costs.

Increasing these credits and expanding eligibility would ensure all families can access opportunity.

These programs would expand affordability, fight poverty, and stimulate local economies.

Lawmakers can expand family tax credits to help families afford basic needs through existing programs, without creating new bureaucracy. While some changes could phase in gradually — as the state did with earlier Earned Income Tax Credit expansions — these credits can deliver relief quickly.

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

Posted on October 24, 2025 by Mark Weber

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

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

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

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

Why does funding matter for schools?

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

Bottomline: Students need well-funded schools to succeed.

Do some schools need more resources than others?

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

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

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

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

Where do New Jersey public schools get their funding?

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

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

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

Why is state funding necessary for schools?

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

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

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

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

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

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

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

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

How does the state’s school funding formula work?

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

District Adequacy Budget - Local Fair Share = Equalization Aid

To break down each of these parts:

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

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

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

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

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

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

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

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

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

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

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

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

Calculating Adequacy Budgets

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

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

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

How does New Jersey fund special education?

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

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

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

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

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

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

How are charter schools funded?

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

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

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

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

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

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

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

How can we improve school funding in New Jersey?

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

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

End Notes

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

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

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

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

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

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

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

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

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

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

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

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

^[10] New Jersey State Constitution (1947).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Census 2024: Economic Gains Bypass Many New Jersey Communities

Posted on October 21, 2025October 21, 2025 by Tonanziht Aguas

While the state saw modest improvements in poverty and income levels, the data reveals persistent differences and growing concerns. Under-resourced communities continue to be disproportionately harmed by economic obstacles. In a state as wealthy as New Jersey, economic mobility is not a privilege — it’s a right everyone deserves.

Gender and Racial Disparities Persisted in 2024

Last month, the U.S. Census Bureau released new data offering insights into New Jersey residents’ economic security, confirming what many already know: poverty is not experienced equally. Women and communities of color continue to face high rates of poverty, highlighting the range of economic outcomes across the state.

According to the 2024 American Community Survey (ACS), New Jersey’s poverty rate stood at 9.2 percent in 2024.^[i] It remains higher than the pre-recession level of 8.7 percent in 2008.^[ii] Although lower than the national poverty rate of 12.1 percent and the prior year’s rate (9.7 percent), nearly 860,000 New Jersey residents lived below the Federal Poverty Level (FPL), the federal government’s official poverty measure.^[iii] In 2024, the FPL was $25,820 for a family of three.^[iv]

This threshold, however, does not adequately measure economic realities in high-cost states like New Jersey. Legal Services of New Jersey’s NJ True Poverty Tracker Report finds that a family of three needs an income closer to 300 percent of the FPL to afford basic necessities and live with dignity without making trade-offs between essentials.^[v]

These topline figures fail to reflect the depth of economic disparity. Gender and racial differences persisted in 2024. Women experienced a poverty rate of 10.1 percent, compared to 8.2 percent for men.^[vi] Black, American Indian and Alaska Native, and Latinx/Hispanic residents were nearly two to three times more likely to live in poverty than white (5.7 percent) and Asian (6.2 percent) residents.^[vii]

Too Little Progress in Child Poverty Reduction

In 2024, 11.4 percent of children in New Jersey lived below the poverty level, a slight improvement from the previous year, yet still higher than the state’s overall poverty rate.^[viii] This means children were disproportionately affected by economic insecurity. Because children rely on the financial stability of their caregivers, household poverty directly becomes child poverty. This effect intensifies in families with multiple dependents or single parents. When families struggle to afford housing, food, healthcare, and childcare, children often bear the brunt of those trade-offs.

More than 230,000 children lived in poverty.^[ix] This number, a reflection of real lives, is unacceptable. Research shows that childhood poverty has long-term consequences, linked to harmful effects on educational attainment, health outcomes, and lifetime earnings.^[x] Tracking child poverty is essential not only to understand the scope of economic inequality, but to ensure that policy prioritizes the well-being of the next generation. Every child deserves the opportunity to grow up with security, dignity, and access to opportunity.

These patterns in child poverty are deeply intertwined with broader patterns of household income. Families struggling to meet basic needs often do so on limited earnings, and income inequality across racial and ethnic lines continues to shape which children are most affected. While overall median household income rose to $104,294, not all New Jerseyans benefited from these gains equally.^[xi]

Black, Latinx/Hispanic, and American Indian and Alaska Native families are still earning less than white and Asian families. These persistent income gaps help explain why child poverty remains disproportionately high in communities of color, despite the state’s economic growth.

New Jerseyans Share Outlooks on Economic Conditions

In the most recent U.S. Census Bureau Household Pulse Survey (HPS), which includes data collected between August 20 and September 16, 2024, one-third of respondents reported difficulty paying for usual household expenses and nearly four in five reported rising prices for goods and services.^[xii]

The 2024 HPS estimates demonstrate that despite overall improvements in general economic indicators, many New Jerseyans were left behind or continue to face financial strain. Data collected also reveals a wide range of experiences across the state, further suggesting that economic conditions had not improved uniformly and many struggled to keep up with the burden of inflation and high cost of living.

Action Needed to Build an Economy for the Many

The latest Census data highlights the urgent need to strengthen New Jersey’s safety net for families facing economic insecurity. In 2024, the state raised its minimum wage to $15.13 per hour, and recipients of the NJ Child Tax Credit received larger refunds.^[xiii] These measures offered meaningful relief and marked progress, but the gains remain modest and uneven. Working-class communities, in particular, continued to face disproportionate hardship.

To build an economy that works for everyone, New Jersey should strengthen policies that put cash directly into people’s hands. Building up existing supports, expanding proven programs, and exploring bold approaches (such as guaranteed income) can buffer families against future shocks.^[xiv] With a potential recession on the horizon and federal rollbacks threatening core assistance programs, it’s more critical than ever to ensure New Jerseyans have the resources they need to thrive.

End Notes

^[i] NJPP Analysis of Census Bureau – American Community Survey. Table S1701 ACS 1-Year Estimates 2024.

^[ii] U.S. Census Bureau. American Community Survey, 2007 and 2008; and Puerto Rico Community Survey, 2007 and 2008.

^[iii] NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2024 (United States); NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2023 (New Jersey); NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2024 (New Jersey).

^[iv] U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. 2024 Poverty Guidelines.

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

^[vi] NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2024.

^[vii] Note that the margins of error for smaller populations, such as American Indian and Alaska Native, are higher and therefore, there is a larger possible variation. NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2024.

^[viii] NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2024.

^[ix] NJPP Analysis of Census Bureau – American Community Survey. Table S1701, ACS 1-Year Estimates 2024.

^[x] New Jersey State Policy Lab at Rutgers University. Prevalence of Child Poverty in New Jersey. 2022.

^[xi] Note that the margins of error for smaller populations, such as American Indian and Alaska Native, are higher and therefore, there is a larger possible variation. NJPP Analysis of Census Bureau – American Community Survey. Table S1903, ACS 1-Year Estimates 2024.

^[xii] NJPP Analysis of Census Bureau – Household Pulse Survey Interactive Tool, “Difficulty Paying for Usual Household Expenses.” August 20th – September 16th, 2024; NJPP Analysis of Census Bureau – Household Pulse Survey Interactive Tool. “Price Increases for Goods and Services.” August 20th – September 16th, 2024.

^[xiii] New Jersey Department of Labor & Workforce Development. New Jersey’s Minimum Wage Chart. 2020; New Jersey Treasury, Division of Taxation. Child Tax Credit. 2025.

^[xiv] Chen, P. Freedom from Want: An Economic Guarantee for New Jersey’s Kids. New Jersey Policy Perspective. September 2025.

A LI“HEAP” of Trouble: Slashing Federal Utility Assistance Will Hurt New Jersey Seniors, Families, and Working-Class Households

Posted on April 23, 2025 by Peter Chen

With double-digit energy cost increases expected to hit electric bills this summer, utility affordability is front of mind for many New Jersey families and lawmakers. For hundreds of thousands of New Jerseyans, a federal program called the Low Income Home Energy Assistance Program (LIHEAP) has helped reduce energy costs by hundreds of dollars each year, especially for those who spend a high percentage of their income on utilities.

Now, LIHEAP faces multiple threats. On April 1, the Trump administration laid off all federal Department of Health and Human Services staff administering the program, leaving billions in funds unable to be sent to states. A leaked draft budget for the department proposes eliminating the entire program’s funding.

Here is what’s at stake for New Jersey. LIHEAP helps over 240,000 households pay their energy bills, including:

56,000 households with a person with a disability
114,000 households with a senior member
36,000 households with a child under age 6

For perspective, this is approximately the same number of households as all of Ocean County (241,000 households).

LIHEAP distributes $212 million to help New Jersey families with their energy bills and to buy more energy-efficient heaters or air conditioners to save them money.

Federal LIHEAP funds go to the New Jersey Department of Community Affairs, which works with local community groups to help eligible people apply for the program. But this process relies on payment processing and reimbursement from the federal government, which staff reductions would threaten.

At a time when utility bills are already rising and the weather in New Jersey is getting more extreme due to climate change, now is the time to protect and expand LIHEAP to get it in the hands of even more eligible families, not cut funding at the federal level and make energy less affordable.

Dismantling U.S. Dept. of Ed. is Costly and Inefficient for New Jersey

Posted on March 20, 2025March 20, 2025 by Mark Weber

A strong education system is fundamental to opportunity, economic mobility, and the long-term success of our communities. The Trump Administration’s efforts to weaken or dismantle the U.S. Department of Education (USED) raise both legal and policy concerns. Only an act of Congress can dissolve the Department; until then, the President has an obligation to keep it staffed and fully functioning. Furthermore, even if Congress were to choose to eliminate USED, much of its work would have to be offloaded to other departments or agencies, undermining efforts to improve efficiency and reduce spending.

Title I grants, for example, must still be distributed according to federal law.^[1] These Congressionally-mandated grants specifically support schools serving large numbers of students from low-income backgrounds; they cannot be halted by any administration, even if the Department is dissolved. Over many years, USED staff have developed expertise in data collection and grant administration, ensuring that complex Title I funding formulas are accurately implemented and that schools receive critically important resources.^[2] Eliminating that institutional expertise — only to have to rebuild it elsewhere — would be an inefficient use of both time and taxpayer money.

In 2022, about 7 percent of the revenues for New Jersey’s school districts came from federal sources.^[3] Districts with higher concentrations of poverty, however, are more reliant on federal aid; in Camden, for example, nearly 15 percent of revenues came from federal sources. Slashing this funding would have devastating effects on the school districts serving our most economically disadvantaged children.

New Jersey’s colleges also rely heavily on USED and the federal funding it distributes. In 2024, New Jersey’s postsecondary students received nearly $1 billion in federal grants and an additional $1.6 billion in federal direct student loans.^[4] Until recently, the Department has also played a significant role in protecting students’ civil rights on college campuses. Weakening or eliminating the Department would put the rights of students, faculty, and staff in jeopardy at New Jersey’s universities and colleges.

Dismantling USED would have far-reaching and long-term disastrous effects both nationwide and for communities across New Jersey. As the state grapples with a structural budget deficit, lawmakers must prioritize defending the critical programs, policies, and federal spending that support New Jersey students and schools.

End Notes

^[1] https://crsreports.congress.gov/product/pdf/R/R47702

^[2] https://nces.ed.gov/pubs2019/2019016.pdf

^[3] Author’s calculation from data published by the US Census: https://www.census.gov/data/tables/2022/econ/school-finances/secondary-education-finance.html

^[4]
https://www.ed.gov/about/ed-overview/annual-performance-reports/budget/us-department-of-education-budget-history

Medicaid Cuts and Red Tape Jeopardize Health Care for Over 750,000 New Jerseyans

Posted on March 13, 2025 by Peter Chen

Every New Jerseyan deserves access to affordable health insurance and care. Medicaid coverage ensures that people can see a doctor for routine checkups and essential care, improving overall health and reducing medical debt for enrollees. However, recent federal proposals to slash Medicaid funding for states threaten gains in coverage for adults and children across New Jersey. Federal Medicaid dollars support New Jersey FamilyCare, which provides health insurance for low- and moderate-income households — making it a critical lifeline for families statewide.

Under the recently passed House budget resolution, one harmful proposal would impose work requirements for Medicaid. If Congress passes these onerous work requirements, about 765,000 New Jersey adults could lose health insurance — 44 percent of all adult Medicaid enrollees. Other estimates, including from the New Jersey Department of Human Services, which administers Medicaid in New Jersey, conclude similarly, showing that hundreds of thousands of people risk losing health insurance with work requirements under these rules.

Overall, these counterproductive requirements would add burdensome and unnecessary red tape to insurance applications while threatening basic health insurance for nearly half of all enrollees. Most adult Medicaid enrollees already work, while those who are not are most often caring for family members, dealing with illness or disabilities, or pursuing education. Evidence from states with work requirements for health insurance demonstrate that these policies fail to increase employment, while access to affordable health insurance actually improves a person’s ability to get and keep a job.

Cuts that remove people from Medicaid shift costs onto working- and middle-class families who rely on it. These families already face rising housing, food, and health care expenses. If a New Jersey family in the lowest 20 percent of earners lost coverage, they would lose, on average, $11,909 annually.

New Jersey must protect NJ FamilyCare by rejecting Medicaid cuts that would undermine affordability, strain the state’s budget, and put hundreds of thousands of New Jerseyans at risk of losing lifesaving health insurance.

From Health Care to Highways: How Federal Funding Shapes New Jersey

Posted on March 12, 2025 by Alex Ambrose

Federal funds play a crucial role in supporting state government services that protect and provide for New Jerseyans. Because of this funding, New Jersey can ensure clean water flows from the tap, children receive healthy meals at schools, state departments can repair roads and rail lines, and residents can access routine medical checkups. In fact, nearly one-third of New Jersey’s budget expenditures depend on federal funds, meaning that federal budget cuts would inevitably lead to reductions in state agency funding and essential services that families rely on.

New Jersey’s State Departments Depend on Federal Funding

New Jersey’s state departments administer essential programs, acting as the clearinghouse for billions in federal funding.

The three state departments most reliant on federal dollars (by percentage of their budget) are:

Department of Agriculture,
Department of Labor and Workforce Development, and
Department of Environmental Protection.

Specifically, these departments administer critical programs, including:

Department of Agriculture: Administers SNAP (Supplemental Nutrition Assistance Program, formerly food stamps), which helps more than 800,000 New Jerseyans afford food to feed their families;
Department of Labor: Oversees unemployment insurance and job assistance programs;
Department of Environmental Protection: Manages air pollution control and water supply protection.

Feeding families and children, helping people get jobs, and keeping the air clean are essential services that federal cuts could put at risk. If Congress slashes federal funding, these departments may be forced to lay off workers and scale back operations, directly harming New Jersey residents.

Top Federal Programs in New Jersey

New Jersey’s state budget also relies on several multi-billion dollar federal grants earmarked for specific programs that fund key services supporting state residents.

Department of Human Services: Administers Medicaid/CHIP and TANF, helping families with low to no income access health care and cash assistance.
Department of Transportation: Receives nearly $2 billion in federal funding to build and maintain state and local roads, improving accessibility and safety for people with disabilities, pedestrians, and cyclists.

These programs receive some of the largest federal grants, playing a crucial role in improving the quality of life for New Jerseyans.

With the state budget already facing a structural deficit, New Jersey must push back against federal funding cuts that could weaken its ability to deliver essential services to residents.

Federal Funding Cuts Threaten New Jersey’s Residents

Posted on February 21, 2025 by Nicole Rodriguez

Federal funding is the backbone of many essential public services in New Jersey, supporting health care, food assistance, child care, and education. However, recent federal proposals from D.C. include deep cuts to these programs — primarily to finance tax breaks for corporations and the ultra-wealthy.

These cuts would have devastating consequences for the state’s most vulnerable residents — including immigrant communities, people with disabilities, low-income families with young children, and older adults on fixed incomes.

New Jersey’s schools, hospitals, and bridges depend on federal funding

New Jersey receives nearly $30.8 billion in federal funds, many of which support critical programs for families and the state’s economy, according to recent data from the Center on Budget and Policy Priorities.

Many of these funds are passed through the state budget to individuals and programs, so even small disruptions in federal funding may lead to child care providers and soup kitchens closing their doors permanently or families being cut off from food or heating assistance.

Millions of New Jersey households count on federally funded programs

Whether programs and services are administered by federal, state, or local governments, federal grants flow to millions of households and families across New Jersey. This aid translates into health insurance and health care, preschool and child care, school meals and special education funding, and affordable housing — foundational supports to help every family succeed.

At a time when families are struggling to afford necessities like housing, food, and healthcare, any cut to these and other federal programs will directly harm hundreds of thousands of people. With the state budget facing its own structural deficit of more than $2.1 billion, federal cuts now would further hamper the state government’s ability to assist New Jerseyans. To safeguard the stability of New Jersey and support affordability for families who need it most, policymakers must prioritize protecting and expanding federal investments in public services and maintain an ample surplus to ensure the state can protect its families from harm.

Boost Family Tax Credits to Boost Affordability

Posted on February 5, 2025February 5, 2025 by Peter Chen

All children in a state as wealthy as New Jersey deserve to grow up without fear of homelessness or hunger. Yet many families with children struggle with affordability due to the state’s high cost of living, especially for housing and transportation. More than 1 in 4 New Jersey children live in a low-income household — less than $62,000 for a family of four. To make the state the best place to raise a child, New Jersey’s state budget must prioritize programs that help working families meet the cost of raising children.

New Jersey already has two programs that help families meet those rising costs:

The Child Tax Credit, which provides families up to $1,000 per eligible child back on their taxes each year, and
The Earned Income Tax Credit, which offers up to $3,100 for families with children.

However, these tax credits do not reach all families with children who need assistance, due to the children’s age, the tax filer’s citizenship, or other eligibility requirements. Also, the credit amounts should increase to keep up with the rising child-related costs like food and child care.

As a recent NJPP report lays out, New Jersey should expand its Child Tax Credit to children beyond age 5 through 11 and increase the maximum benefit from $1,000 to $1,500 for children under age 6. In addition, expanding the Earned Income Tax Credit by another 25 percent and increasing eligibility for all workers who file taxes.

These changes would put hundreds of dollars back into families’ pockets, helping make New Jersey the best place to raise a family by providing an estimated $432 million to low- and moderate-income households. By amplifying the antipoverty effects of these critical lifelines, the state can help more households meet basic needs and raise the standard of living for working families.

These tax credits can help address the affordability crisis for families in the most straightforward way – by giving them cash to help pay critical costs. Working family tax credits have a long track record of reducing poverty and helping families meet basic needs. New Jersey’s budget for fiscal year 2026 should include expanded funding for working family tax credits to put money back in families’ pockets and make good on the state’s promise to its children.

Extending Trump Tax Cuts Would Benefit the Wealthiest New Jerseyans

Posted on February 3, 2025February 3, 2025 by Peter Chen

Fair tax policy depends on prioritizing the well-being of all households, not just the wealthiest. New Jersey, and the nation as a whole, cannot afford to hand special tax breaks to the most affluent residents by slashing essential services such as health insurance for working families. New analysis of the Trump administration’s plan to make tax breaks from the 2017 tax law permanent shows that the proposal would do just that. It would make the wealthiest New Jerseyans even richer while cutting programs and support for families who need help affording basic necessities like food and health care.

This proposal means that the average tax break for the top 1 percent will be nearly 200 times the benefit of the lowest-earning 20 percent of the state’s households. And those differences add up: nearly half the benefits would go only to the top 5 percent of income earners.

Extending these tax breaks perpetuates regressive tax policy – sending enormous benefits to the richest 5 percent while doing little or nothing to help residents struggling to make ends meet.

For more on this analysis and its methodology and other state-by-state analyses, check out the Institute on Taxation and Economic Policy’s issue brief here.

New Jersey can and should make its own tax code fairer by raising rates on the wealthiest individuals and corporations, not giving them even more tax breaks.

Category: Blog