Bill
Bill > A5509
NJ A5509
Modifies school district property tax cap law; appropriates $67.9 million to provide additional State school aid to school districts experiencing reductions in 2025-2026 school year.
summary
Introduced
03/24/2025
03/24/2025
In Committee
03/24/2025
03/24/2025
Crossed Over
Passed
Dead
Introduced Session
2024-2025 Regular Session
Bill Summary
This bill modifies the school district tax levy cap law to require that the cap be the greater of the percentage increase in the Consumer Price Index or two percent. The bill also provides $67.9 million in additional State school aid to ensure that no school district receives an aid reduction in the 2025-2026 school year compared to the 2024-2025 school year. Under current law, a school district is generally prohibited from increasing its property tax levy by more than two percent compared to the previous school year. This limited increase is often referred to as a "tax levy growth limitation" or a "tax levy cap." This bill would require that the tax levy cap in a given school year be the greater of the increase in the Consumer Price Index or two percent. While there is a general prohibition on increasing the school district tax levy by more than two percent, State law authorizes certain allowable adjustments to the general two percent limitation, thereby permitting a district to account for certain increases in items such as enrollment, health care costs, and certain normal and accrued liability pension contributions. This bill would provide for another allowable adjustment for a school district that is spending below adequacy. Under current law, a school district is considered to be spending below adequacy if its prebudget year spending (defined as the sum from the prior school year of equalization aid, special education categorical aid, security categorical aid, and the school district's tax levy) is below its projected adequacy spending (defined as the sum for the school year in which the budget will be implemented of its adequacy budget, special education categorical aid, and security categorical aid). For these districts, the allowable adjustment to the tax levy would be the amount necessary for the district to be spending at adequacy. Finally, the bill appropriates $67.9 million in additional State school aid to ensure that no school district receives an aid reduction in the 2025-2026 school year compared to the 2024-2025 school year. It is estimated that this aid will support approximately 200 school districts.
AI Summary
This bill modifies New Jersey's school district property tax cap law and provides additional state school aid. The bill changes the existing tax levy growth limitation from a fixed 2% to the greater of either the Consumer Price Index (CPI) or 2%, allowing school districts more flexibility in setting their tax levies. It introduces a new provision that permits school districts spending below their calculated "adequacy" level to raise their tax levy to reach that adequacy spending threshold. Additionally, the bill appropriates $67.9 million to ensure that no school district experiences a reduction in state school aid during the 2025-2026 school year compared to the 2024-2025 school year. The legislation affects approximately 200 school districts and provides them with financial stability by guaranteeing that their state aid will not decrease. The bill also adjusts how enrollment-based tax levy increases are calculated, offering more nuanced adjustments based on the percentage of student enrollment growth. The changes will first apply to tax levies in the second full school year following the bill's enactment, with the aid provision specifically taking effect on July 1, 2025.
Committee Categories
Education
Sponsors (2)
Last Action
Introduced, Referred to Assembly Education Committee (on 03/24/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.njleg.state.nj.us/bill-search/2024/A5509 |
| BillText | https://pub.njleg.gov/Bills/2024/A6000/5509_I1.HTM |
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