A New Jersey appeals court rejected a constitutional challenge to the state’s school funding formula on Monday, finding that other problems in the district prevent Lakewood public school students from receiving the “thorough and efficient” education guaranteed by the state’s constitution.
The three-judge panel found financial mismanagement, a failure to raise taxes, and heavy spending on transportation and special education for more than 50,000 private school students who are not included in the funding formula’s calculations are clearer causes for the district’s faltering public schools.
“Petitioners, in effect, ask us to declare the [funding formula] unconstitutional because it doesn’t yield enough state aid to cover the shortfalls caused by Lakewood’s budget and spending choices, particularly in the areas of transportation and special education,” the judges wrote. “These choices, the record shows, have drained resources away from Lakewood’s public school students.”
The decision is the latest in an 11-year legal saga over the sufficiency of public school education in Lakewood, a fast-growing Ocean County township with a large Orthodox Jewish community where children are nearly all enrolled in private religious schools.
Arthur Lang, an attorney who represented district parents and a former Lakewood public schools teacher, called the panel’s decision wrong and said his clients would ask the New Jersey Supreme Court to hear the case.
“You can’t provide mandated services such as transportation and special education for 50,000 kids on a budget designed for 5,000 kids,” Lang said. “There is no way in the world that mismanagement can be the reason for the hundreds of millions of dollars of debt.”
Paul Tractenberg, another attorney for the plaintiffs, criticized the ruling as one that seems to “accept uncritically” the state’s defense and improperly shifts responsibility for funding shortcomings from the state to Lakewood’s district.
Lakewood, New Jersey’s fifth-most populous municipality, had a tax base of just over $11.2 billion in 2024, the 11th largest in the state, but 445 school districts levied school taxes at greater rates than Lakewood, according to Department of Community Affairs property tax data.
The township’s 1.032% school property tax rate fell below the state average of 1.376% in 2024, the most recent year for which property tax data is available.
The district’s proposed budget for the 2025-26 school year includes a loan of just over $100 million from the state government, which would follow a $144.2 million loan in the prior year and a $50 million loan in the year before that. The district expects to spend about $413.4 million this school year.
In October 2024, the district had fewer than 5,000 enrolled public school students, including 1,072 full-time students with special needs. The district earlier this year said more than 50,000 students were enrolled in Lakewood private schools, including more than 10,000 who lived in outlying municipalities.
State law requires districts to provide busing to students who live at least 2 miles away from their school, or 2.5 miles for high school students. Under federal law, school districts are required to provide for special education services to public and nonpublic school students.
The Lakewood school district expected to receive $17.9 million in state transportation aid for the 2025-2026 school year, but forecasted it would spend just over $48 million on student transportation.
In some years, more than half of the Lakewood schools’ total budget went to transportation and special education expenses that typically account for a much smaller share of a district’s total spending.
Lang rejected the argument that raising local taxes would fix the problem.
“Even if they taxed to the maximum based on the wealth, it’s still not enough money,” Lang said.
The case began in 2014 when parents of public school students lodged an administrative appeal over Lakewood’s school aid award, arguing New Jersey’s school funding formula prevented a thorough and efficient education, to which courts have said New Jersey’s students are constitutionally entitled.
An administrative law judge in 2021 found that students were being deprived of a thorough and efficient education, but said the funding formula did not play a significant role in that deficiency.
A final decision issued by then-Education Commissioner Angelica Allen-McMillan in 2024 found that low local taxes, fiscal mismanagement, and staggering special education and transportation expenses were a clearer cause of the district’s distress.
“The causes are well-documented, and quite frankly, hard to miss,” the judges wrote in Monday’s ruling. “The consistent pattern of neglect and misfeasance by various elected and appointed Lakewood school leaders with respect to critical governance, finance, curriculum, transportation, and special education recommendations made by respondents over the years lends an aura of deliberate indifference to these proceedings.”