Toms River Schools Choose Bankruptcy Over Crushing Tax Hikes And Whopping $175 Million Aid Cuts

(MENAFN- Live Mint) Toms River schools, one of New Jersey's largest districts, voted to file for Chapter 9 bankruptcy after refusing to raise property taxes another 12.9%.

This comes after last year's 9.3% increase, totaling a crushing 22% hike over two years for homeowners.

State officials had ordered the district to either pass this tax-heavy budget or shut down all programs immediately.

But, Superintendent Michael Citta declared summer classes would continue anyway, calling the state's demands“illegal and immoral.” The bankruptcy filing pauses debts and lawsuits while the district reorganizes its finances.

$175 million aid loss sparks crisis

Over seven years, New Jersey's school funding changes slashed $175 million from Toms River's budget, forcing 250 teacher/staff layoffs, school sales, and packed classrooms.

Though state aid rose slightly this year, the district still faces a $22 million deficit.

Republican lawmakers blame Governor Murphy's "flawed and politically driven" funding formula, arguing it punishes Ocean County for voting Republican.

Residents already pay some of America's highest property taxes, with schools consuming over 50% of local tax bills in many towns.

Rare bankruptcy signals wider trouble

Toms River's bankruptcy threat, extremely rare for a district with a good AA-credit rating, could rattle investors. Its bonds recently traded at high yields, signaling market worry.

This isn't isolated: 9 New Jersey districts like Lakewood and Jackson also face desperate cuts after aid losses.

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Governor Murphy's new $58.8 billion state budget boasts record school funding overall, but offers Toms River no relief. The district now races to file Chapter 9 paperwork before potential state lawsuits, vowing:“We won't abandon our students.”
The district, with over 14,000 students, criticized the drop in state aid in 2024 financial report.

“The district continues to pursue all means of addressing the loss of state aid, including through legal and legislative channels, given the glaring and known material flaws in the state aid formula that continue to generate unjust allocations,” according to the document, as reported by Bloomberg.

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