How We Got Here
📈 Rising Costs Year Over Year
Across all budgets, costs for the following consistently increased:
- Salaries and benefits (especially health insurance)
- Special education, particularly out-of-district placements
- Transportation, due to inflation and vendor pricing
- Facilities maintenance, deferred capital projects, and insurance
Finalized Data:
- Health benefits increased by 10% (+$2.3M)
- Special education tuition increased by 8.9% (+$1.1M)
- Transportation & insurance increased by 5-11% (~$800K)
- Salary increases averaged 3-4% ($3.6M district-wide)*
*Based on budget totals rather than published raise percentages. Includes new hires and contractual increases.
According to the 2025–26 Final Budget:
| Expense Category | Year-over-Year Increase | Estimated Impact |
|---|---|---|
| Health benefits | +10% | +$2.3M |
| Out-of-district special ed tuition | +8.9% | +$1.1M |
| Transportation & insurance | +5–11% | ~$800K |
| Salary increases (avg est.) | +3–4% | $3.6M district-wide* |
*Based on budget totals rather than published raise percentages. Includes new hires and contractual increases.
The district reported having no remaining capital or emergency reserve flexibility.
💸 Stagnant or Declining Revenue from State & Federal Sources
State Aid:
- 2023–24: $33.6M
- 2024–25: $33.6M
- 2025–26: $32.58M ⬇️
Despite growing enrollment (over 300 new students in 2025–26), state aid declined, due to New Jersey's S2 school funding formula, which rebalances aid based on perceived local wealth. The state now considers West Orange "above adequacy" and expects more local contribution.
Federal Aid:
- SEMI reimbursements dropped by $250,000 in 2025–26
- Extraordinary aid (including nonpublic transportation) decreased by $850,000
The SEMI reduction is likely due to reduced Medicaid claims or billing accuracy issues. The reasons for the extraordinary aid decrease remain unclear.
🧾 Limited Flexibility in Raising Revenue
New Jersey law caps annual tax levy increases at 2% unless:
- A district qualifies for waivers (e.g., enrollment increases, health benefit spikes)
- Or uses banked cap (unused taxing authority from prior years)
West Orange's Situation:
- Used $465,254 in banked cap in 2025–26, exhausting prior-year taxing authority
- Did not pursue emergency tax levy waiver or voter-approved increase
- Just barely missed eligibility for enrollment and health benefit waivers
- No remaining flexibility unless enrollment/health costs spike again next year
⚠️ Heavy Reliance on Local Taxpayers
Across the years, local property taxes increased steadily:
| Year | Local Tax Levy % of Budget |
|---|---|
| 2020–21 | ~71% |
| 2022–23 | ~74% |
| 2023–24 | ~75.3% |
| 2025–26 | ~76.3% |
With state and federal aid flat or falling, West Orange increasingly turned to local revenue—but could not legally or politically raise taxes enough to cover growing expenses.
📊 Key Revenue Reductions in 2025–26
From just four line items alone, West Orange lost nearly $3.3 million in anticipated revenue this year:
| Source | Amount Lost |
|---|---|
| State Aid | -$1M |
| SEMI Reimbursements | -$250K |
| Extraordinary Aid / NP Transportation | -$850K |
| Budgeted Fund Balance (Surplus) | -$1.2M |
| Total | -$3.3M |
🧵 Conclusion: A Long Unraveling
Over several years, the district:
- Faced rising fixed and mandated costs
- Saw flat or reduced outside revenue
- Had limited tools to raise local funds due to the 2% cap
- Depleted capital and emergency reserves
- Added students but received less state support per pupil
By 2025–26, these compounding pressures created a structural shortfall of over $8 million. With no remaining reserves and limited taxing authority, the district enacted significant staffing cuts, larger class sizes, and potential program consolidations—particularly affecting elementary and middle schools.