Facing what it describes as a state-created financial crisis, the Toms River Regional School District says it plans to file for bankruptcy.
The announcement came Monday night after the school board rejected a warning from the state Department of Education that the district must approve a 2025-26 budget or cease all operations.
Toms River Regional has lost a total of $175 million in state aid in recent years due to New Jersey’s revised school funding formula, according to district officials.
To stay afloat, the district has had to lay off 250 staff members, sell buildings, increase class sizes and hike taxes.
State officials told the district it would need to raise taxes again, this time by nearly 13% to balance next year’s budget — a move school leaders said they were unwilling to make.
“We cannot and will not acquiesce to the State Department of Education’s direction without severely undercutting an educational system that our taxpayers deserve,” Toms River Regional Board of Education President Ashley Lamb said in a statement.
“Our district has already endured devastating cuts — we’ve lost over 250 teacher and staff positions and seen class sizes increase to critical levels. Enough is enough,” Lamb said.
The state Department of Education did not immediately respond to a request for comment Wednesday.
The bankruptcy plan comes as the district continues to feud with state officials over school funding. Last year, Toms River Regional officials said they would sue the state, the Department of Education and the acting education commissioner for causing “a revenue crisis” that school officials describe as child abuse
Toms River Regional is one of the largest school districts in New Jersey, serving about 14,500 students across 18 schools.
The district’s financial crisis has been building since 2018, when New Jersey overhauled its school funding formula — shifting aid away from “overfunded” districts to those historically underfunded. The change left districts like Toms River facing deep cuts.
On Monday night, the district’s financial crisis reached a breaking point. For the first time, the Toms River Board of Education unanimously voted to not pass a budget for the upcoming school year.
The decision came in direct defiance of a warning from the state Department of Education, which sent a letter to Toms River Regional Superintendent Michael Citta ahead of the meeting.
In the letter, obtained by the Asbury Park Press, the department said if the board failed to pass a budget, the district would be barred from spending any money or running educational programs starting July 1.
Despite the state’s warning, school officials said summer programs will begin this week and schools will continue to operate as planned.
And instead of raising taxes, the board voted to start the process of filing for Chapter 9 bankruptcy — a legal step that would give the district protection from creditors while it works on a debt adjustment plan, officials said.
“We will continue to attempt to engage the DOE in finding a solution that best serves our community,” Lamb said. “But make no mistake — we will not abandon our students or compromise their education while the state refuses to address the crisis they created.”
Although the district received a $1.69 million increase in state aidthis year, officials say it has still lost about 60% of its total state funding since 2018, when the revised formula began phasing in.
In April, the district proposed selling a district-owned building on Hooper Avenue, formerly used as an early learning center, for $15 million to help close budget gaps.
New Jersey’s school funding formula, fully implemented for the first time this year, was created to achieve what the state calls “full fairness.” But across the state, some districts have resorted to drastic measures to fill budget gaps caused by steep aid cuts — including raising property taxes, laying off staff and closing schools.