Gov. Phil Murphy’s administration on Wednesday announced its intention to take over Lakewood’s Board of Education after years of financial distress.
An order to show cause detailed years of deficits, alleged mismanagement, and poor student performance in Lakewood. The order is anchored on an appellate court’s finding that the district fails to provide students with an adequate education as required by the state Constitution, as well as on a state review of the district’s operations.
“For more than a decade, the New Jersey Department of Education has been working with the Lakewood Township School District to address ongoing fiscal and operational concerns that impact students, staff, parents, and the entire Lakewood community,” said New Jersey Department of Education Commissioner Kevin Dehmer. “For all of those impacted, most especially the students of Lakewood, we are obligated to intervene in this situation and provide the district with the necessary oversight to course correct.”
Lakewood’s school system faces undeniably unique circumstances. The town’s large Orthodox Jewish population means the vast majority of the district’s students — more than 90% — attend private Orthodox Jewish schools in the area.
The New Jersey Globe first reported the Murphy administration’s intent to take over the district.
What’s the state’s basis for pushing a takeover?
The Lakewood Board of Education, according to the state, “is failing its students.”
The state cites Alcantara v. Allen-McMillan, a 2025 state appellate case that found the Lakewood BOE’s “fiscal mismanagement, failure to raise taxes,” and more prevented the district from providing a “thorough and efficient” education as required by New Jersey’s Constitution. Officials say a state review found issues with the district’s governance, curriculum, special education, transportation, and financial practices.
The court’s ruling cites student outcomes, including graduation rates that are 10 percentage points lower than the average state graduation rate, to find that the education was not “thorough and efficient.” Similar disparities exist in standardized testing.
“Lakewood students scored, on average, nearly ten percentage points below the State average, and in some subjects as much as thirty percentage points below,” the state said.
The school district faces a structural deficit of more than $100 million per year; they rely on state loans to meet its obligations, and the loans may not be repaid.
“Instead, Lakewood BOE has, for years, continued to ignore repeated warnings from the Department and mismanage resources to the clear detriment of its students,” the state argues.
The state also argues the Lakewood BOE has failed to follow effective governance procedures. A comprehensive review of the district found the BOE does “not discuss financial issues” and has “minimal” involvement with the budget.
“In particular, Board meetings lack action items and are conducted without discussion of any agenda items or committee reports,” the state wrote. “Lakewood BOE also does not read, review, discuss, or question District policies.”
The review found “a district-wide culture of low expectations for students.” The majority of students in Lakewood’s public schools — 77.2% — come from homes with Spanish as a first language. Despite that, only about 15% of documents online are translated into Spanish, and many more documents are in a PDF format that cannot be easily used with translation tools.
The officials said students face poverty, work late jobs, lack English proficiency, and experience issues with living conditions that obstruct education.
The state also found that the school district ineffectively educates special education students.
“Lakewood BOE expends considerable funds on out-of-district placements for special education students rather than developing more cost-effective in-district programs. … The District did not (or could not) provide a reason for why more of these students are not educated in-district.”
The state has taken over school districts in Jersey City, Newark, Paterson, and Camden in recent decades. The state still supervises Camden, while management of the Jersey City, Newark, and Paterson districts each lasted more than 25 years.
What happens next?
The Murphy administration’s takeover request now goes before the state Board of Education.
The order to show cause will allow Lakewood Board of Education officials to officially respond to the takeover attempt.
The Murphy administration, though, has just six days left. Gov.-elect Mikie Sherrill takes office next Tuesday, and she hasn’t yet announced who will serve as the next education commissioner. The Sherrill administration would be tasked with seeing through the start of the takeover.
How does the state want to intervene?
If the state Board of Education approves the proposal for a takeover, the state would first install a new district superintendent and “highly skilled professionals” (HSPs) tasked with overseeing the Lakewood BOE’s operations.
HSPs would be tasked with overseeing the following: governance and legal compliance; special education; transportation and operations; fiscal management; and nonpublic student services.
If the state’s proposed takeover comes to fruition, the current elected Board of Education would continue, but they would serve solely in an advisory capacity. The education commissioner would also appoint up to three new members to the board, initially in a non-voting capacity.
The commissioner would also require the Lakewood Board of Education to develop an improvement plan within six months of the takeover.
The Murphy administration laid out the proposal in a six-page intervention plan.
What are Lakewood officials saying?
State Sen. Robert Singer (R-Lakewood), Assemblyman Avi Schnall (D-Lakewood), Mayor Ray Coles, and the township committee released a statement on Wednesday saying they will work with state officials on the takeover.
“If the State of New Jersey believes that assuming a more direct role in Lakewood’s school district will finally lead to a sustainable, long-term solution to this structural problem, we welcome that effort,” they said. “We look forward to working collaboratively with the Department of Education and with incoming Governor Mikie Sherrill to resolve this issue once and for all.”
The officials said the issue, more than any other, is one of revenue for Lakewood’s school district.
“More than a dozen state-appointed fiscal monitors have reviewed Lakewood’s finances in depth, each charged with identifying inefficiencies and opportunities for cost savings,” Singer, Schnall, Coles, and the others said. “Without exception, every one of those monitors reached the same conclusion: Lakewood’s challenge is not a management issue — it is a revenue issue.”
Why are Lakewood’s transportation costs so high?
Across the state, about 14% of students attend private school. In Lakewood, that number exceeds 90%, pushing funding formulas — including transportation budget laws — to the extreme.
State law mandates school districts to transport public and private school students in many situations. Public students must be bused if they live “remote” from their school — farther than two or two-and-a-half miles away from their school, depending on their grade — as well as for individualized needs.
Nonpublic students who live “remote” from their school are also granted busing, so long as the school is a nonprofit.
Lakewood is responsible for transporting many more students than any other district in the state. In 2023, Lakewood was statutorily obligated to transport about 29,500 students; Newark followed with about 14,000.
The state provides some funding for mandated transportation. The state budget’s education formula provides for a maximum of about $1,200 in transportation funding per student — about a third of that maximum comes from state aid, but the school district must cover the balance, per a state report.
School districts can also provide “courtesy” busing for students who don’t fit the criteria, but such transportation comes out of school district funds. In 2023, Lakewood provided busing for about 41,000 students, including non-mandated “courtesy” busing for 11,400.
Lakewood’s student transportation system is outsourced to the Lakewood Student Transportation Authority, a nonprofit developed under state law. Accountants have found that the LSTA has saved the school district some $11 million per year, funds that go back into providing courtesy busing for students.
The state argues the Lakewood BOE has mismanaged much of its transportation budgeting. State officials argue, for example, the district should take back the $11 million in savings rather than fund “courtesy” busing.
The state’s comprehensive review also found the district could save money by adjusting how it contracts out its bus routes.
