TRENTON, N.J. — Assemblywoman Aura Dunn has introduced legislation aimed at increasing state aid for municipalities in the Highlands region, including funding that would help support local school districts.
The bill, A4770, would double the per-acre aid rate for watershed moratorium offset aid and watershed property municipal aid to $94 from $47. It would also increase the annual allocation to the Highlands Protection Fund from $5 million to $12 million through realty transfer fee revenues.
Under the proposal, municipalities would be required to devote at least 25% of that aid to local schools.
“Highlands communities protect our clean drinking water for the entire state,” Dunn (R-Morris) said. “The state must finally keep its promise to these towns and schools.”
The Highlands Water Protection and Planning Act of 2004 restricts development in 88 municipalities across seven counties — Bergen, Hunterdon, Morris, Passaic, Somerset, Sussex and Warren — in an effort to protect drinking water resources.
Dunn said those land-use restrictions, combined with New Jersey’s school funding formula, have placed financial pressure on local communities and school districts, especially in towns with limited development opportunities.
According to a January 2026 report cited by Dunn, some Highlands municipalities — particularly those entirely within preservation areas — face significant financial strain because there is no dedicated funding to offset lost development potential and the reduced tax base that comes with it.
“The report further states money from the Highlands Protection Fund goes to municipalities outside the region, while some towns in the Highlands get nothing,” Dunn said.
Dunn also said the School Funding Reform Act of 2008 has compounded those issues for districts in the Highlands region.
She pointed specifically to Jefferson Township Schools, which she said face a cumulative $45 million state aid deficit under the current formula. According to Dunn, that shortfall has contributed to the types of budget pressures seen in other Highlands districts, including staff and program cuts and tax increases above the cap.
The legislation is part of Dunn’s broader “Clean Water Promise” package. Other measures in the package include a bill that would provide Jefferson schools with a $4.8 million supplemental appropriation and a resolution calling for revisions to the 2008 school funding law to reduce major aid cuts, particularly in Highlands communities and other development-restricted areas.
“We can both protect our natural resources and the education of our Highlands students through thoughtful legislation such as the bills I’ve proposed,” Dunn said. “Their unique situation calls for decisive action.”
