During her confirmation hearing before the New Jersey Senate Judiciary Committee, Acting Education Commissioner Lily Laux faced questions from legislators on how she would address chronic financial distress and governance problems in districts such as Lakewood, where years of budget troubles have brought the township’s public schools to the brink of a possible state takeover.

During the hearing, Senator Paul Sarlo, who also chairs the Senate Budget Committee, asked Laux how she would approach districts, such as Montclair, Hackensack, Perth Amboy, Lakewood and Toms River who are all experiencing “these massive issues” and whether the chronic shortfalls stemmed from mismanagement, neglect or incompetence.

In her response, Laux, who was careful to note that she was not referring to any specific district, emphasized her commitment to understanding the underlying causes in each troubled district, saying better data and early warning systems would be key to prevention and support. “We need to know… what is that and that being able to have that conversation,” she told senators. “We’re not ending up in this situation that you just referenced.”

Lakewood, which is likely the most unique school district in the country has become a flashpoint in the debate over school funding and oversight.

Its public school district serves approximately 4,300 students but has been responsible for transporting and providing special education services to tens of thousands of children attending private schools, a burden that has strained its budget and contributed to repeated requests for state loans. State records show the district has borrowed more than $230 million from the state since 2014 to fill gaps and stay solvent.

The financial stress has drawn legal and political scrutiny. In September, a state appeals court rejected a constitutional challenge from parents who argued the state’s school funding formula starved Lakewood of necessary aid, instead blaming years of fiscal mismanagement, low local tax rates and outsized transportation and special education costs. The ruling described a “consistent pattern of neglect and misfeasance” by district leaders, leading the state to install several monitors.

Local officials in Lakewood have pushed back, contending that deep structural problems in the state’s funding formula, rather than local mismanagement, have created a budget imbalance that disproportionately burdens the district. They argue that mandatory transportation obligations to private school students and outdated funding mechanisms leave their public schools underfunded.

The Lakewood public school district has pushed back, and has a March 5 deadline to make a legal argument to stay independent.

Laux, if confirmed, would inherit these challenges at a time when lawmakers and advocates in districts across the state are also wrestling with broader questions about school finance equity, accountability and the role of state intervention.

In his questioning, Sarlo underscored to Laux that a purely reactive approach, such as seeking extra financial aid from Trenton, would not be sufficient. Instead, they signaled a desire for proactive analysis and tailored solutions that get at the root causes of fiscal distress in districts like Lakewood.

Governor Sherrill is expected to release her budget proposal for the upcoming fiscal year on March 10.