The Senate approved the measure 23-8, some five hours after debate began on the Senate floor. The measure originally stalled one vote shy of passing, but was approved after $20 million in special education funding was promised.
The bill had to be approved in both houses before the end of the legislative session at noon on Tuesday. Otherwise, it would have needed to be reintroduced in the new session.
The Senate's second vote followed intense lobbying and talk of stopping the clock just before noon Tuesday. The Assembly passed the bill 41-36 earlier in the evening.
The original Senate vote was 20-19 in favor of the bill. But it takes 21 votes to pass a bill in the Senate. Failure to approve the bill would have been a major setback for Gov. Jon S. Corzine, who put forth the new funding plan.
"The new law replaces a flawed system with an equitable, balanced, and nonpartisan formula that addresses the needs of all students, regardless of where they live," Corzine said in a statement after the final vote.
For three hours, lawmakers huddled in a case of serious politicking that crossed party lines in complicated ways.
The Democrats who favored the changes gave up on any hope of swaying the six African-American Democrats in the chamber, who remained united in their opposition to the bill out of concern that it would hurt the high-poverty, largely minority cities in their districts.
Instead, the Democrats tried to change the minds of Republicans who opposed the measure for other reasons.
They finally got three of them - Martha Bark, Gerald Cardinale and Joseph A. Palaia - to change their votes by promising to introduce legislation early in the next session to increase subsidies for special education students. Eight senators who had opposed the measure on the first ballot did not participate in the second vote.
In a bill that calls for $7.8 billion in state spending, it took in the end a relatively modest $20 million to persuade them.
"We had to get this done," said Sen. Raymond Lesniak, D-Middlesex. "This was so important, not only for the governor but also for the future of the state."
Ahead of Monday's vote, senators from both parties bashed the Corzine proposal.
Sen. Ronald Rice, a Democrat who represents parts of Newark and other Essex County communities, and Republican Leonard Lance, who represents a swath of rural northwest New Jersey, both urged their colleagues to take more time to study the bill and vote against it Monday, the last day of the legislative session.
"We need to know where the new funding is coming from," said Lance.
That's one of many questions opponents said remained unanswered.
Under the proposal from Corzine, aid would be tied in part to the number of low-income students in each district. As a result, a structure set up in response to a series of state Supreme Court mandates that used one formula for 31 poor districts and another for the rest of the state's 618 school systems would be essentially scrapped.
"He can put in some reforms," said Telissa Dowling, a Jersey City parent who came to Trenton to protest the governor's plan. "He doesn't need to cut the money."
Suburban districts with big jumps in enrollment or a large number of low-income students could see annual aid increases as big as 20 percent. The relief is welcome in many of those places because most of those schools have seen their state aid barely budge this decade.
But most of the 31 urban districts would see aid hikes of 2 percent this year, then have state support held flat after that.
Advocates for the urban districts, including Sen. Wayne Bryant, a Democrat who represents Camden and some of its suburbs, say that even with a 2 percent increase, some of those poor districts are likely to have to cut programs because the districts' costs - including contracts with teachers are rising faster than that.
