N.J. Stat. Ann. § 27:15-16

Such funds as are made available pursuant to this chapter may be utilized for the lighting of the roads mentioned in this chapter, including the construction of traffic lights, and for the construction of underpasses and overpasses for school children, where such underpasses or overpasses may be deemed necessary by the joint action of the governing body of any municipality and the State Highway Commissioner. The installation of any traffic lights pursuant to the provisions of this section shall first be approved by the Director of Motor Vehicles.