N.J. Stat. Ann. § 44:8-131

The commissioner shall deduct from the amount of the State aid payable to any municipality in any one year an amount equal to the amount by which the State aid paid to the municipality exceeded the cost of public assistance to the municipality, exclusive of the cost of administration thereof, or the total amount of State aid payable to such municipality, for any preceding year and if the amount of State aid payable to any such municipality in any year does not equal the amount of such excess the director shall withhold any State aid due the municipality for the succeeding and for subsequent years if necessary until the amount of State aid withheld from the municipality equals the total amount of such excess.