Sadly I heard this rumor too from a good friend who is a Brick Twp. cop. Now he is nowhere into radios as I am, beyond his working is all he cares about. However, since I read your post, it got me thinking. Why not make Northern Ocean County an encryption fortress!
At 10:30 this morning dispatch announced, on the fire dispatch channel, "all police communications will be on this channel until further notice". I would imagine either something is wrong with the police channel or they're modifying it for digital.
Once again going digital does not mean encrypted. While it is possible that they will encrypt and using ADP encryption is cheap they can be digital and not encrypted. Perhaps if people would stop putting active calls out this might not happen. Listen and keep silent.