Bill > A4608

Introduced Session

This bill provides that a school district, which has an unpaid balance on certain borrowed funds from the State, is not subject to a State school aid reduction. A school district exempt from a State school aid reduction under the bill, however, is required to apply the full amount of its undesignated general fund balance (i.e., surplus funds) to the repayment of the borrowed funds. One of the types of borrowed funds referenced in the bill is advance State aid payments that are authorized under current law. Under current law, the commissioner may recommend to the State Treasurer whether an advance State aid payment should be made to a school district experiencing certain budgetary deficiencies. The advance State aid payment is required to be repaid by the school district through automatic reductions in State aid in subsequent years. Instead of the automatic reductions in State aid required under current law, this bill requires certain districts to appropriate their undesignated general fund balances to the repayment of the advance State aid payments. This requirement applies to a district that has an outstanding balance on an advance State aid payment and is otherwise supposed to experience a reduction in State school aid pursuant to the school funding formula law. The bill also references emergency aid provided to a school district. Recent appropriations acts have authorized the appropriation of funds for emergency aid to school districts, following a district needs assessment conducted by the Department of Education. In providing for emergency aid, the commissioner is authorized to determine the repayment terms, if any, that will be assessed to a school district. The commissioner may also appoint a State monitor to a school district receiving emergency aid. Under the bill, a district, which has an unpaid balance on emergency aid funds and is otherwise subject to a reduction in State school aid pursuant to the school funding law, is required to appropriate its undesignated general fund balance to repayment of the funds. Certain school districts have been forced into financial hardship due to state aid cuts through the implementation of P.L.2018, c.67, commonly known as "S2." One school district represented by the sponsor has applied to the Department of Education for an advance State aid payment, and the sponsor is aware of at least one other school district that has outstanding debt to the department. Still others have considered applying for such loans. The district represented by the sponsor has had state aid reduced by more than $22 million during implementation of S2. That district was forced to cut over 200 employees and to eliminate advanced placement courses, sports teams and more. For the 2024-2025 school year, the district faces a $25 million shortfall that cannot be effectively addressed by any reasonable program cuts, property tax increases, or combination thereof. Even raising the property tax levy to the maximum amount permitted under P.L.2024, c.13 would not close the gap. As a condition of the district's application, the Commissioner of Education appointed a state fiscal monitor to the district. After reviewing the district's finances, the monitor stated that the district does not have a spending problem, but rather a revenue problem. The sponsor, among many other observers, finds it clear that the greatest source of this revenue problem is the enormous reduction of state aid over the years. As the need for this borrowing has arisen due to the State's actions, the sponsor believes it is appropriate that the State hold affected districts harmless from additional aid reductions while they have unpaid balances on any borrowed funds from the State.

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Alex Sauickie (R)*, 

Introduced, Referred to Assembly Education Committee (on 06/20/2024)

Official Document