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Turner Bill To Bail Out School Districts Running A Deficit Receives Final Legislative Approval

TRENTON – Senator Shirley K. Turner welcomed final approval today by the Senate for the “School District Fiscal Accountability Act” which would set into place a process by which the State would provide loans to school districts running budget deficits, such as Willingboro School District.

“We realize that schools are run by administrators and school board members who occasionally make mistakes. But a mistake of this magnitude must come with consequences and a plan to ensure that the mistake is not repeated,” said Senator Turner, D-Mercer and Chair of the Senate Education Committee. “We are taking a measured approach to addressing local deficits and putting into place monitors and safeguards to provide fiscal stability.”

The bill, S-1469, would allow for advance State aid payments to districts that have a budget deficit during any given fiscal year. Under the bill, the State would also appoint a State monitor empowered to take action within the school district to reestablish financial stability in the district. The State monitor would be responsible for overseeing the fiscal management and expenditures of district funds, ensuring the development and implementation of a plan to address the circumstances which led to the State monitor, and oversee all district staffing.

“Now we can make sure that Willingboro can get the money it needs to ensure that the financial mismanagement of the local school board and administration doesn’t impact the education of the town’s children. While negligence of the school district should not be tolerated, we cannot allow it to set back the progress of thousands of students,” explained Senator Turner

Under the bill, the NJ Department of Education would create a “School Deficit Relief Account” to provide advance aid payments to the school district if the Commissioner of Education recommends such action. These advance aid payments would be repaid through automatic reductions in the State aid amounts provided to the district in future years. The term of repayment would not exceed ten years and interest may be charged to districts that qualify under the bill after the first 90 days following enactment.

“It’s important to note that this is a bill we hope to rarely use. We don’t want to create a precedent here for other districts,” added Senator Turner.

The bill would also require the Office of the State Auditor to conduct a forensic audit of the school district in certain situations. The State Auditor would submit this audit to the Commissioner of Education, the Governor, the Legislature and the local Board of Education upon completion. The State Auditor would also be required to forward any findings of fraudulent activities to the appropriate law enforcement agency.

The bill passed by a vote of 39-0. It now goes to the Governor’s desk for his signature.

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