LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
ASSEMBLY, No. 4970
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JULY 6, 2023
SUMMARY
Synopsis: Requires public institutions of higher education to submit annual fiscal
monitoring report; authorizes Secretary of Higher Education to
appoint State monitor of certain institutions; requires higher education
chief financial officers complete training; annually appropriates
$100,000.
Type of Impact: Annual State expenditure increase; possible cost increase to public
institutions of higher education.
Agencies Affected: Office of the Secretary of Higher Education; certain public institutions
of higher education.
Office of Legislative Services Estimate
Fiscal Impact Annual
State Cost Increase At least $100,000
Possible Cost Increase to Public Institutions
Indeterminate
of Higher Education
 The Office of Legislative Services (OLS) concludes that this bill could result in an
indeterminate increase in costs to the State associated with the appointment of a State monitor
to oversee the finances of an institution and additional staff appointed under the bill. The State
would only incur these additional costs if a State monitor is appointed after an institution’s
fiscal monitoring report shows evidence of fiscal instability. The OLS cannot definitively
estimate the value of the salary of the State monitor, given that the salary would be set by the
Secretary of Higher Education.
 The OLS notes that the Office of the Secretary of Higher Education may also experience
indeterminate cost increases associated with facilitating comprehensive audits of public
institutions of higher education and developing transition plans for restoring full institution
control to institutions subject to the oversight of a State monitor.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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 The OLS concludes that this bill will result in an annual State expenditure increase associated
with the Office of the Secretary of Higher Education’s development and arrangement of
training for chief financial officers of public institutions of higher education. The OLS notes
that the bill provides an annual appropriation of $100,000 to effectuate this purpose.
 The OLS notes that institutions of higher education may also experience indeterminate cost
increases associated with preparing and submitting annual fiscal monitoring reports to the
Office of the Secretary of Higher Education, and with appointing a chief financial officer, to
the extent that institutions have not already done so.
BILL DESCRIPTION
This bill requires public institutions of higher education to submit an annual fiscal monitoring
report; authorizes the Secretary of Higher Education to appoint a State monitor to oversee fiscal
and governance operations of certain institutions; requires higher education chief financial officers
to complete training; and annually appropriates $100,000.
Under current law, the president and chief financial officer of a public research university
or a State college is required to submit an annual audit prepared by an independent auditor.
The bill requires that, in addition to the annual audit prepared by an independent auditor, all
public institutions of higher education are required to submit an annual fiscal monitoring report
to the Office of the Secretary of Higher Education.
The bill requires comprehensive audits of public institutions of higher education as
determined by a schedule set by the secretary. If the secretary determines that conditions at an
institution of higher education may significantly or negatively impact the institution’s
operations, the secretary may direct a comprehensive audit of the institution’s fiscal and
governance operations at any time.
This bill specifies circumstances in which a State monitor may be appointed to provide
direct oversight of an institution’s fiscal and governance operations. The secretary has the
authority to appoint a State monitor if the fiscal monitoring report or comprehensive audit of
the institution includes a finding of financial instability or the institution receives an adverse
or disclaimer opinion in its annual audit. A monitor could also be appointed if the institution
meets any two of the following criteria: the institution ends the fiscal year with a deficit balance
in certain funds; the institution fails to develop and implement a plan to address a deficit
balance in certain funds; the institution receives a qualified opinion in its annual audit; the
institution receives an adverse, disclaimer, or qualified opinion under a single audit section in
its annual audit; the institution fails to implement a plan from the prior fiscal year; the
institution fails to submit the annual audit or the fiscal monitoring report; or the institution
fails to comply with the timely training of governing board members.
A State monitor is to be responsible for: the fiscal oversight of the institution; the
development and implementation of recommendations for restructuring the institution offered
by the governing board of the institution; ensuring the development and implementation of an
acceptable plan to address deficiencies at the institution; oversight of all staffing; overriding
any actions taken by the president of the institution or by vote of the governing board; attending
all meetings of the board; meeting with the board on a quarterly basis; reporting directly to the
secretary; and making recommendations to the Legislature.
The bill specifies that a State monitor appointed pursuant to the bill is considered a St ate
officer for purposes of the New Jersey Tort Claims Act. Additionally, the State monitor is
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required to issue a fiscal accountability plan to the secretary listing the benchmarks, remedial
actions, and capacity and fiscal controls the institution needs to meet and implement to end
State monitor oversight. The State monitor is further required to issue progress reports to the
institution and the secretary. The State is to assume the costs of the State monitor and
associated staff. The secretary is to develop a transition plan for restoring full institution
control.
The bill requires the governing board of a public institution of higher education to approve
the appointment of a chief financial officer. The bill also requires the secretary to establish
the duties and responsibilities of a chief financial officer, inclusive of certain requirements laid
out in the bill.
Under the bill, the secretary, in consultation with the State Comptroller and Attorney
General, is to prescribe terms and conditions upon which a chief financial officer may be held
accountable for violations of the fiduciary duties of the position.
The bill requires a chief financial officer of a public institution of higher education to
complete a training program developed by the secretary.
The bill provides for an annual appropriation of $100,000 to the Office of the Secretary of
Higher Education for costs related to the development and arrangement of training for chief
financial officers of public institutions of higher education.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS concludes that this bill could result in an indeterminate increase in costs to the State
associated with the appointment of a State monitor to oversee the finances of an institution and
additional staff appointed under the bill. The State would only incur these additional costs if a
State monitor is appointed after an institution’s fiscal monitoring report shows evidence of fiscal
instability.
For the purposes of illustration, the OLS notes that the average salary for a management-level
professional at the public institutions of higher education in the State is approximately $170,000.
Accounting for the cost of benefits, the cost of providing a salary for the State monitor at the level
of an average managerial salary would be $275,000. The OLS cannot definitively estimate the
value of the salary of the State monitor, given that the salary would be set by the Secretary of
Higher Education. The State may incur additional costs for the salaries of any employees needed
by the State monitor, and for any administrative costs needed for the State monitor to carry out the
monitor’s responsibilities.
The OLS notes that the Office of the Secretary of Higher Education may also experience
indeterminate cost increases associated with facilitating comprehensive audits of public
institutions of higher education and developing transition plans for restoring full institution control
to institutions subject to the oversight of a State monitor, to the extent that existing staff and
resources are not sufficient.
Additionally, the OLS concludes that this bill will result in an annual State expenditure increase
associated with the Office of the Secretary of Higher Education’s development and arrangement
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of training for chief financial officers of public institutions of higher education. The OLS notes
that the bill provides an annual appropriation of $100,000 to effectuate this purpose.
Finally, the OLS notes that institutions of higher education may also experience indeterminate
cost increases associated with preparing and submitting annual fiscal monitoring reports to the
Office of the Secretary of Higher Education, and with appointing a chief financial officer, to the
extent that institutions have not already done so.
Section: Education
Analyst: Jessica S. Rueb
Assistant Research Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).