This bill aims to protect school districts with unpaid balances on certain borrowed funds from experiencing reductions in State school aid. Specifically, it stipulates that if a school district has an unpaid balance on borrowed funds from the State, including advance State aid payments or emergency aid, it will not face a reduction in State school aid compared to the previous budget year. However, these districts are required to use their entire undesignated general fund balance, or surplus funds, to repay the borrowed amounts. This requirement is intended to ensure that the districts prioritize repayment of their debts while maintaining their funding levels.

Additionally, the bill amends existing law regarding advance State aid payments, which are typically repaid through automatic reductions in future State aid. Under the new provisions, certain districts that have outstanding advance State aid payments will not face these automatic reductions if they apply their full undesignated general fund balance to repayment. The bill reflects a recognition of the financial challenges faced by school districts, particularly those impacted by significant cuts in State aid, and seeks to alleviate some of the financial burdens by allowing them to maintain their funding while addressing their debts.

Statutes affected:
Introduced: 18A:7A-56