This bill aims to protect school districts with unpaid balances on certain borrowed funds from the State from experiencing reductions in State school aid. Specifically, it stipulates that these districts will not face aid reductions if they apply the full amount of their undesignated general fund balance towards repaying the borrowed funds. The bill also clarifies that the types of borrowed funds include advance State aid payments and emergency aid, both of which require repayment. The bill modifies existing law by eliminating the automatic reductions in State aid for districts with unpaid balances and instead mandates that these districts use their surplus funds for repayment.

Additionally, the bill introduces new provisions that ensure school districts with outstanding debts to the State are not penalized with further aid cuts while they are in the process of repayment. This legislative change is particularly relevant for districts that have faced significant financial challenges due to previous state aid cuts, as highlighted by the experiences of specific districts that have had to make drastic budget cuts and layoffs. The bill is designed to provide financial relief and stability to these districts while they work to address their fiscal obligations.

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