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 designed to ensure that the financial burden of repayment does not fall on the State while allowing districts to maintain 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 balances on these payments will not face such reductions if they appropriately allocate their surplus funds to repayment. The bill reflects a response to financial hardships faced by school districts due to significant cuts in State aid, particularly following the implementation of P.L.2018, c.67 (S2). By alleviating the pressure of aid reductions while requiring districts to utilize their surplus for repayment, the bill seeks to provide a more stable financial environment for affected school districts.

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