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 financial burden of repayment does not lead to further cuts in State aid.

Additionally, the bill amends existing law regarding advance State aid payments, which are typically repaid through automatic reductions in State aid in subsequent years. Under the new provisions, certain districts will instead be mandated to apply their undesignated general fund balances to repay these advances, thereby avoiding the automatic aid reductions. The bill reflects a response to the financial challenges faced by school districts due to significant cuts in State aid, particularly following the implementation of P.L.2018, c.67 (S2), which has led to severe budget shortfalls and program eliminations in affected districts.

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