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April 27, 2006 • Vol. XXIX • No. 35

Governor Signs Deficit Relief Bill

Governor Corzine this month signed legislation that will provide loans to any school district operating at a deficit. It also establishes criteria for state intervention into districts’ financial operations.

S-1469 (Turner, Allen, Bryant)/A-2684 (Conaway, Conners), signed April 17, was prompted by the Willingboro school district’s financial situation.

Relief Account Under the legislation, the state Department of Education would advance aid payments to the district upon recommendation of the Commissioner of Education.  The advance payments would be repaid through automatic reductions in future state aid.

Intervention Criteria In addition, the legislation gives the commissioner the authority to appoint a state monitor to oversee a district’s business operations and personnel matters if two or more of the following circumstances apply:

• Ending the fiscal year with a deficit in the general fund, special revenue fund, or capital projects fund (with the exception of a capital projects fund deficit caused by the issuance of bond anticipation notes).

• Receiving a qualified opinion in its annual audit.

• Receiving audit findings identified as material weaknesses in internal controls.

• Failing to develop and implement a plan to address a potential or actual deficit in the general fund, special revenue fund, or capital projects fund.

• Failing to implement a plan from the prior year, resulting in the findings of the independent auditor being repeated.

Forensic Audit If a district meets any one of the criteria and also ends the year with a deficit, the office of the State Auditor would conduct a forensic audit.