A1827

An Act concerning accountability and transparency standards for public research institutions and State colleges and supplementing chapter 3B of Title 18A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The New Jersey Commission on Higher Education, in consultation with the New Jersey Educational Facilities Authority, the Office of the State Comptroller, and the public research universities and State colleges, shall research and develop effective strategies for enhancing accountability and transparency in the operation and governance of public institutions of higher education. The commission’s findings shall be the basis of the implementation of sections 2 through 12 of this act.

2. The commission shall establish criteria for use in the recruitment and appointment of new board members of the institution’s governing board. The criteria shall address credentials, diversity, experiential background, and such factors as may be appropriate to address the unique needs of an institution.

3. In accordance with standards developed by the commission, the governing board of a public research university or a State college shall develop a training and continuing education curriculum for members of the institution’s governing board. The curriculum shall include, but not be limited to, governance responsibilities, ethical standards, due diligence, the requirements of the "Open Public Meetings Act," P.L.1975, c.231 (C.10:4-6 et seq.), and the open public records law, P.L.1963, c.73 (C.47:1A-1 et seq.), issues associated with laws on privacy, and board member fiduciary responsibilities.

4. a. The governing board of a public research university or a State college shall develop an individual long-term capital plan and budget for maintenance, repair, and capital improvements. The institution shall submit the plan to the commission in accordance with such procedures as the commission shall prescribe.

b. The commission shall review a plan submitted by an institution pursuant to subsection a. of this section. The commission shall either approve the plan or return it to the institution for modification and resubmission for approval.

Upon the commission’s final approval of an institution’s long-term capital plan, any subsequent revision made to the plan shall be subject to the commission’s review and approval.

c. The commission, in consultation with the New Jersey Educational Facilities Authority and the governing board of each public research university and State college, shall develop a State master plan for the construction and improvement of capital facilities.

5. a. The commission shall design, administer, and enforce financial accountability standards for the operation of public research universities and State colleges. The commission shall review the standards of the Financial Accounting Standards Board and the Governmental Accounting Standards Board and shall design standards that are relevant to the operations of publicly funded institutions of higher education.

b. In accordance with the standards established pursuant to subsection a. of this section, the commission shall establish internal control standards and procedures for public research universities and State colleges. The standards and procedures shall, at a minimum, require that:

(1) each governing board establish an audit committee;

(2) each governing board adopt of a code of conduct applicable to members of the board, the institution’s president, chief financial officer, and other senior members of the administrative staff;

(3) each member of a governing board, the institution’s president, chief financial officer, other senior members of the administrative staff, and any person employed by the institution in a key financial position file an annual disclosure of potential conflicts of interest;

(4) the president and chief financial officer of an institution certify financial statements submitted to the commission;

(5) the chairman of the governing board, the president, the chief counsel, and members of the audit committee of a public research university or a State college be immediately notified of any report of potential misconduct that bears on the integrity of the institution; and

(6) each governing board establish written policies and procedures that provide confidentiality in the reporting of alleged wrongdoing at the institution and protect employees from retaliatory action in accordance with the provisions of the “Conscientious Employee Protection Act,” P.L.1986, c.105 (C.34:19-1 et seq.).

6. The governing board of a public research university or a State college shall require a criminal history record check of any person employed on or after the effective date of this act. The check shall be conducted in accordance with procedures established by the commission. The commission is authorized to receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation consistent with applicable State and federal laws, rules, and regulations.

7. The Commission on Higher Education shall adopt regulations pursuant to the provisions of the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), to implement the provisions of this act.

8. This act shall take effect on the 180th day after the date of enactment, but the Commission on Higher Education may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.

STATEMENT

This bill implements a number of the recommendations of the New Jersey Commission on Higher Education formulated in response to the October 2007 Report of the State Commission of Investigation (SCI) entitled “Vulnerable to Abuse: The Importance of Restoring Accountability, Transparency and Oversight to Public Higher Education Governance.”

The bill directs the Commission on Higher Education to take a number of actions that are intended to address issues of accountability and transparency in the operations and governance of the nine State colleges and the three public research universities. Under the bill, the commission is directed to consult with the Office of the State Comptroller, the New Jersey Educational Facilities Authority, and the public research universities and State colleges in researching and developing effective strategies for enhancing such accountability and transparency. The commission is specifically directed to:

(1) establish criteria to be used in the recruitment and appointment of new members of the governing boards of the institutions;

(2) develop a training and continuing education curriculum for governing board members that includes information on governance responsibilities, ethical standards, due diligence, fiduciary responsibilities, and issues associated with certain applicable State statutes;

(3) develop, in consultation with the New Jersey Educational Facilities Authority and the governing boards of the institutions, a State master plan for the construction and improvement of capital facilities. The plan will be built on the individual long-term capital plan and budget that must be submitted by each institution for the review and approval of the commission;

(4) design, administer, and enforce financial accountability standards applicable to the public research universities and the State colleges. The commission is directed to review the standards of the Financial Accounting Standards Board and the Governmental Accounting Standards Board and to design standards that are relevant to the operations of publicly funded institutions. The bill stipulates the issues that the standards must address including the establishment of an audit committee, a code of conduct, the filing of an annual disclosure of potential conflicts of interest, the certification of financial statements, the notification of key institutional personnel in regard to any report of misconduct that bears on the integrity of the institution, and the establishment of written policies and procedures to protect employees from retaliatory action for reports of wrongdoing.

The bill also provides that any employee of a State college or public research university who is hired on or after the bill’s effective date will be required to undergo a criminal history record check. The bill establishes the commission as the entity authorized to receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation.