S2964

An Act establishing an independent Office of the Comptroller of Education, revising various parts of statutory law, and supplementing Title 18A of the New Jersey Statutes and Title 52 of the Revised Statutes.

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

1. (New section) a. There is established an Office of the Comptroller of Education. The office shall be established in the Executive Branch of the State government and for the purposes of complying with the provisions of Article V, Section IV, paragraph 1 of the New Jersey Constitution, the office shall be allocated in, but not of, the Department of Education. Notwithstanding this allocation, the office shall be independent of any supervision or control by the Department of Education or by any division, board, office, or other officer thereof.

b. The Comptroller of Education shall report directly to the Governor.

c. The Comptroller of Education shall submit requests for the budget of the office directly to the Governor who shall review the requests and forward them to the Division of Budget and Accounting in the Department of the Treasury.

2. (New section) a. The Office of the Comptroller of Education shall be administered by the Comptroller of Education. The Comptroller of Education shall be appointed by the Governor with the advice and consent of the Senate. The Comptroller of Education shall be a person qualified by education, training, and prior work experience to direct the work of the office and to perform the duties and functions and fulfill the responsibilities of the position.

b. The Comptroller of Education shall serve for a term of six years and until a successor is appointed and has qualified. No person who has served as the Comptroller of Education for two successive terms, including an unexpired term, shall again be eligible to serve in the Office of the Comptroller of Education or in that position until the expiration of six years following the second successive term served by that person.

c. The Comptroller of Education shall devote full time to the duties and responsibilities of the office and shall receive a salary as shall be provided pursuant to law.

d. During the term of office, the Comptroller of Education may be removed by the Governor only for cause upon notice and opportunity to be heard.

e. A vacancy in the position of Comptroller of Education due to a cause other than the expiration of the term shall be filled for the unexpired term only in the same manner as the original appointment.

3. (New section) a. A person who holds the position of Comptroller of Education shall not be a candidate for, or hold, elective public office for a period of two years immediately following the termination of that person’s service as Comptroller of Education.

b. No person who holds the position of Comptroller of Education, or any position of employment as professional staff in the Office of the Comptroller of Education, while holding any such office or position, shall: (1) be a candidate for election to, or hold, any elective public office or any office or position with any political party or club, or (2) in connection with another individual’s candidacy for public office, sign or authorize the use of that person’s name in connection with political or campaign literature or material, or print, publish, or distribute such political or campaign literature or material.

4. (New section) a. The Office of the Comptroller of Education shall be responsible for conducting audits of boards of education and for conducting assessments of the performance and management of programs of boards of education, in accordance with the provisions of this act.

b. The Comptroller of Education shall establish the internal organizational structure of the office in a manner appropriate to carrying out the duties and functions, and fulfilling the responsibilities, of the office. The Comptroller of Education shall have the power to appoint, employ, promote, and remove such assistants, employees, and personnel as the Comptroller of Education deems necessary for the efficient and effective administration of the office. All such assistants, employees, and personnel shall be deemed confidential employees for purposes of the “New Jersey Employer-Employee Relations Act,” P.L.1941, c.100 (C.34:13A-1 et seq.), and shall serve in the unclassified service of the Civil Service.

c. The Department of Education’s Office of Fiscal Accountability and Compliance shall be allocated within the Office of the Comptroller of Education, and shall coordinate and consolidate its investigative and auditing functions with the Comptroller of Education.

d. Within the limits of funds appropriated for such purposes, the Comptroller of Education may obtain the services of certified public accountants, qualified management consultants, and other professionals necessary to independently perform the duties and functions of the office.

5. (New section) The Comptroller of Education is authorized to call upon any department, office, division, agency or independent authority of State government to provide such information, resources, or other assistance deemed necessary to discharge the duties and functions and to fulfill the responsibilities of the Comptroller of Education under this act. Each department, office, division, agency, or independent authority of this State shall cooperate with the Comptroller of Education and furnish the office with the assistance necessary to accomplish the purposes of this act.

6. (New section) a. The Comptroller of Education shall have the power and duty to conduct routine, periodic, and random audits of boards of education, in order to provide increased accountability, integrity, and oversight of school districts.

b. The Comptroller of Education shall undertake analysis and review of any certified financial audits of boards of education that are required pursuant to other provisions of law, including audits conducted under N.J.S.18A:23-1. When the Comptroller of Education’s analysis and review identifies weaknesses, inadequacies or failures in the board’s financial controls or concerns about the quality or independence of the audits, the Comptroller of Education is authorized to undertake a financial audit or such other steps as the Comptroller of Education deems appropriate. For purposes of this subsection, “certified financial audits” does not include audits conducted by the State Auditor.

c. The Comptroller of Education shall have the power and duty to conduct assessments of the performance and management of programs of boards of education and the extent to which they are achieving their goals and objectives.

d. The Comptroller of Education shall establish objective criteria for undertaking performance and other reviews authorized by this act. The criteria shall weigh relevant risk factors, including but not limited to: the size of the board of education’s budget; the board’s past performance; the frequency, scope, and quality of prior audits or reviews regarding the board’s financial condition or performance; assessments or evaluations of the board’s management, performance or financial condition; and other credible information which suggests the necessity of a review.

e. The Comptroller of Education and the Office of the Comptroller of Education shall conduct audits and reviews in accordance with prevailing national and professional standards, rules, and practices relating to such audits and reviews in government environments, including the standards for performance reviews utilized by the United States Government Accountability Office or its successor, and the Comptroller of Education shall ensure that the office remains in compliance with such standards, rules, and practices.

f. The Comptroller of Education shall provide guidance to boards of education units that are required to engage outside auditors regarding procurement of their services, the rotation of the providers of such services, and the avoidance of possible conflicts of interest in the hiring of outside auditors.

g. In carrying out the duties, functions, and responsibilities of the Office of the Comptroller of Education under this act, the Comptroller of Education shall not charge any costs incurred by the office against a board of education.

7. (New section) a. The Comptroller of Education shall ensure that any officers and employees of the Department of Education and the Office of the State Auditor who perform audits, investigations, and performance reviews similar or identical to those authorized to be performed by the Comptroller of Education shall conduct their audits, investigations, and reviews with the consultation of, and in coordination and cooperation with, the Comptroller of Education.

b. The Comptroller of Education shall meet at periodic intervals, but at least four times annually, with the Attorney General, the Commissioner of Education, the State Auditor, and any other public officers or employees deemed necessary who perform audits, investigations, and performance reviews of boards of education. The responsibility of all parties during these meetings shall be to: facilitate communication and exchange information on completed, current, and future audits, investigations, and reviews; avoid duplication and fragmentation of efforts; optimize the use of resources; avoid divisiveness and organizational uncertainty; promote effective working relationships; and avoid the unnecessary expenditure of public funds.

c. The Commissioner of Education shall promptly notify the Comptroller of Education of any local audits that have been submitted to the commissioner that reveal any significant deficiencies.

8. (New section) a. The Comptroller of Education shall have the power and duty to audit and monitor the process of soliciting proposals for, and the process of awarding, contracts made by boards of education that involve a significant consideration or expenditure of funds or are comprised of complex or unique components, or both, as determined by the Comptroller of Education; provided however, for the purposes of the duties of the Office of the Comptroller of Education, “contracts” shall not include public employer-employee labor collective bargaining agreements.

b. A board of education shall provide notice to the Comptroller of Education no later than 20 business days after the award of a contract involving consideration or an expenditure of more than $2,000,000 but less than $10,000,000.

c. (1) A board of education shall inform the Comptroller of Education in writing, in a form to be determined by the Comptroller of Education, of the commencement of any procurement process involving consideration or an expenditure of $10,000,000 or more at the earliest time practicable, but no later than the time the board of education commences preparation of: any bid specification or request for proposal; concession offering; proposal to purchase, sell, or lease real estate; or other related activities and contracts.

(2) Unless waived by the Comptroller of Education upon request by the board of education, at least 30 days shall elapse from the time the board of education informs the Comptroller of Education pursuant to paragraph (1) of this subsection and the time the board of education may issue any public advertising, notice of availability of a request for proposals or any other public or private solicitation of a contract for a procurement that is subject to this subsection, in order to enable the Comptroller of Education to complete a review pursuant to paragraph (4) of this subsection.

(3) At any time during that 30 days, or on a date thereafter, but no later than 15 business days before the date of a planned issuance of any public advertising, notice of availability of a request for proposals or any other public or private solicitation of a contract involving consideration or an expenditure of $10,000,000 or more, the board of education shall provide notice to the Comptroller of Education, in a form to be determined by the Comptroller of Education and to include such documents and information as determined by the Comptroller of Education, of the planned action.

(4) Upon receipt of the notice and any accompanying documents and information required pursuant to paragraph (3) of this subsection, the Comptroller of Education may review the submission and provide a written determination to the board of education regarding whether the procurement process complies with applicable public contracting laws, rules, and regulations. The Comptroller of Education’s review is not for the purpose of reviewing the board of education’s decision to undertake the procurement or to otherwise supplant the board of education’s authority to create or implement public policy. If the Comptroller of Education determines that the procurement process does not comply with applicable public contracting laws, rules, and regulations, the Comptroller of Education shall direct the board of education not to proceed with the procurement. The Comptroller of Education shall state the reasons for the determination and may include guidance to the board of education regarding an appropriate procurement process. A board of education may proceed with a planned procurement that is subject to this subsection after the expiration of the 30-day period or the granting of a waiver as provided in paragraph (2), unless it receives a written determination not to proceed from the Comptroller of Education within 15 business days of the date the board of education provided written notice to the Comptroller of Education pursuant to paragraph (3) of this subsection.

(5) Information communicated by or between a board of education and the Comptroller of Education pursuant to this subsection shall be considered advisory, consultative, or deliberative material for purposes of P.L.1963, c.73 (C.47:1A-1 et seq.), as amended and supplemented, except for written determinations designated by the Comptroller of Education as public records.

d. The notice and review procedures provided for in subsection c. of this section shall not apply to the award of any contract issued pursuant to N.J.S.18A:18A-7, or issued pursuant to any similar provisions of law and regulations thereunder applicable to a board of education. Notice of the award of any such contract shall be provided to the Comptroller of Education no later than 30 business days after the award.

e. The Comptroller of Education, in consultation with the Department of the Treasury, shall, no later than March 1 of every fifth year after the effective date of this act, adjust the threshold amounts set forth in subsections b. and c. of this section, or the threshold amounts resulting from any adjustment under this subsection, in direct proportion to the rise or fall of the index rate as that term is defined in section 2 of P.L.1971, c.198 (C.40A:11-2), and shall round the adjustment to the nearest $100,000. The Comptroller of Education shall, no later than June 1 of every fifth year after the effective date of this act, notify boards of education of the adjustment. The adjustment shall become effective on July 1 of the year in which it is made.

9. (New section) a. The Comptroller of Education shall report the findings of audits and reviews performed by the office to the Governor, the President of the Senate, the Speaker of the General Assembly, and the board of education at issue.

b. In the event that the Comptroller of Education finds a board of education to have deficient practices or procedures during the performance of the comptroller’s duties under this act, the Comptroller of Education shall have the power to propose and enforce a corrective or remedial action plan to correct those deficiencies. The board of education shall fully cooperate with the Comptroller of Education to develop recommendations for a corrective or remedial action plan. The Comptroller of Education shall monitor the implementation of those recommendations and shall conduct a subsequent review to determine whether there has been full implementation and continued compliance with those recommendations.

c. The Comptroller of Education shall report promptly to the Governor, the President of the Senate, and the Speaker of the General Assembly if a board of education refuses to cooperate in the development of a corrective or remedial action plan or to comply with a plan.

d. The Commissioner of Education shall promptly notify the Comptroller of Education if the commissioner becomes aware that a board of education has impeded an audit, or has failed or refused to cooperate in the development of a corrective or remedial action plan or to comply with a plan.

10. (New section) a. If the Comptroller of Education determines that a board of education has impeded an audit or has failed or refused to cooperate in the development of a corrective or remedial action plan or to comply with a plan, the Comptroller of Education shall have the power to:

(1) direct the State Treasurer to withhold the expenditure of State funds that may be due to be paid to the board of education; and

(2) direct the Commissioner of Education to impose a corrective or remedial action plan that may include the prior approval by the Comptroller of Education of that board of education’s contracts and expenditures.

b. The Comptroller of Education shall have the power to direct a board of education not to fund with local tax dollars any position that the Comptroller of Education has determined, through the course of audits, investigations, and reviews, to be unnecessary.

11. (New section) The Comptroller of Education shall provide periodic reports to the Governor, and shall issue an annual report to the Governor and submit that report to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), which shall be available to the public. The reports shall include, but shall not be limited to, the reporting of any programmatic deficiencies and weaknesses that the Comptroller of Education’s audits, investigations, and reviews have found, and detailing the efforts by, or the failure of, any board of education to implement a recommended plan for corrective or remedial action.

12. (New section) The Comptroller of Education is authorized to refer findings that may constitute alleged criminal conduct to the Attorney General or other appropriate prosecutorial authority. In the course of conducting audits and performance reviews of boards of education, the Comptroller of Education may refer matters for investigation to the Attorney General or other appropriate authorities for further civil or administrative action, with recommendations to initiate actions to recover monies, to terminate contracts, or temporarily or permanently debar any person from contracting with or receiving funds from a board of education.

13. (New section) a. When the Comptroller of Education refers a complaint alleging criminal conduct to the Attorney General or other appropriate prosecutorial authority and the Attorney General or prosecutorial authority decides not to investigate or prosecute the matter, the Attorney General or the prosecutorial authority shall promptly notify the Comptroller of Education. The Attorney General or the prosecutorial authority shall inform the Comptroller of Education as to whether an investigation is ongoing with regard to any matter so referred. The Comptroller of Education shall preserve the confidentiality of the existence of any ongoing criminal investigation.

Upon completion of an investigation or, in a case where the investigation leads to prosecution, upon completion of the prosecution, the Attorney General or the prosecutorial authority shall report promptly the findings and results to the Comptroller of Education. In the course of informing the Comptroller of Education, the Attorney General or prosecutorial authority shall give full consideration to the authority, duties, functions, and responsibilities of the Comptroller of Education, the public interest in disclosure, and the need for protecting the confidentiality of complainants and informants.

b. The Comptroller of Education shall maintain a record of all matters referred and the responses received and shall be authorized to disclose information received as appropriate and as may be necessary to resolve the matter referred, to the extent consistent with the public interest in disclosure and the need for protecting the confidentiality of complainants and informants and preserving the confidentiality of ongoing criminal investigations.

14. (New section) a. A board of education and its employees shall provide full assistance and cooperation with any audit, performance review, or contract review by the Comptroller of Education.

b. The Comptroller of Education shall have complete access to all "government records" of "public agencies," as those terms are defined pursuant to section 1 of P.L.1995, c.23 (C.47:1A-1.1), including all information listed as confidential and specifically excluded as a "government record," in section 1 of P.L.1995, c.23 (C.47:1A-1.1). Provided however, that any information listed as confidential and specifically excluded as a "government record," in that section, to which the Comptroller of Education shall have access, shall directly relate to a program or expenditure that is the subject of an audit, performance review, or contract review by the Comptroller of Education, and provided further that if a public agency provides the Comptroller of Education with access to information that is subject to a confidentiality agreement, the public agency shall promptly notify the parties to the agreement that the information is being provided to the Comptroller of Education.

c. Whenever a person requests access to a government record that the Comptroller of Education, during the course of an audit, investigation, performance review, or contract review obtained from another public agency, which record was open for public inspection, examination, or copying before the audit, investigation, or review commenced, the public agency from which the Comptroller of Education obtained the record shall comply with the request if made pursuant to P.L.1963, c.73 (C.47:1A-1 et seq.), provided that the request does not in any way identify the record sought by means of a reference to the Comptroller of Education’s audit or review, including, but not limited to, a reference to a subpoena issued pursuant to such investigation.

d. Private vendors or other persons contracting with or receiving funds from a board of education shall upon request by the Comptroller of Education provide the Comptroller of Education with prompt access to all relevant documents and information as a condition of the contract and receipt of public monies. The Comptroller of Education shall not disclose any document or information to which access is provided that is confidential or proprietary. If the Comptroller of Education finds that any person receiving funds from a board of education refuses to provide information upon the request of the Comptroller of Education, or otherwise impedes or fails to cooperate with any audit or performance review, the Comptroller of Education may recommend to the board of education that the person be subject to termination of their contract, or temporarily or permanently debarred from contracting with the board of education.

15. (New section) The Comptroller of Education shall provide technical assistance and training to boards of education regarding best practices in developing and implementing financial management systems that will strengthen internal control procedures and prevent the misuse of public funds.

16. (New section) The Comptroller of Education shall, pursuant to the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations necessary to effectuate the purposes of this act.

17. (New section) For the purposes of sections 2 to 15 of P.L.2007, c.52 (C.52:15C-2 et seq.), a unit of local government shall not include a board of education.

18. Section 4 of P.L.2006, c.15 (C.18A:7A-57) is amended to read as follows:

4. a. The Office of the State Auditor, or the Office of the [State Comptroller] Comptroller of Education, in cooperation with the State Auditor, shall conduct a forensic audit of the fiscal operations of any school district which has a year-end general fund deficit and also meets one of the other criteria in subsection a. of section 2 of this act. The audit shall be of the fiscal year in which the general fund deficit occurred and shall be in addition to the audit required of school districts pursuant to N.J.S.18A:23-1.

b. Notwithstanding the provisions of R.S.52:24-1 et seq., or any other law to the contrary, the Office of the State Auditor or the Office of the [State Comptroller] Comptroller of Education shall submit the audit to the commissioner, the Governor, and the Legislature. The Office of the State Auditor or the Office of the [State Comptroller] Comptroller of Education shall also present the audit to the district's board of education and the public at the board's next regularly scheduled monthly meeting.

c. The Office of the State Auditor or the Office of the [State Comptroller] Comptroller of Education shall forward any findings of fraudulent activities discovered as a result of the audit to the appropriate law enforcement agency.

d. Within 30 days of the presentation of the audit by the Office of the State Auditor or the Office of the [State Comptroller] Comptroller of Education to the board of education, the board shall submit to the commissioner a plan that addresses all of the findings, conclusions, and recommendations of the Office of the State Auditor or the Office of the [State Comptroller] Comptroller of Education which have not been previously addressed by the school district.

(cf: P.L.2007, c.52, s.21)

19. Section 9 of P.L.2008, c.39 (C.18A:7G-13.1) is amended to read as follows:

9. The development authority, in consultation with the [State Comptroller] Comptroller of Education, shall cause an audit to be conducted of a school facilities project financed pursuant to P.L.2000, c.72 (C.18A:7G-1 et al.) which has a State share that exceeds $10,000,000. This provision shall not be construed to limit the authority of the development authority or the [State Comptroller] Comptroller of Education to conduct audits of other school facilities projects as provided by law.

(cf: P.L.2008, c.39, s.9)

20. Section 70 of P.L.2000, c.72 (C.18A:7G-43) is amended to read as follows:

70. There is established in the Office of the Attorney General the Office of Fiscal Integrity in School Construction. The office shall perform its duties under the direction of the Attorney General and shall cooperate and coordinate the performance of its duties with the Office of the [State Comptroller] Comptroller of Education. The Attorney General or his representative, in cooperation and coordination with the [State Comptroller] Comptroller of Education or his representatives, may investigate, examine, and inspect the activities of the authority and districts related to the financing and construction of school facilities and the implementation of the provisions of P.L.2000, c.72 (C.18A:7G-1 et al.). The Attorney General and the [State Comptroller] Comptroller of Education may require the submission of duly verified reports from the authority and districts, which include such information in such form as the Attorney General and the [State Comptroller] Comptroller of Education may require. The Attorney General or the [State Comptroller] Comptroller of Education or a representative of either, may also consult with the authority on issues and procedures related to the exercise of its duties and responsibilities under P.L.2000, c.72 (C.18A:7G-1 et al.). The Legislature shall annually appropriate such funds as may be necessary to finance the operations of the office.

(cf: P.L.2007, c.52, s.20)

21. Section 5 of P.L.2007, c.52 (C.52:15C-5) is amended to read as follows:

5. a. The Office of the State Comptroller shall be responsible for conducting, in accordance with section 8 of this act, routine, periodic and random audits of the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education] and for conducting assessments of the performance and management of programs of the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education] and the extent to which they are achieving their goals and objectives. [The Office of the State Comptroller shall also serve as the office in which the Office of the State Inspector General, which shall be responsible for all the duties assigned pursuant to P.L.2005, c.119 (C.52:15B-1 et seq.), is allocated within the Department of the Treasury.]

b. (1) The State Comptroller shall establish the internal organizational structure of the office and the bureaus therein in a manner appropriate to carrying out the duties and functions, and fulfilling the responsibilities, of the office. The State Comptroller shall have the power to appoint, employ, promote, and remove such assistants, employees, and personnel as the State Comptroller deems necessary for the efficient and effective administration of the office. All such assistants, employees and personnel shall be deemed confidential employees for purposes of the "New Jersey Employer-Employee Relations Act," P.L.1941, c.100 (C.34:13A-1 et seq.) and shall serve in the unclassified service of the Civil Service.

(2) [The Office of the State Inspector General shall be allocated within the Office of the State Comptroller, and the individual first appointed State Inspector General under P.L.2005, c.119, shall continue as State Inspector General for the first full term to which that individual was appointed pursuant to P.L.2005, c.119, and shall be eligible to serve in that position thereafter.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

c. Within the limits of funds appropriated for such purposes, the State Comptroller may obtain the services of certified public accountants, qualified management consultants, and other professionals necessary to independently perform the duties and functions of the office.

(cf: P.L.2007, c.52, s.5)

22. Section 7 of P.L.2007, c.52 (C.52:15C-7) is amended to read as follows:

7. The State Comptroller shall consolidate within the Office of the State Comptroller the coordination of the internal and external audit functions, including but not limited to economy and efficiency audits in the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education]. The State Comptroller is authorized to:

a. establish a full-time program of audit and performance review, in accordance with section 8 of this act, designed to provide increased accountability, integrity, and oversight of the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education]; and

b. audit and monitor the process of soliciting proposals for, and the process of awarding, contracts made by the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education] that involve a significant consideration or expenditure of funds or are comprised of complex or unique components, or both, as determined by the State Comptroller; provided however, for the purposes of the duties of the Office of the State Comptroller, "contract" or "contracts" shall not include public employer-employee labor collective bargaining agreements.

(cf: P.L.2007, c.52, s.7)

23. Section 8 of P.L.2007, c.52 (C.52:15C-8) is amended to read as follows:

8. a. The State Comptroller shall have all the powers necessary to carry out the duties and functions and to fulfill the responsibilities described in this act, including the power to conduct audits and reviews and propose and enforce remediation plans for the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education] that are found by the State Comptroller to have deficient practices or procedures. The State Comptroller shall, pursuant to the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations necessary to effectuate the purposes of this act.

b. The State Comptroller and the Office of the State Comptroller shall conduct audits and reviews in accordance with prevailing national and professional standards, rules, and practices relating to such audits and reviews in government environments, including the standards for performance reviews utilized by the United States Government Accountability Office or its successor, and the State Comptroller shall ensure that the office remains in compliance with such standards, rules, and practices.

c. (1) As to entities that are not required by law to undergo periodic certified financial audits, the State Comptroller shall determine the frequency with which financial audits shall be conducted of such entities by the State Comptroller by establishing objective criteria, which criteria shall weigh relevant risk factors, including, but not limited to, the size of the entity's budget and the entity's past performance.

(2) As to entities that are required by law to undergo periodic certified financial audits, the State Comptroller shall undertake analysis and review of the certified financial audits of such entities and of the procedures used to conduct those audits. When the State Comptroller's analysis and review identifies weaknesses, inadequacies or failures in the entity's financial controls or concerns about the quality or independence of the audits, the State Comptroller shall be authorized to undertake a financial audit or such other steps as the State Comptroller deems appropriate. In determining when to proceed with a financial audit, the State Comptroller may also take into account information obtained pursuant to section 10 of this act; referrals or recommendations from Executive branch departments or agencies; or assessments or evaluations of the entity's management, performance or financial condition from federal or State government agencies[, such as those undertaken as part of the New Jersey Quality Single Accountability Continuum for school districts].

(3) The State Comptroller shall establish objective criteria for undertaking performance and other reviews authorized by this act, which criteria shall weigh relevant risk factors, including, but not limited to: (a) the size of the entity's budget, (b) the entity's past performance, (c) the frequency, scope, and quality of any audits or reviews that have been performed regarding the entity's financial condition or performance, (d) assessments or evaluations of the entity's management, performance or financial condition [such as those undertaken as part of the New Jersey Quality Single Accountability Continuum for school districts], and (e) other credible information which suggests the necessity of a review.

(4) For purposes of this subsection, "entity" means any unit in the Executive branch of State government, including all entities exercising executive branch authority, public institutions of higher education, independent State authorities, and units of local government [and boards of education] or their vendors. For purposes of this subsection, "certified financial audits" does not include audits conducted by the State Auditor.

d. The State Comptroller shall provide guidance to units in the Executive branch of State government, independent State authorities, and units of local government [and boards of education units] that are required to engage outside auditors regarding procurement of their services, the rotation of the providers of such services, and the avoidance of possible conflicts of interest in the hiring of outside auditors.

e. In carrying out the duties, functions and responsibilities of the Office of the State Comptroller under this act, the State Comptroller shall not charge any costs incurred by the office against a unit of local government [or board of education].

(cf: P.L.2007, c.52, s.8)

24. Section 9 of P.L.2007, c.52 (C.52:15C-9) is amended to read as follows:

9. a. The State Comptroller shall establish a system that shall ensure that any officers and employees of [the Office of the Inspector General,] the Department of Law and Public Safety, [the Department of Education,] the Department of the Treasury, the Department of Transportation, the Division of Local Government Services in the Department of Community Affairs, the Local Finance Board, and the Office of the State Auditor who perform audits, investigations, and performance reviews similar or identical to those authorized to be performed by the State Comptroller shall conduct their audits, investigations and reviews with the consultation of, and in coordination and cooperation with, the State Comptroller.

b. For the purpose of establishing and maintaining this system, the State Comptroller shall meet at periodic intervals, but at least four times annually, with the Attorney General, the State Treasurer, [the State Inspector General, the Commissioner of Education,] the Commissioner of Transportation, the Director of the Division of Local Government Services in the Department of Community Affairs, staff of the Local Finance Board, the State Auditor, and any other public officers or employees deemed necessary who perform audits, investigations, and performance reviews. The responsibility of all parties during these meetings shall be to: facilitate communication and exchange information on completed, current, and future audits, investigations, and reviews; avoid duplication and fragmentation of efforts; optimize the use of resources; avoid divisiveness and organizational uncertainty; promote effective working relationships; and avoid the unnecessary expenditure of public funds.

c. To further ensure the consultation of, and coordination and cooperation with, the State Comptroller, [the Commissioner of Education,] the Director of the Division of Local Government Services in the Department of Community Affairs[,] and the staff of the Local Finance Board shall promptly notify the State Comptroller of any local audits that have been submitted to them that reveal any significant deficiencies.

(cf: P.L.2007, c.52, s.9)

25. Section 10 of P.L.2007, c.52 (C.52:15C-10) is amended to read as follows:

10. a. In furtherance of the duty of the State Comptroller to audit and monitor the process of soliciting proposals for, and the process of awarding, contracts by contracting units which contracts involve a significant consideration or expenditure of funds, a contracting unit shall provide notice to the State Comptroller no later than 20 business days after the award of a contract involving consideration or an expenditure of more than $2,000,000 but less than $10,000,000.

As used in this section, "contracting unit" means the principal departments in the Executive branch of the State Government, and any division, board, bureau, office, commission or other instrumentality within or created by such department, any independent State authority, commission, instrumentality and agency, and any State college or university, any county college, and any unit of local government including a county, municipality, [board of education] and any board, commission, committee, authority or agency, thereof which has administrative jurisdiction over any project or facility, included or operating in whole or in part, within the territorial boundaries of any county[,] or municipality [or board of education] which exercises functions which are appropriate for the exercise by one or more units of local government, and which has statutory power to make purchases and enter into contracts for the provision or performance of goods or services.

As used in this section, "contract" shall not include developers agreements entered into in conjunction with an approval granted under the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.), redevelopment agreements entered into under the "Local Redevelopment and Housing Law," P.L.1992, c.79 (C.40A:12A-1 et al.), financial agreements entered into under the "Long Term Tax Exemption Law," P.L.1991, c.431 (C.40A:20-1 et seq.), agreements entered into under the "Five-Year Exemption and Abatement Law," P.L.1991, c.441 (C.40A:21-1 et seq.), agreements entered into under section 7 of P.L.1989, c.207 (C.54:4-3.145), agreements entered into under sections 34 through 39 of P.L.1997, c.278 (C.58:10B-26 through 58:10B-31), and agreements entered into under the "Municipal Landfill Site Closure, Remediation and Redevelopment Act," P.L.1996, c.124 (C.13:1E-116.1 et al.).

b. (1) A contracting unit shall inform the State Comptroller in writing, in a form to be determined by the State Comptroller, of the commencement of any procurement process involving consideration or an expenditure of $10,000,000 or more at the earliest time practicable as the contracting unit commences the procurement process, but no later than the time the contracting unit commences preparation of: any bid specification or request for proposal; concession offering; proposal to purchase, sell, or lease real estate; or other related activities and contracts.

(2) Unless waived by the State Comptroller upon request of the contracting unit, at least 30 days shall elapse from the time the contracting unit informs the State Comptroller pursuant to paragraph (1) of this subsection and the time the contracting unit may issue any public advertising, notice of availability of a request for proposals or any other public or private solicitation of a contract for a procurement that is subject to this subsection in order that the State Comptroller may complete a review that may be undertaken pursuant to paragraph (4) of this subsection.

(3) At any time during that 30 days, or on a date thereafter, but no later than 15 business days before the date of a planned issuance of any public advertising, notice of availability of a request for proposals or any other public or private solicitation of a contract involving consideration or an expenditure of $10,000,000 or more, the contracting unit shall provide notice to the State Comptroller, in a form to be determined by the State Comptroller and to include such documents and information as determined by the State Comptroller, of the planned action.

(4) Upon receipt of the notice and any accompanying documents and information required pursuant to paragraph (3) of this subsection, the State Comptroller may review such submission and provide a written determination to the contracting unit regarding whether the procurement process complies with applicable public contracting laws, rules, and regulations. The State Comptroller's review is not for the purpose of reviewing the contracting unit's decision to undertake the procurement or to otherwise supplant the contracting unit's authority to create or implement public policy. If the State Comptroller determines that the procurement process does not comply with applicable public contracting laws, rules, and regulations, the State Comptroller shall direct the contracting unit not to proceed with the procurement. In such an instance, the State Comptroller shall state the reasons for such determination and may include in its determination guidance to the contracting unit regarding an appropriate procurement process. A contracting unit may proceed with a planned procurement that is subject to this subsection after the expiration of the 30-day period or the granting of a waiver as provided in paragraph (2), unless it receives a written determination not to proceed from the State Comptroller within 15 business days of the date the contracting unit provided written notice to the State Comptroller pursuant to paragraph (3) of this subsection.

(5) Information communicated by or between a contracting unit and the State Comptroller pursuant to this subsection shall be considered advisory, consultative, or deliberative material for purposes of P.L.1963, c.73 (C.47:1A-1 et seq.), as amended and supplemented, except for written determinations designated by the State Comptroller as public records.

c. Provided however, that the notice and review provided for in subsection b. of this section shall not apply to the award of any contract issued pursuant to section 6 of P.L.1971, c.198 (C.40A:11-6) or N.J.S.18A:18A-7, or under a public exigency requiring the immediate delivery of articles or performance of service under a contract issued pursuant to section 5 of P.L.1954, c.48 (C.52:34-10), or issued pursuant to any similar provisions of law and regulations thereunder applicable for a respective contracting unit. Notice of the award of any such contract shall be provided to the State Comptroller no later than 30 business days after the award.

d. The State Comptroller, in consultation with the Department of the Treasury, shall, no later than March 1, 2010, and March 1 of every fifth year thereafter, adjust the threshold amounts set forth in subsections a. and b. of this section, or the threshold amounts resulting from any adjustment under this subsection, in direct proportion to the rise or fall of the index rate as that term is defined in section 2 of P.L.1971, c.198 (C.40A:11-2), and shall round the adjustment to the nearest $100,000. The State Comptroller shall, no later than June 1, 2010, and June 1 of every fifth year thereafter, notify contracting units of the adjustment. The adjustment shall become effective on July 1 of the year in which it is made.

(cf: P.L.2007, c.52, s.10)

26. Section 11 of P.L.2007, c.52 (C.52:15C-11) is amended to read as follows:

11. a. The State Comptroller shall report the findings of audits and reviews performed by the office, and issue recommendations for corrective or remedial action, to the Governor, the President of the Senate and the Speaker of the General Assembly and to the unit in the Executive branch of State government, including any entity exercising executive branch authority, independent State authority, public institution of higher education, or unit of local government [or board of education] at issue. The unit in the Executive branch of State government, independent State authority, public institution of higher education, or unit of local government [or board of education] shall fully cooperate with the State Comptroller to develop recommendations for a corrective or remedial action plan. The State Comptroller shall monitor the implementation of those recommendations and shall conduct a subsequent review to determine whether there has been full implementation and continued compliance with those recommendations. The State Comptroller shall report the findings of the subsequent review to the Governor, the President of the Senate and the Speaker of the General Assembly within three years of the initial audit. Such report shall include the corrective or remedial action taken and the effect of the corrective or remedial action.

b. The State Comptroller shall report promptly to the Governor, the President of the Senate and the Speaker of the General Assembly if a unit in the Executive branch of State government, independent State authority, public institution of higher education, or unit of local government [or board of education] refuses to cooperate in development of a corrective or remediation plan or to comply with a plan.

c. The State Comptroller shall recommend that the Governor initiate disciplinary proceedings against any official or employee of a unit in the Executive branch of State government, including any entity exercising executive branch authority, or independent State authority who impedes an audit, or who fails or refuses to cooperate in the development of a corrective or remedial action plan or to comply with a plan. The Governor may cause an investigation to be made of the conduct of any such official or employee and may require such official to submit to the Governor a written statement or statements, under oath, of such information as the Governor may call for relating to the official's or the employee's conduct alleged by the State Comptroller. After notice, the service of charges and an opportunity to be heard at public hearing, the Governor may remove any such official or employee for cause. Such official or employee shall have the right of judicial review, on both the law and the facts, in such manner as may be provided by law.

d. If the State Comptroller is advised by [the Commissioner of Education,] the Director of the Division of Local Government Services in the Department of Community Affairs, staff of the Local Finance Board, or the State Auditor that a unit of local government [or board of education] or any official or employee thereof has impeded an audit, or has failed or refused to cooperate in the development of a corrective or remedial action plan or to comply with a plan recommended by such State official or employee thereof, the State Comptroller is authorized to recommend that the Governor (1) withhold the expenditure of State funds that may be due to be paid to that unit of local government [or board of education], and (2) request the [Commissioner of Education,] the Director of the Division of Local Government Services in the Department of Community Affairs, or staff of the Local Finance Board, as may be appropriate for that unit of local government [or board of education], to impose a corrective or remedial action plan that may include the prior approval by the State Comptroller of that local unit's [or board's] contracts and expenditures.

e. The State Comptroller shall provide periodic reports to the Governor, and shall issue an annual report to the Governor and submit that report to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), which shall be available to the public. The reports shall include but shall not be limited to the reporting of any programmatic deficiencies and weaknesses that the State Comptroller's audits, investigations, and reviews have found, and detailing the efforts by, or the failure of, any unit in the Executive branch of State government, including any entity exercising executive branch authority, independent State authority or unit of local government or board of education to implement a recommended plan for corrective or remedial action.

(cf: P.L.2017, c.204, s.1)

27. Section 12 of P.L.2007, c.52 (C.52:15C-12) is amended to read as follows:

12. The State Comptroller is authorized to refer findings that may constitute alleged criminal conduct to the Attorney General or other appropriate prosecutorial authority. In the course of conducting audits and performance reviews, the State Comptroller may refer matters for investigation [to the State Inspector General or] to the Attorney General or other appropriate authorities for further civil or administrative action, with recommendations to initiate actions to recover monies, to terminate contracts, or temporarily or permanently debar any person from contracting with or receiving funds from any unit in the Executive branch of State government, including any entity exercising executive branch authority, independent State authority or unit of local government [or board of education].

(cf: P.L.2007, c.52, s.12)

28. Section 14 of P.L.2007, c.52 (C.52:15C-14) is amended to read as follows:

14. a. All units in the Executive branch of State government, including entities exercising executive branch authority, independent State authorities, public institutions of higher education, and units of local government [and boards of education] and their employees shall provide full assistance and cooperation with any audit, performance review or contract review by the State Comptroller.

b. The State Comptroller shall have complete access to all "government records" of "public agencies," as those terms are defined pursuant to section 1 of P.L.1995, c.23 (C.47:1A-1.1), including all information listed as confidential and specifically excluded as a "government record," in section 1 of P.L.1995, c.23 (C.47:1A-1.1). Provided however, that any information listed as confidential and specifically excluded as a "government record," in that section, to which the State Comptroller shall have access, shall directly relate to a program or expenditure that is the subject of an audit, performance review or contract review by the State Comptroller, and provided further that if a public agency provides the State Comptroller with access to information that is subject to a confidentiality agreement, the public agency shall promptly notify the parties to the agreement that the information is being provided to the State Comptroller.

c. Whenever a person requests access to a government record that the State Comptroller [or the State Inspector General], during the course of an audit, investigation, performance review or contract review obtained from another public agency, which record was open for public inspection, examination or copying before the audit, investigation or review commenced, the public agency from which the State Comptroller [or the State Inspector General] obtained the record shall comply with the request if made pursuant to P.L.1963, c.73 (C.47:1A-1 et seq.), provided that the request does not in any way identify the record sought by means of a reference to the State Comptroller's audit or review or to an investigation by [the State Inspector General or] any other public agency, including, but not limited to, a reference to a subpoena issued pursuant to such investigation.

d. Private vendors or other persons contracting with or receiving funds from a unit in the Executive branch of State government, including an entity exercising executive branch authority, independent State authority, public institution of higher education, or unit of local government [or board of education] shall upon request by the State Comptroller provide the State Comptroller with prompt access to all relevant documents and information as a condition of the contract and receipt of public monies. The State Comptroller shall not disclose any document or information to which access is provided that is confidential or proprietary. If the State Comptroller finds that any person receiving funds from a unit in the Executive branch of State government, including an entity exercising executive branch authority, independent State authority, public institution of higher education, or unit of local government [or board of education] refuses to provide information upon the request of the State Comptroller, or otherwise impedes or fails to cooperate with any audit or performance review, the State Comptroller may recommend to the contracting unit that the person be subject to termination of their contract, or temporarily or permanently debarred from contracting with the contracting unit.

(cf: P.L.2007, c.52, s.14)

29. Section 15 of P.L.2007, c.52 (C.52:15C-15) is amended to read as follows:

15. The State Comptroller shall provide technical assistance and training to units in the Executive branch of State government, including entities exercising executive branch authority, independent State authorities, public institutions of higher education, and units of local government [and boards of education] regarding best practices in developing and implementing financial management systems that will strengthen internal control procedures and prevent the misuse of public funds.

(cf: P.L.2007, c.52, s.15)

30. This act shall take effect on the first day of the sixth month following enactment.

STATEMENT

This bill establishes an independent Office of the Comptroller of Education, in but not of the Department of Education, that will report directly to the Governor. Under current law, the State Comptroller is responsible for conducting financial audits and performance reviews, and for monitoring the process of soliciting and awarding significant or complex government contracts, for State government, independent State authorities, local units of government, and boards of education. This bill would remove these oversight responsibilities with respect to boards of education from the State Comptroller and transfer them to the Comptroller of Education. The Department of Education’s Office of Fiscal Accountability and Compliance will be allocated within the Office of the Comptroller of Education, and will coordinate and consolidate its investigative and auditing functions with the Comptroller of Education.

The Governor will appoint the Comptroller of Education for a six-year term with the advice and consent of the Senate. The appointed Comptroller of Education must be qualified by education, training, and prior work experience to direct the office and perform the duties and functions of the position. An individual serving as Comptroller of Education will be subject to a consecutive two-term limit, and will not be eligible to serve again in that office until the expiration of six years following a second successive term. The Comptroller of Education and professional staff of the office will be restricted in their political activities.

The Comptroller of Education will have the power and duty to conduct routine, periodic, and random audits of boards of education in order to provide increased accountability, integrity, and oversight of school districts. The Comptroller of Education will also analyze and review any certified financial audits of boards of education conducted pursuant to other provisions of law. In addition, the Comptroller of Education will have the power and duty to conduct assessments of the performance and management of programs of boards of education and the extent to which they are achieving their goals and objectives.

The Comptroller of Education, rather than the State Comptroller as under current law, will also be responsible for auditing and monitoring the process of soliciting proposals for, and the process of awarding, contracts made by boards of education that involve a significant consideration or expenditure of funds or are comprised of complex or unique components. To that end, boards of education will be required to provide post-award notice to the Comptroller of Education for any contract amount exceeding $2 million within 20 days of the award. Boards of education will be required to provide advance notice to the Comptroller of Education of the commencement of a procurement process involving $10 million or more, in order to enable the Comptroller of Education to complete a review and provide a determination as to whether the procurement process complies with applicable public contracting laws, rules, and regulations.

If the Comptroller of Education finds a board of education to have deficient practices or procedures during the performance of his duties under the bill, the Comptroller of Education will have the power to propose and enforce a corrective or remedial action plan to correct those deficiencies. If the Comptroller of Education determines that a board of education has impeded an audit or has failed or refused to cooperate in the development of a corrective or remedial action plan or to comply with a plan, the Comptroller of Education is authorized to: (1) direct the State Treasurer to withhold the expenditure of State funds that may be due to the board of education; and (2) direct the Commissioner of Education to impose a corrective or remedial action plan that may include the prior approval by the comptroller of that board’s contracts and expenditures. In addition, the Comptroller of Education will have the power to direct a board of education not to fund with local tax dollars any position that the Comptroller of Education has determined, through the course of audits, investigations, and reviews, to be unnecessary.

Under the bill, the Comptroller of Education will provide periodic reports to the Governor, and will issue an annual report to the Governor and the Legislature, concerning any programmatic deficiencies and weaknesses that the Comptroller of Education’s audits, investigations, and reviews have found, and detailing the efforts or failures of any board of education to implement a corrective or remedial action plan. The Comptroller of Education is authorized to refer findings that may constitute alleged criminal conduct to the Attorney General or other prosecutorial authority, and to refer matters for investigation to the Attorney General for further civil or administrative action.

The bill amends several provisions of current law to remove the responsibilities of the State Comptroller with respect to boards of education. Under the bill, these responsibilities will now be performed by the Comptroller of Education.