SENATE EDUCATION COMMITTEE

STATEMENT TO

SENATE, No. 2439

STATE OF NEW JERSEY

DATED:  NOVEMBER 13, 2014

      The Senate Education Committee favorably reports Senate Bill No. 2439.

      This bill authorizes a school district that receives federal impact aid to establish a federal impact aid reserve account.  Federal impact aid is awarded to school districts in which federal ownership of property reduces the ability to levy property taxes for educational purposes, or when certain federal activity increases a community’s population, resulting in an increase in the number of school-aged children.  School districts in which military bases or federal public housing are located are likely to receive federal impact aid.

      Under the bill, the board of education may appropriate federal impact aid funds to the reserve account in the district’s annual budget, or through a transfer approved by two-thirds of the authorized membership of the board of education between June 1 and June 30, for withdrawal in any subsequent school year.  Any transfer to the reserve account may not exceed the amount of federal impact aid received in that fiscal year.  The board may use the funds in the reserve account to finance the district’s general fund budget or school facilities projects, in a manner consistent with federal law.  There is no limit on the amount of funds that may be on deposit in the reserve account.  The bill also stipulates that a school district that establishes a reserve account would be required to report the amount received, expended, and on deposit in the reserve account in its annual audit, in the required “user-friendly” budgets, at each board of education meeting, and in the board secretary’s monthly report.  The district would also be required to provide any supporting documentation required by the commissioner when the district submits its budget to the department for approval.

      The bill also specifies, consistent with current federal law, that the Commissioner of Education may not award less State school aid to a school district based on the fact that the district receives federal impact aid.  Additionally, the funds may not be considered when calculating the district’s undesignated general fund balance.

      As reported by the committee, this bill is identical to Assembly Bill No. 1286 (1R), which also was reported by the committee on this same date.