Establishes additional procedures for financial oversight and reporting to ensure fiscal stability of school districts.

A5206

ASSEMBLY, No. 5206

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 4, 2026

Sponsored by:

Assemblywoman� ROSAURA "ROSY" BAGOLIE

District 27 (Essex and Passaic)

SYNOPSIS

���� Establishes additional procedures for financial
oversight and reporting to ensure fiscal stability of school districts.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning school district financial procedures,
amending N.J.S.18A:17-9, and supplementing N.J.S.18A:18A-1 et seq. and chapters
6, 11, and 17 of Title 18A of the New Jersey Statutes.

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

���� 1. N.J.S.18A:17-9 is amended
to read as follows:

���� 18A:17-9.�
a.
The chief
school administrator
,
or board designee other than the secretary
,

shall prepare the monthly reconciliation of bank account statements and
,

in conjunction with the secretary
,
take any steps necessary to bring the
cash record balance and reconciled bank balance into agreement prior to
completion of the secretary's monthly report.

����
b.��� The secretary�s monthly
report shall be provided to the board of education in a format to be
established by the Commissioner of Education and include:

����
(1)�� the amount of total
appropriations and the cash receipts for each account;

����
(2)�� the amount for which
warrants have been drawn against each account;

����
(3)�� the amounts of orders
or contractual obligations incurred and chargeable against each account year to
date and since the date of the last report;

����
(4)�� the cash and
appropriation balances for each account and fund;

����
(5)�� the reconciled bank
account balances;

����
(6)�� the projected
year-end surplus or deficit;

����
(7)�� identification of any
structural operating deficits;

����
(8)�� current and projected
fund balance levels;

����
(9)�� analysis of
budget-to-actual expenditures;

����
(10)� any multi-year
contractual commitments, including salary and benefit obligations;

����
(11)� the results of the
monthly reconciliation of the school district�s position control roster and
payroll and human resource staffing records required pursuant to section 2 of
P.L.��� , c.���� (C.�� ) (pending before the Legislature as this bill); and

����
(12)� financial
certifications and objections made by the school business administrator
pursuant to section 4 of P.L.��� , c.���� (C.����� ) (pending before the
Legislature as this bill).

����
c.���� The district�s school
business administrator shall certify the monthly report is accurate, financial
obligations of the district have been disclosed, and projections are based on
available data.

����
d.
The secretary shall:

����
[
a.
]

(1)
������
[
Report
]

provide
testimony
to the board, at each regular meeting, but not more often than
once each month,
[
the
amount of total appropriations and the cash receipts for each account, the
amount for which warrants have been drawn against each account, the amounts of
orders or contractual obligations incurred and chargeable against each account
year to date and since the date of his last report, the cash and appropriation
balances for each account and fund, and the reconciled bank account balances in
the manner and form prescribed by the commissioner
]

summarizing the monthly report,
clarifying the
financial conditions of the district, identifying any
fiscal concerns, and recommending corrective action, if appropriate
;

����
[
b.
]

(2)
������
[
Keep
]

keep

and maintain
[
in
his office
]

all contracts, records and documents belonging to the board
in the
secretary�s office
, except
[
such
as shall
]

those that are required to be
kept by the treasurer of school moneys
pursuant to law, under
[
such
]

any

conditions as the board shall prescribe;
and

����
[
c.
]

(3)
������
[
Perform
]

perform

any other duties prescribed by law.

(cf: P.L.2010, c.39, s.11)

���� 2. (New section)��� a.� In
addition to the monthly reconciliation of bank account statements required
pursuant to N.J.S.18A:17-9, the chief school administrator, or board designee
other than the secretary, shall perform a monthly reconciliation of the school
district�s position control roster, as maintained pursuant to regulations of
the State Board of Education, and the district�s payroll and human resources
staffing records.� The chief school administrator or board designee shall
verify that all payroll expenditures are aligned with the number of
board-approved positions and available school district budget appropriations.

���� b.��� The district�s school
business administrator shall certify to the board of education, on a monthly
basis, that:

���� (1)�� the reconciliation
required pursuant to subsection a. of this section has been completed;

���� (2)�� any discrepancies
between the position control roster and payroll and human resources records
have been identified and addressed; and

���� (3)�� payroll expenditures are
consistent with approved staffing and budget appropriations.

���� c.���� In the event that the
school business administrator determines that all discrepancies have not been
identified and addressed, the school business administrator shall document the
discrepancies in writing.� The written report on the discrepancies shall be
presented to the chief school administrator and the board of education.� If the
discrepancies are not resolved within a time period as may be established by
the Commissioner of Education, the commissioner shall require the school
district to take corrective action or the commissioner may impose additional
oversight on the district as deemed appropriate.

���� d.��� The commissioner shall
establish standardized procedures for the monthly reconciliation required
pursuant to subsection a. of this section and the reporting requirements
established pursuant to subsection c. of this section.� The procedures shall
ensure compatibility with existing school district payroll and human resources
systems and allow for the phased implementation of the requirements of this
section for school districts that require system upgrades.

���� e.���� The commissioner shall
provide school districts with any guidance and technical assistance that may be
necessary to implement the provisions of this section.

���� 3.��� (New section)� School
staff appointment recommendations made to the local board of education that
require a vote of the board pursuant to law shall include, as applicable:

���� a.� the position control
roster number of the individual being hired and the position control roster
number of the individual being replaced;

���� b.� the hired employee�s name,
position, department, school location, salary or hourly rate, and applicable
step in the appropriate salary guide;

���� c.� the account to which the
hired employee�s pay will be charged; and

���� d.� information on whether the
new hire is replacing a position, filling a vacant position, or filling a new
position.

���� 4. (New section)��� a.�������� As
used in this section, �financial commitment� means the hiring of school
district personnel, the award of salary adjustments and stipends, the approval
of collective bargaining agreements and amendments thereto, vendor contracts,
and professional services agreements, and any action resulting in a financial
obligation that extends beyond the current school budget year.

���� b.��� A board of education
shall not approve any financial commitment unless the school business
administrator certifies that:

���� (1)�� sufficient funds are
available in the current school budget year to fund the financial commitment;
and

���� (2)�� the financial commitment
is consistent with the school district�s financial plan.

���� c.���� If the school business
administrator is not able to certify the financial commitment, the school
business administrator shall issue a written objection that indicates either
that sufficient appropriations are not available in the current school budget
year to fund the commitment or the commitment may create or contribute to a
structural deficit of the school district�s budget.� The written objection
shall be presented to the chief school administrator and the board of
education.� The board shall acknowledge the receipt of the written objection in
the board minutes.

���� Any action taken by the board
of education in contravention of the written objection shall be approved by the
adoption of a board resolution that includes a statement acknowledging the
fiscal risk, and identifying how the board intends to address the fiscal
impact.

���� d.��� If a board takes action
to override the financial objection of the school business administrator, the
action shall be reported to the executive county superintendent of schools who
shall forward information on the action of the board to the Commissioner of
Education.� The commissioner shall review the action of the board and if deemed
necessary may require corrective action.

���� e.���� Information on the
financial certifications and objections made by the school business
administrator shall be included in the school district�s monthly financial
reports, and the annual audit of the school district required pursuant to
N.J.S.18A:23-1 and any other required audits.

���� f.���� The commissioner shall:

���� (1)�� develop standardized
certification and objection forms to be used by school districts;

���� (2)�� ensure that
certification and objection procedures are aligned with existing school budget
and procurement procedures and ensure timely certification without delaying
school district operations; and

���� (3)�� provide training to
school business administrators and members of boards of education on compliance
with the provisions of this section.

���� 5.��� (New section) a. The Commissioner
of Education shall, in consultation with interested stakeholders in the
education community, establish a training program on the creation and
interpretation of the monthly reports required pursuant to N.J.S.18A:17-9,
school budgeting, governmental accounting, financial commitments, and any other
fiscal responsibility requirement the commissioner deems necessary.� The
training shall be provided to school business administrators, board of
education members, and any individual serving as the secretary of a board of
education.

���� b.��� The Department of
Education may enter into an agreement with one or more private or non-profit entities
to make a training program available, free of charge, to persons subject to the
requirements of subsection a. of this section.

���� 6. (New section)��� a.� A
board of education shall adopt a policy establishing a procedure regarding the
reporting of fiscal concerns in the district.

���� b.��� The board shall have
control over the policy, except that the policy shall, at a minimum:

���� (1)�� include a definition of
fiscal concern, that at a minimum includes violations of financial policies of
internal controls; discrepancies in financial records or reporting; unrecorded
liabilities or financial obligations; actions that may result in a structural
deficit; or the misuse or misallocation of district funds;

���� (2)�� provide for the creation
of a reporting form, based on the model reporting form developed by the Commissioner
of Education pursuant to subsection c. of this section, that shall be submitted
by a school employee to the school business administrator or the chief school
administrator to initiate a review of an alleged fiscal concern. The reporting form
shall require the school employee to provide, in writing, an explanation of the
alleged violation;

���� (3)�� require the school
business administrator or chief school administrator to review the reporting
form and, within a timeframe established by the commissioner, document in
writing the results of any investigation that was conducted into the alleged
fiscal concern and whether any action was taken;

���� (4)�� permit a school employee
to submit a written complaint of the alleged fiscal concern directly to the
executive county superintendent and the commissioner if the alleged fiscal
concern was not resolved by the school business administrator or the chief school
administrator within a timeframe established by the commissioner; and

���� (5)�� safeguard confidentiality
in the reporting of the alleged fiscal concern and protect school 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.).

���� c.���� To assist boards of
education in developing a policy on the reporting of fiscal concerns in the
district, the commissioner shall develop a model policy and model complaint
form.� The model policy and model complaint form shall be updated as the
commissioner deems necessary.

���� d.��� A school district shall
provide annual training to school employees on the school district's policy on
the reporting of fiscal concerns.� A school district shall require a school
employee to certify, at the completion of the training, that the employee attended
the training and has been informed of the district�s procedures and the
employee�s reporting rights.

���� 7.��� (New section) The
Commissioner of Education shall review a school employee�s written complaint
regarding fiscal concerns in a school district submitted pursuant subsection b.
of section 6 of P.L.��� , c.���� (C.������� ) (pending before the Legislature
as this bill).� The commissioner may require corrective action of the school
district, if deemed appropriate.

���� 8.��� (New section) Notwithstanding
any other law, rule, or regulation to the contrary, the purchasing agent shall have
the authority to override any purchase, contract, or agreement approved or awarded
by the board of education if the purchasing agent determines that the purchase,
contract, or agreement was not properly awarded or approved by the board in
accordance with the "Public School Contracts Law," N.J.S.18A:18A-1 et
seq.

���� 9.��� This act shall take
effect in the first full school year following the date of enactment.

STATEMENT

���� This bill establishes
procedures to be followed by chief school administrators, school business
administrators, boards of education, and school employees in order to improve
the financial management of school districts and ensure the short- and
long-term fiscal stability of the district.

���� Under current law, the
secretary of a board of education makes a monthly report to the board that
includes information on the monthly reconciliation of district bank account
statements that has been conducted by the district�s chief school administrator.�
This bill specifies additional information to be included in the secretary�s
monthly report to provide the board with a more complete picture of the
district�s fiscal situation.� Some of the additional required information
includes:

���� (1) projected year-end surplus
or deficit;

���� (2) identification of any
structural operating deficits;

���� (3) an analysis of budget to
actual expenditures; and

���� (4) any multi-year contractual
commitments, including salary and benefit obligations.

These items and the other
information required under the bill to be included in the monthly report will
allow the board to make more informed decisions over the course of the school
year.

���� In addition to the monthly
reconciliation of bank account statements required under existing law, the bill
requires a district�s chief school administrator to perform a monthly
reconciliation of the district�s position control roster, which is currently required
to be maintained by a school district under State Board of Education
regulations, and the district�s payroll and human resources staffing records.�
The chief school administrator is required to verify that all payroll
expenditures are aligned with the number of board-approved positions, and the
results of this reconciliation will be included in the secretary�s monthly
report.� The bill requires the school business administrator to certify to the
board on a monthly basis that the reconciliation has been completed and that
any discrepancies between the position control roster and payment and human
resources records have been identified and addressed.� The bill establishes
procedures to be followed in the event that the school business administrator
finds any discrepancies between the position control roster and payroll and
human resources staffing records.

���� Additionally, the bill
requires certain information to be conveyed to a board of education when school
staff recommendations require a vote of the board pursuant to current law.

���� The bill also provides that a
board of education may not approve any financial commitment unless the school
business administrator certifies that sufficient funds are available in the
current school budget year to fund the financial commitment, and the financial
commitment is consistent with the district's financial plan.� The bill defines
a �financial commitment� as the hiring of school district personnel, the award
of salary adjustments and stipends, the approval of collective bargaining
agreements and amendments to those agreements, vendor contracts, professional
services agreements, and any action resulting in a financial obligation that
extends beyond the current school budget year.

���� The bill establishes procedures
to be followed by the school business administrator if the administrator is not
able to certify the financial commitment, and ultimately provides for reporting
to the Commissioner of Education if the board takes action in contravention to
the school business administrator�s objection to certification.

���� The bill directs each school
district to adopt a policy regarding the reporting of fiscal concerns in the
district.� At a minimum the policy is required to include a definition of
fiscal concerns as detailed in the bill.� The policy would provide for the
creation of a reporting form based on a model reporting form to be developed by
the commissioner.� A school employee will use the reporting form to provide, in
writing, an explanation of the alleged violation.� The report will be reviewed
by the school business administrator or chief school administrator who will
document in writing the results of the investigation and any action taken.� The
bill permits a school employee to submit a written complaint of the alleged
fiscal concern directly to the executive county superintendent of schools and
the commissioner if the alleged concern was not resolved within a timeframe
established by the commissioner.� The bill requires the policy to safeguard
confidentiality and protect school employees from retaliation in accordance
with the provisions of the �Conscientious Employee Protection Act.�

���� Finally, this bill grants the
purchasing agent the authority to override any purchase, contract, or agreement
approved or awarded by the board of education if the purchasing agent
determines that the purchase, contract, or agreement was not properly awarded
or approved by the board in accordance with the "Public School Contracts
Law."