Expands duties of executive county business official; establishes processes for fiscal review of school districts by executive county superintendent and Commissioner of Education.

A5207

ASSEMBLY, No. 5207

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED JUNE 4, 2026

Sponsored by:

Assemblywoman� ROSAURA "ROSY" BAGOLIE

District 27 (Essex and Passaic)

SYNOPSIS

���� Expands duties of executive county business official;
establishes processes for fiscal review of school districts by executive county
superintendent and Commissioner of Education.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning school district fiscal procedures, amending
P.L.2007, c.63, and supplementing Title 18A of the New Jersey Statutes.

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

���� 1.��� Section 53 of P.L.2007,
c.63 (C.18A:7-11) is amended to read as follows:

���� 53.�
a.
� The
commissioner shall appoint
, for each county based on the number of
municipalities in the county,

[
an
]
executive
county business
[
official
]

officials

to serve in the office of the executive county superintendent of schools for a
term of three years.
An executive county business official appointed
pursuant to this section shall not serve more than 50 municipalities. An
executive county business official appointed shall hold an appropriate
certificate issued by the State Board of Examiners and have experience in
school finance, budget planning, and governmental accounting.

����
b.
��� The executive
county business official shall
:

����
(1)
�� assist the
executive county superintendent in the performance of the superintendent's
fiscal

duties pursuant to N.J.S.18A:7-8
[
,
]
and
the
school district�s fiscal management pursuant to section 10 of P.L.1975, c.212
(C.18A:7A-10);

����
(2)�� conduct fiscal
reviews on a rolling basis pursuant to section 2 of P.L.��� , c.���� (C.�������
) (pending before the Legislature as this bill);

����
(3)�� report any
significant
fiscal concerns within the fiscal reviews conducted pursuant to section 2 of
P.L.��� , c.���� (C.������� ) (pending before the Legislature as this bill) to
the executive county superintendent and the commissioner;

����
(4)�� assist the

executive county superintendent in monitoring the implementation of corrective
action plans pursuant to section 3 of P.L.��� , c.���� (C.������� ) (pending
before the Legislature as this bill);

����
(5)�� provide support and
technical assistance to school business administrators;

����
(6)�� identify school
district fiscal and budgeting risks and recommend early intervention
strategies;

����
(7)�� coordinate with
districts on Statewide fiscal monitoring requirements and data collection;

����
(8)�� oversee school
districts� implementation of budgeting, auditing, and fiscal procedures within
Title 18A of the New Jersey Statutes and regulations promulgated by the State
Board of Education; and

����
(9)
�� perform
[
such
]

any
other

fiscal
duties as determined by the commissioner.�

����
c.
���� Based on
criteria developed by the commissioner, the executive county business official
shall be subject to a performance assessment at least once during the
three-year term.� The business official may be re-appointed on the basis of a
satisfactory performance assessment.

(cf: P.L.2007, c.63, s.53)

���� 2.��� (New section) a.� The
executive county business official appointed pursuant to section 53 of
P.L.2007, c.63 (C.18A:7-11) shall conduct fiscal reviews of each school
district under its purview on a rolling basis on a timeline established by the
executive county superintendent. Each quarterly fiscal review shall include,
but not be limited to:

���� (1) an analysis of
budget-to-actual expenditures;

���� (2) a review of salary and
benefit expenditures for all school employees;

���� (3) the verification of
payroll and position control systems;

���� (4) a review of accounts
payable and outstanding liabilities;

���� (5) an assessment of cash flow
and fund balance status; and

���� (6) the identification of any
structural deficits or emerging fiscal risks.

���� b.� A school district shall
provide the executive county business official with any information necessary
to conduct each quarterly fiscal review.

���� c.� The executive county
business official shall submit a copy of each fiscal review to the board of
education of the school district, the superintendent of schools, the executive
county superintendent, and the Commissioner of Education.� The report shall
include a summary of the executive county business official�s findings, an
analysis of any areas of fiscal concern, and recommendations for corrective
action.

���� d.� In a year in which a
school district is required to undergo a comprehensive review under the New
Jersey Quality Single Accountability Continuum pursuant to section 11 of
P.L.1975, c.212 (C.18A:7A-11), the executive county business official shall not
conduct any fiscal review of the district.

���� e.�� The executive county
superintendent may hire any additional staff as may be necessary to assist the
executive county business official in effectuating the provisions of this
section at the expense of the State.

���� 3.��� (New section) a.� If the
executive county business official identifies significant fiscal concerns in
two consecutive reviews conducted pursuant to section 2 of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill), the executive county
business official shall notify the executive county superintendent and the
Commissioner of Education.

���� b.� The executive county
superintendent shall notify any district that was referred by the executive
county business official for significant fiscal concerns in two consecutive
reviews.� The school district shall then submit a corrective action plan to the
executive county superintendent. The corrective action plan shall be submitted
within a timeframe established by the executive county superintendent. The
corrective action plan shall include timelines for corrective action and
responsibilities of the school district for implementation of the plan.

���� c.� The executive county
superintendent shall, in coordination with the executive county business
official, monitor the district�s implementation of the plan. If a district
fails to implement the corrective action plan, as determined by the executive
county superintendent, the executive county superintendent may refer the school
district to the commissioner for further remedial actions, which may include
additional monitoring and intervention.

���� d.� The commissioner shall
have the authority to take any action necessary to correct continuous fiscal
concerns in a district that fails to implement the corrective action plan.

���� 4.��� (New section) a.� The
Commissioner of Education shall develop and administer a Comprehensive
Statewide Fiscal Early Warning System.� The system shall utilize fiscal
information reported by school districts throughout the fiscal year to enable
timely and structured intervention of districts that are at risk of financial
distress.

���� b.� The system shall monitor
fiscal risk indicators in each school district throughout the fiscal year. The
fiscal risk indicators shall include, but not be limited to:

���� (1) declining or insufficient
fund balance levels;

���� (2) repeated or unresolved
audit findings;

���� (3) increasing accounts
payable or delayed vendor payments;

���� (4) a misalignment between
budgeted and actual expenditures;

���� (5) reliance on one-time or
non-recurring revenues to support operations;

���� (6) structural operating
deficits; and

���� (7) inconsistencies in payroll
and position control reporting.

���� c.� To monitor a school
district�s fiscal risk indicators, the commissioner shall utilize school
district audits conducted pursuant to N.J.S.18A:23-1, comprehensive reviews
conducted under the New Jersey Quality Single Accountability Continuum pursuant
to section 11 of P.L.1975, c.212 (C.18A:7A-11), quarterly fiscal reviews
conducted by the executive county business official pursuant to section 2 of
P.L.��� , c.��� (C.������ ) (pending before the Legislature at this bill), and
any additional information the commissioner deems necessary from a school
district.

���� 5.��� (New section) a.� The
Comprehensive Statewide Fiscal Early Warning System established pursuant to
section 4 of P.L. , c. (C. ) (pending
before the Legislature as this bill) shall establish a fiscal categorization
system whereby each school district is annually categorized as being at low,
moderate, or high fiscal risk pursuant to fiscal standards developed by the
Commissioner of Education.

���� b.� The commissioner shall
provide notice to the school district and the executive county superintendent
when any district is categorized as being at moderate or high fiscal risk.

���� c.� If a district is
categorized as being at moderate or high fiscal risk, the commissioner shall
require the district to develop an improvement plan to address the fiscal
concerns identified by the commissioner. The improvement plan shall be
submitted to and approved by the commissioner.� In accordance with the
improvement plan, the commissioner shall provide technical assistance to the
district.� If necessary, the commissioner may authorize an in-depth evaluation
of the district to determine the causes for the district's fiscal concerns.

���� d.� The commissioner shall
review the district's progress in implementing the improvement plan not less
than once every six months.� If the commissioner finds, based on those reviews,
that after two years the district�s fiscal condition has not substantially
improved in accordance with regulations established by the commissioner
pursuant to section 6 of P.L.�� , c.��� (C.������� ) (pending before the
Legislature as this bill), the commissioner may require the district to amend
the improvement plan. The amended plan shall be submitted to the commissioner
for approval. If after six months the district fails to take remedial action
and address the fiscal concerns addressed in the amended plan, the commissioner
shall issue the district a letter detailing the areas in which the district
remains deficient.

���� e.� All improvement plans
developed pursuant to this section shall be in coordination with any corrective
action plans developed pursuant to section 3 of P.L.��� , c.��� (C.������ )
(pending before the Legislature as this bill). The executive county superintendent
and the commissioner shall make a concerted effort to coordinate the remedial
actions required of districts facing fiscal concerns.

���� f.� The Department of
Education shall provide training to each school district on the Comprehensive
Statewide Fiscal Early Warning System.

���� g.� The department may hire
any additional staff as may be necessary to develop and administer the
Comprehensive Statewide Fiscal Early Warning System established pursuant to
section 4 of P.L.��� , c.��� (C.������ ) (pending before the Legislature as
this bill).

���� 6.��� a.�������� The
Commissioner of Education
shall promulgate rules and
regulations pursuant to the �Administrative Procedure Act,� P.L.1968, c.410
(C.52:14B-1 et seq.) necessary to effectuate the provisions of sections 4 and 5
of P.L.��� , c.��� (C.����� ) (pending before the Legislature as this bill).

���� b.��� The
rules and regulations promulgated by the commissioner may:

���� (1)�

authorize the Department of Education to develop data systems necessary
to support real-time fiscal monitoring of school districts; and

���� (2)� allow for a phased
implementation of the Comprehensive Statewide Fiscal Early Warning System.

���� 7.��� This act shall take
effect immediately except that the Commissioner of Education may take any
anticipatory administrative action in advance as necessary for the
implementation of this act
.

STATEMENT

���� This bill expands the duties
of the executive county business official and establishes processes for the
fiscal review of school districts by the executive county superintendent and
the Commissioner of Education.

���� Under current law, the
commissioner is required to appoint an executive county business official to
serve in the office of the executive county superintendent of schools for a
term of three years. This bill permits a county to hire multiple executive
county business officials based on the number of municipalities the county
serves. This bill clarifies that any individual appointed for this position is
required to hold an appropriate certificate issued by the State Board of
Examiners and have experience in school finance, budget planning, and
governmental accounting.� The bill also expands the duties of the executive
county business official to require, among other duties, more substantial
oversight of the fiscal conditions of the schools in the county.

���� The bill requires the
executive county business official to, on a rolling basis, conduct fiscal
reviews of each school district under its purview on a timeline established by
the executive county superintendent.� The bill provides the information that is
to be included in each fiscal review. A copy of each fiscal review will be submitted
to the board of education of the school district, the superintendent of
schools, the executive county superintendent, and the commissioner. The report
will include a summary of the executive county business official�s findings, an
analysis of any areas of fiscal concern, and recommendations for corrective
action.

���� The bill requires the
establishment of corrective action plans for certain school districts whose
fiscal reviews identify significant fiscal concerns in two consecutive reviews.
The bill establishes a process to notify the executive county superintendent,
commissioner, and the school district. The school district is then required to
submit a corrective action plan and be monitored by the executive county
superintendent and executive county business official.� The bill details a
process to impose certain remedial actions if a school district fails to
implement the corrective action plan. The bill stipulates that the commissioner
has the authority to take any action necessary to correct continuous fiscal
concerns in a district which fails to implement the corrective action plan.

���� The bill also requires the
commissioner to develop and administer a Comprehensive Statewide Fiscal Early
Warning System. The system will monitor financial risk indicators, as
established in the bill, utilizing� information reported by school districts throughout
the fiscal year to enable timely and structured intervention of districts that
are at risk of financial distress.

���� Under the bill, the
Comprehensive Statewide Fiscal Early Warning System will establish a fiscal
categorization system where each district is annually categorized as low,
moderate, or high fiscal risk pursuant to fiscal standards developed by the
commissioner. The commissioner will provide notice to the school district and
the executive county superintendent when any district is categorized as
moderate or high fiscal risk. The bill requires a district categorized as a
moderate or high fiscal risk to develop an improvement plan to address any
fiscal concerns identified by the commissioner.�

���� The bill establishes a
procedure to create an improvement plan and requires the commissioner to review
the district�s progress in implementing the improvement plan not less than
every six months.� The bill grants the commissioner authority to require a school
district to amend the improvement plan if the district�s financial condition
has not substantially improved. If, after six months the district fails to take
remediate action and address the fiscal concerns addressed in the amended plan,
the commissioner will issue the district a letter detailing the areas in which
the district remains deficient.�

���� The bill stipulates that all
improvement plans developed under the Comprehensive Statewide Fiscal Early
Warning System are to be developed in coordination with any corrective action
plans developed by the executive county superintendent pursuant to the provisions
of the bill. The bill also requires the Department of Education to provide
training to each school district on the Comprehensive Statewide Fiscal Early
Warning System.

���� The bill permits the executive
county superintendent and the department to hire additional staff to effectuate
the provisions of this bill at the expense of the State.