Authorizes establishment of charter school payment reserve account in school districts.

S3249

SENATE, No. 3249

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 2, 2026

Sponsored by:

Senator� SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

Co-Sponsored by:

Senator Burgess

SYNOPSIS

���� Authorizes establishment of charter school payment
reserve account in school districts.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
authorizing the establishment of a charter school
payment reserve account in school districts and amending P.L.2007, c.62.

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

���� 1.��� Section 6 of P.L.2007,
c.62 (C.18A:7F-41) is amended to read as follows:

���� 6.��� Notwithstanding the
provisions of any law or regulation to the contrary:

���� a.���� A board of education or
board of school estimate, as appropriate, may supplement a capital reserve
account through a transfer by board resolution at year end of any unanticipated
revenue or unexpended line-item appropriation amounts, or both, for withdrawal
in subsequent school years.

���� b.��� A board of education or
board of school estimate, as appropriate, may supplement a maintenance reserve
account through a transfer by board resolution at year end of any unanticipated
revenue or unexpended line-item appropriation amounts, or both, for withdrawal
in subsequent school years.�

���� c.���� A board of education or
a board of school estimate, as appropriate, may through the adoption of a board
resolution establish the following reserve accounts:

���� (1)�� Current expense
emergency reserve account.� The funds in the reserve shall be used to finance
unanticipated general fund current expense costs required for a thorough and
efficient education, or to finance school security improvements, including
improvements to school facilities.� The account shall not exceed $250,000 or
one percent of the district's general fund budget up to a maximum of
$1,000,000, whichever is greater.� A board of education may appropriate funds
to establish or supplement the reserve in the district's annual budget or
through a transfer by board resolution at year end of any unanticipated revenue
and unexpended line-item appropriation amounts. Withdrawals from the reserve
may be made at any time and shall require the approval of the commissioner
unless the withdrawal is necessary to meet an increase in total health care
costs in excess of four percent, or the withdrawal is included in the original
budget certified for taxes to finance school security improvements, including
improvements to school facilities.

���� As used in this paragraph,
"school security improvements" means school security improvements,
including improvements to school facilities, which are limited to safety and
security measures involving building monitoring and communication technology
designed to address school crime and the safety of students, staff, and
visitors to school facilities. School security improvements may include, but
need not be limited to: security cameras to monitor the school; an electronic
notification system that automatically notifies parents in case of a
school-wide emergency; an automatic door locking system for access control; and
a badge system for school employees.

���� (2)�� Debt service reserve
account in the debt service fund for proceeds from the sale of district
property.� The funds in the reserve shall be used to retire outstanding debt
service obligations of the district. The reserve shall be liquidated within the
lesser of five years from its inception or the remaining term on the
obligations. Any remaining balance shall be used for tax relief.

���� (3)�� Federal impact aid
reserve account in the case of a school district that receives federal impact
aid pursuant to section 8002, 8003, 8007, or 8008 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C. s.7702, 7703, 7707, or 7708).� A
board of education may appropriate federal impact aid funds to establish or
supplement the reserve account in the district's annual budget, or through a
transfer by a two-thirds affirmative vote of the authorized membership of the
board between June 1 and June 30, for withdrawal in any subsequent school
year.� Any transfer to the reserve account shall not exceed the total amount of
federal impact aid received in the fiscal year.� The board, at its discretion,
may use the funds in the reserve account to finance the district's general fund
or to finance school facilities projects, in a manner consistent with federal
law.� The total amount of funds on deposit in the reserve account shall not be
limited.

����
(4)�� Charter school
payment reserve account.� In the case of a school district that has received
authorization to budget an amount for charter school payments for the school
year that is less than the projected payment determined by the department, the
funds in the reserve account shall be used to finance any increase in payments
due to charter schools between the projected payment determined by the
department and the revised payment based on the charter schools� average daily
enrollment as of October 15 of the school year.� A board of education may
appropriate funds to establish or supplement the reserve account in the
district�s annual budget or through a transfer by board resolution at year end
of any unanticipated revenue and unexpended line-item appropriation amounts.

���� d.��� (1)�� All reserve
accounts shall be established and held in accordance with GAAP and shall be
subject to annual audit. Any capital gains or interest earned shall become part
of the reserve account
; except that in the case of a charter school payment
reserve account, a school district may annually or more frequently, by the
adoption of a resolution by the board of education, transfer any interest
earned on the investments in the account to the general fund
. A separate
bank account is not required, however, a separate identity for each reserve
account shall be maintained.

���� (2)�� A board of education
that establishes a federal impact aid reserve account shall:

���� (a)�� report the amount of
federal impact aid received, expended, and on deposit in the federal impact aid
reserve account in its annual audit pursuant to N.J.S.18A:23-1, and in the
budget made available in a "user-friendly" format using plain language
pursuant to N.J.S.18A:22-8;

���� (b)�� report the amount of
federal impact aid received, expended, and on deposit in the federal impact aid
reserve account at each board of education meeting, and shall include the
information in the board secretary's monthly report in a format to be determined
by the commissioner; and

���� (c)�� provide any additional
supporting documentation that may be required by the commissioner pursuant to
subsection c. of section 5 of P.L.1996, c.138 (C.18A:7F-5).

(cf: P.L.2016, c.100, s.1)

���� 2.��� This act shall take
effect immediately.

STATEMENT

���� This bill grants school
districts the authority to establish a charter school payment reserve account. �Under
current law, a school district is required to make payments to charter schools
for each resident student who enrolls in the charter school.� The total payment
is initially determined by the Department of Education based on the projected
charter school enrollment prior to the beginning of the school. The payments
due to charter schools are subsequently adjusted based on charter schools�
actual enrollment as of October 15.

���� When developing its budget for
the upcoming school year, a school district may receive authorization from the
department to budget an amount for charter school payments that is less than
the projected total payment determined by the department.� Under this bill, a
district in this circumstance would be allowed to use funds on deposit in the
charter school payment reserve account to make payments to charter schools if
the revised payment based on the October 15 enrollment is greater than the
amount that the district budgeted.� Similar to the tuition reserve currently
authorized by State Board of Education regulations, a school district board of
education would be allowed to transfer interest earned on investments in the
reserve account to the district�s general fund.