A bill sponsored by Assemblymen Bob Andrzejczak and Troy Singleton to help provide greater financial stability for school districts located on military bases or other operations controlled by the federal government has been signed into law.
“This will help provide school districts near military bases, in particular, with the stability they need to continue operating without overburdening taxpayers should they be impacted by any decisions at the federal level, like base closures, realignments or cutbacks,” said Andrzejczak (D-Cape May/Atlantic/Cumberland).
The new law (A-1286) 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 activities increase 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.
“School districts on military bases, in particular, are at the mercy of decisions far beyond local control,” said Singleton (D-Burlington). “The uncertainty this creates can be tempered by the careful type of long-term budget planning authorized under this law, which will certainly help districts like that at the Fort Dix-McGuire base.”
Under the law, 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 law 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 law also specifies, consistent with 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.
The measure was approved unanimously by both houses of the legislature before being signed into law on Thursday.