ASSEMBLY, No. 2805

STATE OF NEW JERSEY

INTRODUCED MARCH 20, 1997

By Assemblymen ROMANO and GARCIA

An Act concerning the remittance of certain debt service funds by boards of education and supplementing chapter 22 of Title 18A of the New Jersey Statutes.

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

    1. Notwithstanding the provisions of any other law to the contrary, a board of education of an Abbott district as defined under section 3 of P.L.1996, c.138 (C.18A:7F-3) that is a type I school district is authorized to remit to the governing body of the municipality comprising the school district an amount not to exceed the difference between the district's State debt service aid formula entitlement and the amount of State debt service aid actually received by the district for the budget year.

    2. This act shall take effect immediately.

STATEMENT

    This bill authorizes the board of education of any Abbott district that is a type I district to remit to the municipal governing body an amount not to exceed the difference between its State debt service aid formula entitlement and the amount of debt service aid actually received by the district.

    As proposed in the Governor's recommended budget for FY 1998, for the 1997-98 school year, each eligible school district's debt service aid entitlement is to be calculated based on the 1997-98 school year debt service obligation, including lease purchase agreements, and the 1996-97 school year State percentage share. There is also language proposed to prorate each eligible school district's debt service aid entitlement in the event that the total appropriation is not sufficient to fully fund the debt service aid program. For the 1997-98 school year, each district will receive debt service aid equal to 49.66% of its entitlement. In the 1996-97 school year, each eligible district received debt service aid equal to 58.38% of its entitlement.

    For type I school districts, the municipalities are responsible for the issuance of school bonds and making the debt service payments. Therefore, the under-funded debt service amount are included in their municipal budgets and raised by local taxation. This bill would permit school districts to pay to the municipality an amount up to the under-funded debt service aid amount.

Permits type I Abbott districts to remit certain debt service funds to municipalities.