STATE OF NEW JERSEY
222nd LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblyman ALEX SAUICKIE
District 12 (Burlington, Middlesex, Monmouth and Ocean)
SYNOPSIS
Authorizes forgiveness of portion of certain funds owed to State by school districts.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning forgiveness of certain borrowed funds by school districts and supplementing chapter 7A of Title 18A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. For any public school district that has, since the enactment of P.L.2018, c.67 (C.18A:7F-67 et al.), borrowed funds from the State for the purpose of supplementing its general fund budget, the Commissioner of Education and the State Treasurer, as appropriate, shall forgive up to $10,000,000 of the outstanding balance owed to the State as of the date of enactment of this act. In the case of a school district that has applied to the commissioner to borrow funds prior to the date of enactment of this act, the commissioner and the treasurer shall, upon approval of the application, issue the amount in full to the school district and forgive up to $10,000,000 of the borrowed funds.
b. For purposes of this section, “borrowed funds” shall include loans from the State that were provided to a school district for the purpose of supplementing its general fund budget and advanced State aid payments provided to a district pursuant to section 3 of P.L.2006, c.15 (C.18A:7A-56), and any interest on these funds or fees associated with the funds.
2. This act shall take effect immediately.
STATEMENT
This bill requires the State to forgive up to $10 million in funds owed to the State for eligible school districts. Any public school district that has an outstanding balance in loans from the State or advances in State school aid would be eligible for forgiveness. In the case of a school district that has applied to borrow funds prior to the date of enactment, the Commissioner of Education and the State Treasurer, as appropriate, are to issue the amount in full upon approval of the application and forgive up to $10 million of the borrowed funds.
Certain school districts have been forced into financial hardship due to state aid cuts through the implementation of P.L.2018, c.67, the law known as S2. One school district represented by the sponsor has applied to the Department of Education for a loan, known as an advance of state aid, and the sponsor is aware of at least one other school district that has outstanding debt to the department. Still others have considered applying for such loans.
The district represented by the sponsor has had state aid reduced by more than $22 million during implementation of S2. That district was forced to cut over 200 employees and to eliminate advanced placement courses, sports teams and more. For the 2024-2025 school year, the district faces a $25 million shortfall that cannot be effectively addressed by any reasonable program cuts, property tax increases, or combination thereof. Even raising the property tax levy to the maximum amount permitted under P.L.2024, c.13 would not close the gap.
As a condition of the district's application, the Commissioner of Education appointed a state fiscal monitor to the district. After reviewing the district’s finances, the monitor stated that the district does not have a spending problem, but rather a revenue problem. The sponsor, among many other observers, finds it clear that the greatest source of this revenue problem is the enormous reduction of state aid over the years.
As the need for this borrowing has arisen due to the state’s actions, the sponsor believes it is appropriate that the state forgive any such debt while the Legislature works on a permanent solution to the school funding issue.