Chapter 23A, Fiscal Accountablility, Efficiency and Budgeting Procedures

N.J.A.C. 6A:23A, Fiscal Accountability, Efficiency, and Budgeting Procedures

Table of Contents

Subchapter 1. Purpose, Scope, and Definitions

6A:23A-1.1 Purpose and scope

6A:23A-1.2 Definitions

Subchapter 2. Executive County Superintendents of Schools

6A:23A-2.1 General powers and duties of executive county superintendent

6A:23A-2.2 School district regionalization and consolidation of services advisory committee

6A:23A-2.3 Consolidation and sharing of services; joint and cooperative purchasing

6A:23A-2.4 Elimination of school districts that are not operating schools

6A:23A-2.5 Plan for school district consolidation to create regional school districts

6A:23A-2.6 Transportation efficiency study

6A:23A-2.7 Shared special education services

Subchapter 3. Administrator and District Board of Education Member Accountability

6A:23A-3.1 Review of employment contracts for superintendents, assistant superintendents, and

school business administrators

6A:23A-3.2 Required actions relative to early termination of superintendent

6A:23A-3.3 Certification review under certain conditions

6A:23A-3.4 Noncompliance with GAAP, review of certification of a SBA

Subchapter 4. School District Fiscal Accountability

6A:23A-4.1 Additional powers of Commissioner to achieve fiscal accountability

6A:23A-4.2 Compliance with requirements for income tax

6A:23A-4.3 Annual audit to assure income tax reporting compliance

6A:23A-4.4 Repeat annual audit recommendations; action required

Subchapter 5. Additional Measures to Ensure Effective and Efficient Expenditures of District Funds

6A:23A-5.1 Order to show cause to withhold or recover State aid due to excessive, unreasonable,

ineffective, or inefficient expenditures

6A:23A-5.2 Public relations and professional services; district board of education policies; efficiency

6A:23A-5.3 Failure to maximize Special Education Medicaid Initiative (SEMI)

6A:23A-5.4 Violation of public school contracts law

6A:23A-5.5 Expenditure and internal control auditing

6A:23A-5.6 School district response to Office of Fiscal Accountability and Compliance (OFAC)

investigation report

6A:23A-5.7 Verification of payroll check distribution

6A:23A-5.8 District board of education expenditures for non-employee activities, meals, and refreshments

6A:23A-5.9 Out-of-State and high-cost travel events

Subchapter 6. Conditions for The Receipt of State Aid

6A:23A-6.1 Conditions precedent to disbursement of State aid

6A:23A-6.2 Nepotism policy

6A:23A-6.3 Contributions to district board of education members and contract awards

6A:23A-6.4 Internal controls

6A:23A-6.5 Segregation of duties; organization structure

6A:23A-6.6 Standard operating procedures for business functions

6A:23A-6.7 Financial and human resource management systems; access controls

6A:23A-6.8 Personnel tracking and accounting

6A:23A-6.9 Facilities maintenance and repair scheduling and accounting

6A:23A-6.10 Approval of amounts paid in excess of approved purchase orders; district board of

education policy

6A:23A-6.11 Vehicle tracking, maintenance, and accounting

6A:23A-6.12 District board of education vehicle assignment and use policy

6A:23A-6.13 District board of education travel policy

Subchapter 7. School District Travel Policies and Procedures

6A:23A-7.1 School district travel expenditures

6A:23A-7.2 District board of education policy for travel expenditures

6A:23A-7.3 Maximum travel budget

6A:23A-7.4 Travel approval procedures

6A:23A-7.5 Required documentation for travel

6A:23A-7.6 SBA responsibilities regarding accounting for travel

6A:23A-7.7 Sanctions for violations of travel requirements

6A:23A-7.8 Prohibited travel reimbursements

6A:23A-7.9 Travel methods

6A:23A-7.10 Routing of travel

6A:23A-7.11 Subsistence allowance – overnight travel

6A:23A-7.12 Meal allowance – special conditions – and allowable incidental travel expenditures

6A:23A-7.13 Records and supporting documents

Subchapter 8. Annual Budget Development and Submission

6A:23A-8.1 Budget submission; supporting documentation; website publication

6A:23A-8.2 Public notice and inspection

6A:23A-8.3 Administrative cost limits

6A:23A-8.4 Capital outlay budget

6A:23A-8.5 Designation of general fund balances

6A:23A-8.6 Appropriation of unreserved debt service fund balance; exception

Subchapter 9. Executive County Superintendent Budget Review Procedures

6A:23A-9.1 Executive county superintendent budget review

6A:23A-9.2 Executive county superintendent budget review and approval; administrative and

non-instructional expenses

6A:23A-9.3 Efficiency standards for review of administrative and non-instructional expenditures

and efficient business practices

6A:23A-9.4 Commissioner’s authority to direct expenditures to achieve T&E

6A:23A-9.5 Commissioner to ensure achievement of the New Jersey Student Learning

Standards; corrective actions

6A:23A-9.6 Appeal of executive county superintendent budget reductions

6A:23A-9.7 Procedures following voter defeat of proposed budget; municipal governing body or

board of school estimate action

6A:23A-9.8 Municipal governing body failure to certify or agree; Commissioner sets tax levy

6A:23A-9.9 Application for Commissioner restoration of budget reductions

6A:23A-9.10 Executive county superintendent ongoing budget review

6A:23A-9.11 Year-end financial procedures for executive county superintendent and State monitor

Subchapter 10. Unused Tax Authority (Banked Cap)

6A:23A-10.1 Unused spending authority (banked cap)

Subchapter 11. Tax Levy Growth Limitation

6A:23A-11.1 Adjusted tax levy growth limitation

6A:23A-11.2 Adjustment for increases in enrollments

6A:23A-11.3 Adjustment for an increase in health care costs

Subchapter 12. Tax Levy Growth Limitation; Separate Voter Approval

6A:23A-12.1 Voter authorization to exceed tax levy limitation; separate proposal(s)

Subchapter 13. Budget Transfers and Deficits

6A:23A-13.1 Commissioner adjusted tax levies; Commissioner budget reallocations and directives;

and transfers

6A:23A-13.2 Executive county superintendent reduction of administrative and non-instructional

expenses; transfers prohibited

6A:23A-13.3 Transfers during the budget year

Subchapter 14. Reserve Accounts

6A:23A-14.1 Capital reserve

6A:23A-14.2 Maintenance reserve

6A:23A-14.3 Supplementation of capital reserve and maintenance reserve accounts

6A:23A-14.4 Establishment of other reserve accounts

6A:23A-14.5 Reserve accounts recorded in accordance with GAAP; audit

Subchapter 15. State Aid Calculations and Aid Adjustments for Charter Schools

6A:23A-15.1 Definitions

6A:23A-15.2 Per pupil calculations, notification, and caps

6A:23A-15.3 Enrollment counts, payment process, and aid adjustments

6A:23A-15.4 Procedures for private school placements by charter schools

Subchapter 16. Double-Entry Bookkeeping and GAAP Accounting

6A:23A-16.1 Prescribed system of double-entry bookkeeping and GAAP accounting

6A:23A-16.2 Principles and directives for accounting and reporting

6A:23A-16.3 Conflicts between legal provisions and GAAP

6A:23A-16.4 Minimum bond requirements for treasurer of school moneys

6A:23A-16.5 Supplies and equipment

6A:23A-16.6 Mechanical bookkeeping systems

6A:23A-16.7 Employee organizational dues

6A:23A-16.8 Petty cash fund

6A:23A-16.9 Summer payment plan

6A:23A-16.10 Budgetary controls and overexpenditure of funds

6A:23A-16.11 Internal service funds

6A:23A-16.12 Student activity funds

6A:23A-16.13 School store business practices

6A:23A-16.14 Dismissal or reassignment of a school business administrator

6A:23A-16.15 Appeals

Subchapter 17. Tuition Public Schools

6A:23A-17.1 Method of determining tuition rates for regular public schools

6A:23A-17.2 Method of determining tuition rate in a new district board of education

6A:23A-17.3 County vocational school districts funding; public school district tuition payments,

post-secondary vocational-technical education fund sources

6A:23A-17.4 Method of determining tuition rates for county vocational schools

6A:23A-17.5 County special services school districts funding; budget limitations; tuition payments

6A:23A-17.6 Calculation of maximum general fund budget net of county contribution and

maximum average tuition rate

6A:23A-17.7 Method of determining tuition rates for county special services schools

Subchapter 18. Tuition for Private Schools for Students with Disabilities

6A:23A-18.1 Scope and purpose

6A:23A-18.2 Definitions

6A:23A-18.3 Tuition rate procedures

6A:23A-18.4 New approved private schools for students with disabilities and enrollment requirements

6A:23A-18.5 Bookkeeping and accounting

6A:23A-18.6 Non-allowable costs

6A:23A-18.7 Surcharge

6A:23A-18.8 Public school placement restricted working capital fund

6A:23A-18.9 Calculation of student attendance

6A:23A-18.10 Audit requirements

6A:23A-18.11 Appeals

6A:23A-18.12 Roundtable work group

6A:23A-18.13 Out-of-State or New Jersey Department of Human Services approved private

schools for students with disabilities

6A:23A-18.14 Inspection of records

6A:23A-18.15 Fiscal monitoring of approved private schools for students with disabilities and

corrective action plans

6A:23A-18.16 Fiscal and budget information

6A:23A-18.17 Failure to comply with Department directives

6A:23A-18.18 Sale of assets of an approved private school for students with disabilities

6A:23A-18.19 Annual disclosure statement

6A:23A-18.20 Nepotism

6A:23A-18.21 Travel

6A:23A-18.22 Behavior modification

6A:23A-18.23 Child nutrition

Subchapter 19. Emergency State Aid and Residency Determination

6A:23A-19.1 Emergency aid

6A:23A-19.2 Method of determining the district of residence

6A:23A-19.3 Address submission for determining the district of residence

Subchapter 20. Purchase and Loan of Textbooks

6A:23A-20.1 Eligibility

6A:23A-20.2 Responsibility of the district board of education

6A:23A-20.3 Individual requests

6A:23A-20.4 Ownership and storage of textbooks

6A:23A-20.5 Accounting entries

6A:23A-20.6 Charge for textbook loss or damage

Subchapter 21. Management of Public School Contracts

6A:23A-21.1 Change orders and open-end contracts

6A:23A-21.2 Acceptance of bonds under the Public School Contracts Law

6A:23A-21.3 Public sale of bonds

6A:23A-21.4 Contracts for behind-the-wheel driver education

6A:23A-21.5 Joint purchasing systems

6A:23A-21.6 Multi-year leasing

Subchapter 22. Financial Operations of Charter Schools

6A:23A-22.1 Definitions

6A:23A-22.2 Bookkeeping and accounting for charter schools

6A:23A-22.3 Certification

6A:23A-22.4 Financial requirements

6A:23A-22.5 Public school contract law

6A:23A-22.6 Public relations and professional services; board policies; efficiency

6A:23A-22.7 Charter school response to Office of Fiscal Accountability and Compliance (OFAC)

investigation report

6A:23A-22.8 Verification of payroll check distribution

6A:23A-22.9 Board of trustees expenditures for non-employee activities, meals and refreshments

6A:23A-22.10 Nepotism policy

6A:23A-22.11 Contributions to board members and contract awards

6A:23A-22.12 Internal controls

6A:23A-22.13 Segregation of duties; organization structure

6A:23A-22.14 Standard operating procedures (SOPs) for business functions

6A:23A-22.15 Approval of amounts paid in excess of approved purchase orders; board policy

Chapter 23A, Fiscal Accountability, Efficiency, and Budgeting Procedures

Subchapter 1. Purpose, Scope, and Definitions

6A:23A-1.1 Purpose and scope

(a) The purpose of this chapter is to assure the financial accountability of district boards of

education through enhanced State monitoring, oversight, and authority, and to ensure

each district board of education adopts an annual budget that provides adequate resources

to meet the State Constitution’s mandate for a thorough and efficient system of free

public schools for all children. This chapter sets forth the roles of the Commissioner of

Education and the executive county superintendent in overseeing district board of

education budgeting and expenditures. The chapter also establishes mechanisms to

ensure the efficient expenditure of budgeted funds in a manner consistent with a school

district’s approved annual budget.

(b) Pursuant to this chapter, the Commissioner delegates to the executive county

superintendent powers, tasks, and duties that further support efficiency of school district

operation pursuant to N.J.S.A. 18A:7F-43 et seq., and that complement the powers, tasks,

and duties set forth in N.J.S.A. 18A:7-1 et seq.

1. The rules effectuate the provisions of P.L. 2006, c. 15; P.L. 2007, c. 53; P.L.

2007, c. 62; P.L. 2007, c. 260; P.L. 2007, c. 63; P.L. 2008, c. 36; P.L. 2008, c. 37;

P.L. 2009, c. 19; P.L. 2010, c. 39; P.L. 2010, c. 44; P.L. 2010, c. 49; P.L. 2010, c.

121; P.L. 2011, c. 202; P.L. 2012, c. 78; P.L. 2013, c. 173; P.L. 2013, c. 280; P.L.

2015, c. 46; and P.L. 2015, c. 157.

6A:23A-1.2 Definitions

The words and terms used in this chapter shall have the following meanings, unless the context

clearly indicates otherwise:

“Additional administrative position salary increment” means $5,000 for an additional

administrative position held by a superintendent, as set forth in N.J.A.C. 6A:23A-3.1(e)2.

"Additional school district salary increment" means $15,000 for each additional school district

served by a single superintendent pursuant to N.J.S.A. 18A:17-24.1.

"Adjusted tax levy" means the property tax levy for current purposes, excluding any debt

pursuant to N.J.S.A. 18A:7F-37.

"Administrative cost" means total administrative costs as reflected in the Taxpayers’ Guide to

Education Spending and defined in the Uniform Minimum Chart of Accounts for New Jersey

Public Schools and by the National Center for Education Statistics (NCES), as referred to at

N.J.A.C. 6A:23A-16.2(f)1, and other reporting directives published and distributed by the

Commissioner pursuant to N.J.S.A. 18A:4-14 and N.J.A.C. 6A:23A-16.2.

"Administrator" means as set forth in N.J.S.A. 18A:12-23.

"Annual audit" means the audit conducted pursuant to the provisions of N.J.S.A. 18A:23-1 et

seq. and the Federal Single Audit Act of 1984, Public Law 98-502, amended by Public Law 104-

156, of the district board of education’s Comprehensive Annual Financial Report.

"Annual audit program" means the uniform program published and distributed by the

Commissioner for preparation of the Comprehensive Annual Financial Report by a district board

of education pursuant to N.J.S.A. 18A:4-14 and N.J.A.C. 6A:23A-16.2(i).

"Annual salary" shall include, but not be limited to, base pay, increments, stipends, or payments

for additional positions, annuities, and/or longevity, and the total of per diem payments.

“Authorized membership of the district board of education” means the full membership of the

district board of education as established pursuant to Title 18A of the New Jersey Statutes.

"Base budget" means the district board of education's school budget that contains an adjusted tax

levy calculated pursuant to the provisions of N.J.S.A. 18A:7F-38 and 39, State aid, other than

preschool education aid, received pursuant to the provisions of N.J.S.A. 18A:7F-43 et seq.,

miscellaneous revenue estimated pursuant to GAAP, and designated general fund balance; but

exclusive of additional spending proposals submitted to the voters or board of school estimate.

"Board of trustees" means the public agents authorized by the State Board of Education to

supervise and control a charter school pursuant to the provisions of N.J.S.A. 18A:36A-1 et seq.

"Business" means any corporation, partnership, firm, enterprise, franchise, trust, association, sole

proprietorship, union, political organization, or other legal entity, but shall not include a local

public school district or any other public entity.

“Capital maintenance” means as defined in N.J.A.C. 6A:26-1.2.

"Capital outlay" means capital outlay as defined in GAAP.

"Capital project" means as defined in N.J.A.C. 6A:26-1.2.

"Capital projects fund" means the governmental fund that accounts for financial resources used

to acquire or construct capital facilities (other than those of proprietary funds and fiduciary

funds). The source of revenue in this fund includes the sale of bonds, grants received pursuant to

N.J.S.A. 18A:7G-15, and other sources as defined in N.J.A.C. 6A:26-4.1. In the case of a charter

school, the source of revenue may be a mortgage. Separate accounting is required for each

capital project.

“Capital projects fund deficit” means the amount of the sum of expenditures and encumbrances

for a capital project that exceeds the total amount of funds authorized for the capital project by

the State, district’s voters by referendum, the board of school estimate, or the capital projects

control board, as applicable.

"Capital reserve account" means the account established by a district board of education pursuant

to N.J.S.A. 18A:7G-31 and 18A:7F-41 into which monies are deposited to help finance a school

district’s local share of its long- range facilities plan.

"Chart of accounts" means the Department’s prescribed classification structure for the

accounting system that permits the standardization of reported financial data whereby analyses

may be performed within and between district boards of education and on a nationwide basis

using common terminology and classifications established by the NCES.

"Charter school" means a public school that is established in accordance with N.J.S.A. 18A:36A-

1 et seq.

"Chief school administrator" means the superintendent, pursuant to N.J.S.A. 18A:17-15; the

administrative principal, pursuant to N.J.S.A. 18A:17-20.5; the State district superintendent,

pursuant to N.J.S.A. 18A:7A-35 or 18A:7A-49 in the case of a school district under full or partial

intervention; or the lead person of a charter school, as defined at N.J.A.C. 6A:11-1.2.

"Comprehensive Annual Financial Report" or "CAFR" means the official annual report of a

governmental unit containing the basic financial statements, management discussion and analysis

(MD&A) and other required supplementary information and statistical data prepared in

accordance with standards established by the Governmental Accounting Standards Board

“Concentration of at-risk pupils” shall be based on prebudget year pupil data and means, for a

school district or a county vocational school district, the number of at-risk pupils counted in

resident enrollment, divided by resident enrollment pursuant to N.J.S.A. 18A:7F-45.

“County special services school district” or “CSSSD” means any entity established pursuant to

N.J.S.A. 18A:46-29 et seq.

“County vocational school district” or “CVSD” means any entity established pursuant to

N.J.S.A. 18A:54-1 et seq.

"CPI" means as defined at N.J.S.A. 18A:7F-45 and 18A:7F-5.

"Debt service" means as defined at N.J.S.A. 18A:7G-3 and N.J.A.C. 6A:26-1.2.

"Debt service fund" means a governmental fund used to account for the accumulation of

resources for, and the payment of, general long-term debt principal and interest.

"Department" means the New Jersey Department of Education.

“Educational services commission” or “ESC” means an educational services commission

established pursuant to N.J.S.A. 18A:6-52.

"Efficiency standards" means the efficiency standards established for the 2008-2009 school year

in Appendix E of the publication, A Formula for Success: All Children, All Communities, dated

December 18, 2007, and available on the Department's website at:

http://www.state.nj.us/education/sff/reports/AllChildrenAllCommunities.pdf. The standards shall

be updated periodically through the Educational Adequacy Report according to N.J.S.A.

18A:7F-46.

"Emergent circumstance" means a circumstance that must be addressed expeditiously to avoid

peril to the health and safety of students and/or staff and/or to avert an operating deficit from the

required implementation of the thoroughness standards.

"Emergent condition" means as defined at N.J.A.C. 6A:26-1.2.

"Enterprise fund" means a proprietary fund used to report activities for which a fee is charged to

external users for goods and services. Activities are required to be reported if the pricing policies of

the activity establish fees and charges designed to recover its costs, or if the activity meets other

criteria established by Governmental Accounting Standards Board Statement No. 34, paragraph 67.

"Excess costs" means as set forth in N.J.S.A. 18A:7G-3.

"Executive county superintendent” means the executive county superintendent or acting

executive county superintendent, pursuant to N.J.S.A. 18A:7-1 et seq.

“Executive county superintendent roundtable” means the regularly scheduled meetings in each

county with the chief school administrators in that county and the executive county

superintendent.

"Fiduciary funds" means the funds used to account for assets held by a district board of

education in a trustee capacity or agency capacity for others and, therefore, cannot be used to

support the district board of education’s own programs.

"Fund" means a fiscal and accounting entity with a self-balancing set of accounts recording cash

and other financial resources, together with all related liabilities and residual equities or

balances, and changes therein, which are segregated for the purpose of carrying on specific

activities or attaining certain objectives in accordance with special regulations, restrictions, or

limitations.

"GAAP" means the generally accepted accounting principles that are uniform minimum

standards of and guidelines to financial accounting and reporting that are generally recognized as

essential to effective management control and financial reporting, and are promulgated and

published by the Governmental Accounting Standards Board as prescribed by the State Board

pursuant to N.J.S.A. 18A:4-14.

"General fund" means a governmental fund that accounts for all financial resources of the district

board of education or charter school board of trustees, except those required to be accounted for

in another fund.

“Health care costs” mean the costs of medical and prescription drug insurance consistent with

benefits provided by the School Employees’ Health Benefits Program.

"High school" means a public school that is not a charter school and that may grant a State-

endorsed diploma to students, pursuant to N.J.S.A. 18A:7C-4.

"High school salary increment" means $5,000 for a school district served that includes a high

school.

"Household income" means income as defined in 7 CFR 245.2 and 245.6 or any subsequent

superseding Federal law or regulation pursuant to N.J.S.A. 18A:7F-45.

“Immediate family member” means the person’s spouse, partner in a civil union as defined in

N.J.S.A. 37:1-33, domestic partner as defined in N.J.S.A. 26:8A-3, or dependent child, residing

in the same household

“Individualized education program" or “IEP” means as defined in N.J.A.C. 6A:14-1.3.

“Insurance” means coverage for general liability, automobile liability, school board liability,

errors and omissions, property loss or damage, and workers compensation.

“Internal control” means a process, effected by an entity’s management, designed to provide

reasonable assurance regarding the achievement of objectives in the following categories:

1. Effectiveness and efficiency of operations;

2. Reliability of financial reporting; and

3. Compliance with applicable laws and regulations.

“Job description" means a written specification of the function of a position, duties and

responsibilities, the extent and limits of authority, and work relationships within and outside the

school and school district.

"Line item account" means the lowest (most specific) level of detail in the appropriations/expenditure

classification.

"Local share" means as calculated pursuant to N.J.S.A. 18A:7F-52 for purposes of N.J.S.A.

18A:7F-43 et seq. and for purposes of a school facilities project as defined at N.J.A.C. 6A:26-1.2

and pursuant to N.J.S.A. 18A:7G-3.

"Long-range facilities plan" or “LRFP” means the plan required to be submitted to the

Commissioner by a district board of education pursuant to N.J.S.A. 18A:7G-4 and N.J.A.C.

6A:26-2.

"Maximum salary amount" for superintendents means $147,794 for any school district(s) with a

total enrollment of 749 or less based on the enrollment figures in the Application for State

School Aid (ASSA) filed by the district(s) on the prior October 15; $169,689 for any district(s)

with a total enrollment of 750 to 2,999 based on the enrollment figures in the ASSA filed by the

district(s) on the prior October 15; $191,584 for any school district(s) with a total enrollment

greater than 3,000 based on the enrollment figures in the ASSA filed by the district(s) on the

prior October 15. Upon the expiration of a contract in effect on July 1, 2016, a superintendent

reappointed for a subsequent term with the same school district may receive an annual salary that

exceeds the maximum salary amount by up to two percent in the first year of the renewal

contract, followed by annual increases of up to two percent in each of the remaining years of the

renewal contract and any contract thereafter. If the contract in effect on July 1, 2016, is not the

superintendent’s initial contract with that school district, the superintendent can renegotiate at

any time after May 1, 2017 and may receive an annual salary moving forward that exceeds the

maximum salary amount by up to two percent in the first year of the renewal contract, followed

by annual increases of up to two percent in each of the remaining years of the renewal contract

and any contract thereafter. However, the superintendent shall not receive any retroactive or

back pay as part of that renegotiation. For any school district(s) with a total enrollment of 10,000

or more based on the enrollment figures in the ASSA filed by the school district(s) on the prior

October 15, the Commissioner, upon written application by the district board(s) of education and

on a case-by-case basis, may approve a waiver of the maximum salary amount. The eligible

district board(s) of education may only submit one waiver request during the term of a contract;

requests for a renegotiated waiver during the term of a contract are prohibited.

“National Center for Education Statistics” or “NCES” means the organization that publishes the

Federal accounting manual, Financial Accounting for Local and State School Systems, that

contains the financial accounting terminology and classifications required by N.J.S.A. 18A:4-14

for use in the chart of accounts prescribed by the Commissioner with the approval of the State

Board of Education.

“New Jersey Quality Single Accountability Continuum” or “NJQSAC” means the New Jersey

Quality Single Accountability Continuum for evaluating local public school district performance

established pursuant to N.J.S.A. 18A:7A-3 et seq.

“New Jersey Student Learning Standards” or “NJSLS” means as defined in N.J.A.C. 6A:8-1.3.

“Non-discretionary fixed costs” means fixed costs incurred by a school district in its operation

that are outside the control of the district board of education.

“OFAC” means the Office of Fiscal Accountability and Compliance within the New Jersey

Department of Education.

"Other capital project" means as defined at N.J.A.C. 6A:26-1.2.

"Prebudget year," as defined by N.J.S.A. 18A:7F-45, means the school fiscal year preceding the

year in which the school budget is implemented.

"Prebudget year adjusted tax levy” means the adjusted tax levy of the prebudget year less

separate question(s) unless explicitly approved to be permanent.

“Presumptive efficient spending level” means the State median cost per pupil of the prebudget

year as reflected in the Taxpayers’ Guide to Education Spending by indicator for the applicable

operating type and enrollment range adjusted by the increase in CPI, or the efficiency standards

established pursuant to N.J.S.A. 18A:7F-46 and used in the calculation of the adequacy budget

pursuant to the provisions of N.J.S.A. 18A:7F-51, whichever is more appropriate and comparable

for the particular spending category under review as determined by the Commissioner.

“Proposed budget” means the budget required pursuant to N.J.S.A. 18A:7F-5.c.

"Proprietary funds" means the funds used to account for district board of education activities

where the reporting focus is on the determination of operating income, financial position, and

cash flow. Proprietary funds include enterprise and internal service funds.

“Regional school district” means a limited- or all-purpose public school district established on a

regional basis pursuant to N.J.S.A. 18A:13-1 et seq.

"Relative" means an individual's spouse, civil union partner pursuant to N.J.S.A. 37:1-33,

domestic partner as defined in N.J.S.A. 26:8A-3, or the parent, child, sibling, aunt, uncle, niece,

nephew, grandparent, grandchild, son-in-law, daughter-in-law, stepparent, stepchild, stepbrother,

stepsister, half-brother, or half-sister of the individual or of the individual’s spouse, civil union

partner, or domestic partner, whether the relative is related to the individual or the individual’s

spouse, civil union partner, or domestic partner by blood, marriage, or adoption.

"Required maintenance" means as defined in N.J.A.C. 6A:26-1.2.

“School business administrator” or “SBA” means the school business administrator appointed

pursuant to N.J.S.A. 18A:17-14.1 or any other title used for the chief financial officer of the

school district, such as assistant superintendent for business or assistant superintendent for

finance, and requiring the school business administrator endorsement pursuant to N.J.A.C.

6A:9B-11.3(d).

"School district" means any local or regional school district established pursuant to chapter 8 or

chapter 13 of Title 18A of the New Jersey Statutes or a school district under full State

intervention pursuant to N.J.S.A. 18A:7A-34, but not including a charter school established

pursuant to N.J.S.A. 18A:36A-1 et seq. unless specified otherwise.

“School district vehicle” means a vehicle purchased, leased, lease-purchased, or acquired without

cost by gift, donation, or other method by the school district regardless of funding source.

"School Employees' Health Benefit Program” or “SEHBP” means the School Employees’ Health

Benefit Program pursuant to N.J.S.A. 52:14-17.46.1 et seq., which shall be the successor plan to

the SHBP for school employees.

"School facilities project" means as defined in N.J.A.C. 6A:26-1.2 and pursuant to N.J.S.A.

18A:7G-3.

"School report card" means the school report card prepared and disseminated to parents and

other interested taxpayers within each local school district pursuant to N.J.S.A. 18A:7E-2.

"Sending-receiving relationship" means an agreement between two district boards of education,

one of which does not have the facilities to educate in-district an entire grade(s) or provide an

entire program(s), and as an alternative sends such students to a district board of education

having such accommodations and pays tuition, pursuant to N.J.S.A. 18A:38-8 et seq

"Shared service" means any educational or administrative service required to be performed by a

district board of education in which the school district, with district board of education approval,

is able and willing to share in the costs and benefits of that service with another district board of

education, municipality, or other governmental unit, as authorized by the Uniform Shared

Services and Consolidation Act at N.J.S.A. 40A:65-1 et seq., and in compliance with existing

school laws at N.J.S.A. 18A, but does not include sending-receiving relationships.

"Special revenue fund" means the governmental fund that accounts for the proceeds of specific

revenue sources (other than trusts, or revenues for major capital projects) that are legally

restricted to expenditures for specified purposes.

“Standard operating procedures” or “SOPs” mean procedures that cover all business functions

and are detailed with specific steps and instructions; are realistic based on the employment

structure and business system; tie with job descriptions; and are supported by management.

"State support” means as defined at N.J.A.C. 6A:26-1.2.

“Student activity fund” means a fund used to account for monies derived from athletic events or

other activities of pupil organizations and to account for the accumulation of money to pay for

student group activities.

“Subsistence” means lodging, meals, and incidental expenses associated with traveling.

“Superintendent” means the superintendent of schools appointed pursuant to N.J.S.A. 18A:17-

15, the administrative principal appointed pursuant to N.J.S.A. 18A:17-20.5, or the State district

superintendent appointed pursuant to N.J.S.A. 18A:7A-35 or 18A:7A-49 in a school district

under full or partial State intervention.

“Surplus” means the amount of undesignated, unreserved fund balance as of July 1 of each year.

"Taxpayers’ Guide to Education Spending" or “TGES” means the annual report of comparative

financial statistics of school districts compiled and published for general distribution by the

Commissioner, pursuant to N.J.S.A. 18A:4-30, and available on the Department’s website.

"T&E" means the thorough and efficient system of free public schools for the instruction of all

children in the State between the ages of five and 18 years as required by the State Constitution

and defined by the New Jersey Student Learning Standards and efficiency standards established

pursuant to N.J.S.A. 18A:7F-46.

"Thoroughness standards" means the New Jersey Student Learning Standards as approved by the

State Board pursuant to N.J.S.A. 18A:7F-46.a.

"Travel expenditures" means those costs paid by the school district using local, State, or Federal

funds, whether directly by the school district or by employee reimbursement, for travel by school

district employees and district board of education members to the following five types of travel

events:

1. "Training and seminars" means all regularly scheduled, formal residential or non-

residential training functions, conducted at a hotel, motel, convention center,

residential facility, or at any educational institution or facility;

2. "Conventions and conferences" means general programs, sponsored by

professional associations on a regular basis, which address subjects of particular

interest to a school district or are convened to conduct association business. The

primary purpose of employee attendance at conferences and conventions is the

development of new skills and knowledge or the reinforcement of those skills and

knowledge in a particular field related to school district operations. These are

distinct from formal staff training and seminars, although some training may take

place at such events;

3. “School district sponsored events” means conferences, conventions, receptions, or

special meetings, where the school district plans, develops, implements, and

coordinates the event and is the event's primary financial backer. School district

employees are actively involved in working the event and other employees may

attend as participants;

4. "Regular school district business travel" means all regular official business travel,

including attendance at meetings, conferences, and any other gatherings that are

not covered by the definitions included in paragraphs 1, 2, and 3 above. Regular

school district business travel also includes attendance at regularly scheduled in-

State county meetings and Department-sponsored or association-sponsored events

provided free of charge and regularly scheduled in-State professional

development activities with a registration fee that does not exceed $150.00 per

employee or district board of education member. Beginning in 2009-2010, the

$150.00 limit per employee or district board of education member may be

adjusted by inflation; and

5. "Retreats" means meetings with school district employees and district board of

education members, at which organizational goals and objectives are discussed.

“Underbudgeted revenue” means any general fund revenue realized that exceeds the amount

included in the original school district budget certified for taxes.

"Unused tax authority" means the amount of the difference between the maximum allowable

amount to be raised by taxation for the current school budget year and the actual amount to be

raised by taxation for the current school budget year, pursuant to N.J.S.A. 18A:7F-39.

"Weighted resident enrollment" means the differentials in costs based on the efficiency standards

established pursuant to N.J.S.A. 18A:7F-46.a of providing education at the kindergarten,

elementary (grades one through five), middle school (grades six through eight), and high school

levels (grades nine through 12), which are determined by dividing the elementary cost per pupil

into each category. The weights are applied to resident enrollment in each category pursuant to

N.J.S.A. 18A:7F-50.

Subchapter 2. Executive County Superintendent of Schools

6A:23A-2.1 General powers and duties of executive county superintendent

(a) Each executive county superintendent shall exercise and perform the general powers and

duties vested in him or her pursuant to N.J.S.A. 18A:7-8.

(b) Nothing in this section shall be construed or interpreted to contravene or modify the

provisions of the New Jersey Employer-Employee Relations Act, P.L. 1941, c. 100,

(N.J.S.A. 34:13A-1 et seq.), or to limit or restrict the scope of negotiations as provided

pursuant to law, or to require an employer to enter into a subcontracting agreement that

affects the employment of any employee in a collective bargaining unit represented by a

majority representative during the time that an existing collective bargaining agreement

with the majority representative is in effect.

6A:23A-2.2 School district regionalization and consolidation of services advisory committee

(a) Each executive county superintendent shall create a School District Regionalization and

Consolidation of Services Advisory Committee (advisory committee) for the purpose of

providing advice and consultation to the executive county superintendent on the issue of

regionalization of school districts or consolidation of school district services. The

Advisory Committee shall consist of representation from each school district in the

county and shall meet on a monthly basis. At least quarterly, county representatives from

the New Jersey Leadership for Educational Excellence (LEE) Group will be invited by

the executive county superintendent to attend and participate in the advisory committee

meetings. The LEE Group is composed of the New Jersey Education Association, the

New Jersey Principals and Supervisors Association, the New Jersey School Boards

Association, New Jersey Association of School Business Officials, the New Jersey

Association of School Administrators, and the New Jersey Congress of Parents and

Teachers. The executive county superintendent may designate the county superintendent

roundtable as the advisory committee, if appropriate. If the roundtable is used,

attendance by the above organizations shall include only the portion of the roundtable

meeting dedicated to the issue of regionalization and consolidation of services.

(b) The executive county superintendent may create one or more advisory subcommittees

that address issues by subject matter, by region, or by some other method. Subcommittee

members may be local taxpayers or residents, district board of education members,

employees, school district parents, local government officials, representatives of State or

local education associations, or others, as deemed appropriate by the executive county

superintendent. The membership shall reflect the diversity of the county to the extent

possible.

structure of the advisory subcommittees as he or she deems most effective and efficient.

(d) The executive county superintendent shall coordinate the work of the advisory

subcommittees and shall report on the progress of that work to the advisory committee at

its monthly meetings.

(e) The executive county superintendent shall report on the progress of the advisory

committee and advisory subcommittees’ work at the regularly scheduled executive

county superintendent roundtables, where appropriate.

(f) The executive county superintendent may take, where necessary, appropriate action to

engage consultants to perform the work and studies required by this chapter, including

assisting school districts in submission of applications for funds under the SHARE

program pursuant to N.J.S.A. 40A:65-30.

(g) The executive county superintendent shall encourage the advisory subcommittees to

solicit input, to the extent possible, from current school employee representatives

regarding regionalization and consolidation of services proposals.

6A:23A-2.3 Consolidation and sharing of services; joint and cooperative purchasing

(a) The executive county superintendent, in consultation with the Advisory Committee, shall

study the consolidation of school districts’ administrative services, to the extent practical.

In particular, the executive county superintendent shall focus on identifying opportunities

for consolidation of administrative services in the following types of school districts:

1. Any school district with enrollment of 1,000 students or less;

2. Any school district with five or fewer school buildings;

3. Two or more contiguous local public school districts of the same county with a

combined enrollment of 2,500 students or less;

4. School districts that receive non-resident pupils pursuant to a formal send-receive

agreement and their sending districts with a combined enrollment of 5,000

students or less;

5. Limited-purpose regional school districts and their member school districts with a

combined enrollment of 5,000 students or less; and

6. Any school district with an administrative cost per pupil in excess of 125 percent

of the county median administrative cost per pupil.

(b) The study shall include consideration of the following models:

1. Shared leadership models where one or more school districts share the services

and cost of one or more administrators pursuant to N.J.S.A. 18A:17-24.1 et seq.

2. Consortiums such as ESCs, CSSSDs, jointure commissions, jointure agreements,

and audio/visual aides commissions;

3. Cooperative bidding or joint purchasing models;

4. Shared purchased services models for services, such as accounting, graphic arts

and printing, child study team services, transportation, food services, employee

recruitment and screening services, and substitute calling services;

5. Shared systems models such as computer networks, financial and human resource

management software systems, electronic records storage, and information

management systems;

6. Other consolidated administrative services and non-instructional services

arrangements, including, but not limited to, regional school districts or county

offices of education pursuant to the provisions of N.J.S.A. 18A:7-12; or

7. The study may also consider the feasibility of “alternative approaches” for the

sharing or consolidating administrative or management services between school

districts. If an alternative approach that is not currently authorized by statute is

proposed, the alternative approach shall not be implemented unless and until

statutory authorization for the alternative approach is duly enacted.

purchasing of textbooks and other instructional materials with the expectation that school

districts, ESCs, CSSSDs, and jointure commissions shall be the primary entities for

procuring such materials for the operation of school districts.

(d) As part of the study, the executive county superintendent may conduct a survey of all

school districts in the county, CVSDs, CSSSDs, ESCs, and other county- or regional-

based entities to determine the scope of administrative services currently available within

or outside the county and the capacity of administrative service providers to provide said

services.

(e) As part of the study, the executive county superintendent may solicit proposals, as

necessary, from school districts, ESCs, CVSDs, CSSSDs, or other county entities to

expand the scope of available administrative services and/or provider capacity to provide

said services.

(f) Based on the study conducted pursuant to (a) through (e) above, the executive county

superintendent shall make to the Commissioner one or more of the following

recommendations:

1. Where a cost/benefit analysis demonstrates the consolidation of one or more

administrative services is economically advantageous and the consolidation of said

service(s) will have no negative impact on a school district’s educational program,

the executive county superintendent shall recommend the school districts be

required to enter into arrangements to consolidate administrative services.

2. Where it is determined that designation of one or more lead administrative service

providers for one or more specific available administrative services are most

effective and efficient and are in the best interest(s) of the county’s school

districts, the executive county superintendent shall recommend such

designation(s).

3. Where the establishment of a new administrative service provider(s) or shared

service administrative arrangement(s) or expansion of administrative services

delivered by a current provider within the county is in the best interests of the

county’s school districts, the executive county superintendent shall recommend

the establishment or expansion of provider(s) for administrative services such as:

i. An ESC, pursuant to N.J.S.A. 18A:6-52;

ii. A county department of child study to coordinate special education

services and basic child study team services on a countywide basis,

pursuant to N.J.S.A. 18A:46-3 and, when applicable, N.J.S.A. 18A:7-12

iii. A CSSSD, pursuant to N.J.S.A. 18A:46-29;

iv. A school board insurance group pursuant to N.J.S.A. 18A:18B-3 et seq.;

v. A joint purchasing arrangement pursuant to N.J.S.A. 18A:18A-11 et seq.;

vi. A joint transportation arrangement pursuant to N.J.S.A. 18A:39-11 et seq.; and/or

vii. A county educational audiovisual aids center for media and library

services pursuant to N.J.S.A. 18A:51-1 et seq.

(g) The topic of consolidated administrative services shall be an item on the agendas of the

executive county superintendents and county school business officials for their respective

countywide roundtable meetings at least once each quarter. Presentations may include

school district success stories, service provider availability and capacity, and new or

additional administrative service needs or suggestions to improve existing shared

administrative services.

6A:23A-2.4 Elimination of school districts that are not operating schools

(a) The executive county superintendent shall submit to the Commissioner a plan to

eliminate public school districts that are not operating schools. The plan shall address,

but not be limited to, the following issues:

1. The executive county superintendent recommendation as to the most appropriate

local public school district within the county for the “school district not operating

a school” with which to consolidate that results in the least disruption on

educational delivery, school district operations, and local finances, including the

allocation of tax levy and State aid. The current receiving school district shall be

considered the presumptive, most appropriate, local public school district that

results in the least disruption. Factors to rebut this presumption include the

receiving school district’s status under the No Child Left Behind Act whether the

school district not operating a school is currently sending to multiple school

districts, and the long-term goal of creating regional school districts (preschool or

kindergarten to grade 12);

2. A general description of the constituent communities, including the communities’

population, housing trends, and ratables;

3. A general description of the constituent school districts, including, but not limited

to, the board(s) of education, school buildings, enrollment, grade levels by school

district, and financial information. The financial information shall include, but

not be limited to, revenues and appropriations, ratables, borrowing margins,

general fund and debt service fund tax levies, and State aid;

4. Procedures, if needed, to transition current administrative duties of the “school

district not operating a school” to the proposed new school district;

5. An estimate of additional costs, if any, of the proposed new school district

assuming the current administrative duties of the “school district not operating a

school”;

6. An estimate of efficiencies and cost savings, if any, resulting from the

consolidation of school districts such as the elimination of the need to prepare

annual tuition contracts and monthly tuition bills;

7. A comparison of the estimated State aid and property tax impact for the proposed

new school district and the sum of State aid and property taxes for the constituent

school districts as currently authorized by statute. The executive county

superintendent may consider alternative approaches to the allocation of property

taxes and State aid if such approach results in the least financial disruption to the

constituent school districts. If an alternative approach that is not currently

authorized by statute is proposed, the alternative approach shall not be

implemented unless and until statutory authorization for the alternative approach

is duly enacted;

8. A description of the new district board of education as currently authorized by

statute, including a description of the constituent districts’ boards of education.

The executive county superintendent may consider an alternative approach to the

new district board of education. If an alternative approach that is not currently

authorized by statute is proposed, the alternative approach shall not be

implemented unless and until statutory authorization for the alternative approach

is duly enacted;

9. District-specific issues and concerns, including, but not limited to, building

ownership by the school district that is currently not operating a school, potential

loss of Federal Impact aid or other special revenue sources, and new

transportation concerns. If the school district that is currently not operating a

school owns a building(s), a description of the building(s) and plan for the

building to be transferred to the municipality in which the school district that is

currently not operating a school is located, unless a deed restriction on the

building(s) indicates otherwise;

10. The process to liquidate all remaining assets and close the fiscal books of the

school district that is no longer operating a school, including arranging for the

final audit. All remaining cash and fund balances after completion of the

liquidation process shall be transferred to the municipal government of the school

district no longer operating a school; and

11. The transfer of files, records, equipment, and supplies.

6A:23A-2.5 Plan for school district consolidation to create regional school districts

(a) The executive county superintendent, in consultation with the advisory committee, shall

study the consolidation of school districts within the county, other than county school

districts and school districts operating preschool or kindergarten through grade 12

schools, into one or more all-purpose regional school districts. The study shall focus, to

the greatest extent practicable, on the consolidation of school districts that receive

students on a tuition basis with the sending school districts, and the consolidation of

limited-purpose regional school districts that receive students from constituent

municipalities to create enlarged all-purpose regional school districts. The study may

also consider school district models of “alternative approaches” from consolidating or

sharing administrative or management services between school districts where creation of

an all-purpose regional school district is not feasible or is not the most cost-effective

option. If a proposed alternative approach is not currently authorized by statute, and the

plan with the alternative approach is approved by the Commissioner pursuant to (b)

below, the proposal shall not be submitted to the voters in a special election pursuant to

N.J.S.A. 18A:7-8, unless and until statutory authorization for the alternative approach is

duly enacted.

(b) Based on the study required in (a) above, the executive county superintendent shall

submit to the Commissioner a plan to achieve this purpose no later than March 15, 2010,

pursuant to N.J.S.A. 18A:7-8.h. The plan shall contain, but not be limited to, the

following issues:

1. A general description of the proposed all-purpose regional school district(s),

including the names of the constituent school districts, school buildings and grade

levels by school district, and the area of the total proposed regional school district;

2. The proposed structure of the new district board of education of the proposed all-

purpose regional school district, if applicable, that ensures representation from all

constituent communities;

3. An analysis of administrative staffing, collective bargaining agreements, and

compensation guides of the constituent school districts and recommendations and

guidance for the proposed regional school district, including, but not limited to:

i. The existing administrative organization structures of each constituent

school district;

ii. A proposed administrative organization chart for the proposed regional

school district;

iii. Copies of each constituent school district’s bargaining agreement(s) and

the associated salary guides;

iv. A summary report showing each constituent school district’s first step and

last step of the salary guides for the current and last year of each school

district’s current bargaining agreement(s), showing the lowest and highest

starting salaries among the salary guides and the lowest and highest top

salaries among the salary guides for the current and last year of each

school district’s current bargaining agreement(s), the length of the guide,

each school district’s current average teacher salary and average years of

service, and any provisions for longevity pay;

v. A recommended framework for negotiation of a new collective bargaining

agreement in the proposed regional school district;

vi. A recommended framework to assign, recruit, interview, and employ

administrative staff in accordance with the positions on the recommended

administrative organization chart in accordance with N.J.S.A. 18A:6-31.3

through 31.7; and

vii. A recommended framework to assign, recruit, interview, and employ other

teaching staff members and other staff in accordance with N.J.S.A. 18A:6-

31.3 through 31.7;

4. An analysis of each proposed constituent school district’s educational program

and recommendations and guidance for establishing the educational program of

the proposed regional school district;

5. An analysis of potential opportunities for greater effectiveness and efficiency,

including, but not limited to:

i. Consolidation of special education programs and services consistent with

the requirements of the Individuals with Disabilities Education Act

(IDEA), 20 U.S.C. §§ 1400 et seq., State statutes and regulations

(examples: more efficient inclusive practices, returning out-of-district

placements, staff consolidation, and maximization of special education

class sizes to legal limits);

ii. Maximization of student transportation cost savings and other efficiencies

through coordinated bell schedules, tiered bus routes, and other

efficiencies created by the consolidation of transportation management

services;

iii. Consolidation of computer networks and administrative systems such as

finance and human resource systems;

iv. Food service operations (example; centralizing meal preparation with

satellite cafeterias); and

v. Other areas of consolidation and economies of scale such as staff

development, curriculum development, health services, guidance services,

media services, extra- and co-curricular activities, and plant operation and

maintenance;

6. An analysis of socioeconomic and demographic information, including, but not

limited to:

i. Current and projected enrollment data for the succeeding five school years

by location, school, and grade, and for the proposed regional school

district as a whole;

ii. Enrollment data by location, school, and grade showing the student

population’s current racial composition and the resulting racial

composition for the proposed regional school district as a whole;

iii. Enrollment data showing the school food service eligibility status (free,

reduced, or paid) of the student population by location, school, and grade,

and for the proposed regional school district as a whole; and

vi. Attendance areas by school building, grade, current and projected

enrollment of the constituent school districts, and recommended grade

configurations and attendance areas for each existing and proposed school

building, if applicable, of the proposed regional school district;

7. A summary of the advantages and disadvantages for each constituent school

district of forming an all-purpose regional school district;

8. A recommendation by the executive county superintendent regarding the

formation of the proposed regional school district;

9. If the recommendation of the executive county superintendent is to form a

regional school district, the following additional information shall be included in

the plan:

i. A comparison of the estimated State aid and property tax impact for the

proposed regional school district and the sum of State aid and property

taxes for the constituent school districts;

ii. An impact assessment of property tax apportionment among the constituent

school districts using a minimum of three apportionment methods:

(1) The proportion of each constituent municipality’s equalized valuation;

(2) A combination using 50 percent of the proportion of each constituent

municipality’s equalized valuation and 50 percent of the proportion

of each constituent school district’s pupil enrollments; and

(3) A combination of equalized valuation and pupil enrollments using

a percentage split that most closely approximates each proposed

constituent school district’s current percentage share of the sum of

all proposed constituent school districts’ current property taxes to

the percentage share that would result after a regional school

district is newly created or enlarged;

iii. A comprehensive financial analysis of current and projected spending,

local community wealth, debt limit, and current debt burden, including,

but not limited to:

(1) The projected current operating expenses of the proposed regional

school district had it operated in the school year in which the plan

is issued, and the current operating expenses of the constituent

school districts for the school year in which the plan is issued, both

individually and in the aggregate;

(2) The aggregate equalized valuation, average equalized valuation,

and equalized valuation per pupil of each constituent school

district or, if a constituent school district is a regional school

district, of each municipality of the regional school district;

(3) The aggregate income, average household income, and aggregate

income per pupil of each constituent school district or, if a

constituent school district is a regional school district, of each

municipality of the regional school district;

(4) The borrowing margin of each constituent school district or, if a

regional school district, each municipality of the regional school

district, and the projected borrowing margin of the proposed

regional school district as determined in accordance with N.J.S.A.

18A:24-1 et seq.;

(5) A schedule showing for each constituent school district, or if a

regional school district, its municipalities, the original and current

debt principal balance(s) and remaining debt service schedule(s) by

debt issuance, and percentage of each constituent school district’s

debt principal relative to the aggregate debt principal of all

proposed constituent school districts;

(6) The individual and aggregate historical and replacement costs as of

June 30 of the school year prior to the year in which the plan is

issued of school buildings and additions, grounds, furnishings, and

equipment of each constituent school district and for the proposed

regional school district, as a whole; and

(7) The individual and aggregate projected additional costs as of June

30 of the school year prior to the year in which the plan is issued

contained in each constituent school district’s approved LRFP of

school buildings and additions, grounds, furnishings, and

equipment of each constituent school district and for the proposed

regional school district, as a whole; and

iv. A LRFP for the regional school district, if new schools and/or additions

are recommended that are not currently reflected in the existing plans of

the constituent school districts; and

10. If the recommendation of the executive county superintendent also includes an

alternative approach for consolidating or sharing administrative or management

services, the information in (b)1 through 8 above, as applicable, related to the

alternative approach(es) shall be included in the plan.

6A:23A-2.6 Transportation efficiency study

(a) Each executive county superintendent shall complete a study of pupil transportation

services in the county no later than July 12, 2009, pursuant to N.J.S.A. 18A:7F-57. The

study’s purpose shall be to determine ways to provide student transportation services in a

more cost-effective and efficient manner. The study shall be transmitted upon completion

to the Commissioner and to the Legislature pursuant to N.J.S.A. 52:14-19.1.

(b) For the study of pupil transportation services pursuant to (a) above, the executive county

superintendent shall examine ways to promote coordination and regionalization of

student transportation services of school districts and nonpublic schools, including, but

not limited to:

1. The coordination of bus routes, bell schedules, and school calendars within the

county for both public and nonpublic schools;

2. Staggering bell schedules to implement a tiered system of busing within the

school district and with adjoining school districts;

3. Centrally coordinating transportation for out-of-district special education

placements, including practices and/or policies in place to more effectively

provide for special education transportation services;

4. Consolidating transportation services in combinations of two or more school districts

5. Establishing a consolidated countywide transportation system by jointure

agreement or county-based service provider;

6. Analyzing district school bus routing and scheduling to encourage the use of

efficient routing practices;

7. Improving cooperation between district boards of education and nonpublic school

administrators leading to more efficient and effective student transportation

services; and

8. Soliciting input from current public school district transportation employee

representatives and school employee representatives regarding ways to institute

efficiencies and savings.

6A:23A-2.7 Shared special education services

(a) The executive county superintendent shall promote and facilitate the sharing of special

education services consistent with Individuals with Disabilities Education Act, P.L. 105-

17, (IDEA) requirements as follows:

1. Coordinate with the Department to maintain a real time Statewide and

districtwide database that tracks the types and capacity of special education

programs being implemented by each school district and the number of students

enrolled in each program to identify program availability and needs;

2. Coordinate with the Department to maintain a Statewide and districtwide list of

all special education students served in out-of-district programs and a list of all

public and private entities approved to receive special education students that

includes pertinent information such as audit results and tuition charges;

3. Serve as a referral source by maintaining information on placement options

available in other school districts and their tuition rates for school districts that do

not have appropriate in-district programs for individual special education

students;

i. When school personnel serving on an IEP team are considering that a

student’s IEP be implemented in a special class program that is not

available in-district, they shall inform the executive county superintendent

of the student’s age and the class type being considered.

ii. The executive county superintendent shall identify whether special class

programs are available in other school districts and if there are vacancies.

The executive county superintendent shall inform the district of any

available in-district programs for the IEP team’s consideration.

iii. Prior to making a determination regarding the student’s placement, the

school district shall convene a meeting of the IEP team to consider all

placement options, including placements identified by the executive

county superintendent, and shall identify the appropriate placement in the

least restrictive environment according to N.J.A.C. 6A:14

iv. After an IEP team determines a placement other than one of the placement

options identified by the executive county superintendent, the school

district shall provide a written explanation as to why the placement option

selected was the appropriate one for the purpose of identifying program

gaps and needs within school district programs;

4. Conduct regional planning, identify the program needs of the county, and work

with school districts in the development of in-district special education program

options;

5. Identify special class programs within the county’s school districts serving

students with like IEPs that may be appropriately consolidated within legally

permissible class size limits within one school or school district;

6. Maintain a list of appropriately licensed and/or certified professionals or

appropriate county entities, and their fees, available to provide related services

such as speech, physical therapy, or occupational therapy, on an as-needed basis;

7. Maintain a list of appropriately licensed or certified professionals or appropriate

county entities, and their fees, able to participate or provide appropriately licensed

and/or certified professionals to participate on or supplement school district child

study teams;

8. With consideration of school districts’ size, classification rates, types of

classifications, caseloads, geographic proximity, staffing, budget constraints, or

other available information, investigate the feasibility of two or more school

districts sharing of special education staff members, including a director, child

study teams, and related services providers, and make a formal written

recommendation, as appropriate;

9. Prepare and circulate within the county an inventory by school district of surplus

or idle equipment used by students with special needs; and

10. Provide assistance to school districts in budgetary planning for resource

realignment and reallocation to direct special education resources into the

classroom through shared service arrangements and other methods.

Subchapter 3. Administrator and District Board of Education Member Accountability

6A:23A-3.1 Review of employment contracts for superintendents, assistant superintendents,

and school business administrators

(a) The executive county superintendent shall review and approve, for all superintendents,

superintendents reappointed pursuant to N.J.S.A. 18A:17-20.1, deputy superintendents,

assistant superintendents, and SBAs, including any interim, acting, or person otherwise

serving in these positions, in school districts, CVSDs, CSSSDs, and other school districts,

except charter schools, within the county under the supervision of the executive county

superintendent:

1. New employment contracts, including contracts that replace expired contracts for

existing tenured and non-tenured employees;

2. Renegotiations, extensions, amendments, or other alterations of the terms of

existing employment contracts that have been previously approved by the

executive county superintendent; and

3. Provisions for contract extensions where such terms were not included in the

original employment contract or are different from the provisions contained in the

original approved employment contract.

(b) In counties where there is no executive county superintendent, an executive county

superintendent from another county shall be designated by the Commissioner to review

and approve all contracts in (a) above.

hearing pursuant to N.J.S.A. 18A:11-11 and prior to the district board of education

approval and execution of the contracts to ensure compliance with all applicable laws,

including, but not limited to, N.J.S.A. 18A:30-3.5, 18A:30-9, 18A:17-15.1, and 18A:11-

12.

1. The public notice and public hearing required pursuant to N.J.S.A. 18A:11-11 shall

be applicable to a district board of education that renegotiates, extends, amends, or

otherwise alters the terms of an existing contract with a superintendent, deputy

superintendent, assistant superintendent, or SBA. It shall not apply to new

contracts, including contracts that replace expired contracts for existing employees

in one of the positions in (a) above, whether tenured or not tenured. Nothing shall

preclude a district board of education from issuing a public notice and/or holding a

public hearing on new contracts, including new contracts that replace expired

contracts for existing tenured and non-tenured employees.

(d) In connection with the executive county superintendent’s review of the contract, the

district board of education shall provide the executive county superintendent with a

detailed statement setting forth the total cost of the contract for each applicable year,

including salary, longevity (if applicable), benefits, and all other emoluments.

(e) The contract review and approval shall be consistent with the following additional standards:

1. Contracts for each class of administrative position shall be comparable with the

salary, benefits, and other emoluments contained in the contracts of similarly

credentialed and experienced administrators in other school districts in the region

with similar enrollment, academic achievement levels and challenges, and grade span.

2. No contract for a superintendent, including a superintendent reappointed pursuant

to N.J.S.A. 18A:17-20.1 and any contract for an interim superintendent, acting

superintendent, or person otherwise serving as superintendent, with the exception

of any contract for a superintendent at a CVSD, jointure commission, CSSSD, or

an educational services commission, shall include an annual salary in excess of

the maximum salary amount plus, if applicable, additional school district salary

increment(s), a high school salary increment, and/or additional administrative

position salary increment. All additional administrative position salary increments

are subject to review and approval by the executive county superintendent upon

consideration of written submissions from the district board of education, which

shall include justification that serving in the additional position is cost efficient

and operationally feasible for the school district, as well as job descriptions

outlining both positions. This increment is limited to one additional

administrative position.

3. No contract for a superintendent who is to be paid on a per diem basis shall

include a per diem payment amount that exceeds 1/260th of the maximum salary

amount plus, if applicable, an additional school district salary increment(s), a high

school salary increment, and/or additional administrative position salary

increment. This paragraph shall be construed consistent with any tenure rights

acquired pursuant to N.J.S.A. 18A:6-10 et seq.

4. No contract shall include provisions inconsistent with the travel requirements

pursuant to N.J.S.A. 18A:11-12 and N.J.A.C. 6A:23A-7, including, but not

limited to, the provisions for mileage reimbursement and reimbursement for

meals and lodging in New Jersey. Any contractual provision that is inconsistent

with law shall be superseded by the law.

5. No contract shall include provisions for the reimbursement or payment of

employee contributions that are either required by law or by a contract in effect in

the school district with other teaching staff members, such as payment of the

employee’s State or Federal taxes, or of the employee’s contributions to FICA,

Medicare, State pensions and annuities (TPAF), life insurance, disability

insurance (if offered), and health benefit costs.

6. No contract shall contain a payment as a condition of separation from service that

is deemed by the executive county superintendent to be prohibited or excessive in

nature. The payment cannot exceed the lesser of the calculation of three months’

pay for every year remaining on the contract with proration for partial years, not

to exceed 12 months, or the remaining salary amount due under the contract.

7. No contract shall include benefits that supplement or duplicate benefits that are

otherwise available to the employee by operation of law, an existing group plan, or

other means; for example, an annuity or life insurance plan that supplements or

duplicates a plan already made available to the employee. Notwithstanding the

provisions of this section, a contract may contain an annuity where benefits are already

contained in the existing contract between that employee and the school district.

8. Contractual provisions regarding accumulation of sick leave and supplemental

compensation for accumulated sick leave shall be consistent with N.J.S.A.

18A:30-3.5 and 18A:30-3.6. Supplemental payment for accumulated sick leave

shall be payable only at the time of retirement and shall not be paid to the

individual’s estate or beneficiaries in the event of the individual’s death prior to

retirement. Pursuant to N.J.S.A. 18A:30-3.2, a new district board of education

contract may include credit of unused sick leave days in accordance with the new

district board of education’s policy on sick leave credit for all employees.

9. Contractual provisions regarding accumulation of unused vacation leave and

supplemental compensation for accumulated unused vacation leave shall be

consistent with N.J.S.A. 18A:30-9. Contractual provisions for payments of

accumulated vacation leave prior to separation can be included but only for leave

accumulated prior to June 8, 2007, and remaining unused at the time of payment.

Supplemental payments for unused vacation leave accrued consistent with the

provisions of N.J.S.A. 18A:30-9 after June 8, 2007, as well as unused vacation

leave accumulated prior to June 8, 2007, that has not been paid, shall be payable

at the time of separation and may be paid to the individual’s estate or beneficiaries

in the event of the individual’s death prior to separation.

10. Contractual provisions that include a calculation of per diem for 12-month

employees shall be based on a 260-day work year.

11. No provision for a merit bonus shall be made except where payment is contingent

upon achievement of quantitative merit criterion and/or qualitative merit criterion:

i. A contract may include no more than three quantitative merit criteria

and/or two qualitative merit criteria per contract year.

ii. The executive county superintendent shall approve or disapprove the

selection of quantitative merit and/or qualitative merit criteria and the data

that forms the basis of measuring the achievement of quantitative merit

and/or qualitative merit criteria.

iii. A contract may provide for merit bonuses in an amount not exceeding

3.33 percent of annual salary for each quantitative merit criterion achieved

and 2.5 percent of annual salary for each qualitative merit criterion

achieved. Any such merit bonus shall be considered "extra compensation"

for purposes of N.J.A.C. 17:3-4.1 and shall not be cumulative.

iv. The district board of education shall submit to the executive county

superintendent a resolution certifying that a quantitative merit criterion or

a qualitative merit criterion has been satisfied and shall await confirmation

of the satisfaction of that criterion from the executive county

superintendent prior to payment of any merit bonus.

12. No provision for a bonus shall be made except where payment is contingent upon

achievement of measurable specific performance objectives expressly contained

in a contract approved pursuant to this section, where compensation is deemed

reasonable relative to the established performance objectives and achievement of

the performance objectives has been documented to the satisfaction of the district

board of education.

13. No provision for payment at the time of separation or retirement shall be made for

work not performed except as otherwise authorized above.

14. No contract shall include a provision for a monthly allowance except for a

reasonable car allowance. A reasonable car allowance shall not exceed the

monthly cost of the average monthly miles traveled for business purposes

multiplied by the allowable mileage reimbursement pursuant to applicable law

and regulation and New Jersey Office of Management and Budget (NJOMB)

circulars. If such allowance is included, the employee cannot be reimbursed for

business travel mileage nor assigned permanently a car for official school district

business. Any provision of a car for official school district business shall conform

with N.J.A.C. 6A:23A-6.12 and shall be supported by detailed justification. No

contract shall include a provision of a dedicated driver or chauffeur.

15. All superintendent contracts shall include the required provision pursuant to

N.J.S.A. 18A:17-15.1, which states that in the event the superintendent’s

certificate is revoked, the contract is null and void.

16. No contract shall include a provision for additional compensation upon the

acquisition of a graduate degree unless the graduate degree is conferred by a

regionally accredited college or university as defined in N.J.A.C. 6A:9-2.1. No

contract shall include a provision for assistance, tuition reimbursement, or

additional compensation for graduate school coursework unless the coursework

culminates in the acquisition of a graduate degree conferred by a regionally

accredited institution college or university as defined in N.J.A.C. 6A:9-2.1.

(f) Any action(s) by the executive county superintendent undertaken pursuant to this

subchapter may be appealed to the Commissioner pursuant to N.J.A.C. 6A:3,

Controversies and Disputes.

6A:23A-3.2 Required actions relative to early termination of superintendent

(a) Pursuant to N.J.S.A. 18A:17-20.2a, the district board of education shall submit to the

Commissioner for prior approval an early termination of employment agreement for its

superintendent that includes the payment of compensation as a condition of separation.

(b) Early termination of employment agreements shall only be for involuntary separation of

the superintendent where the district board of education documents the separation

agreement is in the best interests of the school district’s students and/or operations.

separation is the result of:

1. Indictment for a felony unless subsequently cleared or acquitted;

2. Conviction of a felony;

3. Documented cause such as gross mismanagement, purposeful waste, or fraud;

4. Revocation of certification; or

5. Finding(s) of ethical violations by the School Ethics Commission.

(d) No early termination of employment agreement shall contain payment of compensation

as a condition of separation when the existing employment contract already contains

provisions for compensation as a condition of separation.

(e) No early termination of employment agreement shall include payment for unspecified

future work or for work not actually performed, such as a retainer for unspecified

consultation or for advice subsequent to separation.

(f) Early termination agreements shall not include the value of accrued, unused sick days

except as permitted by N.J.S.A. 18A:30-3.5.

(g) Early termination agreements containing compensation for separation cannot exceed the

lesser of the calculation of three months’ pay for every year remaining on the contract

with proration for partial years, not to exceed 12 months, or the remaining salary amount

due under the contract, except as noted in the following:

1. The value of accrued, unused vacation days shall not exceed the sum of accrued,

unused vacation days as of June 8, 2007, unused vacation days accrued in the

school year in which the separation agreement is entered, and unused vacation days

accrued in the year preceding the school year in which the separation agreement is

entered, to the extent permitted by N.J.S.A. 18A:30-9, provided payment for

accrued, unused vacation days is an express provision of the existing contract.

(h) No early termination of employment agreement shall include extended payment, payment

for retroactive salary increases, bonuses, overtime, longevity, accrued vacation, or other

time benefit, or any other benefit neither expressly contained in the employment

agreement being terminated early nor earned according to performance or other criteria

established in the agreement.

6A:23A-3.3 Certification review under certain conditions

The State Board of Examiners shall review the certification of the school district’s

superintendent and SBA, pursuant to N.J.S.A. 18A:6-38.2, when the appointment of a State

monitor, pursuant to N.J.S.A. 18A:7A-55, is authorized.

6A:23A-3.4 Noncompliance with GAAP, review of certification of a SBA

The Commissioner, pursuant to N.J.S.A. 18A:6-38.3, shall recommend to the State Board of

Examiners that it review the certification of the school district's SBA when any school district’s

accounting system and financial reports are not in compliance with GAAP.

Subchapter 4. School District Fiscal Accountability

6A:23A-4.1 Additional powers of Commissioner to achieve fiscal accountability

(a) The Commissioner may appoint an external entity to perform a compliance audit of a

school district's general fund spending upon identification that the school district may be

spending State education funds for purposes that are not in compliance with State

education laws and regulations.

(b) The final report shall include, as applicable:

1. Specific findings of:

i. Spending that was not in compliance with Federal and State law and regulations;

ii. Procedural noncompliance with Federal and State law and regulations;

iii. Noncompliance with GAAP and/or generally accepted business practices;

iv. Weaknesses in the system of internal controls; and

v. Questionable or inefficient spending practices;

2. The cause of each finding;

3. Specific corrective recommendations; and

4. The school district response to each finding and recommendation.

monitor pursuant to N.J.S.A. 18A:7A-55.

(d) The school district shall reimburse the Department the total cost of the compliance audit

if the audit determined State aid spending was not in compliance with State education law

and regulation.

6A:23A-4.2 Compliance with requirements for income tax

(a) The SBA or any other person designated by the district board of education shall certify to

the New Jersey Department of the Treasury on a form provided by the Department of the

Treasury that all documentation prepared for income tax related purposes, in regard to

superintendents, assistant superintendents, and SBAs, complies fully with Federal and State

laws and regulations regarding the types of compensation that are required to be reported.

(b) The personal use of a school district vehicle and/or use of driver services shall be taxable

to the employee as a non-cash fringe benefit pursuant to the IRS Code. "Personal use"

includes commuting to and from work, as well as personal travel. Pursuant to N.J.A.C.

6A:23A-3.1 and 6.12, a school district shall not assign a vehicle permanently to an

individual for the primary purpose of commuting nor shall a school district provide a

dedicated driver or chauffeur. Incidental personal use, however, shall be permitted and

shall be taxable pursuant to the IRS Code.

1. The SBA or designee shall be responsible for notifying the affected employees,

within 30 days of providing them with the use of a school district vehicle, of the

valuation method to be used to calculate their vehicle fringe benefit.

2. The value of the services provided by a driver to the individual assigned a school

district vehicle shall also be included in determining the total taxable fringe benefit.

3. The total taxable non-cash fringe benefit amount shall be the proportional share of

personal use and commutation value to total value of the school district vehicle

and driver salary.

4. The taxable non-cash fringe benefit amount shall be included in the gross wages

of the final pay period of the calendar year, and displayed in the box entitled

“Taxable Benefits” on the W-2 Forms of the affected employees.

5. The taxable non-cash fringe benefit amount shall be included in taxable Federal

wages and taxable State wages for New Jersey residents.

6. FICA and Medicare contributions, if required, shall be withheld for affected

employees on the final pay period of the calendar year.

State or Federal law.

6A:23A-4.3 Annual audit to assure income tax reporting compliance

The annual audit conducted pursuant to N.J.S.A. 18A:23-1 shall include test measures to assure

the documentation prepared for income tax related purposes complies fully with Federal and

State laws and regulations regarding the compensation that is required to be reported.

6A:23A-4.4 Repeat annual audit recommendations; action required

(a) School districts that had repeat audit findings in the Auditor's Management Report

submitted with the CAFR in any year shall submit, within 30 days of the CAFR

submission, to the executive county superintendent or State monitor, as applicable, a

specific corrective action plan for addressing the repeat audit findings noted in the

Auditor's Management Report. The corrective action plan shall include the following:

1. Conditions that caused the repeat recommendation(s);

2. Corrective actions taken or to be taken and the dates or projected dates of the actions;

3. Internal controls put in place or to be put in place to prevent another repeat of the

recommendation and the dates or projected dates of their implementation; and

4. The administrator directly responsible for implementing the actions and controls

in (a)2 and 3 above.

Subchapter 5. Additional Measures to Ensure Effective and Efficient Expenditures of District Funds

6A:23A-5.1 Order to show cause to withhold or recover State aid due to excessive, unreasonable,

ineffective, or inefficient expenditures

(a) If the Department identifies ineffective or inefficient expenditure(s) by a school district or

CVSD, including, but not limited to, the practices prohibited in N.J.A.C. 6A:23A-5.2 through

5.9, the Commissioner shall provide, except as otherwise provided in (h) below, the school

district or CVSD the opportunity to be heard as to why the amount of the ineffective or

inefficient expenditure(s) shall not be withheld from State aid or refunded to the Department.

(b) The proceeding shall be instituted by an order to show cause filed by the petitioner. The

filing shall include a statement of factual findings along with a letter memorandum setting

forth the basis for the position that the expenditure(s) was ineffective or inefficient.

the letter memorandum and an answer that meets the filing, service, and format

requirements for answers as set forth in N.J.A.C. 6A:3, Controversies and Disputes.

(d) The petitioner may file a reply to the response within 10 days.

(e) Upon review of the filings, the Commissioner may decide to hear the matter directly

pursuant to N.J.S.A. 52:14F-8 or refer the matter to the Office of Administrative Law. If

the Commissioner decides to transmit the matter to the Office of Administrative Law,

such transmission shall be done on an expedited basis.

(f) If the Commissioner is hearing the matter directly, upon receipt of the filings set forth

above or upon expiration of the time for their submission, the Commissioner shall review

the total record before him or her and render a written decision.

(g) The Commissioner’s decision shall include a determination of whether the expenditure

was ineffective or inefficient and, if so, the amount of funds to be withheld from State aid

or refunded by the school district.

(h) Nothing shall preclude the Commissioner from immediately and summarily withholding

State aid, consistent with N.J.S.A. 18A:55-2, if, at any time, it is determined the fiscal

practices, actions, or expenditures of a school official, district board of education

member, district board of education, or any other party under the Commissioner’s

jurisdiction are in violation of any statute, regulation, rule, or directive of the State Board

of Education or Commissioner.

6A:23A-5.2 Public relations and professional services; district board of education policies; efficiency

(a) Each district board of education of a school district and CVSD shall establish by

policy(ies) a strategy(ies) to minimize the cost of public relations as defined in N.J.A.C.

6A:23A-9.3(c), and professional services. The policy(ies) shall include, to the extent

practical and cost effective, but need not be limited to, the following provisions:

1. A maximum dollar limit, established annually prior to budget preparation, for

public relations, as defined in N.J.A.C. 6A:23A-9.3(c), and each type of

professional service, with appropriate notification to the district board of

education if it becomes necessary to exceed the maximum. Upon such

notification, the district board of education may adopt a dollar increase in the

maximum amount through formal district board of education action;

2. Establishment of procedures to ensure the prudent use of legal services by employees

and district board of education members and the tracking of the use of those services.

3. School districts with legal costs that exceed 130 percent of the Statewide average

per pupil amount should establish the following procedures and, if not established,

provide evidence the procedures would not result in a reduction of costs:

i. A limitation on the number of contact persons with the authority to request

services or advice from contracted legal counsel;

ii. Criteria or guidance to prevent the use of legal counsel unnecessarily for

management decisions or readily available information contained in

school district materials such as policies, administrative regulations, or

guidance available through professional source materials;

iii. A provision that requests for legal advice shall be made in writing and

shall be maintained on file in the school district offices and a process to

determine whether the request warrants legal advice or if legal advice is

necessary; and

iv. A provision to maintain a log of all legal counsel contact, including name

of legal counsel contacted, date of contact, issue discussed, and length of

contact. Legal bills shall be compared to the contact log and any variances

shall be investigated and resolved;

4. A provision that requires contracts for legal services to comply with payment

requirements and restrictions pursuant to N.J.S.A. 18A:19-1 et seq. and as follows:

i. Advance payments shall be prohibited;

ii. Services to be provided shall be described in detail in the contract;

iii. Invoices for payment shall itemize the services provided for the billing period; and

iv. Payment shall be only for services actually provided;

5. Professional services contracts are issued in a deliberative and efficient manner

that ensures the school district receives the highest quality services at a fair and

competitive price or through a shared service arrangement. This may include, but

is not limited to, issuance of such contracts through a request for proposals (RFP)

based on cost and other specified factors or other comparable process; and

6. Professional services contracts are limited to non-recurring or specialized work

for which the school district does not possess adequate in-house resources or in-

house expertise to conduct.

(b) School districts and CVSDs shall not contract with legal counsel or use in-house legal

counsel to pursue any affirmative claim or cause of action on behalf of school district

administrators and/or any individual district board of education member(s) for any claim

or cause of action in which the damages to be awarded would benefit an individual rather

than the school district as a whole.

efficient manner possible that will enable the school district to inform and educate the

target community. The use of expensive materials or production techniques where lower

cost methods are available and appropriate, such as the use of multi-color glossy

publications instead of suitable, less expensive alternatives, shall be prohibited.

(d) School districts and CVSDs shall not distribute, via mass mailings or other means to the

school district community at large, publications that include the picture(s) of any district

board of education member(s) within 90 days before any election in which any district

board of education member is seeking any elective office or any election relating to

school district operations held in the school district. Moreover, any publication(s)

distributed by the district board of education via mass mailings or other means to the

school district community at large within 60 days before any election in which any

district board of education member is seeking any elective office or any election relating

to school district operations held in the district shall be submitted to the executive county

superintendent for review prior to distribution to ensure public funds are being expended

in a reasonable and cost-effective manner.

(e) Public relations activities, such as booths at Statewide conferences, marketing activities

and celebrations for opening schools and community events, and TV productions that are

not part of the instructional program or do not provide, in a cost-effective way,

information about school district or district board of education operations to the public,

that are excessive in nature are prohibited. All activities involving promotional efforts to

advance a particular position on school elections or any referenda shall be prohibited.

(f) Nothing in this section shall preclude a district board(s) of education from accepting

donations or volunteer services from community members, local private education

foundations, and local business owners to conduct or assist in public relations services.

Examples include, but are not limited to:

1. Providing school district flyers, newsletters, or other materials containing school

district related information of public concern to local businesses, public meeting

places, or other local organizations to display or make available for dissemination;

2. Making school district related information of public concern available to local

newspapers to publish related articles; and

3. Utilizing volunteer services of local community members, school district

employees, members of parent organizations, or local businesses with expertise in

related areas such as printing, advertising, publishing, or journalism.

6A:23A-5.3 Failure to maximize Special Education Medicaid Initiative (SEMI)

(a) Every school district and CVSD, with the exception of any school district that obtains a

waiver of the requirements of this section pursuant to (b) below, shall take appropriate steps

to maximize its revenue from the Special Education Medicaid Initiative (SEMI) program by

following the policies and procedures to maximize participation in the program as set forth in

(d) below and to comply with all program requirements as set forth in (e) below.

(b) School districts and CVSDs may seek, in the prebudget year, a waiver of the

requirements of this section upon demonstration that for the subsequent school year: the

school district projects, based on reliable evidence, that it will have 40 or fewer

Medicaid-eligible classified students.

1. The application for a waiver of the requirements of this section shall be made to

the executive county superintendent no less than 45 days prior to the submission

of the school district’s proposed budget for the school year to which the waiver

request applies. The executive county superintendent shall notify the school

district of the decision on the waiver application within 20 days of receipt of the

waiver request. If the waiver is not granted, the school district shall submit to the

executive county superintendent a SEMI action plan as required by (f) below as

part of its annual school district budget submission, or shall demonstrate to the

executive county superintendent that the school district has achieved maximum

participation in the SEMI program in the prebudget year.

CVSD with a projection of available SEMI reimbursement for the budget year, as determined

by the New Jersey Department of the Treasury’s third-party administrator for SEMI.

1. The school district shall recognize as revenue in its annual school district budget

no less than 90 percent of said projection.

2. A school district or CVSD may seek approval from the executive county

superintendent to use its own projection of SEMI reimbursement upon

demonstration the numbers it used in calculating the projection are more accurate

than the projection provided.

(d) Each school district or CVSD shall strive to achieve maximum participation in the SEMI

program. For purposes of this section, “maximum participation” means obtaining a 90

percent return rate of parental consent forms for all SEMI eligible students. School

districts shall enter all students following their evaluations into the third-party system as

determined by the New Jersey Department of the Treasury to identify the school district’s

universe of eligible students. This may be done without parental consent.

(e) School districts participating in the SEMI reimbursement program shall comply with

program requirements as follows:

1. Each district board of education or CVSD board of education shall implement a

policy concerning the effective and efficient administration of the SEMI

reimbursement program consistent with the requirements of this section. A

complete listing of requirements and information are available at the SEMI/MAC

website https://www.state.nj.us/treasury/administration/semi-mac/semi.shtml.

2. Any service submitted to Medicaid for reimbursement shall be rendered by a

Medicaid qualified practitioner, or rendered by a provider under the supervision

of a Medicaid qualified practitioner. The following outlines the required

documentation for each related service provider:

i. Nurses – copy of license (Department certification is not required for SEMI);

ii. Occupational Therapist – copy of license and Department certification;

iii. Physical Therapist - copy of license and Department certification;

iv. Psychologist – copy of Department certification;

v. Social Worker - copy of Department certification;

vi. Speech-language specialist:

(1) Qualification and documentation for provision of evaluation services

shall include:

(A) Copy of licensed physician’s orders, which shall be maintained

with the student’s IEP; or

(B) Copy of New Jersey license as a speech-language pathologist

and Department certification as a speech-language specialist

(N.J.A.C. 6A:9B-14.6) for the individual whose signature

appears on the IEP; or

services included in or with the student’s IEP.

(2) Qualification for provision of related services shall include:

(A) Copy of Department certification or endorsement issued

and an American Speech-Language-Hearing Association

(ASHA) Certificate of Clinical Competence; or

(B) Copy of Department certification or endorsement and a valid

license authorized by the State Audiology and Speech-

Language Pathology Advisory Committee in accordance with

N.J.S.A. 45:3B-1 et seq.

vii. Audiologist – copy of license issued by the State Audiology and Speech-

Language Pathology Advisory Committee in accordance with N.J.S.A.

45:3B-1 et seq.

3. Practitioners who are not Medicaid qualified can deliver services under the

direction of Medicaid qualified practitioners. These include only certified

occupational therapist assistants (COTAs), physical therapist assistants (PTAs),

speech-language specialists who do not meet the qualifications at (e)2vi(2)(A) or

(B) above, and licensed practical nurses (LPNs).

4. Any direct therapy or other related service shall be prescribed in the related

services section of the student’s IEP prior to submitting a claim to Medicaid for

reimbursement. Delivery of nursing services and dispensing of medication shall

be referenced in the IEP and supported by physicians’ orders or prescriptions,

which shall be maintained on file. Supporting documentation to be maintained by

the school district shall be the cover/signature page, related services section of the

IEP, therapy logs, and the evaluations and assessments conducted by the

Medicaid-qualified practitioners.

5. Entities where the school district has placed SEMI-eligible students shall take

steps to enable school districts to maximize participation, including either logging

the eligible services provided directly through the third-party system as

determined by the New Jersey Department of the Treasury or the sending school

district, as mutually agreed upon with the school district, and obtaining SEMI

provider qualification certifications. Every out-of-district placement shall provide

copies of SEMI provider qualifications, certifications and licenses. This

paragraph applies to the following out-of-district placement options:

i. Approved private schools for students with disabilities;

ii. Educational services commissions;

iii. Jointure commissions;

iv. Vocational half-time programs;

v. Department regional day schools; and

vi. Special services school districts.

6. Each school district that does not have an approved waiver pursuant to (b) above

shall comply with the program requirements to assure the year-end cost settlement

of SEMI claims is properly calculated with the standardized submission of quarterly

and annual cost data, as well as staff pool lists transmitted directly through the

third-party system as determined by the New Jersey Department of the Treasury.

7. To retain reimbursement, each school district that does not have an approved

waiver pursuant to (b) above shall ensure compliance with the necessary

components of the cost settlement requirements, which include completion of the

online questionnaire -- Random Moment Time Study (RMTS) -- by staff provided

directly through the third-party system as determined by the New Jersey

Department of the Treasury.

8. All supporting documentation for a Medicaid claim shall be maintained on file

and available for audit or State review for at least seven years from the date of

service. Supporting documentation shall include provider certification (current

and historical for each provider), provider service logs, licenses and certifications,

physician authorizations for nursing services, parental consent forms, attendance

records, and copies of the student’s IEP.

(f) Each school district that has less than 90 percent participation of SEMI eligible students

in the prebudget year or that has failed to comply with all program requirements set forth

in (e) above shall submit a SEMI action plan to the executive county superintendent for

review and approval as part of the school district’s proposed budget submission.

(g) The SEMI action plan shall include the following components:

1. Procedures for obtaining parental consent forms, such as the parental consent best

practices that are available from the Department.

2. Establishment of a benchmark for the year of implementation or for the first year

the school district does not have an approved waiver pursuant to (b) above,

whichever is applicable, for obtaining maximum participation of all SEMI eligible

students by the start of the subsequent school year.

i. The benchmarks for the first year of implementation or for the first year the

school district does not have an approved waiver pursuant to (b) above,

whichever is applicable, for achieving maximum participation shall close, at a

minimum, the gap between current participation and maximum participation

by 50 percent by the beginning of the subsequent school year; and

ii. The benchmarks shall be based on the percentage of parental consent

forms collected from eligible students. The number of parental consent

forms shall reflect one parental consent form or one document noting

parental refusal for each eligible student;

3. Procedures to ensure all IEP meetings are documented in the third-party

administrator’s system. IEPs are claimable only if a Medicaid qualified practitioner

is present and it is documented that a health-related service is discussed;

4. Procedures to ensure all SEMI eligible services, including services provided by

entities where the school district has placed SEMI eligible students, are

documented in the third-party administrator’s system;

5. Procedures to ensure a valid IEP is on file and the IEP date is on file in the third-

party administrator’s system for each SEMI eligible student for whom parental

consent has been obtained; and

6. Procedures to ensure service providers used by the school district and entities

where the school district has placed SEMI eligible students have valid licenses

and certifications documenting SEMI provider qualifications on file in the third-

party administrator’s system.

(h) School districts that did not achieve 90 percent participation or achieve their approved

benchmarks in the SEMI program for a given budget year and cannot demonstrate they

fully implemented their Department-approved SEMI action plan required under (f) and

(g) above shall be subject to review for the withholding of State aid by the Commissioner

pursuant to N.J.S.A. 18A:55-3 in an amount equal to the SEMI revenue projection based

on their approved benchmark for the budget year, if applicable, less actual SEMI

reimbursements for the budget year. The State aid deduction shall be made in the second

subsequent year after the budget year.

6A:23A-5.4 Violation of public school contracts law

(a) Pursuant to the authority granted the Commissioner under N.J.S.A. 18A:55-2 and

18A:7F-60, the Commissioner shall subject to review for the withholding of State funds

any school district or CVSD that fails to obey the provisions of the Public School

Contracts Law, N.J.S.A. 18A:18A-1 et seq.

(b) The amount of funds withheld shall equal the amount of the contract awarded in violation

of N.J.S.A. 18A:18A-1 et seq., except for violations related to the award of contracts

under the extraordinary unspecifiable services (EUS) provision, which shall be governed

by N.J.S.A. 18A:18A-46.1.

6A:23A-5.5 Expenditure and internal control auditing

(a) Pursuant to a phase-in schedule to be determined by the Commissioner, a school district or

CVSD board of education that receives 50 percent or more of its general fund budget in

State aid during the 2008-2009 school year shall engage an independent certified public

accountant or independent certified public accounting firm, other than the accountant or

firm that performs the annual audit pursuant to N.J.S.A. 18A:23-1 et seq., to conduct a

valid sampling of expenditures made during the most recently completed school year that

the school district received 50 percent or more of its general fund budget in State aid. The

purpose of the audit is to determine the educational value and/or reasonableness of

expenditures and to conduct a sampling of internal controls sufficient to determine the

adequacy of the school district’s internal control structure. In establishing the phase-in

schedule for the audits, the Commissioner shall take into account the time period that has

elapsed since any other expenditure and/or comprehensive internal control audit beyond the

CAFR has been conducted in the school district, the school district’s performance on the

fiscal management section of the most recent NJQSAC evaluation, and any other factors

the Commissioner determines are relevant.

(b) A district board of education or CVSD board of education that receives 50 percent or

more of its general fund budget in State aid in any school year subsequent to 2008-2009

shall engage an independent certified public accountant or independent certified public

accounting firm, other than the accountant or firm that performs the annual audit pursuant

to N.J.S.A. 18A:23-1 et seq., to conduct a valid sampling of expenditures made during

the school year in which it received 50 percent or more of its general fund budget in State

aid to determine the educational value and/or reasonableness of said expenditures and to

conduct a sampling of internal controls sufficient to determine the adequacy of the school

district’s internal control structure.

State aid in the seventh year following the audit required by (a) above, an audit shall be

conducted once every seven years:

(d) For a school district receiving greater than 75 percent of its general fund budget in State

aid in the fourth year following the audit required by (a) above, an audit shall be

conducted once every four years.

(e) The cost of the audit required under this section shall be considered to be outside the

calculation of the per pupil administrative cost limit pursuant to N.J.S.A. 18A:7F-5.

6A:23A-5.6 School district response to Office of Fiscal Accountability and Compliance (OFAC)

investigation report

(a) Any school district or CVSD that has been subject to an audit or investigation by the

Department’s Office of Fiscal Accountability and Compliance (OFAC) shall discuss the

findings of the audit or investigation at a public meeting of the district board of education no

later than 30 days after receipt of the findings.

(b) Within 30 days of the public meeting required in (a) above, the district board of

education shall adopt a resolution certifying the findings were discussed in a public board

meeting and approving a corrective action plan to address the issues raised in the

findings. This resolution shall be submitted to OFAC within 10 days of adoption by the

district board of education.

corrective action plan shall be posted on the school district’s website, if one exists.

6A:23A-5.7 Verification of payroll check distribution

(a) At least once every three years, between the months of September through May, school

districts, and CVSDs shall require each school district employee to report to a central

location(s), produce picture identification, and sign for release of his or her paycheck or

direct deposit voucher. The school district may exclude per diem substitutes from the

required verification.

(b) Picture identification shall be in the form of a school district issued identification card,

valid drivers’ license, official passport, or other picture identification issued by a state,

county, or other local government agency.

match the picture identification to the position control roster maintained by the office of

personnel or human resources prior to release of the pay check or direct deposit voucher.

(d) Where no appropriate identification can be produced, the school business administrator

shall withhold paychecks or stop direct deposits until the payee/district employee

produces appropriate identification or until an investigation and corrective action is

concluded, as appropriate to the circumstances.

(e) Upon completion of the payroll check distribution verification procedures set forth in this

section, the chief school administrator shall submit a certification of compliance, in a

form prescribed by the Department, to the executive county superintendent. Verification

of the school district’s compliance with the provisions of this section shall be required as

part of the annual audit.

6A:23A-5.8 District board of education expenditures for non-employee activities, meals,

and refreshments

(a) The words and terms used in this section shall have the following meanings, unless the

context clearly indicates otherwise:

1. “Activities” means events or functions provided or held for the benefit of

students, dignitaries, and other “non-school district” employees (for example,

parents) that are paid from public funds.

2. “Dignitary” means a notable or prominent public figure; a high-level official; or

an individual who holds a position of honor. A dignitary, for purposes of this

section, is not a school district employee or district board of education member.

(b) Allowable expenditures for non-employee district board of education or CVSD board of

education activities shall include:

1. All reasonable costs, including light meals and refreshments, directly related to

activities that benefit students and are part of the instructional program, including

expenditures for field trips and extracurricular programs that are not solely for

entertainment. Nothing in this subsection shall preclude district boards of

education from using student activity funds or accepting donations to support

student activities that are solely for student entertainment;

2. All reasonable costs directly related to activities of dignitaries and other non-

school district employees, including light meals, refreshments, and any other

directly related expense. It is expected that expenditures for this purpose will be

minimal and infrequent;

3. All reasonable costs of commencement and convocation activities for students; and

4. Expenditures related to school district employees to the extent the employees are

essential to the conduct of the activity.

following actions regarding student activities:

1. Pre-approve field trip destinations;

2. Establish dollar thresholds for awards to recognize special accomplishments; and

3. Establish a budget supported by general fund revenues for each category of

activity in a non-discriminatory manner (for example, football, boys soccer, girls

soccer, photography club). Student activity funds are excluded.

(d) Pursuant to N.J.S.A. 18A:11-12 and New Jersey Department of the Treasury, Office of

Management and Budget Circulars for “Travel Regulations” and “Entertainment, Meals,

and Refreshments” and this subchapter, the following costs shall not be permitted using

public funding

1. Receptions, dinners, or other social functions held for or honoring any school

district employee(s) (for example, breakfast, luncheon, dinner, or reception for

retirees or award recipients). This does not prohibit school districts from

honoring employees without a social function or using public funds to support

reasonable costs of employee recognition awards (for example, teacher of the year

awards, years of service awards). Use of public funds for reasonable costs of

employee awards shall be a local discretionary expenditure;

2. Meals or refreshments served to guests at any athletic event(s) or other games or

contests; and

3. Expenses for alcoholic beverages.

(e) Documentation required to support activities, meals, and refreshments at school district

events shall include:

1. A description of the activity;

2. The purpose/justification of the activity, expressed in terms of the school district’s

goal(s) or objective(s);

3. The make-up of the group participating in the activity; and

4. The names and titles of district board of education members or employees

included in the group.

6A:23A-5.9 Out-of-State and high-cost travel events

(a) Reimbursement for all in-State and out-of-State travel shall be made pursuant to N.J.S.A.

18A:11-12.

(b) Out-of-State travel events shall be limited to the fewest number of district board of

education members or affected employees needed to acquire and present the content

offered to all district board of education members or staff, as applicable, at the conclusion

of the event. Lodging may be provided only if the event occurs on two or more

consecutive days and if home-to-event commute exceeds 50 miles.

attendees, or when more than five individuals from the school district are to attend a

travel event out-of-State, the school district or CVSD shall obtain prior written approval

of the executive county superintendent. The executive county superintendent shall

promptly review the request and render a written decision within 10 business days.

(d) For all employee and district board of education member travel events out of the country,

regardless of cost or number of attendees, the school district or CVSD shall obtain prior

written approval of the executive county superintendent. Such requests shall be

supported by detailed justification. The executive county superintendent shall promptly

review the request and render a written decision within 10 business days. It is expected

that approvals will be rare.

Subchapter 6. Conditions for The Receipt of State Aid

6A:23A-6.1 Conditions precedent to disbursement of State aid

(a) The Commissioner shall not disburse any State aid to a school district or CVSD that fails

to comply with the standards set forth at N.J.S.A. 18A:55-3 and the requirements

concerning nepotism, contributions to district board of education members and contract

awards, and internal controls set forth in this subchapter.

(b) Pursuant to N.J.S.A. 18A:55-3, as a condition of State aid, a school district shall:

1. Examine, no less than once every three years, all available group options for

every insurance policy held by the school district, including self-insurance plan

administered by the New Jersey School Boards Association (NJSBA) Insurance

Group on behalf of school districts, and shall participate in the most cost effective

plan. This shall include review of annual claims data and other experience rating

information, as applicable;

2. Take steps to maximize the school district’s participation in the Federal Universal

Service Program (E-rate) and the ACT telecommunications program offered

through the New Jersey Association of School Business Officials;

3. Participate in the Alliance for Competitive Energy Services (ACES) Program

offered through the NJSBA, unless the school district is able to demonstrate to the

Commissioner that it receives goods or services at a cost less than or equal to the

cost achieved by participants of the program based on an analysis of the prior two

years;

4. Take appropriate steps to maximize the school district’s participation in the

Special Education Medicaid Initiative (SEMI) program, pursuant to N.J.A.C.

6A:23A-5.3; and

5. Refinance all outstanding debt in accordance with N.J.S.A. 18A:24-61.1 et seq.

for which a three percent net present value savings threshold is achievable. This

provision shall also be monitored by the executive county superintendent or State

monitor, if applicable, pursuant to N.J.A.C. 6A:23A-9.11.

6A:23A-6.2 Nepotism policy

(a As a condition of receiving State aid, the district board of education or CVSD board of

education shall implement a nepotism policy, which shall include the following:

1. A definition of “relative” that is consistent with N.J.S.A. 52:13D-21.2 and

N.J.A.C. 6A:23A-1.2 and a definition of “immediate family member” that is

consistent with N.J.S.A. 52:13D-13 and N.J.A.C. 6A:23A-1.2;

2. A provision prohibiting any relative of a district board of education member or

chief school administrator from being employed in an office or position in the

school district except

i. A person employed by the school district on the effective date of the

policy or the date a relative becomes a district board of education member

or chief school administrator shall not be prohibited from continuing to be

employed or to be promoted in the school district; and

ii. A school district may employ a relative of a district board of education

member or chief school administrator provided the school district has

obtained approval from the executive county superintendent. Such

approval shall be granted only upon demonstration by the school district

that it conducted a thorough search for candidates and the proposed

candidate is the only qualified and available person for the position.

3. A provision prohibiting the chief school administrator from recommending to the

district board of education, pursuant to N.J.S.A. 18A:27-4.1, his or her relative or

the relative of a district board of education member, unless the person is subject to

an exception in (a)2 above;

4. A provision prohibiting a school district administrator from exercising direct or

indirect authority, supervision, or control over his or her relative. If it is not feasible

to eliminate such a direct or indirect supervisory relationship, appropriate screens

and/or alternative supervision and reporting mechanisms shall be put in place;

5. A provision prohibiting a school district administrator or district board of

education member whose relative is a member of the bargaining unit from

discussing or voting on the proposed collective bargaining agreement with that

unit or from participating in any way in negotiations, including, but not limited to,

being a member of the negotiating team; nor should that school district

administrator be present with the district board of education in closed session

when negotiation strategies are being discussed; however, the administrator may

serve as a technical resource to the negotiating team and may provide technical

information necessary to the collective bargaining process when no one else in the

school district can provide such information; and

6. A provision prohibiting a school district administrator or district board of

education member who has an immediate family member who is a member of the

same Statewide union in another school district from participating in any way in

negotiations, including, but not limited to, being a member of the negotiating

team or being present with the district board of education in closed sessions when

negotiation strategies are being discussed, prior to the district board of education

attaining a tentative memorandum of agreement with the bargaining unit that

includes a salary guide and total compensation package; once the tentative

memorandum of agreement is established, a school district administrator with an

immediate family member who is a member of the same Statewide union in

another school district may fully participate in the process, absent other conflicts.

Notwithstanding the above, a school district administrator who has an immediate

family member who is a member of the same Statewide union in another school

district may serve as a technical resource to the negotiating team and may provide

technical information necessary to the collective bargaining process when no one

else in the school district can provide such information.

(b) A district board of education or CVSD board of education may exclude per diem

substitutes and student employees from its nepotism policy.

6A:23A-6.3 Contributions to district board of education members and contract awards

(a) As a condition of receiving State aid, each school district and CVSD shall have policies

that comply with the provisions of this section to ensure the school district shall maintain

honest and ethical relations with vendors and shall guard against favoritism, improvidence,

extravagance, and corruption in its contracting processes and practices. The terms

“business entity” and “interest” as used below are defined as set forth in P.L. 2004, c. 19.

1. No district board of education shall vote upon or award any contract in the

amount of $17,500 or greater to any business entity that has made a contribution

reportable by the recipient under P.L. 1973, c. 83 (N.J.S.A. 19:44A-1 et seq.), to a

member of the district board of education during the preceding one-year period.

2. Contributions reportable by the recipient under P.L. 1973, c. 83 (N.J.S.A. 19:44A-

1 et seq.), to any member of the district board of education from any business

entity doing business with the school district shall be prohibited during the term

of a contract.

3. When a business entity referred to in (a)2 above is a natural person, a contribution

by that person’s spouse or child who resides therewith shall be deemed to be a

contribution by the business entity. Where a business entity is other than a natural

person, a contribution by any person or other business entity having an interest

therein shall be deemed to be a contribution by the business entity.

4. The disclosure requirement set forth in section 2 of P.L. 2005, c. 271 (N.J.S.A.

19:44A-20.26) also shall apply when the contract is required by law to be publicly

advertised for bids.

5. This subsection shall not apply to a contract when a school district emergency

requires the immediate delivery of goods or services.

6. With the exception of school districts previously subject to the requirements of

N.J.A.C. 6A:10-2.1(e), this subsection shall not apply to contributions made prior

to the effective date of these rules.

6A:23A-6.4 Internal controls

(a) As a condition of receiving State aid, each school district and CVSD shall establish

specific policies and procedures on internal controls designed to provide management

with reasonable assurance that the school district’s goals and objectives will be met and

meet the requirements of N.J.A.C. 6A:23A-6.5 through 6.13. Internal controls shall

promote operational efficiency and effectiveness, provide reliable financial information,

safeguard assets and records, encourage adherence to prescribed policies, and comply

with law and regulation.

(b) The subchapter’s specific internal controls shall be established together with other

internal controls contained in N.J.A.C. 6A and other law and regulations, required by

professional standards, and as deemed necessary and appropriate by school district

management. Any school district may submit to the Commissioner a written request to

approve an alternative system, approach, or process for implementing the internal

controls required in this subchapter. The application shall include documented evidence,

including, but not limited to, an independent, third-party written assessment that the

alternative system, approach, or process will achieve the same safeguards, efficiency, and

other purposes as the specified internal control requirement(s).

6A:23A-6.5 Segregation of duties; organization structure

(a) All school districts and CVSDs shall evaluate business processes annually and allocate

available resources appropriately in an effort to establish a strong control environment.

(b) The SBA shall identify processes that are a violation of sound segregation of duties when

performed by the same individuals. The SBA shall segregate the duties of all such processes

among business office staff based on available school district resources, assessed

vulnerability, and the associated cost-benefit, except as required by (b)1 and 2 below.

1. The functions of human resources and payroll shall be segregated and completed

by different employees in all school districts.

2. The functions of purchasing and accounts payable shall be segregated and

completed by different employees in all school districts.

detailed organizational charts for the central office that tie to the school districts’ position

control logs, including, but not limited to, the business, human resources, and information

management functions.

6A:23A-6.6 Standard operating procedures for business functions

(a) Each school district and CVSD shall establish SOPs for each task or function of the

business operations of the school district.

(b) An SOP manual shall include sections on each routine task or function in the following areas:

1. Accounting, including general ledger, accounts payable, accounts receivable,

payroll and fixed assets, and year-end procedures for each

2. Cash management;

3. Budget development and administration, including tasks such as authorization of

transfers and overtime;

4. Position control;

5. Purchasing, including tasks such as preparation of requisitions, approval of

purchase orders and encumbering of funds, bid and quote requirements, and

verification of receipt of goods and services;

6. Facilities, including administration of work, and health and safety;

7. Security;

8. Emergency preparedness;

9. Risk management;

10. Transportation;

11. Food service;

12. Technology systems; and

13. Information management.

ordered in appropriate quantities, maintained in appropriate storage facilities, and

monitored to keep track of inventory.

6A:23A-6.7 Financial and human resource management systems; access controls

(a) School districts and CVSDs with budgets in excess of $25,000,000 or with more than 300

employees shall maintain an enterprise resource planning (ERP) system that integrates all

data and processes of an organization into a unified system. An ERP system uses

multiple components of computer software and hardware and a unified database to store

data for the various system modules to achieve the integration.

(b) Whenever considering financial systems or the automation of other services or functions,

the school district shall notify the executive county superintendent in writing to see if

opportunities for a shared service system exist.

single person does not have the ability to make system edits that would violate

segregation of duties controls.

1. The process for creating, modifying, and deleting user accounts shall include the

use of user access request forms.

2. All requests for financial applications shall be approved and specified by the SBA.

3. All requests for network access shall be granted by the head of the technology

department, if one exists.

4. A review of user access shall be conducted yearly at a minimum by the relevant

department managers and an audit trail should be maintained to verify the

performance of this review.

5. Access to the network and key applications within a school district shall be

restricted to authorized users through the use of unique user names and passwords.

6. Proper protocols shall be implemented that appropriately address password

expiration and complexity.

6A:23A-6.8 Personnel tracking and accounting

(a) Each school district and CVSD shall maintain an accurate, complete, and up-to-date

automated position control roster to track the actual number and category of employees

and the detailed information for each. The position control roster shall:

1. Share a common database and be integrated with the school district's payroll system;

2. Agree to the account codes in the budget software; and

3. Ensure the data within the position control roster system includes, at a minimum,

the following information:

i. The employee’s name;

ii. The employee’s date of hire;

iii. A permanent position tracking number for the employee, including:

(1) The expenditure account codes for the general fund consistent with the

State prescribed budget, special revenue fund, and enterprise funds;

(2) The building(s) the position is assigned;

(3) The certification title and endorsement held, as applicable;

(4) The assignment position title as follows:

(A) Superintendent or chief school administrator;

(B) Assistant superintendent;

(D) Board secretary (when other than (a)3iii(4)(A), (B), or (C) above);

(E) Principal;

(F) Vice principal;

(G) Director;

(H) Supervisor;

(I) Facilitator;

(J) Instructional coach by subject area;

(K) Department chairperson by subject area;

(L) Certificated administrator – other;

(M) Guidance;

(N) Media specialist/librarian;

(O) School nurse;

(P) Social worker;

(Q) Psychologist;

(R) Therapist – OT;

(S) Therapist – PT;

(T) Therapist – speech;

(U) Certificated support staff – other;

(V) Teacher by subject area;

(W) Instructional assistants;

(X) Certificated instructional – other;

(Y) Aides supported by IEP;

(Z) Other aides;

(AA) Maintenance worker;

(BB) Custodian;

(CC) Bus driver;

(DD) Vehicle mechanic;

(EE) Food service; and

(FF) Other non-certificated;

iv. A control number for substitute teachers;

v. A control number for overtime;

vi. A control number for extra pay;

vii. The status of the position (filled, vacant, abolished, etc.);

viii. An indication, when available, of whether the employee is retiring in the

budget year or not being renewed, including associated costs such as

contractual buyouts, severance pay, paid vacation or sick days, etc.;

ix. Each of the following: base salary, step, longevity, guide, stipends by type,

overtime, and other extra compensation;

x. The benefits paid by the school district, net of employee reimbursements

or co-pays, by type of benefit and for FICA and Medicare;

xi. The position's full-time equivalent value by location;

xii. The date the position was filled; and

xiii. The date the position was originally created by the district board of

education. If the date the position was originally created is not available,

this item shall represent the date the person currently filling that position

was approved by the district board of education.

6A:23A-6.9 Facilities maintenance and repair scheduling and accounting

(a) Any school district or CVSD with three or more school district buildings shall have an

automated work order system for prioritizing, performing, and recording all maintenance

and repair requests for all school district buildings and grounds.

1. The superintendent or designee shall establish SOPs for the approval and

prioritization of work order requests that take into account the health and safety of

building occupants; priorities and objectives established annually to carryout the

school district strategic plan; the need for the work requested; and other factors

the school district deems appropriate.

2. The work order system shall include the following information for a request for work

before work begins, except in an emergency where the work is necessary to correct a

situation that poses an imminent threat to the health or safety of students and/or staff:

i. The name of the person making the request;

ii. The date of the request;

iii. The appropriate approval(s) as established by SOP;

iv. The date of approval(s);

v. The location of work requested;

vi. The priority level (for example, urgent, high, average, low);

vii. The scheduled date(s) of service;

viii. The trade(s) needed, such as general maintenance worker; custodian;

carpenter; plumber; electrician; heating, ventilation, and air conditioning

(HVAC); grounds; roofer; masonry; glazer; other;

ix. A description of the work requested;

x. A projection of the materials and supplies needed for the work;

xi. The estimated labor hours needed to complete task;

xii. The name of the work order assigner; and

xiii. The name of the employee(s) working on the order.

3. The work order system shall include the following close-out information for each

request for work:

i. The actual hours worked, by date, for each assigned staff member;

ii. The actual hourly rate paid, both regular and overtime, for each assigned

staff member;

iii. The aggregate cost of labor by regular, overtime, and total;

iv. The actual materials and supplies needed to complete the work order;

v. Actual cost of materials and supplies; and

vi. The name of the employee responsible for attesting that the job was

completed satisfactorily.

4. Except when prohibited by collective bargaining agreement, the SOP shall require

for any work that cannot be completed during regular working hours by the

needed completion date, an assessment of the cost-benefit of outsourcing any such

work in excess of the quote threshold as determined under N.J.S.A. 18A:18A-37.

5. If, according to the assessment, the cost of outsourcing work is less than the in-

house estimated cost of labor, at overtime rates, and materials for the same work,

the work shall be outsourced provided the work can be contracted in accordance

with N.J.S.A. 18A:18A-1 et seq., can be completed by the projected completion

date contained in the prioritized work order system, and does not violate the terms

of the collective bargaining agreement for maintenance workers and/or

custodians.

6. The SBA, in consultation with the supervisor responsible for this work, shall

conduct an analysis of the information in the work order system no later than

February 1 of the prebudget year for consideration during budget preparation.

The analysis should include productivity of staff as a whole and individually,

significant variations between estimated labor time and materials and actual labor

time and materials, unusual trends for like projects, and other factors that will

improve productivity and efficiency.

6A:23A-6.10 Approval of amounts paid in excess of approved purchase orders; district

board of education policy

(a) Each district and CVSD board of education shall adopt a policy establishing the approval

process for any remittance of payment for invoice amounts greater than the approved

purchase order. The policy shall require the SBA to identify and investigate, if necessary,

the reason for any increase to a purchase order. If the SBA finds an increase is

warranted, he or she shall either approve a revision to the original purchase order with the

reason noted, approve the issuance of a supplemental purchase order for the difference, or

cancel the original purchase order and issue a new purchase order. If the SBA finds an

increase is not warranted, the purchase order shall be canceled and the goods returned. In

no instance shall an adjustment be made to a purchase order that changes the purpose or

vendor of the original purchase order or a bid award price.

(b) Financial systems shall be programmed to:

1. Limit system access so only appropriate business office staff can make purchase

order adjustments;

2. Reject adjustments in excess of any established approval thresholds;

3. Prevent unauthorized changes to be processed;

4. Reject payments when the sum of the invoice amount plus any previous invoices

charged to the purchase order exceeds the sum of the original purchase order

amount plus any authorized adjustments;

5. Reject duplicate purchase order numbers;

6. Reject duplicate invoice numbers; and

7. Prepare an edit/change report listing all payments made in excess of the originally

approved purchase order amount.

in excess of the originally approved purchase order amount to ensure all payments made

are properly authorized.

6A:23A-6.11 Vehicle tracking, maintenance, and accounting

(a) Each district and CVSD board of education shall adopt a policy for the management,

control, and regulatory supervision of school district vehicles, including, but not limited

to, the following:

1. A vehicle inventory control record, including:

i. The vehicle make, model, and year;

ii. The vehicle identification numbers (VIN);

iii. The original purchase price;

iv. The date purchased;

v. The license plate number;

vi. The person assigned or the pool, if not individually assigned;

vii. The driver license number of the person assigned and the expiration date;

viii. The insurer and policy number of the person assigned; and

ix. The usage category such as regular business, maintenance, security, or

pupil transportation;

2. A driving record of the operators of school district vehicles, including:

i. The name of the driver;

ii. The driver license number and expiration date;

iii. The insurer and policy number of person assigned;

iv. Motor vehicle code violations;

v. Incidents of improper or non-business usage;

vi. Accidents; and

vii. Other relevant information; and

3. A record of maintenance, repair, and body work for each school district vehicle, including:

i. The vehicle make, model, and year;

ii. The vehicle identification numbers (VIN);

iii. The original purchase price;

iv. The date purchased;

v. The license plate number;

vi. The usage category, such as regular business, maintenance, security, or pupil

transportation;

vii. The manufacturer’s routine maintenance schedule;

viii. The category of work performed (routine maintenance, repair, or body work);

ix. The purchase order number;

x. The date the work was performed;

xi. A detailed description of the work performed;

xii. The mileage on the date work was performed; and

xiii. The cost of the work performed.

6A:23A-6.12 District board of education vehicle assignment and use policy

(a) Each district and CVSD board of education shall adopt a policy(ies) regarding school

district vehicle assignment to ensure compliance with this section, in accordance with OMB

Circular “The State Vehicular Assignment and Use Policy” or any superseding circulars.

(b) The district board of education, upon the recommendation of the superintendent may

authorize, by an affirmative vote of its full membership, the lease, lease-purchase, or

purchase and assignment of school district vehicles for the conduct of official school

district business. The vehicles may be assigned either to individuals or to units within the

organization for pool use according to the following classifications:

1. Vehicles may be assigned permanently and individually to the superintendent,

SBA, head of facilities services, head of security services, or other supervisory

employees who, based on their job duties, may be called upon on a 24-hour,

seven-day-a-week basis. No individual assignment shall be made for the primary

purpose of commuting.

2. A unit may be permanently assigned one or more school district pool vehicles

only if the unit’s employees will collectively use the vehicle or each vehicle for

more than an average of 750 miles per month on official school district business.

Pool vehicles shall not be used for the purpose of commuting and shall remain at

a school district facility when not in official use.

district vehicle for travel events.

(d) Each district and CVSD board of education shall ensure an employee, such as the SBA,

insurance or risk management staff member, head of facilities services, or other

appropriate employee is assigned the functions of a school district vehicle coordinator.

(e) Vehicle use logs shall be maintained for all individual and pool assignments to accurately

record all usage of each vehicle, including the driver, mileage, and starting and

destination points.

(f) All complaints of a potential misuse shall be investigated and appropriate disciplinary

action taken.

(g) All changes to vehicle assignment, whether pool or individual, shall require prior written

approval of the superintendent and the authorization of an affirmative majority vote of

the full district board of education.

(h) No luxury vehicle, one which exceeds the greater of $30,000 or any current dollar limit

established in Internal Revenue Service (IRS) law or regulation, shall be purchased, lease-

purchased, or leased by the school district. If a vehicle is assigned to the superintendent, it

may be a full-size or intermediate, four-door sedan of the non-luxury class. All other

vehicles shall be compact sedans unless special passenger, cargo, equipment, or use

requirements make the standard vehicle unsuitable for documented school district needs.

(i) The school district vehicle shall be used primarily for business purposes; however,

incidental and reasonable personal use shall be permitted.

(j) All damage to school district vehicles, regardless of cause, shall be reported within 24

hours to the vehicle coordinator and the employee assigned to file insurance claims.

(k) No physical alterations shall be made to a vehicle without prior district board of

education approval.

(l) Drivers of school district vehicles shall possess a valid driver's license to operate a

vehicle in New Jersey.

(m) When a vehicle is due for routine maintenance in accordance with the manufacturer’s

schedule, the driver of an individually assigned vehicle, or the vehicle coordinator in the case

of a pool vehicle, shall be responsible for ensuring the vehicle receives the scheduled service.

(n) A driver assigned a school district vehicle shall be responsible for the security of the

vehicle and its contents.

(o) Drivers shall be personally responsible for all fines accrued as a result of traffic violations

related to operation of school district vehicles.

(p) The driver, or the driver's supervisor if the driver is incapacitated, of a school district

vehicle involved in an accident resulting in damage to the school district vehicle or other

vehicle shall file, within 24 hours of the accident, a detailed written report with the

vehicle coordinator and the school district employee responsible for filing insurance

claims.

(q) Police shall be immediately notified of an accident by the driver, or vehicle coordinator if

the driver is incapacitated. A copy of the police report shall be submitted to the vehicle

coordinator and the school district employee responsible for filing insurance claims as

soon as possible.

(r) If a school district vehicle is misused in any of the following ways, the driver's privileges

for driving school district vehicles shall be suspended or revoked, and additional

disciplinary action shall be taken as appropriate.

1. Frequent violation of traffic laws;

2. Flagrant violation of the traffic laws;

3. Operation of a vehicle that the police or insurance company determined was the

cause of an accident;

4. Use of a vehicle for unauthorized use, whether personal use, business use, or commuting;

5. Violation of these rules or school district policy governing the assignment, use,

operation, repair, and/or maintenance of vehicles. This includes the failure to

submit a vehicle for routine maintenance as called for in the manufacturer’s

routine maintenance schedule;

6. Operation of a vehicle while impaired to any degree, or under the influence of

alcohol or narcotics as defined by State statutes;

7. Use of a school district vehicle by an unauthorized individual while assigned to an

employee;

8. Use of a school district vehicle to transport any person or child, other than in the

course of their assigned duties and responsibilities; or

9. Use of radar detectors in school district vehicles.

(s) The district board of education shall establish a policy for progressive, uniform, and

mandatory disciplinary actions to be applied as necessary.

6A:23A-6.13 District board of education travel policy

As a condition of receiving State aid, each district and CVSD board of education shall establish

specific travel policies and procedures that comply with N.J.S.A. 18A:11-12 and N.J.A.C. 6A:23A-7.

Subchapter 7. School District Travel Policies and Procedures

6A:23A-7.1 School district travel expenditures

(a) Each school district shall ensure the effective and efficient use of funds by adopting and

implementing policies and procedures that are in accordance with N.J.S.A. 18A:11-12 and

New Jersey Department of the Treasury, Office of Management and Budget (OMB)

Circulars 16-11-OMB and 11-09-OMB and any superseding circulars pertaining to travel,

meals, events and entertainment, and the additional requirements set forth in this

subchapter. If any superseding circulars of the Office of Management and Budget conflict

with the provisions of these rules, the provisions of the superseding circulars shall govern.

(b) The provisions of this subchapter shall apply to charter schools. For purposes of this

subchapter, the following shall apply:

1. References to "school districts" shall also mean charter schools;

2. References to "district board of education" shall also mean a charter school board

of trustees;

3. References to "superintendent" shall also mean charter school lead person; and

4. References to "employee" shall also mean employee of a charter school.

Travel, Entertainment, Meals, and Refreshments Circulars, that conflict with New Jersey

school law (N.J.S.A. 18A:1-1 et seq.) shall not be included in the district board of

education policy nor authorized under this section. This includes, but is not limited to, the

authority to issue travel charge cards as allowed under the OMB Circulars, but which is

not authorized for school districts under New Jersey school law.

(d) School district travel expenditures shall include, but shall not be limited to, all costs for

transportation, meals, lodging, and registration or conference fees directly related to

participation in the event.

(e) School district travel expenditures subject to this subchapter shall include costs for all

required training and all travel authorized in school district employee contracts and

district board of education policies. This includes, but is not limited to, required

professional development, other employee training and required training for district board

of education members, and attendance at specific conferences authorized in existing

employee contracts, provided the travel meets the requirements of this subchapter. All

such expenditures are subject to the rules in this subchapter, including, but not limited to,

inclusion in the annual travel limit, prior district board of education approval, separate

tracking as described at N.J.S.A. 18A:11-12.q, and per diem reimbursements.

6A:23A-7.2 District board of education policy for travel expenditures

(a) A district board of education shall implement a policy, including procedures, pertaining

to travel expenditures for its employees and district board of education members that is in

accordance with N.J.S.A. 18A:11-12, this subchapter, and other rules and procedures the

district board of education deems appropriate.

(b) The district board of education policy pertaining to school district travel expenditures

shall incorporate either expressly, in whole or in part, and/or by reference, the laws and

regulations contained in N.J.S.A. 18A:11-12 and this subchapter.

by its employees and district board of education members is educationally necessary and

fiscally prudent. A district board of education’s travel policy and procedures shall include

the requirement that all school district travel expenditures are:

1. Directly related to and within the scope of the employee's or district board of

education member's current responsibilities and, for school district employees, the

school district's professional development plan, the school professional

development plan, and employee’s individual professional development plan;

2. For travel that is critical to the instructional needs of the school district or furthers

the efficient operation of the school district; and

3. In compliance with State travel payment guidelines as established by the New

Jersey Department of the Treasury, Office of Management and Budget, and with

guidelines established by the Federal Office of Management and Budget; except

any State or Federal regulations and guidelines that conflict with the provisions of

Title 18A of the New Jersey Statutes shall not be applicable, including, but not

limited to, the authority to issue travel charge cards. The district board of

education shall specify in its travel policy the applicable restrictions and

requirements set forth in the State and Federal guidelines, including, but not

limited to, types of travel, methods of transportation, mileage allowance,

subsistence allowance, and submission of supporting documentation including

receipts, checks, or vouchers.

(d) A district board of education shall state in its policy that travel reimbursements will be

paid only upon compliance with all provisions of N.J.A.C. 6A:23A-7 and the district

board of education’s procedures and approval requirements. The policy shall state the

district board of education shall not ratify or approve payments or reimbursements for

travel after completion of the travel event, except as provided at N.J.A.C. 6A:23A-7.4(d).

(e) A district board of education shall require a district board of education member to recuse

himself or herself from voting on travel if the district board of education member, a

member of his or her immediate family, or a business organization in which he or she has

an interest has a direct or indirect financial involvement that may reasonably be expected

to impair his or her objectivity or independence of judgment.

(f) A district board of education’s travel policies shall prohibit a district board of education

member from acting in his or her official capacity in any matter in which he or she or a

member of his or her immediate family has a personal involvement that is or creates

some benefit to the district board of education member or member of his or her

immediate family; or undertaking any employment or service, whether compensated or

not, that may reasonably be expected to prejudice his or her independence of judgment in

the execution of his or her official duties.

6A:23A-7.3 Maximum travel budget

(a) Annually in the prebudget year, each district board of education shall establish by

resolution a maximum travel expenditure amount for the budget year, which the school

district shall not exceed. The resolution shall also include the maximum amount

established for the prebudget year and the amount spent to date.

1. The maximum school district travel expenditure amount shall include all travel

supported by local and State funds.

2. A district board of education may exclude travel expenditures supported by

Federal funds from the maximum travel expenditure amount. If Federal funds are

excluded from the established maximum amount, the district board of education

shall include in the resolution the total amount of travel supported by Federal

funds from the prior year, prebudget year, and projected for the budget year.

3. Exclusion of Federal funds from the annual maximum travel budget shall not

exempt such travel from the requirements applicable to State and local funds.

(b) A district board of education may authorize in its travel policy an annual maximum

amount per employee for regular business travel only for which district board of

education approval is not required.

1. The annual maximum shall not exceed $1,500 and shall be subject to the approval

requirements in N.J.S.A. 18A:19-1.

2. Regular school district business travel as defined in N.J.A.C. 6A:23A-1.2 shall

include attendance at regularly scheduled in-State county meetings and

Department-sponsored or association-sponsored events provided free of charge. It

also shall include regularly scheduled in-State professional development activities

for which the registration fee does not exceed $150.00 per employee or district

board of education member.

3. Regular school district business travel as authorized in the district board of education’s

travel policy shall require approval of the superintendent prior to obligating the school

district to pay related expenses and prior to attendance at the travel event.

i. The superintendent shall designate an alternate approval authority to

approve travel requests in his or her absence when necessary to obtain

timely district board of education approval.

ii. The superintendent shall establish in writing the internal levels of approval

required prior to his or her approval of the travel event, as applicable.

6A:23A-7.4 Travel approval procedures

(a) All travel requests for employees of the school district shall be approved in writing by the

superintendent and approved by a majority of the district board of education’s full voting

membership, except if the district board of education has excluded regular business travel

from prior approval pursuant to N.J.A.C. 6A:23A-7.3(b), prior to obligating the school

district to pay related expenses and prior to attendance at the travel event.

1. The superintendent shall designate an alternate approval authority to approve

travel requests in his or her absence when necessary to obtain timely district board

of education approval.

2. The superintendent shall establish in writing the internal levels of approval

required prior to his or her approval of the travel event, as applicable.

(b) All travel requests for district board of education members shall require prior approval by a

majority of the district board of education’s full voting membership, except where the district

board of education has excluded regular business travel from prior approval pursuant to N.J.A.C.

6A:23A-7.3(b), and the travel shall be in compliance with N.J.S.A. 18A:12-24 and 24.1.

months as long as the approval detailed in district board of education minutes itemizes the

approval by event, total cost, and number of employees and/or district board of education

members attending the event. General or blanket pre-approval shall not be authorized.

(d) A district board of education policy may exclude from the requirements of prior district

board of education approval any travel caused by or subject to existing contractual

provisions, including grants and donations, and other statutory requirements, or Federal

regulatory requirements. For the exclusion of prior district board of education approval to

apply, the required travel event shall be detailed, with number of employee(s), district

board of education member(s), and total cost in the applicable contract, grant, donation,

statute, or Federal regulation.

1. This shall not include general grant guidelines or regulations that are permissive

but do not require the travel event, unless the specific travel event, number of

employee(s), district board of education member(s), and total cost is detailed in

the approved grant, donation, or other fund acceptance agreement.

2. This shall not include general contractual provisions in employment contracts for

continuing education or professional development, except if the district board of

education has included in its policy a maximum amount per employee for regular

business travel that does not require prior district board of education approval

pursuant to N.J.A.C. 6A:23A-7.3.

(e) If occasional unforeseen situations arise wherein a travel request cannot obtain prior

approval of the district board of education, justification shall be included in the text of the

travel request.

1. Such requests shall require prior written approval of the superintendent, or

designee, and the executive county superintendent, or designee.

2. The district board of education shall ratify the request at its next regularly

scheduled meeting.

3. Travel to conferences, conventions, and symposiums shall not be considered

emergencies and shall not be approved after the fact.

(f) Subsequent to pre-approval by a majority of the full voting membership of the district

board of education, reimbursement of prospective employee travel expense shall be pre-

approved by the executive county superintendent.

6A:23A-7.5 Required documentation for travel

(a) The district board of education policy shall specify the type of documentation required to

justify the number of employees attending an event and the benefits to be derived from

their attendance;

(b) Neither the superintendent, or designee, nor the district board of education shall approve

a travel request unless it includes the following information:

1. The name and date(s) of the event;

2. A list of district board of education members and/or employees to attend, either

by name or title;

3. The estimated cost associated with travel;

4. A justification and brief statement that includes the primary purpose for the travel,

the key issues that will be addressed at the event, and their relevance to improving

instruction or the operation of the school district. For training events, the

statement must include whether the training is for a certification required for

continued employment, continuing education requirements, requirements of

Federal or State law, or other purpose related to the programs and services

currently being delivered or soon to be implemented in the school district; or

related to school district operations;

5. The account number and funding source -- Federal, State, private, or local; and

6. For annual events, the total attendance and cost for the previous year.

with the district board of education’s travel policy, including travel approvals, reports,

and receipts for all school district funded expenditures, as appropriate.

6A:23A-7.6 SBA responsibilities regarding accounting for travel

(a) The SBA or designee shall prepare itemized travel budgets by function and object of

expense for each cost center, department, or location maintained in the school district's

accounting system, as applicable, as part of the preparation of and documentation for the

annual school district budget. The aggregate amount of all travel budgets shall not exceed

the district board of education approved maximum travel expenditure amount for the

budget year as required by N.J.A.C. 6A:23A-7.3.

(b) The SBA shall maintain separate accounting for school district travel expenditures, as

necessary, to ensure compliance with the school district's maximum travel expenditure

amount. The separate accounting tracking system may include, but need not be limited to,

a separate or offline accounting of such expenditures or expanding the school district's

accounting system. The tracking system shall be sufficient to demonstrate compliance

with the district board of education’s policy and this subchapter, and shall be in a detailed

format suitable for audit.

required by this subchapter and submitted by the person(s) having incurred travel

expense. The SBA shall not approve or issue payment of travel expenditures or

reimbursement requests until all required documentation and information to support the

payment has been submitted, and shall not approve any travel expenditure that, when

added to already approved travel expenditures, would exceed the district board of

education approved maximum travel expenditure amount for the budget year.

(d) The SBA shall be responsible for the adequacy of documentation of transactions processed

by his or her staff and the retention of the documentation to permit audits of the records.

(e) An district board of education employee, a district board of education member, or an

organization shall not receive partial or full payment for travel and travel-related expenses

in advance of the travel, pursuant to N.J.S.A. 18A:19-1 et seq. The payment of travel and

travel-related expenses, including travel-related purchases for which a purchase order is not

applicable, shall be made personally by a school district employee or district board of

education member and reimbursed at the conclusion of the travel event. This section shall

not preclude the school district from paying the vendor directly with the proper use of a

purchase order (for example, for registration, airline tickets, hotel).

6A:23A-7.7 Sanctions for violations of travel requirements

(a) Any district board of education that violates its established maximum travel expenditure,

as set forth in N.J.A.C. 6A:23A-7.3, or that otherwise is not in compliance with the

subchapter’s travel limitations, may be subject to sanctions by the Commissioner as

authorized pursuant to N.J.S.A. 18A:4-23 and 24, including reduction of State aid in an

amount equal to any excess expenditure pursuant to N.J.S.A. 18A:11-12 and 18A:7F-60.

(b) A person who approves any travel request or reimbursement in violation of the district

board of education policy or this subchapter shall reimburse the school district in an

amount equal to three times the cost associated with attending the event, pursuant to

N.J.S.A. 18A:11-12.

1. The travel policy shall designate the chief school administrator, school business

administrator, or both as the person(s) who is the final approval authority for

travel and, therefore, subject to this penalty.

policy or these rules shall be required to reimburse the school district in an amount equal to

three times the cost associated with attending the event, pursuant to N.J.S.A. 18A:11-12.

(d) The district board of education policy shall include procedures to monitor compliance and

application of the penalty upon determination a violation has occurred after district board of

education payment of the event. If a violation is determined prior to payment or reimbursement

of the travel event, the policy may exclude application of any additional penalties.

(e) The annual audit conducted pursuant to N.J.S.A. 18A:23-1 shall include test procedures

to ensure compliance with the district board of education’s policy and travel limitations

set forth in this section and N.J.S.A. 18A:11-12.

6A:23A-7.8 Prohibited travel reimbursements

(a) A district board of education’s travel policy shall state the following types of

expenditures are not eligible for reimbursement:

1. Subsistence reimbursement for one-day trips, except for meals expressly

authorized by and in accordance with N.J.A.C. 6A:23A-7.12;

2. Subsistence reimbursement for overnight travel within the State, except where

authorized by the Commissioner in accordance with N.J.A.C. 6A:23A-7.11;

3. Travel by district board of education members or employees whose duties are

unrelated to the purpose of the travel event or who are not required to attend to

meet continuing educations requirements or to comply with law or regulation;

4. Travel by spouses, civil union partners, domestic partners, immediate family

members, and other relatives;

5. Costs for employee attendance for coordinating other attendees' accommodations

at the travel event;

6. Lunch or refreshments for training sessions and retreats held within the school

district, including in-service days and for employee participants traveling from

other locations within the school district;

7. Training to maintain a certification that is not required as a condition of

employment (example: CPE credits to maintain a CPA license if the employee is

not required to be a CPA for continued school district employment);

8. Charges for laundry, valet service, and entertainment;

9. Limousine services and chauffeuring costs to, or during, the event;

10. Car rentals, either utilized for airport transportation or transportation at a

conference, convention, etc., unless absolutely necessary for the conduct of school

district business. Justification shall accompany any request for car rentals. If

approved, the most economical car rental is to be used, including the use of

subcompacts and discounted and special rates. An example of the justified use of

a car rental is when an employee is out of State, making inspections at various

locations, and the use of public transportation is impracticable. When car rental is

authorized, the employee shall not be issued an advance payment for the

anticipated expense associated with the rental;

11. Alcoholic beverages;

12. Entertainment costs, including amusement, diversion, social activities, and any

costs directly associated with such costs (such as tickets to shows or sports events,

meals, lodging, rentals, transportation, and gratuities);

13. Gratuities or tips in excess of those permitted by Federal per diem rates;

14. Reverse telephone charges or third party calls;

15. Hospitality rooms;

16. Souvenirs, memorabilia, promotional items, or gifts;

17. Air fare without documentation of quotes from at least three airlines and/or on-line

services; and

18. Other travel expenditures that are unnecessary and/or excessive.

6A:23A-7.9 Travel methods

(a) For the purposes of this section, "transportation" means necessary official travel on

railroads, airlines, shuttles, buses, taxicabs, school district-owned or leased vehicles, and

personal vehicles.

(b) The purchase or payment of related transportation expenses shall be made by purchase

order or personally by a school district employee or district board of education member

and reimbursed at the conclusion of the travel event. An actual invoice or receipt for each

purchase or expense shall be submitted with a claim for reimbursement.

apply:

1. Air and rail tickets shall be purchased via the Internet, if possible, using airline or

online travel services such as Travelocity, Expedia, or Hotwire.

2. Air travel shall be authorized only when determined that it is necessary and

advantageous to conduct school district business.

i. The most economical air travel should be used, including the use of

discounted and special rates.

ii. The following options should be considered when booking tickets:

(1) Connecting versus nonstop flights;

(2) Departing earlier or later compared to the preferred departure time;

(3) Utilizing alternative airports within a city, for example, Chicago,

Illinois--Midway Airport versus O'Hare Airport;

(4) Utilizing alternative cities, for example, Newark versus Philadelphia;

(5) Utilizing "low cost" airlines; and

(6) Exploring alternate arrival and/or departure days.

iii. No employee or district board of education member can earn benefits as a

result of school district funded travel. Employees and district board of

education members shall be prohibited from receiving "frequent flyer" or

other benefits accruing from school district funded travel.

iv. Airfare other than economy (that is, business or first class) shall not be

fully reimbursed by the school district except when travel in such classes:

(1) Is less expensive than economy;

(2) Avoids circuitous routings or excessive flight duration; or

(3) Would result in overall transportation cost savings.

v. All airfare other than economy and not covered by the above exceptions

purchased by an employee or district board of education member shall be

reimbursed only at the economy rate for the approved destination.

vi. Cost estimates on travel requests and associated authorizations shall be

consistent with current airline tariffs, with consideration of available

special fares or discounts, for the requested destination.

vii. Airline tickets shall not be booked until all necessary approvals have been

obtained.

viii. Additional expenses over and above the authorized travel request shall be

considered only for factors outside the purchaser’s control. The burden of

proof shall be placed upon the purchaser and any additional expenses

incurred without sufficient justification and documentation, as determined

by the school business administrator, shall not be reimbursed.

ix. Justification shall accompany requests for airline ticket reimbursement

when purchased by employees or district board of education members

contrary to (e)2i through viii above. Sufficient justification shall be

considered only for factors outside the purchaser’s control. Noncompliant

purchases without sufficient justification shall not be reimbursed.

3. Rail travel shall be authorized only when determined that it is necessary and

advantageous to conduct school district business.

i. The most economical scheduling of rail travel shall be utilized, including

excursion and government discounts, whenever applicable.

ii. The use of high-speed rail services, such as Acela, shall not be authorized.

iii. All rail travel shall be processed in the same manner as prescribed for air

travel in (c)2 above.

4. Use of a school district-owned or -leased vehicle shall be the first means of

ground transportation. Use of a personally owned vehicle on a mileage basis shall

not be permitted for official business where a school district-owned or -leased

vehicle is available.

i. Mileage allowance in lieu of actual expenses of transportation shall be

allowed at the rate authorized by the annual State Appropriations Act, or a

lesser rate at the district board of education’s discretion for an employee or

district board of education member traveling by his or her personally

owned vehicle on official business.

(1) If any condition in an existing negotiated contract is in conflict with

the OMB Travel Circulars, such as the mileage reimbursement rates,

the provisions of the existing contract shall prevail.

ii. Parking and toll charges shall be allowed in addition to mileage allowance.

iii. Reimbursement for travel to points outside the State by automobile shall

be permitted when such arrangements prove to be more efficient and

economical than other means of public transportation.

iv. In determining the relative costs of private and public transportation, all

associated costs (that is, tolls, taxicabs, airport or station transfers, etc.)

shall be considered.

v. All employees and district board of education members using privately

owned cars in the performance of their duties for the school district shall

present a New Jersey Insurance Identification Card indicating that

insurance coverage is in full force and effect with companies approved by

the State Department of Banking and Insurance. The card shall be made

available to the superintendent or designee before authorization to use

privately owned cars.

vi. Employees and district board of education members who are out-of-State

residents shall provide appropriate insurance identification in lieu of the

New Jersey Insurance Identification Card.

5. School district-owned or -leased vehicles shall be utilized in accordance with

N.J.A.C. 6A:23A-6.12.

6. Necessary taxicab charges shall be permitted. However, travel to and from

airports, downtown areas, and between hotel and event site shall be confined to

regularly scheduled shuttle service, whenever such service is complimentary or is

less costly. If shuttle service is not available, taxicabs may be used.

7. Cruises shall not be permitted for travel events or transportation.

6A:23A-7.10 Routing of travel

(a) Pursuant to State travel guidelines as established by the New Jersey Department of the

Treasury, Office of Management and Budget, and presented in the OMB Travel Circulars:

1. All travel shall follow the most direct, economical, and usually traveled route.

Travel by other routes as a result of official necessity shall be eligible for payment

or reimbursement only if satisfactorily established in advance of such travel.

2. If a person travels by indirect route for personal convenience, the extra expense

shall be borne by the individual.

3. Reimbursement for expenses shall be based only on charges that do not exceed

what would have been incurred by using the most direct, economical, and usually

traveled route.

6A:23A-7.11 Subsistence allowance - overnight travel

(a) Pursuant to the State travel guidelines as established by the New Jersey Department of

the Treasury, Office of Management and Budget, and presented in the OMB Travel

Circulars, one-day trips that do not involve overnight lodging shall not be eligible for

subsistence reimbursement, except for meals expressly authorized by and in accordance

with the provisions of N.J.A.C. 6A:23A-7.12.

(b) Pursuant to the OMB Travel Circulars, generally, overnight travel shall not be eligible for

subsistence reimbursement if travel is within the State. Overnight travel is permitted if it

is authorized pursuant to (c) below, or is a required component by the entity issuing a

grant, donation, or other funding agreement with the school district. The specific required

overnight in-State travel event shall be detailed in the final grant, donation, or other fund

acceptance agreement along with the number of authorized travelers and total cost. All

reimbursements shall be subject to this subchapter unless the funding acceptance

agreement specifies otherwise.

the Treasury, Office of Management and Budget, and presented in the OMB Travel

Circulars, the Commissioner shall be authorized to grant waivers for overnight travel for

district board of education members and school district employees to attend in-State

conferences. Such waivers will be granted in only extremely limited circumstances when

the sponsoring organization can demonstrate the conference is broad and multi-

disciplinary in scope, incorporates content offerings from numerous specialty areas, and

includes important professional development opportunities and/or required training. In

addition, the sponsoring organization shall demonstrate the conference's content,

structure, scheduling, and anticipated attendance necessitate that it be held on multiple

consecutive days with overnight lodging. When such waivers are granted, individual

school districts or individuals shall not be required to submit waiver requests for

attendance at these conferences.

1. Sponsors of in-State conferences may submit to the Commissioner a request for a

waiver of this prohibition by providing information regarding the conference as

follows:

i. The name and dates of the event;

ii. Justification for the length of the conference and the necessity to hold

events for each day beyond the first day of the conference;

iii. Identification of all other conferences sponsored or co-sponsored by the

organization (whether single or multi-day) in the previous year;

iv. A description of the target audience by position title and/or educational

certificate and endorsement;

v. Justification of the importance of the target audience attending the event;

vi. The cost of registration;

vii. A detailed list and description of any activities to be charged to the

participants by the sponsor separate from the registration fee, such as

luncheons, workshops, entertainment, etc., including:

(1) The cost of the activity;

(2) Whether participation is mandatory or voluntary; and

(3) The purpose such as social, guest speaker, working session, etc.;

viii. A copy of agenda or program for the event;

ix. A brief statement that includes the primary purpose of the event, the key

issues that will be addressed at the event, and their relevance to improving

instruction or the operation of a school or school district;

x. For training events, whether the training is needed for a certification

required for continued employment, continuing education requirements, or

requirements of Federal or State law; and

xi. For annual events, total attendance, and registration cost for the previous year.

(d) If a waiver of the prohibition on overnight travel is granted pursuant to this section, it

shall permit reimbursement for travel expenses only for individuals whose home-to-

convention commute exceeds 50 miles.

(e) Overnight travel within the State shall not be eligible for subsistence reimbursement if

travel is on the day prior to the start of the conference. Reimbursement shall be prohibited

for lodging prior to check-in time for the first day of the event or after check-out time on

the last day of the event.

(f) The United States General Services Administration publishes a schedule of Federal per

diem rates in the Federal Register for approved overnight travel by the event location.

The latest Federal per diem rates schedule for lodging, meals, and incidental expenses by

location can be found at https://www.gsa.gov/travel/plan-book/per-diem-rates. The

following restrictions apply to allowable per diem reimbursements:

1. Allowable per diem reimbursement for lodging, meals, and incidentals shall be

actual reasonable costs, not to exceed the Federal per diem rates for the event

location. Registration and conference fees are not subject to the Federal per diem

rate caps. If the event location is not listed, the maximum per diem allowance

shall be equal to the standard CONUS per diem rates published by the General

Services Administration for meals, incidental expenses, and lodging.

2. Pursuant to N.J.S.A. 18A:11-12.o, reimbursement for lodging expenses for

overnight travel, out-of-State or in-State as authorized by the Commissioner, may

exceed the Federal per diem rates if the hotel is the site of the convention,

conference, seminar, or meeting and the going rate of the hotel is in excess of

Federal per diem rates.

i. If the hotel at the site of the current travel event is not available, lodging

may be paid for similar accommodations at a rate not to exceed the hotel

rate at the site of the current event.

ii. If there is no hotel at the site of the current travel event (for example,

Atlantic City Convention Center), then reimbursement for lodging shall

not exceed the Federal per diem rate.

3. If the meal is not part of a one-sum fee for a travel event, reimbursement may be

approved for the full cost of an official convention meal that the employee or

board member attends, when such meal is scheduled as an integral part of the

convention or conference proceedings. Receipts shall be submitted to obtain

reimbursement in such situations. The amount of the Federal per diem rate for the

corresponding meal shall be deducted from that day's subsistence allowance.

4. The allowance for a meal(s) or incidentals shall not be eligible for reimbursement

when included and paid in the registration fee, the cost of lodging, or

transportation charge.

5. Receipts shall be required for all hotel and incidental expenses. Meal expenses

under the Federal per diem allowance limits shall not require receipts pursuant to

N.J.S.A. 18A:11-12.o(3).

6. If the total per diem reimbursement is greater than the Federal per diem rates, the costs

shall be considered excessive in the absence of substantial justification accompanying

the travel voucher submitted by the employee or district board of education member. In

such cases, receipts shall be submitted for all costs, including meals.

7. Employees and district board of education members shall patronize hotels and

motels that offer special rates to government employees unless alternative lodging

offers greater cost benefits or is more advantageous to the conduct of school

district business.

8. Actual subsistence expenses shall not be reimbursable if paid by the traveler to a

member of his or her family, to another school district employee, or to a family

member of another school district employee.

6A:23A-7.12 Meal allowance -- special conditions -- and allowable incidental travel expenditures

(a) Meals for in-State travel shall not be eligible for reimbursement except as expressly

authorized within this subchapter.

(b) A meal allowance may be provided to employees or district board of education members

in relation to one-day, out-of-State trips required for school business purposes that do not

require an overnight stay. The reimbursement for breakfast, lunch, and/or dinner shall

not exceed the amounts authorized in State travel regulations as published by the New

Jersey Department of the Treasury, Office of Management and Budget, and presented in

the OMB Travel Circulars.

person only when it is necessary that employees or district board of education members

remain at a site other than their school district and there are no viable options for lunch at

the off-site location.

1. Per N.J.S.A. 18A:11-12.a(1)(d), employee and district board of education member

retreats shall be held onsite unless there is no school district site available.

2. If lunch is included in a lump-sum registration fee for an off-site training session,

the full amount is eligible for reimbursement, if reasonable. Providing lunch for

on-site staff meetings and in-service days or for employees who come from other

parts of the school district shall not be permitted. (See (d) below.)

3. Refreshments for breaks may also be provided at training sessions held at a site

other than the school district.

(d) Subsistence expenses for an employee or district board of education member shall not be

allowed within the school district or within a radius of 10 miles thereof, except for meals

expressly authorized by and in accordance with this section. Non-allowed expenses include,

but are not limited to, meals and refreshments for on-site staff meetings and in-service days.

(e) Reimbursement may be approved for the cost of an official luncheon or dinner, up to

$10.00 and $15.00, respectively, that an employee or district board of education member

is authorized to attend, if the meal is scheduled as an integral part of an official

proceeding or program related to school district business and the employee's or board of

education member's responsibilities.

1. School district business above refers to the management operations of the school

district and does not refer to activities that benefit students and are part of the

instructional program. Pursuant to N.J.A.C. 6A:23A-5.8(b)4, all reasonable

expenditures related to school district employees that are essential to the conduct

of a student activity are permitted.

(f) Regular meetings, special meetings, and work sessions of the district board of education

shall be limited to light meals and refreshments for all district board of education members.

1. The meals may be served to employees who are required to attend the event and if

it is impractical for the employee to commute to and from his or her residence

between the end of the work day and the beginning of the event, or if the

employee is required to remain at the school district to prepare for the event.

2. The school district shall acquire the light meals and refreshments by the

solicitation of quotes, if required pursuant to N.J.S.A. 18A:18A-1 et seq.

3. If the school district's food service program can prepare comparable meals at a

lower cost, the food service program shall be used.

4. The average cost per meal shall not exceed $10.00.

5. The school district shall purchase or prepare food that is sufficient to provide each

district board of education member, dignitary, non-employee speaker, or

allowable staff member one meal. Meals should be carefully ordered to avoid

excess. Unintended leftover food should be donated to a charitable shelter or

similar facility, if at all possible.

(g) Reimbursement may be approved for allowable telephone and incidental travel expenses

that are essential to transacting official business.

1. Charges for telephone calls on official business may be allowed. The voucher

shall show the dates on which such calls were made, the points between which

each call was made, and the cost per call.

2. Employees and district board of education members using their personally owned

telephone for business may request reimbursement, less Federal Communications

Tax. Calls for business are tax exempt and the telephone company will make

allowances for the tax if the employee or district board of education member

certifies to the telephone company when paying bills for personally owned phones

that said calls were business calls.

3. Incidental expenses, defined as “non-meal tips” by the State travel regulations,

when necessarily incurred by the traveler in connection with the transaction of

official business, may be submitted for reimbursement only when the necessity

and nature of the expense are clearly and fully explained on the travel voucher

and the voucher is approved. Travel vouchers shall be supported by receipts

showing the quantity and unit price.

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6A:23A-7.13 Records and supporting documents

(a) All persons authorized to travel on business shall keep a memorandum of expenditures

chargeable to the school district, noting each item at the time and date the expense is incurred.

(b) The travel voucher shall be completed by the employee or district board of education

member to document the details of the travel event. The travel voucher shall be signed by

the employee or district board of education member to certify the validity of the charges

for which reimbursement is sought. The form also shall bear the signatures of approval

officials for processing.

payment and approval of the travel voucher.

(d) In addition to the documentation required for reimbursement, each person authorized to

travel shall submit a brief report that includes the primary purpose for the travel, the key

issues addressed at the event, and their relevance to improving instruction or the operations

of the school district. This report shall be submitted prior to receiving reimbursement.

(e) Documentation for requests for travel reimbursement shall show:

1. The date(s) and individual points of travel, number of miles traveled between

such points, and kind of conveyance used;

2. If the distance traveled between individual points is greater than the usual route

between the points, the reason for the greater distance shall be stated;

3. The hours of the normal work day and actual hours worked shall be shown when

requesting meal reimbursement for non-overnight travel;

4. Original receipts shall be required for all reimbursable expenses, except for meals

that qualify for per diem allowances and for parking meters;

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5. Actual vendor receipts for personal credit card charges shall be attached to

reimbursement requests. Credit card statements shall not be accepted as

documentation of expenses;

6. Personal charges on a hotel bill shall be deducted and shown on the bill;

7. When lodging is shared jointly, the fact shall be stated on the travel voucher;

8. Where travel is not by the most economical, usually traveled route, the employee

or district board of education member reimbursement request shall set forth the

details of the route, the expenses actually incurred, the hour of departure, the hour

of arrival, and an explanation for the use of costlier travel arrangements;

9. When travel is authorized in the employee's or district board of education

member's own automobile on a mileage basis, the points between which travel

was made, and the distance traveled between each place shall be shown. A

statement as to ownership of the auto or other conveyance used, as well as a

certification that liability insurance is in effect, shall be documented;

10. Reimbursement requests shall be supported by other receipts as required;

11. The voucher shall be itemized; and

12. Reimbursement requests shall be rendered monthly when in excess of $ 25.00.

Travel for a single travel event shall be reported as soon as possible after the trip.

(f) All outstanding travel vouchers for the school year ending June 30 shall be submitted as

soon as possible after June 30 regardless of amount, notwithstanding (e)12 above.

(g) Travel mileage reimbursement requests of the just-completed school year that are not

submitted by July 30 or the date approved by the school district for the closing of books,

whichever is earlier, for the just-completed school year shall not be approved or paid.

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Subchapter 8. Annual Budget Development and Submission

6A:23A- 8.1 Budget submission; supporting documentation; website publication

(a) Annually, on or before the due date established in N.J.S.A. 18A:7F-5.c, each district

board of education shall adopt and submit to the executive county superintendent for

approval, together with Commissioner-prescribed supporting documentation, a budget

that provides for a thorough and efficient (T&E) education. The Commissioner may

adjust the date for the submission of budgets to conform with the State aid notification

date pursuant to N.J.S.A. 18A:7F-5.c or if the Commissioner determines the availability

of preliminary aid numbers for the subsequent school year warrants adjustment.

(b) A district board of education shall complete a budget application prepared and distributed

by the Commissioner, which shall be referred to as the School District Budget Statement

and Supporting Documentation. The district board of education shall include in the

budget application a complete reporting of revenues and appropriations and other

requirements pursuant to N.J.S.A. 18A:22-8 and N.J.S.A. 18A:7F-5 through 63.

provided for public inspection on the school district's website, if one exists, and made

available in print in a "user-friendly," plain language budget summary format within 48

hours after the public hearing on the budget.

1. The budget shall be maintained on the school district’s website, if one exists, with

a visible link off the main page, for the entire budget year and revised, as

applicable, when changed as follows:

i. Prior to adoption of a separate proposal(s);

ii. Upon voter approval of a separate proposal(s);

iii. Upon municipal action on a voter rejected base budget question; and

iv. For any subsequent determination on an application for restoration to the

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Commissioner.

2. The Commissioner shall develop and provide through the Department’s Internet

site "user-friendly," plain language budget summary forms for the use of school

districts. Each school district shall submit the required budget summary form to

the Department following the approval of the base budget question by voters or

the board of school estimate, as applicable, or following municipal action when

the base budget question is rejected by voters; or, pursuant to N.J.S.A. 18A:22-32,

following approval by the district board of education for school districts with

November elections. When the base budget question and any separate question(s)

are approved by voters or the board of school estimate, as applicable, all approved

amounts shall be consolidated and reflected in the "user-friendly," plain language

budget summary form.

3. The plain language budget summary shall include an abbreviated version of the

formal budget adopted by the district board of education and statistical

information the Commissioner determines to be useful for the public's

understanding of the school district's fiscal matters and condition, including, but

not limited to, the following information for both the school district's budget year

and the prebudget year:

i. All line items of appropriation aggregated by item type;

ii. The school tax rate;

iii. The equalized school tax rate;

iv. Revenues by major category;

v. The amount of available surplus;

vi. A description of unusual revenues or appropriations, with a description of

the circumstances of the revenues or appropriations; and

vii. A list of shared service agreements in which the school district is participating.

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4. The Department shall make the plain language budget summary available to the

public through its website in an easily accessible location and in a manner that can be

downloaded by the public for comparative purposes using commonly used software.

(d) Pursuant to N.J.S.A. 18A:7F-5.3, the Commissioner shall require each school district,

CVSD, and CSSSD to submit as part of the annual budget submission supporting

documentation regarding employment contracts of the superintendent, any assistant

superintendent(s), the SBA, and any employee with an annual salary that exceeds

$75,000 who is not a member of a collective bargaining unit. The supporting

documentation shall include the following employment contract information:

1. A detailed statement of the employment contract terms for the school employees,

including, but not limited to, the duration of the contract, number of annual work

days, number of annual vacation days, number of annual sick days, number of

annual personal days, number of annual consulting days, and any other contracted

non-working days. The statement shall also include an itemization of all forms of

compensation provided for under the contract.

2. The annualized cost of all benefits provided to the school employees, including,

but not limited to, all allowances, bonuses and stipends, and all contributions

made by the school district toward the costs of health, dental, life, and other types

of insurance, medical, and reimbursement plans, any reimbursement of the

employee share of Federal and/or State taxes or benefits, and retirement and tax

sheltered annuity plans that exceed the contributions for the costs of the items

made on behalf of a teaching staff member under a collective bargaining

agreement with the district board of education.

i. Allowances include, but are not limited to, the provision of a

computer/Internet and cell phone, tuition reimbursement, and payment of

professional membership fees.

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ii. Bonuses include, but are not limited to, additional compensation for

longevity and meeting specific performance goals.

3. A detailed statement of any benefit(s) provided for in the employment contract

with the school employees that are to be conferred after or upon the separation

from the school district. This includes buyback of vacation days, sick days (if

retiring), and any other post-employment benefits.

4. A detailed statement of any form of in-kind or other form of remuneration

provided to the school employees that is not otherwise included in the employee's

salary or benefits. This includes any annual option to buyback vacation time.

(e) The employment contract information in (d) above shall be provided for public

inspection, along with the budget as prescribed in (c) above, in an easily accessible

location and in a "user-friendly," plain-language format as prescribed by the

Commissioner on the school district's website, if one exists, no less than 48 hours after

the public hearing on the budget.

1. The employment contract information shall be maintained on the school district’s

website, if one exists, with a visible link off the main page, for the entire budget year.

2. The Department shall also post the items in (e) above on its website for public

inspection after submission by all school districts of the final approved school

district budget.

(f) A district board of education shall submit at the Commissioner's request supplemental

information such as documents, contracts, reports, and financial records and statements

required by law or regulation, or other information necessary to conduct a review of the

school district's annual spending plan. Additional information may include, but need not

be limited to:

1. Contracted salaries:

i. Copies of the current labor contract for each bargaining unit. For any

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contract that has not been settled or is due to expire at the end of the

prebudget year, the school district shall provide a copy of the last or

expiring labor contract, as applicable, and the anticipated range of

settlement by unit;

ii. An accurate, complete, and up-to-date position control roster, pursuant to

N.J.A.C. 6A:23A-6.8;

iii. A list of stipend amounts by staff member name, position, and purpose;

2. Health benefits: The school district shall provide the following:

i. A summary list by type of coverage and aggregate annual amount for

major medical, prescription, dental, and all other benefit costs, including

actual costs for the year prior to the prebudget year, and actual or

estimated, as available, for the prebudget year and budget year;

ii. A summary list by type and category (single, parent and child, or family)

by amount for the year prior to the prebudget year, prebudget year, and

budget year;

iii. Documentation from provider(s) showing estimated rate increases;

iv. The reimbursement required by employee, if any;

v. School districts that have elected not to participate in the School

Employees’ Health Benefits Program shall provide a detailed analysis

documenting the cost savings of using the alternative provider;

3. Operation and maintenance of plant services:

i. A detailed list of actual or scheduled equipment purchases with a cost of

$2,000 or more per unit by the actual or estimated cost of each, as

available, for the year prior to the prebudget year, prebudget year as of

February 1, and the budget year;

ii. The square footage for each building, including administration, schools,

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temporary classroom units, warehouses, bus garages, and other structures;

iii. The full time equivalent (FTE) number of custodians and/or janitors by building;

iv. A summary of the number of maintenance employees by trade and the

cost by regular hours and overtime hours for each of the three years

included in the budget: prior year actual, projected prebudget year

updated as of February 1, and estimated budget year;

v. An analysis of any lease(s) held by the school district for classroom

space, office space, and other spaces. The analysis shall include, but not

be limited to, the use of the building, square footage, term of the lease,

monthly cost, and the annual cost for each of the three years included in

the budget: prior year audited, prebudget year updated as of February 1,

and proposed budget; and the school district's long-term plan to obtain

school district-owned space for these purposes;

4. Utilities: Where applicable, an analysis of savings by not using the Alliance for

Competitive Energy Services (ACES) or Alliance for Competitive

Telecommunications (ACT);

5. Purchased professional services: A detailed list of all contracts by service type

such as auditor, architect, attorney, etc., by actual cost for the year prior to the

prebudget year, actual or maximum cost, as available, for the prebudget year, and

actual or estimated maximum cost for the budget year;

6. Purchased technical services: A detailed list of all contracts by service type by

actual cost for the year prior to the prebudget year, actual or maximum cost, as

available, for the prebudget year, and actual or estimated maximum cost for the

budget year. Identification of any technical service(s) purchased without public

bidding under the extraordinary unspecified services provision pursuant to

N.J.S.A. 18A:18A-5;

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7. Textbook adoptions:

i. A list of any new textbook adoption(s) for the budget year by title, title

and date published of series being replaced, and cost;

ii. Summary of textbook adoptions expenditures by actual cost for the year

prior to the prebudget year, and actual or estimated cost, as available, for

the prebudget year and budget year;

8. Equipment purchases: Schedules with descriptions of all actual and scheduled

purchases of equipment with a cost of $2,000 or greater per unit, other than those

for operation and maintenance of plant services, by actual cost for the year prior

to the prebudget year, and actual or estimated cost, as available, for the prebudget

year and budget year;

9. A detailed list of efforts to improve administrative efficiency and realize other

potential or real cost savings;

10. An accounting and analysis of actual salary breakage in the year prior to the

prebudget year for replacement of employees who retired or otherwise left school

district employment before or during the year, actual or estimated salary

breakage, as available, for the prebudget year for replacement of employees who

retired or otherwise left school district employment or are known to be retiring or

otherwise leaving school district employment before the end of the prebudget

year, and estimated salary breakage for the budget year for replacement of

employees known to be retiring or otherwise leaving school district employment

at the end of the prebudget year;

11. A list of budgeted positions and salaries that have been vacant for more than one year;

12. A list of aides and salaries that are not mandated for preschool and kindergarten

or required by IEP for special education; and

13. A list of appropriations to fund deficits in any of the school district's enterprise

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fund activities.

6A:23A-8.2 Public notice and inspection

(a) Each district board of education, upon submission of its budget application to the

executive county superintendent or by the statutory submission date, whichever is earlier,

shall make available upon request for public inspection all budget and supporting

documentation contained in the budget application and all other documents listed in

N.J.A.C. 6A:23A-8.1 once the budget application has been submitted to the executive

county superintendent for approval. Nothing in this section shall restrict access by the

citizens of this State to documents that otherwise qualify as public records pursuant to

N.J.S.A. 47:1A-1 et seq., or under the common law.

(b) Notwithstanding any provision of law to the contrary, if a district board of education

proposes a budget with a general fund tax levy and equalization aid that exceed the

school district’s adequacy budget, the following statement shall be published, pursuant to

N.J.S.A. 18A:7F-5.d(10), in the legal notice of public hearing on the budget pursuant to

N.J.S.A. 18A:22-28, posted at the public hearing held on the budget pursuant to N.J.S.A.

18A:22-29, and printed on the sample ballot required pursuant to N.J.S.A. 19:60-10:

"Your school district has proposed programs and services in addition to the New Jersey

Student Learning Standards adopted by the State Board of Education. Information on

this budget and the programs and services it provides is available from your local school

district."

the thoroughness and efficiency standards established pursuant to N.J.S.A. 18A:7F-46

that describes in specific detail the reasons why and to the extent that the school district's

proposed budget contains spending that exceeds the adequacy budget. That statement

shall be included with the budget application and other materials for public inspection.

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6A:23A-8.3 Administrative cost limits

(a) Each district board of education shall budget and report administrative costs using the

minimum chart of accounts and other reporting directives published and distributed by

the Commissioner pursuant to N.J.S.A. 18A:4-14 and N.J.A.C. 6A:23A-16, which

includes, but is not limited to, recording the full salary of the SBA, chief school

administrator, and principal/vice principal(s) as administrative costs, except as follows:

1. The salary of the chief school administrator may be prorated between general

administration and school administration whenever the chief school administrator

also acts as a building principal.

2. The salary of a chief school administrator, SBA, or principal/vice principal shall

not be prorated between other functions, except as otherwise provided in (a)1

above, or to instruction when providing direct classroom instruction as part of the

school district’s regular curriculum.

(b) Each district board of education, except for CVSDs and non-operating school districts,

shall prepare and submit to the executive county superintendent a proposed budget

consistent with N.J.S.A. 18A:7F-5 and 18A:22-1 et seq. and this chapter, in which the

advertised per pupil administrative cost does not exceed the lower of the following:

1. The school district’s adjusted, as of February 1, prebudget year per pupil

administrative costs as reported in the proposed budget; or

2. The per pupil administrative cost limit for the school district’s region. The per

pupil administrative cost limits are calculated individually for each of the three

regions, North, Central and South, using audited expenditure data from the 2003-

04 school year inflated annually by the CPI or 2.5 percent, whichever is greater.

Each district board of education will receive a statement of its regional

administrative cost limit with the annual State aid notices.

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the executive county superintendent, as the Commissioner’s designee, to exceed the

school district’s adjusted, as of February 1, prebudget year per pupil administrative costs

up to 2.5 percent or the CPI, whichever is greater, as follows:

1. The district board of education shall submit the request to the executive county

superintendent in writing no less than two weeks prior to budget submission;

2. The request shall not exceed the per pupil administrative cost limits for the school

district’s region in (b)2 above; and

3. The district board of education shall include with the request documentation that

supports the request for factors including, but not limited to:

i. Enrollment changes;

ii. Administrative changes to fulfill mandated requirements;

iii. Changes to nondiscretionary fixed costs; and

iv. Opening a new school.

(d) Each district board of education subject to (b) above may submit to the executive county

superintendent any shared services contractual agreement(s) and documented costs for

the provision of administrative services to other school districts or governmental units.

The executive county superintendent may consider the contractual agreements and

documented costs in the calculation of total administrative spending in the prebudget and

budget year for purposes of determining the district board of education’s adherence with

the per pupil administrative cost limits.

(e) Each district board of education subject to (b) above shall submit to the executive county

superintendent a proposed budget in which the advertised per pupil administrative cost is

within the per pupil administrative cost limits in (b) above. A district board of education

may include as a separate proposal for voter or board of school estimate approval any

excess administrative spending above the cost limits only if the proposal is consistent

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with N.J.A.C. 6A:23A-12.1.

(f) Each district board of education subject to (b) above that submits to the executive county

superintendent a proposed budget in which the advertised per pupil administrative cost

exceeds the per pupil administrative cost limits in (b) above, and has not received

executive county superintendent approval to exceed this requirement as set forth in (c)

above, or has not presented documentation to the executive county superintendent as set

forth in (d) above, shall not receive budget approval.

1. The district board of education shall resubmit to the executive county

superintendent a budget that has met the administrative cost limits, through either

a reduction in administrative costs and/or submission of a separate proposal for

voter or board of school estimate approval of the excess administrative costs, no

later than five working days prior to the school district’s last day to advertise for

the public hearing.

2. A district board of education that does not resubmit a budget in accordance with

(f)1 above within this timeframe:

i. Shall lose the authority and decision-making capacity for development of

the final administrative budget for advertisement to the voters or board of

school estimate and this responsibility shall be shifted to the executive

county superintendent as the Commissioner’s designee. The executive

county superintendent shall conduct all necessary budgetary reallocations

and reductions to meet these requirements; and

ii. May be subject to withholding of State aid, pursuant to N.J.S.A. 18A:7F-9.

(g) Each district board of education subject to (b) above that fails to submit to the executive

county superintendent an approvable budget in a second consecutive year or any year

thereafter shall be subject to:

1. A more restrictive fiscal and budgetary review and approval process as deemed

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appropriate by the Commissioner; and

2. Withholding of State aid, pursuant to N.J.S.A. 18A:7F-9.

6A:23A-8.4 Capital outlay budget

(a) Pursuant to N.J.A.C. 6A:26-3.7 and 3.12, a district board of education shall obtain

approval of the local funding for a non-referendum capital project (school facility project

or other capital project) through one of the following methods:

1. Necessary line items in capital outlay in the budget certified for taxes;

2. Separate voter-approved question, board of school estimate approved resolution, or

capital projects review board approved resolution of the expenditure of local support; or

3. Withdrawals from capital reserve in accordance with N.J.A.C. 6A:23A-14.1.

(b) A district board of education seeking approval of local funding for a non-referendum

capital project through appropriations made to the necessary line items in the budget

pursuant to (a)1 above shall provide the necessary detail in the appropriate supporting

documentation to the budget submission, pursuant to N.J.S.A. 18A:22-8 and N.J.A.C.

6A:23A-8.1. For school districts that hold annual elections in November, approval of

local funding for a non-referendum capital project shall be obtained through executive

county superintendent approval of the base budget.

budgeted in capital outlay to the capital projects fund, pursuant to N.J.A.C. 6A:26-3.8(a)3.

6A:23A-8.5 Designation of general fund balances

(a) Each district board of education shall designate, at a minimum, in the original budget

certified for taxes an estimate of undesignated-unassigned general fund balance at June

30 of the prebudget year in excess of the limitations contained in N.J.S.A. 18A:7F-7, less

any excess amount(s) approved by the Commissioner for deposit into a capital reserve

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account, pursuant to N.J.A.C. 6A:23A-14.1, less any Federal impact aid anticipated to be

received in the prebudget year, less any restricted school bus advertising revenue,

pursuant to N.J.S.A. 18A:39-31, and any general fund balance(s) restricted by law or

regulation or designation.

(b) If a school district's audited undesignated general fund balance at June 30 of any school

year exceeds the amounts permitted in (a) above, the district board of education shall

reserve and designate the excess amount in the subsequent year's budget.

deduction in the State aid payable to the district board of education in the subsequent

budget year in an amount equal to the audited excess undesignated general fund balance

less any Federal impact aid received in the prebudget year.

6A:23A-8.6 Appropriation of unrestricted debt service fund balance; exception

(a) A district board of education shall appropriate annually all unrestricted debt service fund

balances in the budget certified for taxes unless expressly authorized and documented by

the voters in a bond referendum, after transfer of unexpended bond proceeds pursuant to

N.J.A.C. 6A:26-4.6(c), upon formal Commissioner approval after review of documented

authorization by the voters in a public meeting.

(b) A district board of education shall include in the bond referendum or documented

authorization pursuant to (a) above, the specific purpose for maintaining the unrestricted

debt service fund balance and duration that the unrestricted debt service fund balance will

be maintained.

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Subchapter 9. Executive County Superintendent Budget Review Procedures

6A:23A-9.1 Executive county superintendent budget review

(a) A district board of education shall submit the budget application and all required

supporting documentation as prescribed in this section to the executive county

superintendent for review and approval.

(b) The executive county superintendent, as designated by the Commissioner, shall review

and approve each district board of education's proposed budget prior to its advertisement,

except when the Commissioner has granted authority to advertise prior to budget

approval. The executive county superintendent shall approve budgets only when:

1. The base budget portion of the budget application and supporting documentation

submitted by the district board of education includes measures to ensure

curriculum and instruction are designed and delivered in a way that all students

will have the opportunity to achieve the knowledge and skills defined by the New

Jersey Student Learning Standards and that all proposed expenditures are suitable

and appropriate for that purpose;

2. The base budget contains funds sufficient to meet all existing statutory and

regulatory mandates; and

3. The base budget is within the applicable regional limit, pursuant to N.J.S.A. 18A:7F-5.

but not be limited to, the following information and records:

1. The thoroughness and efficiency standards established pursuant to N.J.S.A.

18A:7F-46 and defined in N.J.A.C. 6A:23A-1.2;

2. Any progress report or other annual report required by the Commissioner

regarding compliance with the quality performance indicators pursuant to

N.J.S.A. 18A:7A-3 et seq., and N.J.A.C. 6A:30;

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3. Pupil achievement or progress in meeting existing State assessment standards;

4. Annual independent audits and other external reviews by a State or Federal

agency or reviews required by statute and regulation;

5. The Taxpayers’ Guide to Education Spending;

6. The school performance report;

7. Contractual obligations;

8. The comprehensive maintenance plan pursuant to N.J.A.C. 6A:26-20; and

9. The section of long-range facilities plan (LRFP), submitted pursuant to N.J.S.A.

18A:7G-4, that includes the capital projects proposed in the budget.

(d) The executive county superintendent shall order any change(s) in proposed expenditures

that is found unsuitable, inappropriate, or unreasonable, including administrative

spending, pursuant to N.J.S.A. 18A:7F-5.

(e) The executive county superintendent shall not approve a base budget unless it includes

the required annual maintenance amount, pursuant to N.J.A.C. 6A:26-20.4.

(f) The executive county superintendent shall annually review expenditures of each district

board of education, pursuant to N.J.S.A. 18A:7F-5, and shall not predicate budget

determinations on past practices. The executive county superintendent shall direct in the

proposed budget, as appropriate, an increase, decrease, or elimination of expenditures

contained in the prior year's approved budget.

6A:23A-9.2 Executive county superintendent budget review and approval; administrative and

non-instructional expenses

(a) Prior to advertisement by the district board of education, the executive county

superintendent shall:

1. Review all budgets of the school districts within the county, pursuant to N.J.S.A.

18A:7F-5, and may disapprove, pursuant to N.J.S.A. 18A:7-8.l and 8.x, a portion

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of a school district's proposed budget if the school district has not implemented all

potential efficiencies in its administrative operations or if the budget includes

excessive non-instructional expenses. In making this determination, the executive

county superintendent will consider, but need not be limited to, a school district’s

failure to meet efficiency standards or failure to implement efficient business

practices established, pursuant to N.J.A.C. 6A:23A-9.3. The school district shall

deduct the disapproved amounts from the budget prior to publication, and shall

not transfer funds back into any general ledger appropriation account that has

been reduced pursuant to the review.

i. Budget reallocations may be calculated using the presumptive efficient

spending levels as defined in N.J.A.C. 6A:23A-1.2; and

2. Review and approve separate proposals to be submitted to the voters for

additional funds, pursuant to N.J.S.A. 18A:7F-5 or 39, as applicable, provided the

school district:

i. Provides written documentation it has made efforts to enter into shared

arrangements with other school districts, municipalities, counties, and

other units of local government for the provision of administrative,

business, purchasing, public and nonpublic transportation, and other

required school district services;

ii. Certifies and provides written documentation it participates in on-going

shared arrangements; or

iii. Certifies and provides written documentation that entering such shared

arrangements would not result in cost savings or would result in additional

expenses for the school district.

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6A:23A-9.3 Efficiency standards for review of administrative and non-instructional

expenditures and efficient business practices

(a) For purposes of executive county superintendent budget reviews, pursuant to N.J.A.C.

6A:23A-9.1 through 9.5, the standards and requirements set forth in this section shall apply.

(b) In determining whether a school district has implemented all potential administrative

efficiencies and/or eliminated all excessive non-instructional costs, the executive county

superintendent shall consider the efficiency standards and Taxpayers’ Guide to Education

Spending indicators in (c) below as guidelines and applied based on school district-

specific circumstances, including, but not limited to, the school district’s spending

relative to its adequacy budget and the school district’s results on NJQSAC and other

measures of efficiency and effectiveness. The executive county superintendent shall also

consider the impact on the stability of school district operations given the need for long-

term planning and budgeting to meet the standards and indicators, school district-specific

cost factors beyond the school district’s control and any phase-in period needed to

implement any efficiency(ies) the executive county superintendent deems feasible based

on the standards and indicators in (c) below.

the following:

1. Resources and costs that are equal to or less than the “efficiency standards”

established pursuant to N.J.S.A. 18A:7F-46 and defined in N.J.A.C. 6A:23A-1.2;

2. Indicators from the Taxpayers’ Guide to Education Spending for school districts’

operating type and enrollment range indexed to the budget year by the applicable

growth in the CPI as follows:

i. Administrative cost per pupil equal to or less than the State median;

ii. Support services cost per pupil equal to or less than the State median;

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iii. Operation and maintenance of plant cost per pupil equal to or less than the

State median;

iv. A ratio of students to administrative personnel equal to or more than the

State average;

v. A ratio of faculty to administrative personnel equal to or more than the

State average; and

vi. A ratio of students to educational support personnel equal to or more than

the State average;

3. Custodians and janitors on a ratio of one for every 17,500 square feet of building

space calculated on a districtwide basis;

4. A transportation efficiency rating equal to or more than 120 percent;

5. Overtime pay for any given function of 10 percent or less of regular wages for

that function;

6. School district participation in the SHBP or SEHBP that permits employees with

other health care coverage to waive health care coverage and may pay

consideration pursuant to N.J.S.A. 52:14-17.31a;

7. School districts with two or more buildings or buildings configured by two or

more grade spans (for example, kindergarten through five, six through eight, or

nine through 12) that established a tiered system of pupil transportation or

demonstrate that doing so would not result in savings or would be more costly.

Any school district that does not have a tiered system of student transportation

and cannot demonstrate that such a system would not result in savings or would

be more costly shall submit to the executive county superintendent a plan to

establish a tiered system of pupil transportation;

8. Vacant positions budgeted at no more than step one of the salary guide unless

justification for the additional amount has been approved by the Department;

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9. Aides not mandated by law or required by an IEP, only when supported by

independent research-based evidence that demonstrates the use of aides is an

effective and efficient way of addressing the needs of the particular student

population served;

10. The food service fund is self-sufficient and does not require a contribution from

the general fund budget;

11. The school district solicits competitive proposals with fee quotes or uses a

comparable process to ensure the school district receives the highest quality

services at a fair and competitive price prior to the award of contracts for

professional services;

12. Textbook purchases meet one of the following conditions:

i. The purchase is in accordance with a textbook replacement plan;

ii. Textbooks have been identified as stolen or destroyed;

iii. A change in curriculum or new edition requires a new textbook; or

iv. The current supply of a textbook edition(s) is not adequate due to

enrollment increases;

13. Library books, magazine subscriptions, video tapes, and DVDs are for educational

purposes; and

14. Public relations services are incorporated into the duties of the superintendent,

SBA, and/or other staff position(s) and are not provided by a dedicated public

relations staff position or contracted service provider. Public relations functions

as defined in (c)14i and ii below should not comprise more than 50 percent of the

duties of any one staff position.

i. For the purpose of this paragraph, public relations services include

activities directly relating to promotional efforts that advance a particular

position and/or communicate information to the news media and school

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district community at large through means such as press releases, press

conferences, newsletters, flyers, mass community mailings and emails,

television and radio broadcasting, and school-related community events.

ii. Public relations activities do not include activities such as crisis

communications, website maintenance, data collection and dissemination,

school operations, and development of the school district calendar or handbook.

(d) The school district shall either document it has taken steps to improve administrative

efficiency and reduce non-instructional costs through shared service arrangements or

demonstrate that doing so would not result in savings or would be more costly.

6A:23A-9.4 Commissioner’s authority to direct expenditures to achieve T&E

(a) If a district board of education submits a budget with a general fund tax levy and

equalization aid set at less than its adequacy budget, the Commissioner may direct, when

deemed necessary to ensure implementation of the thoroughness and efficiency

standards, additional expenditures, in specific accounts and for specific purposes, up to

the school district's adequacy budget.

(b) If a district board of education submits a budget with a general fund tax levy and

equalization aid set at less than its adequacy budget and the school district fails to meet the

New Jersey Student Learning Standards in that school year, the Commissioner shall direct

the district board of education to increase expenditures to meet at least the adequacy budget

within the next two budget years in a manner that addresses the cause(s) of the failure.

fund tax levy and equalization aid above its adequacy budget, the Commissioner may direct

budgetary reallocations and programmatic adjustments, or take other measures, as deemed

necessary to ensure implementation of the required thoroughness and efficiency standards.

(d) The Commissioner may approve a budget with an increase in its adjusted tax levy by more

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than the allowable amount authorized pursuant to N.J.S.A. 18A:7F-38, up to the amount

required to support the directed increases in expenditure accounts in (a) and (b) above.

6A:23A-9.5 Commissioner to ensure achievement of the New Jersey Student Learning

Standards; corrective actions

(a) A district board of education shall be subject to action by the Commissioner, as part of

the budget approval process, upon the failure of one or more schools within the school

district to achieve the New Jersey Student Learning Standards as evidenced by existing

Statewide assessment methods or other statutory or regulatory methods of evaluation.

(b) If the Commissioner deems progressive actions would not be sufficient due to the

magnitude of the failure and/or other factors, the Commissioner shall take, pursuant to

the summary authority granted the Commissioner by N.J.S.A. 18A:7F-6.b, immediate

corrective actions as deemed appropriate, including, but not limited to:

1. Restructuring of curriculum or programs consistent with the thoroughness

standards established pursuant to N.J.S.A. 18A:7F-46;

2. Retraining or reassignment of staff and the development and implementation of a

formal plan for professional development at the amount provided for in the

efficiency standards established pursuant to N.J.S.A. 18A:7F-46;

3. Conducting a comprehensive budget evaluation;

4. Redirecting expenditures consistent with the thoroughness and efficiency

standards established pursuant to N.J.S.A. 18A:7F-46;

5. Enforcing spending at the full adequacy budget consistent with the thoroughness

and efficiency standards established pursuant to N.J.S.A. 18A:7F-46;

6. Reviewing terms of future collective bargaining agreements prior to final approval

by the district board of education and an assessment of the impact of the terms on

the school district's budget, education program, and the local property tax levy; and

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7. Requiring a district board of education to implement enhanced budget procedures,

as deemed appropriate, as follows:

i. Consider revenue payable pursuant to N.J.S.A. 18A:7F-43 et seq., School

Funding Reform Act of 2008, and all other State, local, and Federal

revenue as revenue of the general fund, unless expressly restricted by

Federal law or written contract, for the purpose of implementing the

Commissioner’s directives;

ii. Record appropriations and expenditures by school for classroom

instruction, school-level technology, student support services, curriculum

development, educational media services and school library, professional

development, security, and school level administration. A district board of

education may require other types of expenditures, such as maintenance

and custodial and transportation, to be recorded by school;

iii. Obtain written Commissioner approval on Commissioner-prescribed

forms for school-level appropriation transfers necessary during the year to

effectuate the Commissioner’s directives; and

iv. Obtain written Commissioner approval prior to appropriating for new purposes

school-level appropriation balances occurring during the year from salary

breakage, unanticipated circumstances, overestimated costs, or other events.

(1) Upon approval, a district board of education may transfer, in

accordance with N.J.S.A. 18A:22-8.1, the appropriation balances

between schools or for districtwide purposes, except where

prohibited by any Federal law that restricts such transfers.

(2) A district board of education shall cause any school-level

appropriation balances remaining at the end of the year to lapse

and be commingled with the general fund balance of the school

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district, except where prohibited by any Federal law that restricts

commingling or otherwise required by law or regulation.

Board within 30 days.

(d) A district board of education may appeal any action(s) taken by the Commissioner under N.J.S.A.

18A:7F-6.b to the Appellate Division of the Superior Court, pursuant to N.J.S.A. 18A:6-9.1.

(e) Nothing in this section shall be construed to limit general or specific powers elsewhere

conferred upon the Commissioner pursuant to law.

6A:23A-9.6 Appeal of executive county superintendent budget reductions

(a) Any formal budgetary action of the executive county superintendent may be appealed directly

to the Commissioner, who shall render a decision within 15 days of the receipt of the appeal.

If the Commissioner fails to issue a decision within 15 days of the filing of an appeal, the

budgetary action of the executive county superintendent shall be deemed approved.

(b) The procedure for appealing a budget reduction(s) made by the executive county superintendent

for administrative inefficiency or excess non-instructional costs shall be as follows:

1. A district board of education in which the general fund tax levy proposed in the

base budget has been reduced or a separate proposal(s) has been reduced or

rejected shall submit, within five business days of the written notice of said

action, to the Commissioner the following information:

i. The complete line-item budget as originally submitted to the executive

county superintendent and all supporting documentation and narrative

explanations, including any copies of additional spending proposals;

ii. An electronic schedule in Microsoft Excel with a list of the line items

reduced by the executive county superintendent showing in separate

columns:

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(1) Budget line number;

(2) Account description;

(3) Account number;

(4) Actual audited expenditure of prior year budget;

(5) Expenditure as of February 1 of the prebudget year (current year);

(6) Originally proposed expenditure for the budget year;

(7) Amount of executive county superintendent reduction; and

(8) Proposed expenditure after executive county superintendent reduction;

iii. A copy of the executive county superintendent’s written explanation for

each line-item reduction;

iv. The school district’s written itemized argument(s) for the restoration of all

or part of each line-item reduction accompanied by available supporting

documentation;

v. The numbers of professional administrative and professional non-

instructional staff by line-item account during the current school year and

projected staff for the ensuing school year, together with the reason(s) for

any increase or decrease;

vi. The numbers of nonprofessional administrative and nonprofessional non-

instructional staff by line-item account during the current school year and

projected staff for the ensuing school year, together with the reason(s) for

any increase or decrease;

vii. Pupil enrollment by grade for the school district as of the preceding June

30, the last school day prior to the preceding October 16, and as projected

for October of the ensuing school year;

viii. Salaries or salary schedules for all administrative and non-instructional

staff by job title; and

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ix. The number of schools and classrooms in each school.

6A:23A-9.7 Procedures following voter defeat of proposed budget; municipal governing

body or board of school estimate action

(a) Procedures following voter defeat of the proposed budget with a general fund tax levy

above the school district’s required local share, calculated pursuant to N.J.S.A. 18A:7F-

5.b, are as follows:

1. A district board of education in which the general fund tax levy proposed in the

base budget has been rejected by voters at the April school election shall submit,

within two days of the certification of election results, to the executive county

superintendent and the governing body(ies) comprising the school district, the

following information:

i. A complete line-item budget listing each item by code and line

description, including actual expenditures for the previous school year,

actual budgeted amount for the current school year, proposed budgeted

amount for the ensuing school year as proposed to voters, the advertised

budget for the ensuing school year, and all supporting documentation and

narrative explanations, including copies of approved spending proposals,

indicating which were approved;

ii. A copy of the annual progress report, if any, submitted to the

Commissioner, pursuant to N.J.S.A. 18A:7A-11 and N.J.A.C. 6A:30;

iii. A copy of the school district's most recent annual audit;

iv. An explanation of any action(s) to reallocate, direct additional

expenditures, and so forth, taken by the Commissioner, or the executive

county superintendent on behalf of the Commissioner, pursuant to

N.J.S.A. 18A:7F-5 through 7, 18A:7F-39, or 18A:7-8, or a statement that

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no such action(s) was taken;

v. The numbers of professional and nonprofessional staff during the current

school year and projected staff for the ensuing school year, together with

reasons for any increase or decrease;

vi. Pupil enrollment by grade for the school district as of the preceding June

30, the last school day prior to the preceding October 16, and as projected

for October of the ensuing school year;

vii. Salary schedules for all employees;

viii. The number of schools and classrooms in each school;

ix. Tuition received or paid during the previous school year, anticipated for

the current school year, and projected for the ensuing school year;

x. Substantiation of need for any proposed capital projects and/or deposits

into the capital reserve, including documentation of the projects' inclusion

in the long-range facilities plan (LRFP);

xi. Any information required for budget submission to the executive county

superintendent and not specifically enumerated in (a)1i through x above;

xii. The applicable portions of the Taxpayers’ Guide to Education Spending;

xiii. The applicable portions of the school performance report; and

xiv. Any other documentary materials or records the Commissioner deems

appropriate for a specific district board of education.

2. The governing body(ies) shall transmit to the district board of education a letter

acknowledging the receipt of the information in (a)1 above.

3. The governing body(ies) comprising the school district, or a formally approved

committee thereof, shall consult, as soon as immediately practicable, with the

district board of education, or a formally approved committee thereof, for purposes

of determining the amount of general fund tax levy sufficient to ensure provision of

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a T&E education or to maintain the stability of a school district's programs.

4. If either the district board of education or municipal governing body, or both, will

have a majority present at the meeting, the meeting shall be publicly announced

and advertised according to the Open Public Meetings Act by the body(ies) with

the majority present.

5. On or before May 19, or the Commissioner-established date if the April school

election date is changed pursuant to N.J.S.A. 19:60-1, the governing body(ies)

shall certify to the county board of taxation an amount to be appropriated as

school district tax levy, pursuant to N.J.S.A. 18A:22-37. Copies of the

certification shall be forwarded to the district board of education and executive

county superintendent. The governing body(ies) shall not certify an amount less

than the minimum tax levy required to meet the required local share established

pursuant to N.J.S.A. 18A:7F-5. The governing body does not have the authority to

recommend a reduction in the debt service fund tax levy, only the general fund

tax levy.

i. The general fund tax levy certification, in the form of a resolution, shall be

for the sum of the base budget amount and additional amounts approved

by voters through separate questions.

ii. If the amount certified for the base budget is less than the amount

proposed to voters by the district board of education, the governing

body(ies) shall present, in the form of a resolution, to the district board of

education and the executive county superintendent a statement of the

specific line item expenditure reductions or increases in budgeted

revenues or designated general fund balance recommended by the

governing body(ies). The governing body(ies) shall also submit a

certification attesting it has reviewed the budget proposed by the district

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board of education and it deems the revised budget sufficient for provision

of a thorough and efficient system of education.

iii. If the sum of the equalization aid and general fund tax levy resulting from

the review pursuant to (a)5ii above is at or below the school district’s

adequacy budget, as calculated pursuant to N.J.S.A. 18A:7F-51, the

governing body(ies) shall concurrently present to the district board of

education and to the executive county superintendent a specific written

explanation documenting by clear and convincing evidence for each line

item reduced that it either will not adversely affect the ability of the

district board of education to meet the thoroughness and efficiency

standards established pursuant to N.J.S.A. 18A:7F-46 or will not adversely

affect the stability of a district board of education's overall operations

given the need for long-term planning and budgeting, as required by

N.J.S.A. 18A:7F-5.e(2).

(b) Procedures following voter defeat of the proposed budget with a general fund tax levy at

the school district’s required local share, calculated pursuant to N.J.S.A. 18A:7F-5.b, are

as follows:

1. A district board of education in which the general fund tax levy proposed in the

base budget has been rejected by voters at the April school election shall submit,

within two days of the certification of election results, to the governing body(ies)

comprising the school district the following information:

i. A complete line-item budget listing each item by code and line

description, including actual expenditures for the previous school year,

actual budgeted amount for the current school year, proposed budgeted

amount for the ensuing school year as proposed to voters, the advertised

budget for the ensuing school year, and all supporting documentation and

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narrative explanations, including copies of approved spending proposals,

indicating which were approved;

ii. A copy of the school district's most recent annual audit;

iii. An explanation of any action(s) to reallocate, direct additional

expenditures, and so forth, taken by the Commissioner, or the executive

county superintendent on behalf of the Commissioner, pursuant to

N.J.S.A. 18A:7F-5 through 7, 18A:7F-39, or 18A:7-8, or a statement that

no such action(s) was taken; and

iv. Any other documentary materials or records the Commissioner deems

appropriate for a specific district board of education.

2. The governing body(ies) shall transmit to the district board of education a letter

acknowledging the receipt of the information in (a)1 above.

3. If the board of education or municipal governing body, or both, will have a majority

present at the meeting, the meeting shall be publicly announced and advertised

according to the Open Public Meetings Act by the body(ies) with the majority present.

4. On or before May 19, or the Commissioner-established date established if the

April school election date is changed pursuant to N.J.S.A. 19:60-1, the governing

body(ies) shall certify to the county board of taxation an amount not less than the

required local share established pursuant to N.J.S.A. 18A:7F-5.b for this purpose,

pursuant to N.J.S.A. 18A:22-37. Copies of the certification shall be forwarded to

the district board of education and executive county superintendent. The

governing body(ies) does not have the authority to certify a reduction in the

general fund tax levy or debt service fund tax levy.

i. The general fund tax levy certification, in the form of a resolution, shall be

for the base budget amount plus any additional amount(s) approved by

voters through separate questions.

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ii. The governing body(ies) may include in the resolution a list of recommended

line-item reallocations for district board of education consideration.

iii. If the amount certified for the base budget is less than the required local

share, the certification shall be considered a failure to certify in

accordance with N.J.A.C. 6A:23A-9.8.

1. When submitting its proposed budget to the board of school estimate, a district

board of education shall also submit to the board of school estimate, the

governing body(ies), and the executive county superintendent the documents

enumerated in (a)1 above.

i. If the amount of money appropriated by the board of school estimate for

general fund purposes for the ensuing year, which shall not be less than

the required local share established pursuant to N.J.S.A. 18A:7F-5.b, is

less than the amount proposed by the district board of education, the board

of school estimate shall present to the district board of education, the

governing body(ies), and the executive county superintendent a statement

of the specific line-item reductions made. The board of school estimate

shall submit with the statement a certification that the board of school

estimate has reviewed the budget proposed by the district board of

education and that the board of school estimate deems the revised budget

sufficient for provision of a thorough and efficient system of education.

2. The governing body of each municipality comprising the school district shall

appropriate the amount certified by the board of school estimate.

i. If the amount of money appropriated by the governing body(ies) for

general fund purposes for the ensuing year, pursuant to N.J.S.A. 18A:22-

17, which shall not be less than the required local share established

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pursuant to N.J.S.A. 18A:7F-5.b, is less than the amount certified by the

board of school estimate, the governing body(ies) shall present to the

board of school estimate, the district board of education, and the executive

county superintendent a statement of the specific line-item reductions

made by the governing body(ies). The board of school estimate shall

submit with the statement a certification that the amount appropriated for

school purposes is sufficient for provision of a thorough and efficient

system of education.

ii. If the sum of the equalization aid and general fund tax levy resulting from

board of school estimate review or subsequent governing body

certification is at or below the school district’s adequacy budget, as

calculated pursuant to N.J.S.A. 18A:7F-51, the board of school estimate

and/or governing body(ies) shall concurrently present a specific written

demonstration as to why such reductions will not adversely affect the

ability of the school district to provide a thorough and efficient education

or the stability of the school district given the need for long-term planning

and budgeting as required by N.J.S.A. 18A:7F-5.e(2).

3. If the money appropriated by the governing body(ies) for general fund purposes

for the ensuing year, pursuant to N.J.S.A. 18A:22-17, is less than the required

local share established pursuant to N.J.S.A. 18A:7F-5.b, the certification shall be

considered a failure to certify in accordance with N.J.A.C. 6A:23A-9.8.

(d) If the governing body(ies) or the board of school estimate has certified an amount of tax

levy less than the amount proposed by the district board of education as a result of

reductions eligible for restoration through application to the Commissioner as set forth in

N.J.A.C. 6A:23A-9.9, the executive county superintendent shall schedule a conference

between the district board of education, or a formally approved committee thereof, and

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the governing body(ies) or the board of school estimate, or a formally approved

committee thereof, for the purpose of assisting the respective bodies in reaching

agreement on the amount of tax levy sufficient to ensure provision of a T&E education

consistent with N.J.S.A. 18A:7F-5 through 63.

1. If an agreement is reached, any resultant adjustment in tax levy shall be certified

forthwith to the county board of taxation.

2. If an agreement is not reached and a tax levy has already been certified pursuant

to N.J.S.A. 18A:22-37, the levy shall stand as originally certified and application

to the Commissioner for restoration of reductions may be made in accordance

with N.J.A.C. 6A:23A-9.9.

6A:23A-9.8 Municipal governing body failure to certify or agree; Commissioner sets tax levy

Pursuant to N.J.S.A. 18A:22-38, if the governing body(ies) fails to certify by May 19, or the

Commissioner-established date established if the April school election date is changed pursuant

to N.J.S.A. 19:60-1, an amount of tax levy for any item rejected at the April school election or

certifies different amounts to the county board of taxation, a district board of education shall

submit the budget and any reduction(s) recommended, pursuant to N.J.S.A. 18A:7F-5.e(1) or (2),

by the governing body(ies) following voter defeat for review and determination by the

Commissioner of the tax levy amount to be certified to the county board of taxation.

6A:23A-9.9 Application for Commissioner restoration of budget reductions

(a) The requirements for application to the Commissioner for restoration of reductions are as follows:

1. A district board of education that has proposed to voters or the board of school

estimate a general fund budget, pursuant to N.J.S.A. 18A:7F-5, with a sum of

general fund tax levy and equalization aid in excess of the school district’s

adequacy budget, as calculated pursuant to N.J.S.A. 18A:7F-51, may apply for

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restoration of reductions made, pursuant to N.J.S.A. 18A:7F-5.e(1), by the

governing body(ies) following voter defeat, or by the board of school estimate,

only on grounds the reductions will negatively impact the stability of the school

district given the need for long-term planning and budgeting ("stability grounds").

The district board of education shall document by clear and convincing evidence

its need for restoration of each item reduced. In such cases, a district board of

education shall not argue that any of the reductions will adversely affect its ability

to meet the thoroughness and efficiency standards established pursuant to

N.J.S.A. 18A:7F-46.

i. "Stability grounds" as used in the School Funding Reform Act of 2008,

N.J.S.A. 18A:7F-43 et al., means reductions that would require long-term

planning or budgeting and cannot be accomplished within the budget year;

that would adversely affect the district board of education's ability to

operate a school system; and that are not a program, service, or other

expenditure contained within the efficiency standards established pursuant

to N.J.S.A. 18A:7F-46 or are expenditures for items that are in excess of

those contained in the efficiency standards established pursuant to

N.J.S.A. 18A:7F-46.

2. A district board of education that has proposed to voters or the board of school

estimate a general fund budget, pursuant to N.J.S.A. 18A:7F-5, with a sum of

general fund tax levy and equalization aid at or below the school district’s

adequacy budget, as calculated pursuant to N.J.S.A. 18A:7F-51, may apply for

restoration of reductions made, pursuant to N.J.S.A. 18A:7F-5.e(2), by the

governing body(ies) following voter defeat, or by the board of school estimate, on

grounds the reductions either will adversely affect the district board of education's

ability to meet the thoroughness and efficiency standards established pursuant to

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N.J.S.A. 18A:7F-46 ("T&E grounds") or will adversely affect the stability of a

district board of education's overall operations given the need for long-term

planning and budgeting ("stability grounds").

i. T&E grounds means the reduction(s) would adversely affect the district

board of education's ability to implement programs and services at the

level contained in the efficiency standards to ensure its students achieve

the New Jersey Student Learning Standards.

3. Within 10 business days after certification of the general fund tax levy by the

governing body(ies), or the board of school estimate, a district board of education

eligible for restoration pursuant to (a)1 or 2 above may submit to the

Commissioner an application for restoration on a form deemed appropriate by the

school district. The district board of education shall:

i. Address each line-item reduction made by the governing body(ies) or the

board of school estimate; and

ii. Provide a specific written explanation supported by attached

documentation, or specific reference to information contained in materials

submitted pursuant to N.J.A.C. 6A:23A-9.7(a)1, as to why each reduction

will adversely affect the ability of the school district to provide a thorough

and efficient education or the stability of the school district given the need

for long-term planning and budgeting, whichever criterion or criteria will

apply under (a)1 or 2 above.

4. A district board of education shall submit an application for restoration to the

executive county superintendent, and shall concurrently submit a copy of the

complete application to the governing body(ies) or the board of school estimate.

5. Within 10 business days of receipt of the district board of education's application,

the governing body(ies) or the board of school estimate may submit to the

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executive county superintendent its comments on the district board of education’s

application. A copy of such comments shall concurrently be submitted to the

district board of education.

(b) Commissioner review and certification of tax levy, and determination of application for

restoration, shall be as follows:

1. Upon receipt of a district board of education's application and the governing

body’s or board of school estimate's comments thereon, or upon expiration of the

time for their submission, the Commissioner will review the materials submitted

and issue an order directing restorations or reallocations as he or she deems

warranted pursuant to the appropriate standard in N.J.S.A. 18A:7F-5 consistent

with the overall intent of the Act. For purposes of assessing budgets for

certification of tax levy and assessing applications, the Commissioner may engage

the assistance of such Department staff as he or she deems appropriate.

2. In addition to application materials and responsive comments, and materials

submitted to the executive county superintendent in accordance with (a)1 above,

the Commissioner may consider additional information available to him or her

through established reporting requirements and Department data collection

processes. If the Commissioner or a designee determines during the course of

review that further information or explanation is required from a district board of

education, governing body, or board of school estimate, the information may be

requested at any time during the review process.

3. In the case of budgets subject to Commissioner tax levy certification pursuant to

N.J.A.C. 6A:23A-9.8 or applications submitted pursuant to (a) above, the

Commissioner may consider enrollment increases or decreases within the school

district, the history of voter or board of estimate approval or rejection of school

district budgets, the impact on the local tax levy, whether reductions made will

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impact the ability of the school district to fulfill its contractual obligations, and the

other factors listed in (b)4 below.

4. In determining the impact of reductions on the stability of a school district, the

Commissioner may consider the following information:

i. Increases or decreases in enrollment;

ii. The history of voter approval or rejection of school district budgets;

iii. The impact on the local tax levy;

iv. The ability of the school district to fulfill its existing contractual

obligations under N.J.S.A. 18A:7F-43 et seq. and the relationship of

contractual obligations to Statewide trends in bargaining practices;

v. The impact on class sizes relative to instructional space;

vi. The impact on class sizes relative to teaching staff reductions under

existing teacher contracts;

vii. The link between the proposed reduction and classroom instruction or

health and safety;

viii. The nature of the reduction as to whether it is a continuation expenditure

or a new or increased expenditure;

ix. The school district's relative standing in the Taxpayers’ Guide to

Education Spending on the indicators for total administration;

administrative salaries and benefits; total operations and maintenance of

plant; district board of education contributions to the food service

program; and extracurricular costs;

x. The school district's original budget to actual spending and unreserved

general fund balance usage and projections trend histories;

xi. Nonrecurring costs;

xii. The degree to which a school district exceeds its adequacy budget; and

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xiii. Any facts or data that would provide evidence of the reduction's impact.

5. In directing adjustments to budgets that are subject to Commissioner certification,

application for restoration, or required review, the Commissioner may reallocate or

sustain reductions to surplus where such reallocations or reductions do not decrease

surplus below $250,000 or the minimum amount necessary based on the school

district’s specific circumstances and needs, whichever is greater, notwithstanding

that budgeted amounts are within the level permitted by N.J.S.A. 18A:7F-7.

6. Commissioner decisions issued pursuant to this subchapter are final decisions that

may be appealed to the Appellate Division of the Superior Court, pursuant to

N.J.S.A. 18A:6-9.1.

6A:23A-9.10 Executive county superintendent ongoing budget review

(a) Subsequent to voter or board of school estimate approval, as applicable, but prior to

submission of the subsequent school district budget, the executive county superintendent shall:

1. Reexamine and monitor all school district budgets of the school districts within the

county to identify any potential efficiencies in administrative operations or any

excessive non-instructional expense(s) that was not identified during the initial

budget review or is the result of subsequent events or new information. During the

reexamination, the executive county superintendent shall consider the following:

i. The efficiency standards and efficient business practices established

pursuant to N.J.A.C. 6A:23A-9.3;

ii. The school district’s year-end board secretary’s report;

iii. The school district’s independent annual audits and CAFRs;

iv. Recent evaluations and progress reports of the five key components of

school district effectiveness under NJQSAC;

v. The results of year-end financial procedures conducted pursuant to

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N.J.A.C. 6A:23A-9.11;

vi. Routine school district inspections made pursuant to N.J.S.A. 18A:7-8.a; and

vii. Other information or documentation obtained during the performance of the

executive county superintendent’s duties, pursuant to N.J.S.A. 18A:7-8; and

2. Notify in writing any school district with identified administrative inefficiencies

and/or excessive non-instructional costs of the findings, and quantify the amounts

by account that shall not be included in the school district’s subsequent budget.

The written notification shall state transfers shall not be made during the current

budget year to the identified accounts.

6A:23A-9.11 Year-end financial procedures for executive county superintendent and State monitor

(a) Within 30 days of receipt of a school district’s audited CAFR, the office of the executive

county superintendent or State monitor, where one has been appointed in the school

district pursuant to N.J.S.A. 18A:7A-55, shall review each school district’s and CVSD’s

I-1, Schedule of Serial Bonds, for compliance with N.J.S.A. 18A:55-3.e.

1. The executive county superintendent or State monitor, as applicable, shall notify

each school district and CVSD of any debt that might result in a three percent net

present value savings if refinanced and shall document whether the district board

of education has passed a resolution to refinance or taken any other action to

study the refinancing of such debt; and

2. The executive county superintendent or State monitor, as applicable, shall

recommend to the Commissioner that he or she seek the withholding of State aid

in an amount equal to the projected savings to be achieved through refinancing if

no action has been commenced to study refinancing or refinance such debt.

(b) The office of the executive county superintendent or State monitor, as applicable, shall

annually review each school district’s and CVSD’s audited account payables and

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encumbrances that are part of the reserve for encumbrances as of June 30 that are in

excess of $5,000.

1. No earlier than October 15 but no later than December 1 of each year, each school

district and CVSD shall submit to the executive county superintendent or State

monitor, as applicable, a detailed list for encumbrances and a detailed list for

accounts payable that comprise the aggregate amount of the respective balance

sheet accounts reflected in the annual independent audit of the most recently

completed fiscal year-end. Each list shall indicate for each item:

i. The purchase order number;

ii. The date of purchase order issuance;

iii. The vendor name;

iv. The purchase order amount;

v. A brief description of goods or service, and when available;

vi. The invoice number;

vii. The invoice date;

viii. The invoice amount;

ix. The check number; and

x. The check date.

up documentation for some or all of the items to be reviewed at school district offices or

delivered to the executive county superintendent’s office, if applicable.

(d) The executive county superintendent or State monitor, as applicable, may lower the dollar

amount of transactions to be reviewed, if deemed warranted after reviewing transactions

in excess of $5,000.

(e) Except for construction projects and other long-term contracts, the reserve for

encumbrances or undesignated general fund balance created by cancelled encumbrances,

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as applicable, shall be reclassified to “designated general fund balance for appropriation

in the subsequent school year” in the aggregate amount of the following:

1. Encumbrances reflected in the independent audit report’s reserve for

encumbrances that are cancelled on or after July 1; or

2. Encumbrances for goods or services that have not been liquidated by September

30 of the fiscal year subsequent to the recently audited fiscal year.

(f) Account payables at year-end shall include amounts only for goods or services that have

been received or rendered as evidenced by the invoice date on or before June 30 of the

audited fiscal year.

(g) Account payables that do not meet the criteria in (f) above shall be treated as

encumbrances in accordance with (e) above. Prior-year accounts payables that were

actually encumbrances or unassigned general fund balance created by cancelled accounts

payables/encumbrances, as applicable, shall be reclassified to “assigned general fund

balance for tax relief in the subsequent school year” in the aggregate amount of accounts

payable at June 30 of the audited fiscal year.

Subchapter 10. Unused Tax Authority (Banked Cap)

6A:23A-10.1 Unused tax authority (banked cap)

(a) A district board of education may increase its adjusted tax levy pursuant to N.J.S.A. 18A:7F-39.e.

(b) A district board of education shall comply with the following when including unused tax

authority in any of the next three budget years:

1. Fully exhaust all tax authority authorized pursuant to N.J.S.A. 18A:7F-38 in the budget

prior to including unused tax authority calculated under (a) above in that budget year;

2. Adopt and submit with the budget application a true copy of a formal district

board of education resolution that contains the need for and the amount of the

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unused tax authority to be included in the base budget, and a statement that said

need must be completed by the end of the budget year and cannot be deferred or

incrementally completed over a longer period of time; and

3. Submit with the budget application a true copy of the minutes of the district board

of education meeting at which the need for the unused tax authority to be included

in the base budget was formally introduced and discussed in public.

separate proposal(s) with the base budget shall not be considered unused tax authority

available to a district board of education in the next three subsequent budget years.

(d) A district board of education shall fully utilize unused tax authority from the earliest prior

year(s) before utilizing unused tax authority from the prebudget year.

(e) The executive county superintendent may disapprove use of banked cap, pursuant to

N.J.S.A. 18A:7F-5, if he or she determines the district board of education has not

implemented all potential efficiencies in the administrative operations of the school district.

Subchapter 11. Tax Levy Growth Limitation

6A:23A -11.1 Adjusted tax levy growth limitation

(a) A school district shall not adopt a budget with an increase that exceeds the adjusted tax

levy growth limitation, calculated pursuant to N.J.S.A. 18A:7F-38. The adjusted tax levy

growth limitation shall be calculated as the sum of the:

1. Prebudget year adjusted tax levy, plus any adjustment for increases in enrollment

calculated pursuant to N.J.S.A. 18A:7F-38.b, multiplied by two percent; and

2. Adjustments for an increase in health care costs calculated pursuant to N.J.S.A.

18A:7F-38.d(1) and N.J.A.C. 6A:23A-11.3, and an increase in normal and

accrued liability pension contributions to Public Employees’ Retirement System

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(PERS) (pension deferral) calculated pursuant to N.J.S.A. 18A:7F-38.d(2).

(b) The school district shall prove by clear and convincing evidence the anticipated dollar

amount of the expenditure for each tax levy adjustment sought is reasonable.

responsibility and associated cost of a school district activity is transferred to another

school district or governmental entity.

6A:23A-11.2 Adjustment for increases in enrollments

(a) For purposes of the calculation of the adjustment to the tax levy cap for increases in

enrollment, the school district shall use the enrollment projection calculated by the

Commissioner for the purpose of State aid calculations for the budget year.

(b) The allowable adjustment for increases in enrollment shall equal the per pupil prebudget

year adjusted tax levy multiplied by EP, where EP equals the sum of:

1. 0.50 for each unit of weighted resident enrollment that constitutes an increase

from the prebudget year over one percent, but not more than 2.5 percent;

2. 0.75 for each unit of weighted resident enrollment that constitutes an increase

from the prebudget year over 2.5 percent, but not more than four percent; and

3. 1.0 for each unit of weighted resident enrollment that constitutes an increase from

the prebudget year over four percent.

equal one if it can demonstrate:

1. The calculation in N.J.S.A. 18A:7F-38.b would result in an average class size that

exceeds by 10 percent the facilities efficiency standards established pursuant to

N.J.S.A. 18A:7G-1 et seq.; and

2. New resources were added to the budget to achieve actual average class size

reduction. For this purpose, adding another teacher to an existing classroom shall

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not constitute class size reduction.

6A:23A-11.3 Adjustment for an increase in health care costs

(a) For the purposes of calculating the adjustment for health care costs, health care costs

shall include medical insurance and prescription drug insurance consistent with the

coverage provided under the SEHBP.

(b) A district board of education may increase its adjusted tax levy pursuant to N.J.S.A. 18A:7F-38.d.

1. For the purpose of this calculation, the health care cost for the prebudget year

shall equal the projected cost of medical and prescription drug insurance from the

original budget of the prebudget year.

2. The average percentage increase of the SEHBP shall be the amount determined

annually by the New Jersey Department of the Treasury’s Division of Pensions

and Benefits.

superintendent as follows:

1. A written verification or estimate, as applicable, of the rate increases for medical

and prescription drug insurance from the insurance broker or insurer;

2. A summary schedule of invoices for the 12 months or four quarters ended, as

applicable, prior to the fiscal year for which the adjustment request for medical

and prescription drug insurance is being requested;

3. The actual cost, if available, or estimated cost of medical and prescription drug

insurance for the budget year;

4. A summary schedule of medical and prescription drug insurance for the prebudget

year and budget year including:

i. Plan type (for example, traditional, HMO, or PPO);

ii. Cost by coverage category (single, parent and child(ren), or family); and

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iii. The number of employees in each plan by category;

5. Reimbursement required by employees;

6. A written assurance that health benefit invoices are reviewed at least quarterly or

that personnel and payroll systems contain controls to ensure coverage and

payments are made only for current eligible employees; and

7. For school districts that do not participate in the SEHBP:

i. A detailed analysis documenting the cost savings achieved from the

current provider(s) as compared to participation in the SEHBP; and

ii. Documentation that the cost of health care insurance and alternative

insurers, including group plans and consortiums, were examined at least

once in the last three years and the school district participates in the most

cost effective plan available pursuant to N.J.S.A. 18A:55-3.a given the

requirements of the existing collective bargaining agreement(s).

Subchapter 12. Tax Levy Growth Limitation; Separate Voter Approval

6A:23A-12.1 Voter authorization to exceed tax levy limitation; separate proposal(s)

(a) A district board of education may put to voters the matter of exceeding the tax levy

limitation, pursuant to N.J.S.A. 18A:7F-5.d(9) and 39.c.

1. The proposal(s) to increase the tax levy shall be approved if a majority of the

people voting at the school election votes in the affirmative or, when applicable,

approved by a majority of a quorum of the board of school estimate.

2. A proposal(s) submitted to voters shall not include any program(s) or service(s)

necessary for students to achieve the New Jersey Student Learning Standards.

3. A proposal(s) submitted to voters shall not include any capital outlay(s) necessary

for health and safety reasons or that constitutes eligible costs of a T&E

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construction project.

4. A proposal(s) submitted to voters shall not include any existing program(s) or

service(s) included in the prebudget year except when documented to the executive

county superintendent’s satisfaction that reallocation is required to maintain or

achieve T&E or that such programs and services are not necessary for T&E.

5. A district board of education shall frame each question to request sufficient funds

to carry out the specific purpose(s) contained therein. A district board of

education shall include in the base budget only funds for purposes that can be

implemented without the approval of a separate question.

6. All proposals to increase the tax levy shall include interpretive statements

specifically identifying the program purposes for which the proposed funds will

be used and a clear statement on whether approval will affect only the current

year or result in a permanent increase in the levy.

7. The executive county superintendent may prohibit the submission of a separate

proposal(s) to voters or board of school estimate if he or she determines the

school district has not implemented all potential efficiencies in the administrative

operations of the school district, when the efficiencies would eliminate the need

for the raising of additional general fund tax levy.

8. Any rejection by voters of a school district’s separate proposal(s) shall be final

and conclusive with no appeal. The municipal governing body(ies) or board of

school estimate shall not authorize the raising of additional tax levy upon

rejection by voters of a school district’s separate proposal(s).

9. A district board of education shall not modify the base budget to execute such

purposes pursuant to (a)8 above, except as allowed in (a)13 below.

10. A district board of education shall use amounts approved by voters or the board of

school estimate exclusively for the purpose(s) contained in the associated question.

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i. If multiple purposes are approved, a district board of education may

approve a transfer of amounts among purposes, if necessary, as long as all

purposes in the statement originally approved by voters or board of school

estimate can be completed.

11. A district board of education shall maintain a separate accounting of expenditures

for each purpose, and shall expend or encumber approved amounts by the end of

the school year. For any unexpended or unencumbered balances, the district board

of education shall either anticipate such funds as a part of the designated general

fund balance of the subsequent school year budget, or reserve and designate such

funds in the second subsequent school year budget.

12. A district board of education shall submit to the Commissioner amounts approved

by voters or the board of school estimate as part of the final overall budget

certified for taxes.

13. Purposes that were rejected by voters may be implemented in the budget year

only through a donation or contribution from an external source other than the

district board of education and only if implementation will not require any

funding by the school district in the budget year and/or subsequent budget years.

(b) For purposes of the tax levy certification, pursuant to N.J.S.A. 18A:22-34, school districts

that hold their annual election in November shall base the calculation of half the tax levy

on the base budget and not include a separate proposal. A school district with a

November-approved separate proposal shall recertify the levy, including the approved

separate proposal, within 15 days after the proposal’s authorization.

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Subchapter 13. Budget Transfers and Deficits

6A:23A-13.1 Commissioner-adjusted tax levies; Commissioner budget reallocations and

directives; and transfers

Transfers from line accounts that include expenditures and/or reallocations directed by the

Commissioner shall be prohibited unless approved in writing by the executive county

superintendent and in accordance with N.J.S.A. 18A:22-8.1 and N.J.A.C. 6A:23A-13.3. District

boards of education shall submit to the executive county superintendent written requests for

transfers, including the amount to be transferred, the account(s) to be reduced, the account(s) to

be increased, and the purpose and justification. Transfers shall not be requested or made prior to

December 1 of the applicable budget year and shall be approved only for an emergent

circumstance(s).

6A:23A-13.2 Executive county superintendent reduction of administrative and non-instructional

expenses; transfers prohibited

If the executive county superintendent, pursuant to N.J.S.A. 18A:7-8, disapproves a portion of a

school district's proposed budget because the school district has not implemented all potential

efficiencies in its administrative operations or because the budget includes excessive non-

instructional expenses, the school district shall not transfer appropriations during the budget year

into the line-item account(s) from which the disapproved amount(s) were removed.

6A:23A-13.3 Transfers during the budget year

(a) All transfers shall be executed only by district board of education resolution approved in

accordance with law and regulation applicable to the particular circumstances. Each

resolution shall indicate the exact amount of the transfer(s) to and from the applicable

accounts or fund balance.

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(b) A district board of education may transfer surplus or other unbudgeted or underbudgeted

revenue between April 1 and June 30 only upon prior approval by the executive county

superintendent, as the Commissioner’s designee, pursuant to N.J.S.A. 18A:22-8.1.

Requests shall be received by June 30. All approved transfer requests shall be expended

or encumbered for the approved use by June 30, or the district board of education shall

reserve and designate the funds for appropriation in the subsequent budget year. To

request approval of such transfers, a district board of education shall submit to the

executive county superintendent the following:

1. Documentation of approval of the transfer by a two-thirds affirmative vote of the

authorized membership of the district board of education;

2. Certification by the same membership that the transfer is necessary to achieve the

thoroughness standards for the current year. The certification shall include the

purpose, need of transfer, and, at a minimum, a list of specific line items to be

transferred into and corresponding amounts. Requests to appropriate surplus for

textbooks, computers, equipment, or other needs for use and operation for the

subsequent school year shall not be considered a need for the current year and

shall not be approved; and

3. The latest board secretary’s report as documentation that no other line item balances

are available and all appropriation balances are or will be expended or encumbered.

thirds affirmative vote of the authorized membership of the district board of education,

for approval of a transfer of surplus or other unbudgeted or underbudgeted revenue only

for an emergent circumstance. The district board of education shall be subject to an on-

site inspection by the executive county superintendent for verification of the emergent

circumstance and other supporting documentation. The district board of education shall

submit the district board of education-approved petition to the executive county

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superintendent for recommendation to the Commissioner. At a minimum, the district

board of education shall include the following in its submission:

1. Certification the transfer is necessary for an emergent circumstance, no other line-

item balances are or will be available, and the remaining surplus will enable the

district board of education to operate in a fiscally solvent position for the

remainder of the budget year;

2. Documentation the emergent circumstance, if not addressed through an

appropriation of additional revenue, would render peril to the health and safety of

students or staff, and/or force the school district into an operating deficit as a

result of the required implementation of the thoroughness standards;

3. The latest board secretary’s report as documentation that no other line item

balances are or will be available as set forth in (c)3i below:

i. Any unexpended, unencumbered balances are for non-discretionary fixed

costs and supported by historical expenditures or other documentation

ensuring that the balances will be expended by June 30; and

4. Evidence of approval of the petition and supporting documentation by a two-thirds

affirmative vote of the authorized membership of the district board of education.

(d) A district board of education may at any time and without Commissioner approval:

1. Appropriate unbudgeted or underbudgeted State aid for which approval was

granted by the Department in the written notification to the district board of

education of the additional aid;

2. Appropriate unbudgeted and underbudgeted tuition revenue generated from a

school district specific program that is not part of a formal sending-receiving

relationship, pursuant to N.J.S.A. 18A:38-19 and 18A:46-21;

3. Appropriate unbudgeted or underbudgeted school transportation revenue generated

from a school district’s or coordinated transportation services agency’s role as the host

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provider of school transportation services, pursuant to N.J.S.A. 18A:39-11 and 11.1;

4. Appropriate unbudgeted or underbudgeted restricted miscellaneous local revenue;

5. Appropriate unbudgeted or underbudgeted Federal revenue;

6. Appropriate surplus generated from any Federal and/or State revenue excluded

from the excess surplus calculation in the prebudget year in accordance with the

annual audit program; and

7. Appropriate unbudgeted or underbudgeted revenue from school bus advertising or

restricted fund balance that has been designated to offset fuel costs associated

with the provision of transportation services pursuant to N.J.S.A. 18A:39-31.

(e) As used in this section, general fund appropriation account means the required advertised

appropriation accounts pursuant to N.J.S.A. 18A:22-1 et seq., except where consolidated

as follows:

1. Basic skills, bilingual, and special education instruction, including other related

and extraordinary services;

2. Student activities, student athletics, and other student instructional services;

3. Student support services, including attendance, health, guidance, child study team,

and media;

4. Improvement of instruction and staff training; and

5. Special programs (fund 13).

(f) For all transfers from any general fund appropriation account as defined in (e) above, and

as amended to include prior year encumbrances carried forward to the current year and

revenue appropriated pursuant to (d) above, the district board of education shall obtain

approval for such transfers by two-thirds affirmative vote of the authorized membership

of the district board of education, pursuant to N.J.S.A. 18A:22-8.1.

1. When the total amount of such transfers, on a cumulative basis, exceeds 10

percent of the amount of the account that was included in the school district’s

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budget as certified for taxes, as amended to include prior year encumbrances

carried forward to the current year and revenue appropriated pursuant to (d)

above, the district board of education shall request in writing approval from the

executive county superintendent, as the Commissioner’s designee, by submitting

the request and purpose for the transfer using the report pursuant to (i) below.

i. The district board of education may request approval from the executive

county superintendent prior to obtaining the two-thirds affirmative vote of the

authorized membership of the district board of education for such approval.

ii. A district board of education’s written transfer request shall be deemed

approved after 10 business days of receipt of the request by the executive

county superintendent if no executive county superintendent approval or

denial is provided within that timeframe. A district board of education shall

maintain proof in the form of a sent and received e-mail receipt, or other form

of documentation of proof of delivery to the executive county superintendent

for all transfer requests deemed approved under this subsection.

2. Prior to any transfer(s) from capital outlay accounts to current expense, except for

equipment, a district board of education shall submit to the executive county

superintendent a written request for approval with documentation the transfer is

required due to demonstrated hardship.

(g) For all transfers to the advertised appropriation accounts identified as general

administration, school administration, central services, or administrative information

technology that, on a cumulative basis, exceed 10 percent of the amount of the account

included in the school district’s budget as certified for taxes, amended to include prior

year encumbrances carried forward to the current year, a district board of education shall

submit, prior to the transfer, to the executive county superintendent a request for approval

in a Commissioner-prescribed format.

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1. Approval will not be granted, except as provided in (g)2 below, if:

i. The school district’s budget currently exceeds the administrative cost

limits; or

ii. The transfer would result in a budget in excess of the administrative cost

limits in the applicable budget year, as prescribed in N.J.S.A. 18A:7F-5.c.

2. Transfers may be approved to support a contractual obligation or one-time

increase in spending as justified by district board of education documentation.

Transfers may not be approved if the school district did not budget sufficient

funds upon review of actual expenditures and historical trends in those accounts.

A district board of education that is granted approval remains subject to the

requirements in N.J.S.A. 18A:7F-5.c.

(h) For all transfers to the advertised appropriation accounts identified as capital outlay for a

capital outlay project not previously approved by voters or the board of school estimate,

pursuant to N.J.A.C. 6A:23A-8.4, a district board of education shall submit, prior to the

transfer, to the executive county superintendent a request for approval. Approvals are

required for unbudgeted or underbudgeted revenue, including those listed and

appropriated pursuant to (d) above, and shall be granted only for requests with written

documentation that supports the existence of an emergent circumstance, as defined in

verify the emergent circumstance. Transfers to equipment accounts or to supplement a

capital outlay project previously approved by voters or the board of school estimate,

pursuant to N.J.A.C. 6A:23A-8.4, do not require approval by the executive county

superintendent.

(i) Each district board of education shall maintain a report of current month and year-to-date

transfers between general fund appropriation accounts as defined in (e) above, in a

Commissioner-prescribed format or in a format developed locally and approved by the

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executive county superintendent. The district board of education shall submit the report

to the executive county superintendent with any transfer request(s) and in accordance

with the submission requirements of the board secretary’s and treasurer’s financial

reports under N.J.A.C. 6A:23A-16.10.

Subchapter 14. Reserve Accounts

6A:23A-14.1 Capital reserve

(a) A district board of education or board of school estimate may establish, at any time, by board

resolution a capital reserve account, pursuant to N.J.S.A. 18A:21-2 and 3 and 18A:7G-31.

(b) A district board of education shall be prohibited from using the funds in the capital reserve

account for current expenses, pursuant to N.J.S.A. 18A:21-4, and shall use funds only to:

1. Implement capital projects in the school district’s LRFP as required pursuant to

N.J.S.A.18A:7G-4.a and N.J.A.C. 6A:26-2; and

2. Augment a capital project funded in whole or part by bond proceeds only when:

i. The original referendum question separately listed the amount and portion of

local share (or portion of total costs of a project receiving debt service aid) to

be funded by capital reserve, pursuant to N.J.A.C. 6A:26-3.7 and 3.12; or

ii. Voter or board of school estimate approval was received to augment the

original approved question by special appropriation in a type I school

district, by separate question at a special election, or through the

appropriate line items and supporting documentation in the base budget at

the annual school election, pursuant to N.J.A.C. 6A:26-4.4(a)3iii; or, for

school districts that hold annual elections in November, through executive

county superintendent approval of the base budget.

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1. Appropriating funds in the annual general fund budget certified for taxes to meet

the needs of the LRFP that are not met by State support; or

2. Requesting approval from the executive county superintendent, as the

Commissioner’s designee, to appropriate any anticipated excess unreserved

general fund balance, as calculated in the supporting documentation of the

proposed budget, into a capital reserve in the proposed budget, pursuant to

N.J.S.A. 18A:7F-7.b, only when the district board of education has:

i. Formally established a capital reserve account; and

ii. Obtained an approved LRFP in accordance with N.J.A.C. 6A:26-2.

(d) A district board of education may satisfy the withdrawal approval requirements in (h)

below when funds are deposited into the capital reserve account in the annual budget,

pursuant to (c)1 and 2 above, using the designated line item, supporting documentation,

and a statement of purpose in the advertised budget. The district board of education shall

include in its statement of purpose:

1. The amount of the deposit;

2. A description of the future capital project and purpose; and

3. A statement that "The amount represents expenditures for construction elements or

projects that exceed the facilities efficiency standards determined by the

Commissioner as necessary to achieve the New Jersey Student Learning Standards."

(e) A district board of education may request express approval of voters for appropriation of

additional amounts into the capital reserve by a separate proposal at the April or

November election, as applicable, or by a special question at one of the four special

elections authorized pursuant to N.J.S.A. 19:60-2. A district board of education may

request approval of the board of school estimate for appropriation of additional amounts

into a capital reserve by a separate proposal at budget time or by special resolution. The

amount expressly approved by voters or the board of school estimate for deposit into a

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capital reserve may be from surplus or unrestricted local miscellaneous revenue only if

the source is delineated in the question and/or special resolution.

(f) A district board of education shall not deposit into a capital reserve account audited

excess undesignated, unreserved general fund balance. The district board of education

shall reserve and designate the funds in the subsequent year's budget, pursuant to

N.J.A.C. 6A:23A-8.5(b).

(g) The district board of education shall maintain an amount of funds in the capital reserve

account that does not exceed the amount needed to implement the capital projects in a

school district's LRFP that are not met by State support.

1. If the amount in the capital reserve exceeds the amount authorized in (g) above,

the district board of education shall withdraw the excess and reserve and

designate it in the subsequent year's budget.

2. The district board of education shall ensure all excess amount in the capital

reserve account identified in the annual audit, required pursuant to N.J.S.A.

18A:23-1 and Commissioner-developed procedures, are reserved and designated

in the subsequent year’s budget.

(h) A district board of education may withdraw funds from the capital reserve account at any

time as follows:

1. By district board of education resolution for the transfer of funds to the line items

in the capital outlay major account/fund to fund pre-development or other pre-

application costs associated with architects, lawyers, and construction managers

for school facilities projects included in the approved LRFP;

i. Pursuant to N.J.A.C. 6A:26-4.2(a), a district board of education that used

capital reserve to fund pre-development or other pre-application costs in a

capital project funded in part or in whole by bond proceeds may reimburse

the general fund from the capital projects fund after approval of the

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referendum or resolution;

2. By district board of education resolution for the transfer of funds to the line items

in the capital outlay major account/fund to fund the local share less any excess

costs of a school facilities project as determined in accordance with N.J.A.C.

6A:26-3 and approved pursuant to N.J.A.C. 6A:26-3.3;

3. By district board of education resolution for the transfer of funds to the line items

in the capital outlay major account/fund to fund the total costs, less any excess

cost(s), of an other capital project submitted and reviewed in accordance with

N.J.A.C. 6A:26-3.11, which would otherwise be eligible for State support, as

determined in accordance with N.J.A.C. 6A:26-3;

4. By district board of education resolution for the transfer of funds to the capital

projects fund, pursuant to N.J.A.C. 6A:26-4, for a school facilities project

approved pursuant to N.J.A.C. 6A:26-3.3, after receiving voter, board of school

estimate, or capital project review board approval, as applicable, or executive

county superintendent approval for a school district that holds the annual school

election in November, of the capital reserve use and specific amount in an

approved referendum or resolutions, pursuant to N.J.A.C. 6A:26-3.7;

5. By district board of education resolution after receiving voter, board of school

estimate, or capital project review board approval, as applicable, or executive

county superintendent approval for a school district that holds the annual school

election in November, except as authorized in N.J.A.C. 6A:26-3.12(c), for the

transfer of funds to the line items in the capital outlay major account/fund to fund

excess costs of a school facilities project and to fund the total costs for other

capital projects that would not otherwise be eligible for State support, as

determined in accordance with N.J.A.C. 6A:26, Educational Facilities;

i. Voter, board of school estimate, or capital project review board approval,

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or executive county superintendent approval for a school district that holds

the annual school election in November, may be obtained through the

original budget certified for taxes, in which the district board of education

shall include a statement of purpose in the advertised budget, or through

the board of school estimate’s special appropriation process.

ii. The district board of education or board of school estimate shall include in

the statement of purpose or special question for the capital project:

(1) The total costs;

(2) The final eligible costs;

(3) The amount requested for withdrawal for excess costs;

(4) A description/purpose of the capital project, or portion thereof, the

excess costs will fund; and

(5) A statement that “The amount represents expenditures for

construction elements or projects that exceed the facilities

efficiency standards determined by the Commissioner as necessary

to achieve the New Jersey Student Learning Standards.”

iii. If requesting a withdrawal for multiple capital projects, the district board

of education or board of school estimate shall include in the statement of

purpose or special question the required information in (h)4i and ii above

separately for each individual capital project.

iv. The district board of education or board of school estimate shall ensure the

amount(s) approved by voters, the board of school estimate, or the capital

project review board, or the executive county superintendent approval for a

school district that holds the annual school election in November, are used

exclusively for the purpose(s) contained in the associated statement or question.

v. For any approved amount(s) that remains unexpended or unencumbered at

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the end of the school year, the district board of education or board of

school estimate shall:

(1) Return the funds to the capital reserve account;

(2) Anticipate the funds as part of the designated general fund balance

of the subsequent school year budget; or

(3) Reserve and designated the funds in the second subsequent school

year budget;

6. For the transfer of funds to the line items in the capital outlay major account/fund

for the purchase of land by district board of education resolution, and after

receiving Commissioner approval in accordance with N.J.A.C. 6A:26-3.12; and

board of school estimate approval pursuant to (b)2ii above or capital project review

board approval in accordance with N.J.A.C. 6A:26-3.1; and voter approval for

school districts with April elections, or executive county superintendent approval

for a school district that holds the annual school election in November; or

7. By district board of education resolution for the transfer of funds to the debt

service account for the purpose of offsetting locally funded principal and interest

payments for bonded projects included in the school district’s LRFP.

8. By district board of education resolution for the transfer of funds to the general fund

for the purpose of funding the Schools Development Authority debt assessment

associated with grants the school district received in current or prior years.

(i) Notwithstanding (h) above, a district board of education or board of school estimate may

apply, at any time, to the Commissioner for approval to withdraw funds from its capital

reserve account for uses authorized in (b) above. A district board of education or board of

school estimate may make a withdrawal pursuant to this subsection only upon receipt of

the Commissioner’s written approval. To obtain the Commissioner’s approval, the district

board of education shall establish, to the Commissioner’s satisfaction, that an emergent

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condition exists necessitating an immediate withdrawal of capital reserve account funds.

(j) A district board of education shall administer and account for the capital reserve account

as follows:

1. The district board of education shall establish and maintain the capital reserve

account in accordance with Generally Accepted Accounting Principles, and shall

be subject to annual audit, pursuant to N.J.S.A. 18A:23-1 et seq.;

2. If the cost to complete an approved school facilities project not funded in whole

or part by school bonds exceeds the local share less excess costs, costs up to 10

percent above the local share less excess costs may be withdrawn from capital

reserve in accordance with (h)1 above;

3. The district board of education shall transfer to the capital projects account, and

account for separately with the corresponding grant, any funds withdrawn for the

local share of a school facilities project that is not using school bonds or loan

bonds for all or part of the local share that received a grant pursuant to N.J.S.A.

18A:7G-15. For any unexpended transferred capital reserve funds remaining after

completion of the school facilities project, the district board of education shall:

i. Return the funds to the capital reserve account;

ii. Anticipate the funds as part of the designated general fund balance of the

subsequent school year’s budget; or

iii. Reserve and designate any unexpended transferred capital reserve funds in

the second subsequent year’s budget for tax relief;

4. Pursuant to N.J.S.A. 18A:21-3, a district board of education shall increase the

capital reserve account by the earnings attributable to the investment of the

account's assets, and:

i. Anticipate as miscellaneous income any investment income included in

the original annual general fund budget certified for taxes; and

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ii. Include any investment earnings in the maximum amount of capital

reserve permitted in (g) above; and

5. A district board of education shall establish a separate account in the general fund

for bookkeeping purposes only to account for increases to and withdrawals from

the capital reserve account and its balance. The district board of education shall

record a capital reserve account on the annual audit's general fund balance sheet

as follows:

i. Dr: Capital Reserve Account; and

ii. Cr: Reserved/Restricted Fund Balance--Capital Reserve Account.

(k) Funds in capital reserve accounts in existence prior to July 18, 2000, shall be subject to

the Educational Facilities Construction and Financing Act (EFCFA), P.L. 2000, c. 72,

and this subchapter. The district board of education shall use the funds only for the

original purpose for which the funds were deposited.

1. If the original purpose is outside the scope of the district board of education’s

approved LRFP, the district board of education shall account for the funds

separately in the capital reserve fund and appropriate the funds as revenue for

such purposes in the annual budget certified for taxes. The district board of

education shall restore to the capital reserve account, for use pursuant to this

subchapter, any unexpended capital outlay appropriations up to the amount of

capital reserve funds appropriated. Expenditures shall be charged first to

unrestricted capital outlay fund sources with capital reserve account

appropriations expended last. The district board of education shall not deposit any

additional funds into the capital reserve account, pursuant to (c) through (f) above,

for pre-July 18, 2000, purposes.

2. If the original purpose is within the scope of the school district's approved LRFP,

the district board of education shall make withdrawals pursuant to (h) above.

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However, if voter, board of school estimate, or capital project review board

approval, or executive county superintendent approval for a school district that

holds the annual school election in November, of excess costs or an other capital

project was obtained when the funds were deposited into the capital reserve

account, the district board of education shall be deemed to have satisfied the

requirement for approval of excess costs or other capital projects in (h)2 above.

6A:23A-14.2 Maintenance reserve

(a) A district board of education may establish, by resolution, a maintenance reserve account to be

used to implement required maintenance of the school district’s facilities. The district board of

education shall be prohibited from using the funds for routine or capital maintenance.

(b) The district board of education shall establish and maintain the maintenance reserve

account in accordance with GAAP. The account shall be subject to annual audit, pursuant

to N.J.S.A. 18A:23-1 et seq.

balance in the maintenance reserve account by appropriating funds in the annual general

fund budget certified for taxes.

(d) A district board of education or board of school estimate, as appropriate, may withdraw

by resolution funds from the maintenance reserve account and appropriate the funds into

the required maintenance account lines at budget time or any time during the year for use

on required maintenance activities for a school facility, as reported in the comprehensive

maintenance plan pursuant to N.J.A.C. 6A:26A-4.

1. Funds withdrawn from the maintenance reserve account shall be restricted to

required maintenance appropriations. A district board of education or board of

school estimate shall not transfer the funds to any other line-item account.

(e) In any year that maintenance reserve account funds are withdrawn, the district board of

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education shall restore to the maintenance reserve account at year-end any unexpended

required maintenance appropriations, up to the amount of maintenance reserve account

funds withdrawn.

(f) The district board of education shall transfer, by resolution, to the general fund on an

annual basis, or more frequently, any interest earned on the investments in the

maintenance reserve account.

(g) The district board of education shall ensure the maintenance reserve account balance does

not, at any time, exceed four percent of the replacement cost of the school district’s

school facilities for the current year. If the account exceeds this maximum amount at June

30, the district board of education shall reserve and designate the excess in the

subsequent year’s budget.

6A:23A-14.3 Supplementation of capital reserve and maintenance reserve accounts

(a) A district board of education or board of school estimate, as appropriate, may supplement

a capital reserve account through a transfer, by resolution, of any unanticipated revenue

and/or unexpended line-item appropriation amounts anticipated at year end for

withdrawal in subsequent school years. The transfer resolution shall be adopted by the

district board of education or board of school estimate no earlier than June 1 and no later

than June 30 of the respective school year.

(b) A district board of education or board of school estimate, as appropriate, may supplement

a maintenance reserve account through a transfer, by resolution, of any unanticipated

revenue and/or unexpended line-item appropriation amounts anticipated at year end, for

withdrawal in subsequent school years. The transfer resolution shall be adopted by the

district board of education or board of school estimate no earlier than June 1 and no later

than June 30 of the respective school year.

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6A:23A-14.4 Establishment of other reserve accounts

(a) A district board of education or a board of school estimate, as appropriate, may establish,

by resolution, the following reserve accounts:

1. Current expense emergency reserve account.

i. The funds in the reserve shall be used to finance unanticipated general fund

current expense costs required for T&E. For the purpose of the emergency

reserve account, “unanticipated” shall mean reasonably unforeseeable and

shall not include additional costs caused by poor planning or error.

ii. The account shall not exceed $250,000 or one percent of the school

district’s general fund budget as certified for taxes up to a maximum of

$1,000,000, whichever is greater.

iii. A district board of education may appropriate funds to establish or

supplement the reserve in the school district’s annual budget or through a

transfer by district board of education resolution of any unanticipated

revenue and/or unexpended line-item appropriation amounts anticipated at

year end. The transfer resolution shall be adopted by the district board of

education no earlier than June 1 and no later than June 30 of the respective

school year.

iv. Withdrawals from the reserve shall require Commissioner approval unless

the withdrawal is necessary to meet an increase in total health care costs in

excess of four percent, for which the school district did not receive an

automatic adjustment for health care costs pursuant to N.J.A.C. 6A:23A-

11.3. Total health care costs shall include medical insurance and

prescription drug insurance costs.

2. Debt service reserve account in the debt service fund for proceeds from the sale of

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school district property. For the purposes of the debt service reserve account,

“property” shall mean land, buildings, and other property that was incidental to

the sale of land or a building. The funds in the reserve shall be used by the school

district first to reduce the outstanding principal amount at the earliest call date or

to annually reduce the debt service principal payments. The funds may be used for

any outstanding debt obligation(s) of the school district. The reserve shall be

liquidated within the lesser of five years from its inception or the remaining term

on the obligation(s). Any remaining balance shall be used for tax relief.

3. Tuition adjustment reserve account in the general fund for up to 10 percent of the

estimated tuition cost in the contract year for an anticipated tuition adjustment in

the third year following the contract year. In such case, the district board of

education shall:

i. Establish by district board of education resolution the tuition adjustment

reserve account at June 30;

ii. Make full appropriation of the reserve for the tuition adjustment in the

second year following the contract year; and

iii. Transfer, by district board of education resolution, to the general fund on

an annual basis, or more frequently, any interest earned on the investments

in a tuition adjustment reserve account.

4. School bus advertising reserve for 50 percent of revenue from school bus

advertising to offset transportation fuel costs, pursuant to N.J.S.A. 18A:39-31.

5. Federal Impact Aid reserves in the general fund, pursuant to N.J.S.A. 18A:7F-

41.c(3).

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6A:23A-14.5 Reserve accounts recorded in accordance with GAAP; audit

All reserve accounts shall be recorded in accordance with GAAP and subject to annual audit.

Any capital gains or interest earned shall become part of the reserve account. A separate bank

account is not required; however, a separate identity for each reserve account shall be

maintained.

Subchapter 15. State Aid Calculations and Aid Adjustments for Charter Schools

6A:23A-15.1 Definitions

The following words and terms shall have the following meanings when used in this subchapter,

unless the context clearly indicates otherwise.

"Average daily enrollment" for the purpose of determining the adjusted State, local, and Federal

aid means the sum of the days (present and absent) of all students enrolled in the register(s) of

the program for which the aid is being determined divided by the number of days school was

actually in session.

"Categorical aid attributable to the student" means security categorical aid attributable to the

student and a percentage of the school district’s special education categorical aid equal to the

percentage of the school district’s special education students enrolled in the charter school and, if

applicable, 100 percent of preschool education aid attributable to the student. Preschool

education aid is restricted revenue, which is to be recorded in the special revenue fund 20 and is

subject to the provisions of N.J.A.C. 6A:13A.

“Certification” means as defined in N.J.A.C. 6A:11-1.2.

"Charter school rate" means an amount equal to 90 percent of the sum of the budget year

equalization aid per pupil and the prebudget year general fund tax levy per pupil inflated by the

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CPI rate most recent to the calculation, pursuant to N.J.S.A.18A:36A-12.

“District of residence” means as defined in N.J.A.C. 6A:11-1.2.

“Initial recruitment period” means as defined in N.J.A.C. 6A:11-1.2.

"Local share" means the percentage of the school district’s adequacy budget supported by

general fund tax levy.

“Non-resident school district" means a school district outside the school district of residence of

the charter school.

“Non-resident” student means as defined in N.J.A.C. 6A:11-1.2.

"Prebudget year" means the school fiscal year immediately preceding the year in which the

school budget is implemented.

"Projected enrollment(s)" means the estimated total enrollment(s) from both the school district of

residence and non-resident school district(s) as follows:

1. For the first year, the projected enrollment is based on the enrollment as indicated

in the New Jersey Charter School Application;

2. In subsequent years, projected enrollment is based on actual charter school

enrollment as of October 15 of the prebudget year, the initial recruitment period

that is submitted by January 15 and any approved change of enrollment as

specified in the school’s charter or an approved amendment.

“Region of residence” means as defined in N.J.A.C. 6A:11-1.2.

“Resident student” means as defined in N.J.A.C. 6A:11-1.2.

“School year” means as defined in N.J.A.C. 6A:11-1.2.

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"State share" means the percentage of the school district’s adequacy budget that is supported by

State aid.

6A:23A-15.2 Per pupil calculations, notification, and caps

(a) The resident and non-resident school districts shall use projected charter school aid as

established by the Commissioner in a report to be distributed no later than February 15 of

the prebudget year for budget purposes and to initiate school district payments to the

charter school for the subsequent year. The report establishes for each resident and non-

resident school district a per pupil amount for the local and State shares and categorical

aids per student. Once the per pupil amount is established, it is not adjusted. Projected

charter school aid is based on projected enrollments at the charter school. The number of

students enrolled in the charter school is adjusted based on average daily enrollment for

aid purposes throughout the school year in accordance with the prescribed adjustments

listed in N.J.A.C. 6A:23A-15.3.

(b) The per pupil amount comprises local share as defined in (b)1 below and State share as

defined in (b)2 below.

1. The local share per pupil is the part of the per pupil amount that includes the general

fund tax levy of the school district of residence's or nonresident district(s)' budget(s).

2. The State share per pupil is the part of the per pupil amount that includes the

equalization aid portion of the school district of residence's or nonresident

district(s)' budget(s) or amounts, if any, contained in the annual appropriations act

in-lieu-of or to supplement equalization aid for the corresponding fiscal year.

Commissioner a budget in the State-mandated format for the following fiscal year, all of

which are based on the most recent enrollment projections provided to the charter school

by the Commissioner.

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6A:23A-15.3 Enrollment counts, payment process, and aid adjustments

(a) To enroll in a charter school, the student first shall be registered in the school district in

which he or she resides. For any student who applies for enrollment in a charter school, the

district board of education in which the charter school applicant resides shall process the

student’s registration for the subsequent school year upon submission of the registration

forms. A district board of education shall process in a timely manner all such registrations,

including the assessment of residency and the subsequent transfer to the charter school, and

shall identify the specific categorical aid for which each student qualifies.

(b) Actual average daily enrollment in a charter school shall not exceed the enrollment as

specified in the school’s charter and approved by the Commissioner.

for categorical programs, pursuant to N.J.S.A. 18A:36A-12.b. The aid shall be paid to a

charter school in the amount that is attributable to each resident student enrolled in the

charter school.

(d) A district board of education that receives preschool education aid, pursuant to N.J.S.A.

18A:7F-54, shall pay to a charter school the amount of preschool education aid

attributable to a resident student attending the charter school if:

1. The charter school has a concentration of at-risk pupils, as defined in N.J.S.A.

18A:7F-45, that is equal to or greater than 40 percent; and

2. The resident student is receiving appropriate services to be funded through

preschool education aid.

(e) All categorical aid paid to a charter school by a district board of education shall be

accounted for in the general fund of the charter school. Preschool aid is restricted and

shall be accounted for in fund 20.

(f) A charter school may apply directly to the Commissioner for aid for high-cost placement

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for a special education student in accordance with N.J.S.A.18A:7F-55.b and c.

(g) A district board of education shall process payment(s) and payment adjustments to a

charter school during the school year as follows:

1. The district of residence and non-resident school district(s) shall initiate payments

to the charter school based on projected enrollment, as set forth in this section.

2. The school district of residence and non-resident school district(s) shall pay

directly to a charter school the local share per pupil at the charter school rate,

pursuant to N.J.S.A. 18A:36A-12.b, in 12 equal installments starting July 15 and

thereafter on the 15th of each month.

3. Pursuant to N.J.S.A. 18A:36A-12.b, the school district of residence and non-

resident school district(s) shall pay directly to the charter school the following aid

in 20 equal installments on the 9th and 23rd of every month starting with

September 9 and ending with June 23, or as established by the Legislature:

i. The State share per pupil at the charter school rate; and

ii. Categorical aid attributable to the student.

4. The charter school shall submit to the resident school district a listing of all

students on roll on October 15 in a format prescribed by the school district for

purposes of determining State aid. Pursuant to the guidelines in the school

source documents related to the determination of State aid.

5. During the school year, a charter school board of trustees shall conduct an

enrollment count on October 15 and the last day of the school year. A charter

school board of trustees shall submit each count in a summary school register for

the purposes of determining average daily enrollment.

i. The charter school board of trustees shall submit the summary school

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enrollment counts required pursuant to (g)5 above.

(1) All aid paid to the charter school by the school district will be

adjusted accordingly from projected enrollment to average daily

enrollment on October 15 and the adjustment shall be spread

evenly over the remaining pay periods in the school year.

(2) A final adjustment shall be calculated at year-end to account for

changes in the average daily enrollment from October 15 to the

end of the school year.

(3) The Commissioner will issue a report for the end-of-year

adjustment to both the charter school and the district of residence

and non-resident school district(s) after the final enrollment count.

If there is a reduction in aid, the charter school shall pay the full

amount to the school district no later than September 30 of the

subsequent school year. If there is an increase in aid, the school

district shall pay the full amount to the charter school no later than

September 30 of the subsequent school year.

(4) A district board of education and a charter school board of trustees

may change the payment provisions, as outlined in (g)2, 3, and 4

above, if mutual agreement can be reached on an alternative

payment schedule.

(A) Such change in the payment provisions shall be effective

only for the stated school year.

(B) Such change in the payment provisions shall require the

written approval of both the charter school board of trustees

and the district board of education through resolutions. The

charter school board of trustees and the district board of

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education shall submit to the Commissioner a copy of its

resolution on or before July 1 of the school year in which

the payment schedule is effective.

6. If a district board of education falls behind by 15 days in the payment schedule in

(g)2, 3, 4, and 5 above, a charter school board of trustees may petition the

Commissioner to have the amounts owed to the charter school deducted from the

district board of education’s State aid and paid directly to the charter school.

7. The Commissioner may adjust the payment schedule based on the effective date

of the final granting of the charter or based on significant change in enrollment

during the school year.

6A:23A-15.4 Procedures for private school placements by charter schools

(a) Within 15 days of a charter school’s provision of written notice to a student’s parent(s) of

a proposed individualized education program (IEP) or proposed amendment to a

student’s IEP that provides for the student’s placement in a private day or residential

program, the charter school shall also provide to the school district of residence of the

student’s parent(s) written notice of the proposed placement.

1. The school district of residence may immediately request a copy of the student

records to determine whether a less-restrictive program can appropriately meet the

student’s educational needs. The charter school shall forward a copy of the

records without delay. In accordance with N.J.A.C. 6A:32-7.5(e)10, the charter

school shall provide written notification to the parent(s) that a copy of the records

has been forwarded to the school district of residence.

(b) If the school district of residence determines to challenge the placement, the school

district of residence may file, within 30 days of receiving notice of the placement, for a

due process hearing against the charter school and the student’s parent(s). The due

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process hearing shall be limited in scope to a determination by an administrative law

judge as to whether there is a less-restrictive placement that will meet the student’s

educational needs and, if so, whether the charter school must place the student in the

program.

1. The request for a due process hearing shall be processed in accordance with

N.J.A.C. 6A:14-2.7 and, if the parties agree, mediation will be offered prior to

transmittal of the matter to the Office of Administrative Law for a due process

hearing.

2. For purposes of administering the request for a due process hearing, the school

district of residence shall be considered the “school district” as the term is utilized

in N.J.A.C. 6A:14-2.7 and the request shall be processed in accordance with the

regulations applicable to requests for a due process hearing by a school district.

3. All procedural issues that arise with respect to filings by a school district of

residence for a due process hearing in accordance with N.J.A.C. 6A:14-2.7 shall

be addressed by the administrative law judge assigned to hear the matter.

4. If the due process petition is resolved with a determination that the student must

be placed in the less-restrictive program sought by the school district of residence,

the student shall still be considered a student enrolled in the charter school who

has been placed in the program by the charter school. The charter school shall

maintain the student’s slot in its enrollment and provide all child study team

services for the student, including the development of an IEP and the monitoring

of the implementation of the student’s IEPs.

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Subchapter 16. Double-Entry Bookkeeping and GAAP Accounting

6A:23A-16.1 Prescribed system of double-entry bookkeeping and GAAP accounting

(a) Each district board of education and charter school board of trustees shall maintain a

uniform system of financial bookkeeping and reporting.

(b) Each district board of education and charter school board of trustees shall ensure that the

uniform system is fully consistent with the "generally accepted accounting principles"

(henceforth referred to as “GAAP”) as set forth in the Governmental Accounting and

Financial Reporting Standards Original Pronouncements, published annually by the

Governmental Accounting Standards Board (GASB; 401 Merritt 7, PO Box 5116,

Norwalk CT), incorporated herein by reference, as amended and supplemented, and is

compatible with the financial accounting terminology and classifications established in

the Federal accounting manual, Financial Accounting for Local and State School

Systems, 2014 Edition, by the National Center for Education Statistics (NCES; K Street

NW, Washington, DC 20006), incorporated herein by reference, as amended and

supplemented, as prepared, published, and distributed by the Commissioner, as required

by N.J.S.A. 18A:4-14.

6A:23A-16.2 Principles and directives for accounting and reporting

(a) Each district board of education and charter school board of trustees shall use accounting

and reporting directives as prepared, published, and distributed by the Commissioner in

addition to any books, materials, or bulletins, for the guidance of school officials in

establishing and maintaining the double-entry bookkeeping and accounting system

mandated in this subchapter.

(b) Each district board of education and charter school board of trustees shall develop a

system of accounting and reporting objectives that makes it possible to:

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1. Present fairly and with full disclosure the funds and activities of the district board

of education and charter school board of trustees in conformity with GAAP; and

2. Determine and demonstrate compliance with finance-related legal and contractual

provisions.

accounting system that is organized and operated on a fund basis and shall:

1. Report governmental, proprietary, and fiduciary funds in the fund financial

statements to the extent that they have activities that meet the criteria for using

those funds;

2. Establish and maintain those funds required by law and sound financial

administration. Only the minimum number of funds consistent with legal and

operating requirements should be established;

3. Use the modified accrual or accrual basis of accounting as appropriate in

measuring financial position and operating results in accordance with GAAP and

regulatory provisions; and

4. Recognize transfers in the accounting period in which the interfund receivable

and payable arise.

(d) Each district board of education and charter school board of trustees shall adopt an annual

budget and shall include the adopted annual budget in the minutes of the board.

1. A district board of education or charter school board of trustees shall develop a

detailed budget statement, which includes the classification of expenditures by

program and function and is prepared on a fund basis in accordance with N.J.S.A.

18A:22-8 and on a form prescribed by the Commissioner.

2. A district board of education or charter school board of trustees shall prepare a

detailed budget for each special project, each capital project as separately

identified in a referendum, and each Federal or State grant and maintain the

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detailed budget, along with all authorized revisions, on file in the district board of

education or charter school board of trustees’ business office.

3. Each district board of education and charter school board of trustees shall take

appropriate action, as necessary, to maintain a balanced budget.

(e) Each district board of education and charter school board of trustees shall ensure that the

accounting system provides the basis for appropriate budgetary control.

(f) Each district board of education and charter school board of trustees shall use common

terminology and classification consistently throughout the budget, accounts, and financial reports

of each fund, and shall adopt a chart of accounts prepared in conformity with the following:

1. Each district board of education and charter school board of trustees shall use, for

financial reporting to the Department of Education, a uniform minimum chart of

accounts published and distributed by the Commissioner consistent with Financial

Accounting for Local and State School Systems, 2014 Edition, developed by the

National Center for Education Statistics (NCES); K Street NW, Washington DC

20006), incorporated herein by reference, as amended and supplemented.

2. A district board of education or charter school board of trustees wishing to expand

upon the minimum requirements for the budget system established in (f)1 above

shall compile budget data in the expanded and minimum format each month and

at the end of the fiscal year, and shall use for such expanded systems the Financial

Accounting for Local and State School Systems, developed by NCES, as

published and distributed by the Commissioner.

3. A district board of education and charter school board of trustees shall approve

and adopt any modifications to the chart of accounts, and shall ensure

conformance of the modifications to the standards established in (f)1 and 2 above.

(g) Each district board of education and charter school board of trustees shall establish an

adequate internal control structure and procedures for financial reporting.

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(h) Each district board of education and charter school board of trustees shall prepare

monthly financial statements and reports of financial condition, operating results, and

other pertinent information, in accordance with directions issued by the Commissioner, to

facilitate management control of financial operations, legislative oversight, and, where

necessary or desired, for external reporting purposes.

(i) Each district board of education and charter school board of trustees shall prepare and

publish a Comprehensive Annual Financial Report (henceforth referred to as CAFR) in

compliance with the standards set forth by the Government Accounting and Financial

Reporting Standards Original Pronouncements, incorporated herein by reference, as

amended and supplemented, as prepared, published, and distributed by the Governmental

Accounting Standards Board (GASB 401 Merritt 7, PO Box 5116, Norwalk CT 06856-

5116) and GAAP, covering all activities of the district board of education or charter

school board of trustees. The district board of education and charter school board of

trustees shall ensure that the CAFR includes, but is not limited to: an introductory section;

basic financial statements; required supplementary information; schedules, narrative

explanations, and a statistical section. Each district board of education and charter school

board of trustees shall use the uniform program as published and distributed by the

Commissioner for preparing the Comprehensive Annual Financial Report.

1. A district board of education or charter school board of trustees shall cause an

audit of the annual financial statements to be made pursuant to N.J.S.A. 18A:23-1

et seq., and shall engage only a licensed public school accountant to conduct the

annual audit who has an external peer/quality report performed in accordance

with Government Auditing Standards (Yellow Book) by the Comptroller General

of the United States (U.S. Government Printing Office, Stop SSOP, Washington,

DC 20402-0001). The district board of education or charter school board of

trustees shall ensure that the external peer/quality report is completed within the

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time established by Government Auditing Standards issued by the Comptroller

General of the United States unless the accountant or firm can show good cause as

to why there is a delay.

2. A district board of education or charter school board of trustees shall require the

submission of the most recent external peer/quality report and letter of comment

to the district board of education or charter school board of trustees for review and

evaluation prior to each appointment of a licensed public school accountant to

conduct the annual audit.

i. A district board of education or charter school board of trustees shall

acknowledge the receipt, review, and evaluation of the external

peer/quality report in the public session and minutes in which the district

board of education or charter school board of trustees authorizes the

engagement of the accountant or firm to perform the audit.

ii. A district board of education or charter school board of trustees shall

require the submission of an updated external peer/quality report of the

licensed public school accountant engaged by the district board of

education, within 30 days after the issuance date of the external

peer/quality report if such report is issued prior to the date of the audit

opinion for the most recent fiscal year.

iii. In accordance with NJOMB Circular Letter 15-08, Single Audit Policy for

Recipients of Federal Grants, State Grants and State Aid, including any

amendments or revisions thereto, a district board of education or charter

school board of trustees shall ensure that the public school accountant

provides a copy of the most recent external peer/quality report to the

Department, within 30 days after the initial engagement of a licensed

public school accountant or firm and within 30 days after the issuance of a

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subsequent peer/quality report.

3. A district board of education or charter school board of trustees shall engage a

public school accountant during the audit engagement period for non-auditing,

management, or other consulting services only if the services comply with the

independence standards as established in Government Auditing Standards

(Yellow Book) by the Comptroller General of the United States.

4. A district board of education or charter school board of trustees may be prohibited

for good cause by the Commissioner from engaging a particular licensed public

school accountant, or may be directed by the Commissioner on a process to be

used in the appointment of a licensed public school accountant. For the purpose of

this provision, good cause shall include documented violations of N.J.S.A.

18A:23-1 et seq., reported deficiencies or violations identified through the

American Institute of Certified Public Accountants (AICPAs) Peer Review

Process as applied by the New Jersey Society of Certified Public Accountants

(NJSCPA), disciplinary action by the State Board of Accountancy or AICPA, or

after an investigation by the Department and hearing before the Commissioner or

his or her designee.

5. Documented violations of N.J.S.A. 18A:23-1 et seq. will be reported to the State

Board of Accountancy with a recommendation by the Commissioner to cancel the

license of the licensed public school accountant. A district board of education or

charter school board of trustees is prohibited from employing any accountant

subject to this provision until the State Board of Accountancy makes a

determination on the cancellation of the license.

(j) Each district board of education shall, pursuant to N.J.S.A. 18A:4-14, maintain legal

reserves as defined at N.J.A.C. 6A:23A-1.2 and published by the Governmental

Accounting Standards Board (GASB; 401 Merritt 7, PO Box 5116, Norwalk, CT) for

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encumbrances, or State or other government-imposed or permitted legal restrictions. A

district board of education may request approval to establish a legal reserve other than

those authorized herein by submitting a written request to the Office of School Facilities

and Finance in accordance with the annual audit program.

6A:23A-16.3 Conflicts between legal provisions and GAAP

(a) If financial statements prepared in conformity with GAAP do not demonstrate finance-

related legal and Federal or State contractual compliance, a district board of education or

charter school board of trustees shall present such additional schedules and narrative

explanations in the Comprehensive Annual Financial Report as may be necessary to

report its legal compliance responsibilities and accountabilities.

(b) Each district board of education and charter school board of trustees shall maintain the

accounting system on a legal-compliance basis, and shall include sufficient additional

records to permit GAAP-based reporting.

6A:23A-16.4 Minimum bond requirements for treasurer of school moneys

(a) Each district board of education and charter school board of trustees shall use as the

minimum requirements for the surety bond for the treasurer of school moneys, such

percentage of the current year's school budget as required in the schedule set forth below:

Total School Budget Minimum Bond Required

Up to $100,000.00 20 percent of budget (Minimum $10,000)

$100,000.01 to $250,000.00 $20,000 plus 15 percent of all over $100,000

$250,000.01 to $500,000.00 $42,500 plus 13 percent of all over $250,000

$500,000.01 to $750,000.00 - $75,000 plus eight percent of all over $500,000

$750,000.01 to $1,000,000.00 $95,000 plus four percent of all over $750,000

$1,000,000.01 to $2,000,000.00 $105,000 plus two percent of all over $1,000,000

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$2,000,000.01 to $5,000,000.00 $125,000 plus one percent of all over $2,000,000

$5,000,000.01 to $10,000,000.00 $155,000 plus 1/2 percent of all over $5,000,000

$10,000,000.01 and upwards $180,000 plus 1/4 percent of all over $10,000,000

(b) A district board of education or charter school board of trustees, in fixing such minimum

bond, shall round to the nearest $1,000.

independent school auditor verifies the adequacy of the treasurer's surety bond, which is

required by N.J.S.A. 18A:17-32, and includes appropriate comment and a

recommendation, if needed, in the annual school audit report.

6A:23A-16.5 Supplies and equipment

(a) Criteria to distinguish between supplies and equipment for accounting purposes as

prescribed by GAAP pursuant to N.J.A.C. 6A:23A-16.1 and contained in the Financial

Accounting for Local and State School Systems, which is established by the National

Center for Education Statistics (NCES), and further specified in the New Jersey

Department of Education's Uniform Minimum Chart of Accounts for New Jersey Public

Schools, is incorporated by reference herein, as amended and supplemented, and on file

and may be reviewed at the Office of Administrative Law, Quakerbridge Plaza, Building

9, PO Box 049, Trenton, New Jersey and the Department of Education, PO Box 500,

Trenton, New Jersey.

(b) For the purpose of this section, "food supplies" includes only those supplies that are to be

eaten or drunk and those substances that may enter into the composition of a food in the

operation of a school cafeteria or in a home economics class.

purchase food supplies pursuant to this section, it shall adopt a policy stating what food

supplies will be purchased without advertising for bids, pursuant to N.J.S.A. 18A:18A-5,

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designating a person or persons authorized to purchase food supplies, describing the

procedure by which interested vendors may become eligible to submit quotations, and

outlining the method by which the district board of education or charter school board of

trustees will solicit and accept quotations. A district board of education or charter school

board of trustees shall adopt this policy before the opening of school each year, and shall

make the policy known to the public.

(d) A district board of education or charter school board of trustees shall provide definite and

uniform specifications governing standards of quality to each eligible vendor from whom

quotations are solicited.

1. Each time a purchase of food supplies is to be made, the person(s) designated by

the district board of education or charter school board of trustees to purchase food

supplies shall solicit quotations from interested, eligible vendors in the manner

prescribed in the adopted district board of education or charter school board of

trustees’ policy. Quotations for fresh or frozen fruits, vegetables, and meats need

not be solicited more than once in any two-week period.

2. The person(s) designated to purchase the food supplies shall purchase them from

the vendor giving the lowest quotation, unless the person(s) designated by the

district board of education or charter school board of trustees to purchase food

supplies can justify the purchase from one of the other vendors submitting a

quotation. The person(s) designated shall retain such justification, together with all

quotations received, in permanent record form, which shall be available to school

officials, the district board of education or charter school board of trustees, and the

Department of Education for review and for audit for a minimum of three years.

3. Contingent upon approval of the district board of education or charter school

board of trustees in its adopted policy, the person(s) designated by the district

board of education or charter school board of trustees to purchase food supplies

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may purchase food supplies for any school cafeteria or home economics class to

the extent of not more than $500.00 in any month without soliciting quotations,

provided a statement signed by the purchaser is filed with the invoice indicating

the reason why quotations could not be obtained, and shall retain such record for

review and for audit.

(e) Paragraphs (d)1 and 2 above shall not apply to food supplies purchased by advertising for bids.

6A:23A-16.6 Mechanical bookkeeping systems

A district board of education or charter school board of trustees that contracts for electronic data

processing bookkeeping services shall annually have an audit prepared, or obtain a copy of an

audit of the internal controls of the service company or agency and maintain a copy of such audit

on file. The audit shall be performed as prescribed by Statement of Standards for Attestation

Engagements (SSAE) No. 16, Reporting on Controls at a Service Organization.

6A:23A-16.7 Employee organizational dues

(a) Pursuant to provisions of N.J.S.A. 52:14-15.9e, any person holding employment with a

district board of education or charter school board of trustees in this State may have

deductions made from this compensation for the purpose of paying dues to a bona fide

employee organization.

(b) A district board of education or charter school board of trustees shall require that

employees desiring payroll deductions of organizational dues indicate, in writing, their

choice of employee organization. Any such written authorization may be withdrawn at

any time by filing a notice with the secretary of the district board of education or charter

school board of trustees.

trustees responsible for making organizational payroll deductions shall submit to the

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designated employee organization all deductions made for such purposes.

6A:23A-16.8 Petty cash fund

(a) Pursuant to the provisions of N.J.S.A. 18A:19-13, a district board of education or charter

school board of trustees may establish policies for the annual allocation of a petty cash fund

or funds for the purpose of making immediate payments of comparatively small amounts.

(b) A district board of education or charter school board of trustees establishing a petty cash

fund shall:

1. Indicate the amount or amounts authorized for each fund;

2. Set the maximum expenditure that may be made from each fund;

3. Designate an employee who shall be responsible for the proper disposition of each fund;

4. Establish the minimum time period in which the designated person shall report to

the district board of education or charter school board of trustees on amounts

disbursed from each fund; and

5. Approve a voucher prepared by the school business administrator/board secretary

to replenish each fund.

funds are returned to the depository at the close of each fiscal year.

6A:23A-16.9 Summer payment plan

A district board of education, in accordance with N.J.S.A. 18A:29-3, shall establish a summer

payment plan to provide for withholding 10 percent of the salary of 10-month employees during

the academic year. The district board of education shall ensure that the amount withheld earns

interest and is available to the employee either at the end of the academic year or in installments

prior to September 1.

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6A:23A-16.10 Budgetary controls and overexpenditure of funds

(a) A district board of education or charter school board of trustees shall implement controls

over budgeted revenues and appropriations as follows:

1. A district board of education or charter school board of trustees shall only

approve an encumbrance or expenditure (liability or payment) that, when added to

the total of existing encumbrances and expenditures, does not exceed the amount

appropriated by the district board of education or charter school board of trustees

in the applicable line item account established pursuant to the minimum chart of

accounts referenced in N.J.A.C. 6A:23A-16.2(f)1.

2. A district board of education or charter school board of trustees shall approve the

recording of revenues only when measurable and available, in accordance with

GAAP, unless otherwise authorized pursuant to N.J.S.A. 18A:22-44.2.a. State aid

and tax levy approved in the budget certified for taxes shall be recorded in full as of

July 1. State restricted and unrestricted grants shall be recorded in full upon signing

and execution of the grant agreement or as otherwise directed by the grantor.

3. When a district board of education or charter school board of trustees adopts an

expanded chart of accounts pursuant to N.J.A.C. 6A:23A-16.2(f)2, such district

board of education or charter school board of trustees shall adopt a policy

concerning the controls over appropriations for line item accounts that exceed the

minimum level of detail established pursuant to N.J.A.C. 6A:23A-16.2(f)1. If a

district board of education or charter school board of trustees fails to adopt such a

policy, such school district or charter school shall apply the restrictions in (a)1

above to line item accounts that exceed the minimum level of detail.

4. A district board of education or charter school board of trustees, unless otherwise

restricted by law or Commissioner directive, may transfer amounts from line item

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accounts with available appropriation balances to permit the approval of

encumbrances or expenditures otherwise prohibited in (a)1 and 3 above. A district

board of education or charter school board of trustees shall make these transfers

prior to the approval of encumbrances or expenditures. A district board of education

or charter school board of trustees shall make all transfers in accordance with

N.J.S.A. 18A:22-8.1, 18A:22-8.2, and 18A:7G-31, and N.J.A.C. 6A:23A-13.14.

(b) A district board of education or charter school board of trustees incurring or projecting a

year-end deficit on a budget basis in the general fund, capital projects fund, or debt

service fund or for a restricted project in the special revenue fund as designated in

N.J.A.C. 6A:23A-16.2(c) shall proceed in the following manner:

1. The district board of education or charter school board of trustees shall direct the

chief school administrator, or charter school lead person, to notify the executive

county superintendent, or the Department in the case of charter schools, within

two working days, of the following:

i. The projected amount of the overexpenditure/deficit; and

ii. The preliminary findings of the conditions that caused the projected or

actual overexpenditure/deficit.

2. The district board of education or charter school board of trustees shall develop,

and adopt at a public meeting, an acceptable corrective action plan to eliminate

the projected/actual fund deficit within 30 days of the discovery of such fund

deficit, but in no circumstance more than 30 days after completion of the CAFR

for that year. The corrective action plan shall include:

i. The projected or actual amount of the fund deficit;

ii. A detailed list of the line items and the actual or projected deficit amount

comprising the overall fund deficit;

iii. The conditions producing the deficit; and

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iv. The corrective actions taken or to be taken to correct or prevent the deficit

and dates or projected dates of such actions.

3. The executive county superintendent, or the Department in the case of charter

schools, shall immediately notify the Commissioner, in writing, of a school district or

charter school with an actual or projected fund deficit and the amount of said deficit.

4. The office of the executive county superintendent, or the Department in the case

of charter schools, shall immediately investigate to determine if the corrective

action being taken by the district board of education or charter school board of

trustees is sufficient to avoid a fund deficit or correct an actual fund deficit. If

necessary, the office of the executive county superintendent, or the Department,

shall assist the district board of education or charter school board of trustees in

determining what further corrective action can be taken, or request assistance

from the Office of School Facilities and Finance.

5. The executive county superintendent, or the Department in the case of charter

schools, shall immediately notify the Commissioner, in writing, should it appear

that a fund deficit has occurred or may occur and the district board of education or

charter school board of trustees is not taking adequate action to avoid the

overexpenditure/deficit.

following occurs at every regular district board of education or charter school board of

trustees meeting:

1. The school business administrator/board secretary shall present to the district

board of education or charter school board of trustees a report showing all

transfers between line item accounts, as well as appropriations, adjustments to

appropriations, encumbrances, and expenditures for each line item account shown

on the budget form prepared in accordance with N.J.S.A. 18A:22-8. This report

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shall be in addition to the report required by N.J.S.A. 18A:17-9.

2. The school business administrator/board secretary shall report to the district board

of education or charter school board of trustees any change(s) in anticipated

revenue amounts and revenue sources.

3. A district board of education or charter school board of trustees shall obtain a

certification from the school business administrator/board secretary each month

that the total of encumbrances and expenditures for each line item account do not

exceed the line item appropriation in violation of (a) above.

i. If a violation has occurred, the district board of education or charter school

board of trustees shall, by resolution, approve by a two-thirds affirmative

vote of the authorized membership of the board, pursuant to N.J.S.A.

18A:22-8.1, to either transfer amounts among line items if no department

approvals are required pursuant to N.J.A.C. 6A:23A-13, or to direct the

school business administrator/board secretary, or the chief school

administrator or charter school lead person, as appropriate, to request

approval pursuant to N.J.A.C. 6A:23A-13 to transfer amounts among line

items and/or from undesignated fund balance or other unbudgeted or

underbudgeted revenue to eliminate the line item account deficit(s). If the

latter option is selected, the appropriate official shall provide a detailed

report of approvals granted and the subsequent amounts transferred into

and out of the affected line item account(s), undesignated fund balance, or

other unbudgeted or underbudgeted revenue account for the board's

ratification at the next regularly scheduled meeting.

ii. As applicable, the school business administrator/board secretary shall

reflect in the minutes of the board, the certification or a detailed account of

all transfers and the board's ratification, when this option is selected. The

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district board of education or charter school board of trustees shall make

such transfers in accordance with this subchapter and N.J.S.A. 18A:22-

8.1, 18A:22-8.2, and 18A:7G-31.

4. A district board of education or charter school board of trustees, after review of

the school business administrator/board secretary's and treasurer's monthly

financial reports and upon consultation with the appropriate school district or

charter school officials, shall certify in the minutes of the board each month that

no fund has been overexpended in violation of (b) above, and that sufficient funds

are available to meet the district board of education's or charter school board of

trustee's financial obligations for the remainder of the fiscal year.

i. If the district board of education or charter school board of trustees is

unable to make such a certification, the board shall direct the chief school

administrator or charter school lead person to initiate the steps outlined in

(b) above and shall reflect such directive in the minutes of the board.

ii. If the district board of education or charter school board of trustees is able

to make such certification, but one or more members of the board votes no

to the certification, the district board of education or charter school board

of trustees shall provide to the executive county superintendent, the board

vote, names(s) of the member(s) who voted no, and the reason for the no

vote.

iii. Within 60 days of the month’s end, or later upon approval of the executive

county superintendent, district boards of education subject to N.J.S.A.

18A:7F-6.b, district boards of education that satisfy less than 80 percent of

indicators in the fiscal management section of the district performance

review located in the Appendix to N.J.A.C. 6A:30, and other district boards

of education shall provide to the executive county superintendent a copy of

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the school business administrator/board secretary's and treasurer's monthly

financial reports submitted to the district board of education under (c)1

above and as required pursuant to N.J.S.A. 18A:17-9 and 18A:17-36.

iv. Within 60 days of the December month-end, or later upon approval of the

executive county superintendent, every district board of education shall

provide to the executive county superintendent a copy of the school

business administrator/board secretary's and treasurer's monthly financial

reports submitted to the board of education under (c)1 above and as

required pursuant to N.J.S.A. 18A:17-9 and 18A:17-36.

v. Within 60 days of the September, December, and March month end, every

charter school board of trustees shall provide to the Department a copy of

the monthly financial reports submitted to the board of trustees under (c)1

above and as required pursuant to N.J.S.A. 18A:17-9 and 18A:17-36.

vi. Any school business administrator/board secretary who is more than two

months behind in submitting the report required pursuant to N.J.S.A.

18A:17-9 to a district board of education shall immediately report this

noncompliance to the executive county superintendent.

(d) The executive county superintendent shall report to the Commissioner by August 15, all

fund overexpenditures, as shown on the June report of the school business

administrator/board secretary filed pursuant to N.J.S.A. 18A:17-10.

1. A district board of education shall immediately develop and adopt an acceptable

remedial plan to address any fund(s) deficits consistent with the provisions of (b)

above.

2. If necessary, the executive county superintendent shall assist the district board of

education in determining what further action can be taken, or request assistance

from the Office of School Facilities and Finance

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3. The executive county superintendent shall immediately notify the Commissioner,

in writing, if it appears the district board of education is not taking adequate

action to remediate the fund(s) deficit.

(e) A district board of education or charter school board of trustees that fails to develop a

corrective action plan or fails to take adequate action in order to avoid or remediate an

overexpenditure or fund deficit may be subject to the following:

1. Comprehensive review pursuant to N.J.A.C. 6A:30-3, improvement activities

pursuant to N.J.A.C. 6A:30-5, or intervention activities pursuant to N.J.A.C.

6A:30-6, as deemed warranted by the Commissioner.

2. Beginning in the second year following the year in which the projected

overexpenditure or fund deficit occurred, a reduction in a district board of

education or charter school board of trustees cash payment of State aid by the

percentage of the sum of the deficits or projected deficit in any fund to its

adequacy budget calculated pursuant to the provisions of N.J.S.A. 18A:7F-51, or,

in the case of a charter school, a reduction in the charter school aid. Reductions

shall be made in the following descending order:

i. Equalization aid;

ii. Adjustment aid;

iii. Transportation aid;

iv. Security categorical aid;

v. Special education categorical aid;

vi. Extraordinary special education cost aid; and

vii. Preschool education aid.

3. A district board of education or charter school board of trustees shall apply

deficits incurred for State and Federal grant projects, enterprise funds such as the

school lunch fund, trust and agency funds, and student activity funds, to the

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balance or deficit of the general fund when such overexpended projects and funds

should have been balanced by expenditures from or transfers to that fund.

(f) In those cases where the Commissioner determines that the failure to develop a corrective

action plan or take adequate action in order to avoid or address an overexpenditure or

fund deficit impacts upon the school district's ability to meet its goals and objectives, the

Commissioner may recommend to the State Board of Education that action be taken

pursuant to (b) above as deemed warranted by the Commissioner, or in the case of a

charter school that its charter be revoked, pursuant to N.J.S.A. 18A:36A-17.

6A:23A-16.11 Internal service funds

(a) Internal service funds are used to account for and report any activity that provides goods

and services from one department or office to other departments or offices of the district

board of education, or to other district boards of education and governmental units, on a

cost-reimbursement basis. Internal service funds are cost accounting and distribution

entities and are intended to recover their costs annually or over a reasonable time period.

(b) A district board of education or charter school board of trustees providing a shared

service under a shared service agreement with another board of education or external

entity shall account for the shared service costs in an internal service fund in accordance

with GAAP.

1. The district board of education or charter school board of trustees providing the

shared service shall allocate the costs on a user-charge basis to all participating

entities on an annual basis at a minimum.

i. A district board of education or charter school board of trustees that is

receiving the services shall report user charges in the applicable line item

account for the goods or services received.

ii. A district board of education or charter school board of trustees shall

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report as revenues the sales and purchases of goods and services for a

price approximating their external exchange value ("Services Provided to

Other Funds") in provider/seller funds.

2. The district board of education or charter school board of trustees shall ensure that

the shared service agreement includes an agreed-upon mechanism for the use

and/or distribution of any unexpended balance(s).

3. The district board of education or charter school board of trustees shall evaluate

annually any unexpended balance(s) to determine the amount of monies, if any,

due back to the shared service entities.

costs on a user charge or other basis.

6A:23A-16.12 Student activity funds

(a) Student activity funds are used to account for funds derived from athletic events or other

activities of pupil organizations and to account for the accumulation of money to pay for

student group activities. A district board of education or charter school board of trustees

shall establish student activity funds by resolution. Such funds shall be maintained under

the jurisdiction of the board of education or charter school board of trustees and

supervision of the school business administrator/board secretary, who may appoint a

designee for purposes of administering the funds.

(b) Each district board of education and charter school board of trustees shall maintain

student activity funds in an interest-bearing account separate from all other funds of the

district board of education or charter school board of trustees. The district board of

education or charter school board of trustees shall disburse interest on this account(s) to

each student activity fund in proportion to the balances on deposit for each activity.

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adoption of a formal board policy, that all financial and bookkeeping controls are

adequate to ensure appropriate fiscal accountability and sound business practices. The

district board of education or charter school board of trustees shall include in its policy

the following minimum requirements:

1. Receipts are detailed showing date, sources, purpose, and amount. The district

board of education or charter school board of trustees shall promptly deposit all

receipts in the bank. The district board of education or charter school board of

trustees shall ensure that all deposits agree with the entries in the cash receipt

book and are traceable to the actual receipts or groups of receipts.

2. Disbursements shall be recorded chronologically showing date, vendor, check

number, purpose, and amount. The district board of education or charter school

board of trustees shall make all disbursements by check bearing a minimum of

two authorized signatures, and shall support all disbursements by a claim, bill, or

written order to persons supervising the fund.

3. Book balances shall be reconciled with bank balances. The district board of

education or charter school board of trustees shall retain canceled checks and

bank statements for examination by the licensed public school accountant as part

of the annual audit required under N.J.S.A. 18A:23-1 et seq. and stated in

N.J.A.C. 6A:23A-16.2(i).

4. Student activity funds shall be classified by school.

5. Borrowing from the student activity accounts shall be prohibited.

(d) The district board of education or charter school board of trustees shall not be responsible for

the protection of and the accounting for funds collected by any teacher or pupil for an outside

organization, and shall not approve such funds for deposit in a school activity account.

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6A:23A-16.13 School store business practices

A district board of education, or any organization under its auspices, shall comply with sales tax

rules established by the New Jersey Department of the Treasury’s Division of Taxation when

operating a school store or offering goods for sale.

6A:23A-16.14 Dismissal or reassignment of a school business administrator

(a) In order to protect the integrity of the school business administrator office, a district

board of education shall submit to the executive county superintendent a written

justification for the non-renewal, dismissal for cause, reassignment, or elimination of the

position of a school business administrator, or the individual duly certified and

performing the duties of a school business administrator, within 48 hours of said

notification by the district board of education to the affected employee.

(b) The affected employee may request a meeting with the executive county superintendent

to discuss the justification submitted by the district board of education. The executive

county superintendent shall initiate any follow-up action as warranted on issues under the

Department’s jurisdiction.

6A:23A-16.15 Appeals

(a) Decisions of the Commissioner issued pursuant to this chapter may be appealed to the

Appellate Division of the Superior Court.

(b) Decisions of the Assistant Commissioner and executive county superintendent issued pursuant

to this chapter may be appealed pursuant to N.J.A.C. 6A:3, Controversies and Disputes.

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Subchapter 17. Tuition Public Schools

6A:23A-17.1 Method of determining tuition rates for regular public schools

(a) For the purposes of this subchapter, a district board of education does not include an

educational services commission or jointure commission.

(b) The term "actual cost per student" for determining the tuition rate or rates for a given year

referred to in N.J.S.A. 18A:38-19 and 18A:46-21 means the local cost per student in

average daily enrollment, based upon audited expenditures for that year for the purpose

for which the tuition rate is being determined and consistent with the grade/program

categories in N.J.S.A. 18A:7F-50 and 18A:7F-55, that is, regular education classes:

preschool and kindergarten, grades one through five, grades six through eight, and grades

nine through 12; and special class programs as defined in N.J.A.C. 6A:14-4.7. Districts

that receive preschool education aid shall determine an actual cost per student only for

kindergarten students. Pursuant to N.J.A.C. 6A:13A-2.1, districts that receive preschool

education aid and charge tuition to another district and/or parent or guardian, as permitted

under N.J.A.C. 6A:13A, may charge any amount, not to exceed the per pupil amount

established pursuant to N.J.S.A. 18A:7F-54.

1. The receiving district board of education shall include in its calculation all

expenditures for each purpose except Federal and State special revenue fund

expenditures and those specifically excluded in (e)5 below.

2. "Average daily enrollment," for the purpose of determining the "actual cost per

student," means the sum of the days present and absent of all students enrolled in

the register or registers of the program for which the rate is being determined

during the year divided by the number of days school was actually in session, but

in no event shall the divisor be less than 180 days.

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student" for each tuition category for a given year from the Commissioner based upon either:

1. A report prepared and submitted annually by the receiving district board of

education indicating the actual amounts of expenditures and adjustments,

whenever practicable, or amounts equitably allocated and supported by

documentation for each applicable item in the grade/program category for which

the tuition rate is required, according to the prescribed bookkeeping and

accounting system; or

2. A report prepared annually by the Commissioner for each receiving district board

of education. This report establishes the "actual cost per student" for each tuition

category using the following:

i. Expenditures reflected in the receiving district board of education's annual

independent audit;

ii. Supplemental data for average daily enrollment and items of expenditure

detailed in (e)2 below submitted by category by the receiving district

board of education on a form prescribed by the Commissioner; and

iii. Criteria contained in (e) below.

(d) Once having determined to annually submit the report pursuant to (c)1 above to the

Commissioner, a receiving district board of education shall submit a written request to the

Commissioner for review and approval in order to change to the certification method in

(e) The receiving district board of education shall determine the share of each item of

expenditure for each grade/program category on the report in (c)1 above on a pro rata or

actual basis as follows:

1. The actual expenditures for each category as reflected in the receiving district

board of education's annual independent audit for the following items:

i. Teachers' salaries and equipment for regular education classes; and

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ii. Direct instructional expenditures for salaries, equipment and other

expenses for special education classes.

2. Expenditures submitted by category on the supplemental data report and

determined on either an actual basis or an equitable basis of allocation, such as

square footage or average daily enrollment selected by the receiving district board

of education and supported by documentation for the following items:

i. Rental of land and buildings;

ii. Interest on lease-purchase agreements;

iii. School-sponsored co-curricular activities, athletics, and other instructional

programs of the general fund;

iv. Local vocational programs;

v. Facilities acquisition and construction services included in the budget

approved by the executive county superintendent and certified for taxes;

vi. Building use charges as defined in (e)6 and 7 below;

vii. Other support services, special education students;

viii. Related services; and

ix. Benefits for special programs.

3. Unallocated expenditures for general education class categories as reflected in the

receiving district board of education's annual independent audit and allocated in

proportion to the average daily enrollment in the grade categories for general

education classes for the following items:

i. Other salaries for instruction such as teaching assistants and aides, as well

as others providing or assisting directly in the instructional program;

ii. Textbooks;

iii. Equipment;

iv. Teaching supplies;

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v. Purchased professional educational services;

vi. Purchased technical educational services;

vii. Other support services, regular students;

viii. Other direct expenses of general education classes;

ix. Direct instructional expenditures for salaries, other expenses, and

equipment for basic skills remedial programs; and

x. Employee benefits.

4. Expenditures, including related employee benefits and equipment, as reflected in

the receiving district board of education's annual independent audit and allocated

in proportion to the average daily enrollment in each category for all categories

listed in (b) above for the following items:

i. General administration, central services, administrative information

technology, and business and other support services;

ii. Improvement of instructional services;

iii. Staff training services;

iv. Educational media services, school library;

v. School administration;

vi. Attendance, social work, and health;

vii. Contracted transportation or transportation provided by district board of

education owned vehicles for curricular activities such as field trips,

athletic trips, and other trips that are part of the instructional program;

viii. Operation and maintenance of plant expenditures;

ix. Fixed charges, including unallocated employee benefit costs for retirement

and Social Security contributions except Teacher's Pension and Annuity Fund

(TPAF) contributions, insurance and judgments, including unemployment

compensation (UCC), interest on current loans, and other fixed charges except

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rental of land and buildings and interest on lease-purchase agreements

determined pursuant to (e)2 above, and principal on lease-purchase

agreements and tuition that are excluded pursuant to (e)5 below;

x. Food service expenditures of the general fund; and

xi. Direct instructional expenditures for salaries, equipment, and other

expenses for bilingual education programs and home instruction.

5. Expenditures that are excluded from the actual cost per student for tuition

purposes for the following items:

i. Transportation to and from school that is paid by the resident district board

of education;

ii. Employee retirement and social security contributions for TPAF members

that are fully funded by the State;

iii. Principal on lease-purchase agreements;

iv. Tuition;

v. Community services;

vi. Resource rooms, which are determined pursuant to (e)9 below and

permitted as a separate charge over and above tuition for general

education classes;

vii. Accredited adult education programs and nonaccredited adult and evening

programs; and

viii. Extraordinary services provided to special education students for which a

district board of education may bill directly.

6. Building use charge determined as follows:

i. Divide the amount of debt service State support received by the debt

service paid for the school year to determine the ratio of State support;

ii. Multiply the debt service interest charges paid on debt for the buildings in which

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the program is located by the ratio of State support obtained in (e)6i above;

iii. Subtract the amount obtained in (e)6ii above from the debt service interest

charge paid on debt for the buildings in which the program is located; and

iv. Distribute the amount obtained in (e)6iii above in accordance with (e)2 above.

7. Special building use charge determined as follows:

i. Whenever a receiving district board of education receives more than 50

percent of the average daily enrollment in a program for which a tuition

rate is being determined, the receiving district board of education may

include, in accordance with (e)2 above, the amount expended for principal

and interest on major repairs and major renewals of furniture, equipment,

and apparatus for the building in which the program is located, provided:

(1) Such major repairs or major renewals were funded by the issuance

of bonds as provided in N.J.S.A. 18A:21-1;

(2) The receiving district board of education consulted with each

sending district board of education having more than 10 percent of

the average daily enrollment in the program for which the tuition

rate is being determined prior to taking any action in accordance

with N.J.S.A. 18A:24-10 to authorize the issuance of bonds; and

(3) The majority of district boards of education with more than 10

percent of the enrollment in the program passed a resolution in

support of the receiving district board of education's determination

to issue such bonds or the Commissioner, after a conference,

approved the proposal for the issuance of such bonds.

ii. A receiving district board of education for which this section is applicable

may include, in accordance with (e)2 above, the entire rental on a site or

school building acquired by a lease-purchase agreement, pursuant to

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N.J.S.A. 18A:20-4.2, provided:

(1) The receiving district board of education consulted with each sending

district board of education having more than 10 percent of the average

daily enrollment in the program for which the tuition rate is being

determined prior to entering into the lease-purchase agreement; and

(2) Each sending district board of education with more than 10 percent

of the enrollment in the program passed a resolution in support of the

receiving district board of education's determination to enter into a

lease-purchase agreement or the Commissioner, after a conference,

approved the proposal to enter into a lease-purchase agreement.

iii. A receiving district board of education for which this section is applicable

may include, in accordance with (e)2 above, a facilities acquisition and

construction service charge, which is determined by the straight line

amortization over three years of that part of the total expenditure for

facilities acquisition and construction services that is over and above the

amount stated in the budget certified for taxes and used in (e)2v above.

8. In addition to the tuition charged for each grade category, a receiving district

board of education may charge for students receiving services in a resource room

an additional amount up to the actual direct instructional cost per student for such

services calculated on an hourly basis (an example of the calculation is contained

in Policy Bulletin: 100-1 issued by and available from the Office of School

Facilities and Finance, Department of Education, PO Box 500, Trenton, New

Jersey 08625-0500).

(f) The receiving district board of education and the sending district board of education shall

establish by written contractual agreement a tentative tuition charge for budgetary

purposes. Such tentative charge shall equal an amount not in excess of the receiving

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district board of education's "estimated cost per student" for the ensuing school year for

the purpose or purposes for which tuition is being charged, multiplied by the "estimated

average daily enrollment of students" expected to be received during the ensuing school

year. Such written contract shall be on a form prepared by the Commissioner.

1. "Estimated cost per student" shall be determined by the receiving district board of

education using the appropriate supporting schedule in its annual budget for the

ensuing year. In lieu of completing the form specified in (c)1 above, a receiving

district board of education that has elected to use (c)1 above to certify actual cost

per student shall have the option of setting an estimated cost per student up to an

amount that shall be determined by multiplying the most recent year's certified

cost per student by one plus the Consumer Price Index (CPI) as defined in

N.J.S.A. 18A:7F-45 for the budget year or 2.5 percent, whichever is greater. If

this option is selected and more than one fiscal year has elapsed since the most

recent cost per student certification, the receiving district board of education shall

further increase the estimated cost per student by multiplying the above by the

sum of one plus the CPI for each additional year.

2. "Estimated average daily enrollment" for the purpose of calculating a tentative

tuition charge shall be determined as follows:

i. A receiving district board of education shall project the number of

students in each tuition category expected to be received consistent with

the growth in average daily enrollment (ADE) taken from the three most

recent school register summary reports prior to the year for which the

budget is being prepared.

ii. Estimated average daily enrollment (EADE) equals Y1x(1+G)2 where the

growth rate G = 0.5x(Y1-Y3)/Y3, where G shall not exceed +/-10 percent,

Y1 is the ADE two years prior to the year for which the tuition is being

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estimated, and Y3 is the ADE four years prior to the year for which the

tuition is being estimated. For the purposes of the tentative tuition

contract, a receiving district board of education shall apply the same

growth rate calculation (as noted above) to project the number of students

to be received from each sending district board of education.

3. The sending district board of education and the receiving district board of

education shall enter into a written contractual agreement for tuition for the

ensuing school year, except for a contractual agreement for a student enrolled in a

special education class, no later than seven days prior to the date on which the

proposed budget for the ensuing school year is required to be submitted to the

executive county superintendent. The sending district board of education shall be

required in the contractual agreement to pay 10 percent of the tentative tuition

charge no later than the first of each month from September through June of the

contract year. The contractual agreement, except for a contractual agreement for a

student enrolled in a special education class, shall require all adjustments resulting

from a difference in cost or in the number of students sent to be made only during

the second school year following the contract year. All contractual agreements

shall contain a payment schedule for all adjustments that may be necessary.

4. The sending district board of education shall notify in writing the receiving

district board of education of the estimated average daily enrollment of students in

each tuition category expected to be sent during the ensuing school year no later

than December 15 preceding the beginning of the ensuing school year. The

receiving district board of education shall notify in writing the sending district

board of education of the estimated cost per student in each tuition category for

the ensuing school year and the tentative tuition charge no later than February 4

preceding the beginning of the ensuing school year. The receiving district board

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of education shall submit to the sending district board of education, on a form

prepared by the Commissioner, a copy of its calculations to determine the

estimated cost per student in each tuition category for the ensuing school year no

later than February 4 preceding the beginning of the ensuing school year.

5. The executive county superintendent in the county in which the receiving district

board of education is located shall review any unique circumstances or variations

in methodology and mediate all disputes that arise from the determination of

tentative tuition charges, including challenges to the estimated average daily

enrollment counts generated using the formula in (f)2 above. Such a review shall

include examination of the following documents:

i. Annual budgets, including supporting documents;

ii. Application for State School Aid (ASSA) reports;

iii. School register summary reports;

iv. Tuition contracts; and

v. Any other information deemed necessary.

6. If the Commissioner later determines that the tentative tuition charge established by

written contractual agreement, except for a contractual agreement for a student

enrolled in a special education class, was greater than the actual cost per student

during the school year multiplied by the actual ADE received, the receiving district

board of education shall return to the sending district board of education in the second

school year following the contract year the amount by which the tentative charge

exceeded the actual charge as determined above, or, at the option of the receiving

district board of education, shall credit the sending district board of education with

the excess amount. The receiving district board of education shall make such

adjustment for a contractual agreement for a student enrolled in a special education

class no later than the end of the second school year following the contract year.

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7. If the Commissioner later determines that the tentative charge established by

written contractual agreement, except for a contractual agreement for a student

enrolled in a special education class, was less than the actual cost per student

during the school year multiplied by the actual average daily enrollment received,

the receiving district board of education may charge the sending district board of

education all or part of the amount owed by the sending district board of

education, to be paid during the second school year following the school year for

which the tentative charge was paid. Such adjustment for a contractual agreement

for a student enrolled in a special education class shall be made no later than the

end of the second school year following the contract year. The executive county

superintendent of schools of the county in which the sending district board of

education is located may approve the payment of the additional charge over

another period, if the sending district board of education can demonstrate that

payment during the second school year following the school year for which the

tentative charge was paid would cause a hardship.

8. If at the end of the contract year, a district board of education anticipates a tuition

adjustment will be required in the second year following the contract year, the district

board of education may restrict fund balance of up to 10 percent of the estimated

tuition cost in the contract year in a legal reserve for tuition adjustments established

by resolution at June 30. In such case, the district board of education shall:

i. Make full appropriation of the legal reserve for the tuition adjustment in

the second year following the contract year;

ii. Exclude from the net budget cap calculation, if applicable, the budgeted

fund balance and appropriation of the legal reserve in the second year

following the contract year for such tuition adjustments; and

iii. Transfer to the general fund, by board resolution, any interest earned on

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the investments in a tuition reserve account on an annual basis. Such

transfer may be made on a more frequent basis at the discretion of the

district board of education.

(g) The receiving district board of education shall use forms prepared by the Commissioner

for certification of the "actual cost per student" for each tuition category according to the

rules in this section, for contracts, and for establishing the estimated cost per student for

each tuition category for the ensuing school year.

(h) In any year in which the receiving district board of education can prove, to the

satisfaction of the Commissioner, that the charge for the use of the school facilities

pursuant to (e)6 above is not adequate, the Commissioner may approve an additional

charge for the use of such school facilities.

6A:23A-17.2 Method of determining tuition rate in a new district board of education

(a) During the first year of operation of a district board of education program that is to

receive students, the receiving district board of education shall set the estimated cost per

student in each program for which the tuition rate is required and shall base the estimate

on budgeted costs. The receiving district board of education shall submit the established

estimated cost or costs per student to the Commissioner for approval or disapproval no

later than January 1 preceding the beginning of the first year of operation.

(b) If the Commissioner approves the estimated cost or costs per student, each sending

district board of education shall pay tentative tuition charges based upon these estimated

costs per student during the first year of operation.

charge was greater than the actual cost, the receiving district board of education shall

return, except if the tentative tuition charge was for a student who was enrolled in a

special education class, in the second school year following the first year of operation to

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each sending district board of education the amount by which the tentative charge

exceeded the actual cost, or, at the option of the receiving district board of education,

shall credit each sending district board of education with the amount by which the

tentative tuition charge exceeded the actual cost. The receiving district board of education

shall remit payment or credit for a student who was enrolled in a special education class

no later than the end of the second school year following the first year of operation.

(d) If, after the first year of operation, the Commissioner determines that the tentative tuition

charge was less than the actual cost, the receiving district board of education may charge

the sending district board of education all or part of the amount owed by the sending

district board of education, to be paid, except if the amount owed is for a student who

was enrolled in a special education class, during the second school year following the

first year of operation. The sending district board of education shall pay the amount owed

for a student who was enrolled in a special education class no later than the end of the

second school year following the first year of operation.

6A:23A-17.3 County vocational school districts funding; public school district tuition

payments, post-secondary vocational-technical education fund sources

(a) The board of education of any county vocational school district (CVSD) may receive, but

not be limited to, the following general fund revenue and fund sources for programs and

services provided to students of local public school districts within or outside the county:

1. State aid received pursuant to N.J.S.A. 18A:7F-43 et seq. and other sources of

unrestricted State aid;

2. Funds as may be appropriated by the county pursuant to N.J.S.A.18A:54-29.2 and

designated for the programs and services provided to students of local public

school districts within the county;

3. Tuition from the sending districts in which the pupils attending the CVSD reside

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for a sum not to exceed the actual cost per pupil as determined for the applicable

program as follows:

i. Tuition rates shall be calculated separately for the following:

(1) One tuition rate for regular vocational-technical programs for

students sent by local public school districts;

(2) One tuition rate for all learning disability program categories for

special education programs provided during the regular school year

for students sent by local public school districts; and

(3) One tuition rate for all learning disability program categories for

special education programs provided for extended periods beyond

the regular school year (extended school year programs) for

students sent by local public school districts;

4. A nonresident fee in addition to tuition for any pupils of sending school districts

who are not residents of the county whenever funds have been appropriated by the

county.

i. The fee shall not exceed the amount of the county's per pupil

appropriation to the CVSD, pursuant to N.J.S.A. 18A:54-20.1.

ii. The maximum fee per nonresident student shall be calculated by dividing

the total county appropriation to the CVSD, pursuant to N.J.S.A. 18A:54-

29.2 and (a)2 above, by the average daily enrollment (ADE) of students

who are residents of the county and are sent on a tuition basis to the

CVSD by the public school districts of the county in which the CVSD is

located; and

5. Reimbursement for any extraordinary special education services provided to an

individual student from the student’s resident district. The cost of extraordinary

special education services shall not be included in the actual cost per pupil for

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purposes of determining tuition rates for special education programs.

(b) The board of education of any CVSD may receive, but not be limited to, the following

revenue and fund sources for post-secondary vocational-technical programs provided to

post-secondary students who reside within or outside the county:

1. Funds as may be appropriated by the county pursuant to N.J.S.A.18A:54-29.2 and

designated for post-secondary vocational-technical programs for post-secondary

students within the county; and

2. Amounts charged pursuant to N.J.S.A. 18A:54-20.1 and 23.4 to each county of

residence for post-secondary vocational-technical students who are not residents

of the county as follows:

i. $200.00 per each nonresident post-secondary vocational-technical student

to be applied to the county’s share of the CVSD’s capital expenses; and

ii. The average county share of budgeted operating cost per full-time post-

secondary vocational-technical student who is a county resident as certified

by the Commissioner; provided, however, that the said CVSD board may,

with the approval of the Commissioner, charge and collect a higher annual

amount(s) when high-cost or high-priority programs are provided.

(1) The average county share of budgeted operating cost per full-time

post-secondary vocational-technical student who is a county

resident shall be calculated by dividing the county contribution,

pursuant to N.J.S.A. 18A:54-29.2 and (b)1 above, by the average

daily enrollment (ADE) of post-secondary vocational-technical

students who are residents of the county.

6A:23A-17.4 Method of determining tuition rates for county vocational school districts

(a) The term "actual cost per student" for determining the tuition rate or rates for a given year

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referred to in N.J.S.A. 18A:46-21 and 18A:54-20.1 means the adjusted net cost per

student in average daily enrollment, based upon audited expenditures for that year for the

purpose for which the tuition rate is being determined.

1. The CVSD board of education shall determine tuition rates for each applicable

program category consistent with N.J.A.C. 6A:23A-17.3(a)3.

2. "Average daily enrollment" for the purpose of determining the "actual cost per

student" means the sum of the days present and absent of all students enrolled

during the year in the register or registers of the program for which the rate is being

determined, divided by the number of days school was actually in session, but in no

event shall the divisor for the regular school year programs be less than 180 days.

3. The CVSD board of education shall adjust the "actual cost per student" for all

tuition categories to reflect net costs plus a reasonable surplus.

(b) Each CVSD board of education will receive from the Commissioner certification of the

"actual cost per student" for each tuition category for a given year utilizing the following:

1. Revenues, expenditures, and fund balances reflected in the CVSD’s annual

independent audit; and

2. Average daily enrollment data by category submitted by the CVSD on a form

prescribed by the Commissioner.

enable the CVSD to cover the net cost of said program.

(d) The maximum tuition rate per pupil for each education program for sending public school

districts shall be based on the net cost calculated by reducing the amount of general fund

expenditures by the following:

1. State aid received pursuant to N.J.S.A. 18A:7F-43 et seq. and other sources of

State aid, except for restricted State grants;

2. All other revenue sources other than tuition (such as the county contribution,

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nonresident fees, Medicaid reimbursements, and miscellaneous revenue) available

to fund the education program for sending school districts;

3. All direct and indirect expenditures that are not associated with the education

program for sending public school districts such as post-secondary vocational-

technical programs;

4. All expenditures associated with each education program for sending public

school districts but that are funded through sources other than the tuition rate such

as extraordinary special education costs, which are separately reimbursed for

individual students;

5. Expenditures for Teachers' Pension and Annuity Fund (TPAF) pension and social

security; and

6. Refunds of prior-year tuition adjustments made to sending public school districts.

(e) The Commissioner shall develop and disseminate workpapers for the purpose of

allocating revenue, other fund sources, and expenditures amongst the various programs

and services within the general fund.

1. With the exception of the regular vocational-technical education program, the

actual programs and/or services will vary by individual CVSD.

2. The purpose of this allocation shall be to isolate the revenue, other fund sources, and

expenditures related to the tuition for each regular and special vocational-technical

education program by segregating programs and services that are not related to those

programs, or are related but funded through sources other than tuition.

3. Expenditures shall be allocated on a direct and indirect basis amongst the various

general fund programs and services when funded through sources other than

tuition, such as extraordinary special education services.

i. Direct instructional expenditures for salaries and related benefits,

textbooks, teaching supplies, purchased services, equipment, and other

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expenses for each program or learning disability program category, as

applicable, shall be allocated on an actual basis.

ii. When allocating indirect expenditures amongst major programs, such as

regular vocational-technical education, special vocational-technical

education, post-secondary vocational-technical education, and other

programs, indirect expenditures, except expenditures for Teachers' Pension

and Annuity Fund (TPAF) pension and social security, shall be allocated

amongst the various programs based on the percent of direct expenditures in

each program to the total of all direct expenditures since there is no common

average daily enrollment (ADE) equivalent among all programs.

iii. Services provided as part of a program, such as extraordinary special

education services, shall not bear part of the indirect expenditures but shall

include only direct instruction and support services expenditures.

iv. When allocating indirect expenditures between the learning disability

program categories of the regular school year and the extended school

year, indirect expenditures, except expenditures for Teachers' Pension and

Annuity Fund (TPAF) pension and social security, shall be allocated in

proportion to the average daily enrollment.

(f) The CVSD board of education shall adjust, as appropriate, its net cost determined for

each tuition category in (d) above to include in the certified maximum tuition rate for

each category an amount that will permit the CVSD board of education to maintain at its

discretion for the year the tuition rate applies an ending general fund unassigned balance

not to exceed the amount permitted pursuant to N.J.S.A. 18A:7F-7.

1. If the CVSD board of education's general fund budget for the prebudget year is

$100 million or less and the ending general fund free balance is less than the greater

of six percent of its general fund budget or $250,000 for the year the tuition rate

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applies, the CVSD board of education shall allocate the difference amongst the

tuition categories in proportion to the average daily enrollment for each category. If

the amount of the general fund budget for the prebudget year exceeds $100 million,

and the undesignated general fund balance is less than the sum of six percent of the

first $100 million and three percent of the amount which exceeds $100 million, the

CVSD board of education shall allocate the difference amongst the tuition

categories in proportion to the average daily enrollment for each category.

2. If the CVSD board of education's general fund budget for the prebudget year is

$100 million or less and the ending general fund free balance is equal to or greater

than the greater of $250,000 or six percent of its general fund budget for the year

the tuition rate applies, the CVSD board of education shall not add an amount to

the net cost of any tuition category. If the amount of the general fund budget for

the prebudget year exceeds $100 million, and the undesignated general fund

balance is in excess of the sum of six percent of the first $100 million and three

percent of the amount that exceeds $100 million, the CVSD board of education

shall not add an amount to the net cost of any tuition category.

(g) The CVSD board of education shall determine the tuition for each program category at

the same rate per student for each sending district board of education whether within or

outside the county pursuant to N.J.S.A. 18A:54-20.1.

(h) Calculation of tentative tuition rates, execution of written contractual agreements,

payment of tuition (including the nonresident fee), and adjustments to tentative tuition

charges upon certification of actual tuition rates by the Commissioner shall be made by

the CVSD board of education in accordance with N.J.A.C. 6A:23A-17.1(e) except that

the CVSD board of education shall base the tentative tuition rates on its estimated

adjusted net cost per student consistent with the calculation in (d) through (f) above.

(i) The CVSD board of education shall use the "actual cost per student" certification forms,

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contract forms, and tentative tuition rate forms as prepared and provided by the

Commissioner.

6A:23A-17.5 County special services school districts funding; budget limitations; tuition payments

(a) The board of education of any county special services school district may receive, but not

be limited to, the following revenue and fund sources:

1. Funds appropriated by the county, pursuant to N.J.S.A. 18A:46-41;

2. Tuition from the sending districts in which the pupils attending the county special

services school district reside for a sum not to exceed the actual cost per pupil as

determined for each special education program as follows:

i. Tuition rates shall be calculated separately for the following:

(1) Special education programs provided during the regular school year; and

(2) Special education programs provided for extended periods beyond

the regular school year (extended school year programs);

ii. Tuition may be determined and charged as follows:

(1) One tuition rate for the regular school year program; or one tuition

rate for each learning disability program category within the

regular school year program; and

(2) One tuition rate for the extended school year program, when

applicable; or one tuition rate for each learning disability program

category within the extended school year program, when applicable;

3. A nonresident fee, in addition to tuition for any pupils who are not residents of the

county, whenever funds have been appropriated by the county.

i. The fee shall not exceed the amount of the county's per pupil appropriation

to the special services school district, pursuant to N.J.S.A. 18A:46-31.

ii. The maximum fee per nonresident student shall be calculated by dividing

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the total county appropriation to the county special services school district

by the number of students who are residents of the county and are sent on

a tuition basis to the county special services school district by the public

school districts of the county in which the special services school district

is located; and

4. Reimbursement for extraordinary special education services provided to an

individual student from the student’s resident district. The cost of extraordinary

special education services shall not be included in the actual cost per pupil for

purposes of determining tuition rates for regular year or extended year programs.

(b) Tuition rates shall be at the same rate per pupil for each sending district whether within or

outside the county and consistent with the methodology as chosen in (a)2 above.

education of the county special services school district with respect to the annual budget

of the county special services school district.

(d) Tuition charged to the resident district shall be deducted from the resident district's State

aid and transferred directly to the county special services school district by the

Department of Education.

1. The transfers shall equal 1/20th of the tuition charged and shall occur on the same

schedule of State aid payments for resident districts.

2. Beginning in May of the preceding year, the county special services school

district shall report to the department and resident districts the current enrollments

and tuition rates by district. Enrollment changes reported at least 30 days in

advance of a scheduled transfer shall be honored.

(e) Unless specifically designated, county special services school districts shall not receive

State aid under the provisions of N.J.S.A. 18A:7F-43 et seq.

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6A:23A-17.6 Calculation of maximum general fund budget net of county contribution and

maximum average tuition rate

(a) Pursuant to N.J.S.A. 18A:46-31, the county special services school district general fund

budget, exclusive of any county contribution received pursuant to N.J.S.A. 18A:46-41,

shall not exceed the general fund budget, exclusive of any county contribution received

pursuant to N.J.S.A. 18A:46-41, in the prebudget year adjusted by the CPI or three

percent, whichever is greater, plus an enrollment factor.

1. The general fund budget, exclusive of any county contribution, in the prebudget

year shall be the sum of all originally budgeted general fund revenue and other

fund sources of the prebudget year, except the county contribution of the

prebudget year received pursuant to N.J.S.A. 18A:46-41, and shall include, but

not be limited to, the following:

i. Designated, unreserved general fund balance;

ii. Tuition from sending public school districts for the regular school year

programs;

iii. Tuition from sending public school districts for any extended school year

programs;

iv. Prior-year tuition adjustments received from sending public school districts;

v. Tuition for programs other than programs for students of sending public

school districts;

vi. Nonresident fees received pursuant to N.J.S.A. 18A:46-31;

vii. Reimbursements from sending public school districts for extraordinary

special education costs;

viii. Medicaid reimbursements; and

ix. All other revenue sources of the general fund, with the exception of the

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county contribution received pursuant to N.J.S.A. 18A:46-41.

2. The enrollment growth factor shall equal the percentage growth in estimated

average daily enrollment (ADE) between the prebudget year and the budget year.

(b) The maximum general fund budget net of county contribution shall establish the

maximum amount of tuition revenue receivable and the associated tuition rate a county

special services school district can charge to local public school districts for special

education programs for the regular school year.

1. The maximum tuition revenue for the regular school year special education

program shall be calculated by deducting from the maximum general fund budget

net of county contribution calculated pursuant to this section, all budget year

revenue sources and other funding sources of the general fund as delineated in

this subsection, except for the county contribution and estimated tuition for the

regular school year special education program.

2. The maximum average tuition rate per pupil for the regular school year special

education program shall be calculated by dividing the maximum tuition revenue

for the regular school year program calculated in (b)1 above by the estimated

ADE for the budget year.

tuition rate pursuant to the provisions of N.J.S.A. 18A:46-31 shall not exceed the lesser

of the amount needed to maintain a 10 percent undesignated general fund balance or the

amount that may be added to the tuition rate without exceeding the maximum general

fund budget net of county contribution.

6A:23A-17.7 Method of determining tuition rates for county special services schools

(a) The term "actual cost per student" for determining the tuition rate or rates for a given year

referred to in N.J.S.A. 18A:46-31 means the adjusted net cost per student in average daily

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enrollment for special education classes, based upon audited expenditures for that year.

1. The county special services school district board of education shall include all

expenditures for each purpose, except Federal and State grant project expenditures.

2. "Average daily enrollment" for the purpose of determining the "actual cost per

student" is the sum of the days present and absent of all students enrolled during the

year in the register or registers of the program for which the rate is being

determined divided by the number of days school was actually in session, but in no

event shall the divisor for the regular school year program be less than 180 days.

(b) Each county special services school district board of education shall obtain from the

Commissioner certification of the "actual cost per student" for a given year either for the

county special services school district as a whole or for each special education program

by learning disability category based on the following:

1. Revenues, expenditures, and fund balances reflected in the county special services

school district’s annual independent audit;

2. Average daily enrollment data by category submitted by the county special

services school district on a form prescribed by the Commissioner.

shall be sufficient to enable the county special services school district to cover the net

cost of said program subject to the statutory maximum general fund budget net of county

contribution and statutory limitations on undesignated, unreserved general fund balance.

(d) The tuition rate per pupil for the regular school year special education program for

sending public school districts shall be based on the net cost calculated by reducing the

amount of general fund expenditures by the following:

1. All revenue sources other than tuition (such as the county contribution,

nonresident fees, Medicaid reimbursements, and miscellaneous revenue) available

to fund the regular school year special education program for sending public

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school districts;

2. All direct and indirect expenditures that are not associated with the regular school

year special education program for sending public school districts;

3. All expenditures associated with the special education program for sending public

school districts but that are funded through sources other than the regular school

year tuition rate such as extraordinary special education costs, which are

separately reimbursed for individual students, and the extended school year

special education program for which an additional tuition fee is charged; and

4. Refunds of prior-year tuition adjustments made to sending public school districts.

(e) The Commissioner shall develop and disseminate workpapers for the purpose of

allocating revenue, other fund sources, and expenditures amongst the various programs

and services within the general fund.

1. With the exception of the regular school year special education program, the actual

programs and/or services will vary by individual county special services school district.

2. The purpose of this allocation shall be to isolate the revenue, other fund sources,

and expenditures related to the tuition for the regular school year special

education program by segregating programs and services that are not related to

the regular school year special education program, or are related but funded

through sources other than regular school year special education tuition.

3. Expenditures shall be allocated on a direct and indirect basis amongst the various

general fund programs and services when funded through sources other than

tuition, such as extraordinary special education services.

i. Direct instructional expenditures for salaries and related benefits,

textbooks, teaching supplies, purchased services, equipment, and other

expenses for each program or learning disability program category shall be

allocated on an actual basis.

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ii. When allocating indirect expenditures amongst major programs, such as

regular school year special education, extended school year special

education and other programs, indirect expenditures, except expenditures for

Teachers' Pension and Annuity Fund (TPAF) pension and social security,

shall be allocated amongst the various programs based on the percent of

direct expenditures in each program to the total of all direct expenditures

since there is no common ADE equivalent among the programs.

iii. Services provided as part of a program, such as extraordinary special

education services, shall not bear part of the indirect expenditures but shall

include only direct instruction and support services expenditures.

iv. When allocating indirect expenditures amongst the learning disability

program categories of the regular school year or amongst the learning

disability program categories of the extended school year, indirect

expenditures, except expenditures for Teachers' Pension and Annuity Fund

(TPAF) pension and social security, shall be allocated amongst all learning

disability program categories in proportion to the average daily enrollment.

(f) Pursuant to N.J.S.A. 18A:46-31, an undesignated general fund balance of 10 percent of the

general fund budget exclusive of tuition adjustments of prior years may be maintained.

1. When estimating the tuition rate for the budget year, the estimated ending undesignated

general fund balance of the budget year for this purpose shall be the estimated

beginning fund balance of the budget year less any prior-year tuition adjustment

refunds to be made to sending public school districts during the budget year.

2. When certifying actual final tuition rates, the actual audited ending undesignated

general fund balance shall be used.

3. Undesignated general fund balance in excess of 10 percent of the general fund

budget exclusive of tuition adjustments of prior years shall be deducted from

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adjusted expenditures calculated pursuant to (d) above for purposes of calculating

the regular school year special education program tuition rate.

4. When undesignated general fund balance is under 10 percent of the general fund

budget exclusive of tuition adjustments of prior years, an amount may be added to

adjusted expenditures calculated pursuant to (d) above for purposes of calculating

the regular school year special education program tuition rate subject to the

maximum general fund budget net of county contribution calculated pursuant to

the provisions of N.J.A.C. 6A:23A-17.6(a)2.

(g) Calculation of tentative tuition rates, execution of written contractual agreements, payment of

tuition (including the nonresident fee), and adjustments to tentative tuition charges upon

certification of actual tuition rates by the Commissioner shall be made by the county special

services school district board of education in accordance with N.J.A.C. 6A:23A-17.1(e)

except that the county special services school district board of education shall base the

tentative tuition rates on the county special services school district board of education's

estimated adjusted net cost per student consistent with the calculation in (c) through (f)

above. The tentative tuition rate and actual cost per student for a given fiscal year shall be

calculated in the same manner chosen pursuant to (b) above.

(h) The county special services district board of education shall use the "actual cost per

student" certification forms, contract forms, and tentative tuition rate forms as prepared

and provided by the Commissioner.

(i) A new county special services school district board of education shall use the method of

determining tentative tuition rates contained in N.J.A.C. 6A:23A-17.2.

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Subchapter 18. Tuition for Private Schools for Students with Disabilities

6A:23A-18.1 Scope and purpose

The rules in this subchapter establish requirements for accounting, financial reporting, and

tuition rate setting by approved private schools for students with disabilities. The rules also set

forth processes and procedures, including, but not limited to, new school applications, non-

allowable costs, and audit requirements. The rules in this subchapter shall become effective

immediately, unless otherwise indicated.

6A:23A-18.2 Definitions

The following words and terms, when used in this subchapter, have the following meanings,

unless the context clearly indicates otherwise:

"Administrative costs" means the costs defined as administrative costs as prescribed by the

Commissioner in the chart of accounts required in accordance with N.J.A.C. 6A:23A-18.5(a)7.

"Advertising costs" means the costs associated with promoting, marketing, or public relations for

the APSSD’s programs and/or services, as prescribed by the Commissioner in the chart of

accounts required in accordance with N.J.A.C. 6A:23A-18.5(a)7.

“Approved private school for students with disabilities” or “APSSD” means an entity approved

by the Department according to N.J.A.C. 6A:14-7.1 through 7.3 to provide special education and

related services to a student with disabilities placed in the APSSD by a parent/guardian, sending

district board of education, or State agency responsible for providing the student’s education

through implementation of his or her individualized education program (IEP).

“APSSD official” means a member of the board of directors or board of trustees of an APSSD;

anyone holding an ownership interest in the APSSD; an officer, employee, administrator, or

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supervisor of an APSSD; or anyone responsible for making recommendations regarding hiring or

the purchase or acquisition of any property or service(s) by the APSSD.

“Assistant director” shall mean the same as “director.”

"Average daily enrollment (ADE)" means the sum of the days present and absent of all school

students enrolled in the APSSD register(s) divided by the number of days the APSSD was

actually in session for the entire school year rounded to the nearest four decimal places, except in

no event shall the divisor be less than 180 days.

"Bonus" means payment to an employee that meets any of the following:

1. Is not part of the employee's executed contracted salary;

2. Is not part of the employee's base salary in the subsequent school year;

3. Is arbitrary and not based on any specific criteria or qualifications; or

4. Is paid solely at the discretion of management.

"Business manager" means an individual whose job function includes a majority of the following:

financial budget planning and administration, insurance/risk administration, purchasing, financial

accounting and reporting, facility planning, construction and maintenance; personnel

administration; administration of transportation and food services; and data processing. Prior to

June 30, 2017, the holder of this job title shall hold a bachelor's degree in business, accounting,

finance, or economics from an accredited institution or a standard school business administrator's

certificate but shall not be required to hold a school certification. Effective July 1, 2017, all

business managers, except those employed by the APSSD as a business manager or otherwise

serving as business manager with the APSSD prior to July 1, 2017, shall hold a master’s degree in

business, accounting, finance, economics, or a related field from an accredited institution; a

standard school business administrator's certificate issued pursuant to N.J.A.C. 6A:9B-12.7, as

amended or supplemented; or a certified public accountant certificate.

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"Certified actual cost per student" means the actual allowable cost for the entire school year plus

the applicable maximum surcharge/public school placement restricted working capital fund

divided by ADE for the school year as determined by an independent school auditor.

"Compensation increases" means any additional payment made to an employee after the start of

the fiscal year that would appear on the employee's W-2 and/or should result in a Form 1099

being issued to the employee.

"Conditional approval status" means the APSSD is precluded from accepting and/or enrolling

new students from the date the Department placed the APSSD on conditional approval status.

"Contingent pay increase" means a staff salary increase of either a certain dollar amount or

percentage of contracted salary that is paid to all staff if the APSSD attains the predetermined ADE

for the school year that was filed with and approved by the Commissioner, or his or her designee.

“Director” means an individual whose job function includes a majority of the following:

formulation of school goals, plans, policies, and budgets and recommendation of their approval to

the school's board of directors; recommendations to the school's board of directors for all staff

appointments and other personnel actions, such as terminations, suspensions, and compensation,

including the appointment of the business manager; responsibility for school operations and

programs, including administration, supervision, and evaluation of administrators, supervisors, and

all other school staff. Prior to June 30, 2017, all individuals employed by the APSSD as director,

or serving as director of an APSSD, shall hold a bachelor’s degree from an accredited institution,

but shall not be required to hold a professional school license/certification pursuant to N.J.A.C.

6A:9B. After July 1, 2017, all directors, except those employed as, or otherwise serving as

director for the APSSD prior to July 1, 2017, shall hold a master’s degree from an accredited

institution, but shall not be required to hold a certification pursuant to N.J.A.C. 6A:9B.

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"Entertainment expenses" means the cost of providing any type of food/beverage to APSSD

officers, APSSD directors/trustees, consultants, and/or individuals providing services to the

APSSD at any time or to APSSD employees after school hours.

"Executive director" means the same as the “Director.”

"Extraordinary service" means the services of a one-to-one aide, or one-to-one nurse, for a

student as required by the student’s individualized education program (IEP).

"Final tuition rate" means an amount equal to or less than the certified actual cost per student

calculated in accordance with N.J.A.C. 6A:23A-18.3(a).

“Full time” for the purposes of the maximum salaries in N.J.A.C. 6A:23A-18.3(o), (p), and (q),

and full-time equivalent means 35 hours or more per week over the term outlined in the

employment contract pursuant to N.J.A.C. 6A:23A-18.5(c).

“Full-time equivalent” or “FTE” means the ratio of the total number of paid hours during a

period divided by the number of full-time working hours in that period; one FTE is equivalent to

one employee working full time.

“Independent school auditor” means an independent registered municipal accountant of New

Jersey or an independent certified public accountant of New Jersey who holds a valid registration

license as a public school accountant of New Jersey and conducts an APSSD’s annual audit in

accordance with N.J.A.C. 6A:23A-18.10.

"Instructional costs" means those costs defined as instructional costs as prescribed by the

Commissioner in the chart of accounts required in accordance with N.J.A.C. 6A:23A-18.5(a)7.

"Internal Revenue Code" or “IRC” means any Federal tax code section indicated in this

subchapter and as amended and supplemented.

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"Keyman life insurance" means insurance on staff members for which the school is the

beneficiary of the life insurance policy.

“Meals” means the provision of breakfast and/or lunch to students.

"Merit pay increase" means a staff salary increase of either a certain dollar amount or percentage

of contracted salary that is based on specific performance criteria previously submitted to and

approved by the Commissioner or his or her designee.

"New approved private school for students with disabilities" or “new APSSD” means an APSSD

during the initial two fiscal years of operation.

“Passenger vehicle” means a vehicle originally designed by the manufacturer with a seating

capacity of 10 or fewer persons, including the driver.

"Private placement student" means a student placed in an APSSD by an entity or parent/guardian

other than a New Jersey sending district board of education, charter school or renaissance school

board of trustees, or a New Jersey State agency.

"Public school placement restricted working capital fund" means a nonprofit APSSD’s total

public school restricted assets less the total public school restricted liabilities.

"Public school placement student" means a student placed in an APSSD by a New Jersey

sending district board of education, board of trustees of a charter or renaissance school, or a New

Jersey State agency.

"Related services" means the type of services defined in N.J.A.C. 6A:14-1.3.

"School year" means the time period an APSSD is in session either from July through June,

August through June, or September through June.

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“Sending district board of education” or “sending school district” means the New Jersey public

school district, charter school, renaissance school, or State agency sending a student to an APSSD.

"Severance pay" means compensation in addition to regular salaries and wages that is paid by an

APSSD to an employee whose employment is being terminated by separation agreement or otherwise.

"Start-up costs" means costs such as, but not limited to, legal fees, filing fees, furniture, fixtures,

equipment, and facility costs incurred by an APSSD for the nine-month period prior to receiving

Department approval to operate as an APSSD. A salary is not an allowable start-up cost.

"Surcharge" means the amount of profit that for-profit APSSDs may include in the certified

actual cost per student.

"Tentative tuition rate" means the original budgeted tuition rate charged to a sending district

board of education or board of trustees for a charter or renaissance school for the school year.

6A:23A-18.3 Tuition rate procedures

(a) The board of directors of an APSSD located in New Jersey shall determine the final

tuition rate charged to be an amount less than or equal to the certified actual cost per

student as determined by an independent school auditor. The board of directors shall

identify the certified actual cost per student and final tuition rate charged in the audited

financial statements submitted to the Department pursuant to N.J.A.C. 6A:23A-18.10.

1. When determining the actual allowable costs for the program, the board of

directors shall ensure the costs are:

i. Based on all costs required for student instruction from July 1 through June 30;

ii. Consistent with the students' individualized education programs (IEP);

iii. Inclusive of all costs required to implement all students' IEPs and all

related services, except as set forth in (a)5 below;

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iv. Reasonable, that is, ordinary and necessary and not in excess of the cost

that would be incurred by an ordinarily prudent person in the

administration of public funds; and

v. Based on goods actually received and placed in service and/or services

rendered in the fiscal year expensed.

2. If any of the APSSD’s quarterly financial reports, completed pursuant to N.J.A.C.

6A:23A-18.5(a)11, demonstrates the year-to-date per diem rate exceeds the

tentative tuition rate for the year by more than 10 percent, the APSSD shall notify

each sending district board of education and the Commissioner, or his or her

designee, that such an increase will be charged and the reason for the increase on

or before the following dates: December 15 for the first quarter, March 15 for the

second quarter, June 15 for the third quarter, and September 15 for the fourth

quarter, or the next business day when applicable. The determination of a final

tuition rate in excess of 10 percent above the tentative tuition rate charged shall be

based on the completion of the required quarterly financial report in accordance

with N.J.A.C. 6A:23A-18.5(a)11.

i. If the sending district board of education and the Commissioner, or his or

her designee, are not notified on or before the dates noted in (a)2 above,

the APSSD may charge an increase that shall not exceed 10 percent of the

tentative tuition rate charged.

ii. The notification required in (a)2i above shall contain a detailed statement

outlining changing costs and/or enrollment, the reasons for the changes,

including management’s response to same, and the reason(s) the changes

are not offset by decreases in costs. If the notification does not include

this statement, the Commissioner, or his or her designee, may prohibit an

APSSD from charging an increase above 10 percent.

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3. Costs for the program shall include instructional costs and administrative costs, as

defined in the chart of accounts, as follows:

i. For the 2016-2017 school year, minimum instructional costs of 55 percent

and maximum administrative costs of 25 percent;

ii. For the 2017-2018 school year, minimum instructional costs of 55.5

percent and maximum administrative costs of 24.5 percent;

iii. For the 2018-2019 school year, minimum instructional costs of 56 percent

and maximum administrative costs of 24 percent;

iv. For the 2019-2020 school year, minimum instructional costs of 56.5

percent and maximum administrative costs of 23.5 percent;

v. For the 2020-2021 school year, minimum instructional costs of 57 percent

and maximum administrative costs of 23 percent; and

vi. For the 2021-2022 school year and thereafter, minimum instructional costs

of 57.5 percent and maximum administrative costs of 22.5 percent.

4. Unless otherwise determined pursuant to (b) below, the APSSD shall charge one

tentative tuition rate as published by the Department, charge one final tuition rate

determined by the APSSD, and calculate one certified actual cost per student for the

school year that must be approved by the Commissioner, or his or her designee.

i. An APSSD shall report all tuition rates on a per diem and school-year

basis, calculated as the number of enrolled days in the school year

multiplied by the per diem rate.

ii. An APSSD that operates both a 10-month and an extended school year

shall report tuition rates for both the July/August through June and

September through June school years.

5. Except for extraordinary services, an APSSD shall provide required related

services in the scope of services rendered pursuant to the tuition contract and may

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not bill the sending district board of education separately for related services that

are required by a student's initial or any subsequent IEP with limited exception. If

the related service required by an IEP is beyond what is typically provided during

the school day, or the nature of the related services requires that it be provided

beyond the school day/operating hours, the APSSD may address the costs and

provision of such related services through a separate agreement with the sending

district. However, if such related services beyond that typically provided during

the school day or beyond the school day/operating hours are not in the scope of

services rendered under the tuition contract, nothing in this section shall prevent a

sending district board of education from providing those services itself or

separately contracting for those services with an approved service provider other

than the APSSD.

6. For programs in operation less than the minimum of 180 days of instruction

(September 1 through June 30) the APSSD shall calculate total costs minus 1/180

for each day less than the 180-day requirement to determine actual allowable costs.

7. The ADE for students enrolled in an APSSD for a time period other than a full or

half day shall be based on the total number of hours actually enrolled during the

school year divided by the total possible number of hours in the school year.

8. For fiscal reporting purposes, an extended school year program means a program

in which activities commence on or after July 1 and end on or before August 31 of

the same year. For program activities that begin prior to July 1, an APSSD shall

report all costs and revenues in the prior fiscal year.

(b) An APSSD may charge one tuition rate per school location for the school year. Prior to

June 30, 2017, the Commissioner, or his or her designee, may approve APSSDs to charge

separate tuition rates by class type and by school location for the school year. APSSDs

that have not received written approval to charge separate tuition rates by class type and

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by school location prior to July 1, 2017, shall not be permitted to do so for the school

year beginning July 1, 2017, and thereafter. APSSDs that are approved prior to June 30,

2017, to charge by class type shall:

1. Maintain bookkeeping and accounting records by class type and school location

for the school year;

2. Charge a separate tuition rate for each class type served;

3. Prepare, in the Department-prescribed format, the audited costs by class type for the

first two years that tuition is charged by class type, which will allow the Commissioner

to determine the tentative tuition rates in accordance with (i) below; and

4. Determine, on a pro rata basis and when it is not possible to charge the actual

amount expended, the individual share of a particular allowable cost item for a

class type, in accordance with the following ratios or an alternative method

approved by the Commissioner:

i. Ratio of ADE in each class type to the total ADE;

ii. Ratio of square feet of floor space in each class type to the total square

feet of floor space used; or

iii. Direct costs.

to N.J.A.C. 6A:23A-18.5(a)8, all direct costs that can be specifically attributed to a

program and/or revenue source.

(d) For indirect costs that are incurred for a common or joint purpose, but are not readily

assignable to an APSSD and/or its program and/or a revenue source, an APSSD may

establish indirect cost pools as appropriate for allocation to the APSSD at the end of the

fiscal year as follows:

1. The expenditures included in the indirect cost pool shall be related to the

APSSD’s function(s), operation(s), and/or program(s); and

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2. Salary expenditures and associated fringe benefits included in an indirect cost pool

shall be for individuals who are assigned, pursuant to a contract and/or job description,

to perform work related to the APSSD’s function(s), operation(s), and program(s).

(e) An entity that operates only as an APSSD and operates one or more tuition programs at

one or more locations shall charge costs as follows:

1. Direct costs for each program as determined pursuant to (c) above; and

2. Indirect costs, as defined in (d) above, are calculated in accordance with any of

the following:

i. An equitable allocation plan approved in writing by the Commissioner, or

his or her designee;

ii. Ratio of direct costs for each program determined pursuant to (c) above to

total direct costs; or

iii. Ratio of ADE for each program to total ADE.

(f) An entity that operates other programs in addition to an APSSD program(s) at one or

more locations shall charge their costs as follows:

1. Direct costs for each program as determined pursuant to (c) above;

2. Indirect cost centers established as follows:

i. A cost center that shall include indirect costs that are allowable costs in

accordance with this subchapter; and

ii. A cost center that shall include indirect non-allowable costs in accordance

with this subchapter.

3. Allowable indirect costs, charged pursuant to (f)2i above, may be included on a

consistent basis in the respective actual cost per student in accordance with:

i. An equitable allocation plan approved by the Commissioner, or his or her

designee;

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ii. Ratio of direct costs for each program determined pursuant to (c) above to

total direct costs; or

iii. Ratio of ADE for each APSSD to total ADE.

(g) Whenever a facility used by an APSSD is also used for unrelated activities and/or

enterprises by related or unrelated parties, all direct and indirect costs associated with the

facility and operations shall be charged according to the ratio of the square footage of the

portion of the facility used for activities associated with the APSSD program(s),

operation(s), and/or function(s) to the square footage of the total facility. Indirect costs

for using the APSSD’s facilities in any other manner shall not be included in the certified

actual cost per student.

1. If any facility or portion thereof as set forth in (g) above are jointly used by the

APSSD for the APSSD program(s), operation(s), and/or function(s), and for unrelated

activities and/or enterprises by related or unrelated parties, the direct and indirect

costs associated with the facility and operations shall be charged according to the

ratio of the time used for activities associated with the APSSD program(s),

operation(s), and/or function(s) to the total time the facility is used for any purpose.

(h) A tentative tuition rate, calculated in accordance with (i) and (j) below, shall be established

by written contractual agreement between the APSSD and the sending district board of

education. The tentative tuition rate charged shall not exceed the maximum tentative tuition

rate, calculated in accordance with (i) and (j) below, for the ensuing school year, and shall

not be changed during the school year regardless of the APSSD’s financial or other

circumstances. The written contract shall be on the mandated tuition contract form

prescribed by the Commissioner and shall be executed prior to a student’s enrollment.

1. The contractual agreement shall require the sending district board of education to

pay a tentative tuition charge based upon a per diem rate for the total number of

days the student is enrolled during the month, for each month the student is

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enrolled. The per diem rate is determined by dividing the tentative tuition rate for

the school year by the estimated number of days school will be in session, but not

less than 180 days, and rounding to the nearest two decimal places.

2. If applicable, the contractual agreement shall require the sending district board of

education to pay the APSSD the tentative tuition charge for extraordinary services.

3. The contractual agreement shall require the sending district board of education to

pay the APSSD the tentative tuition charge based on one of the following options

as determined by the APSSD. The APSSD shall use the same option for all

students enrolled in the APSSD:

i. Option 1: A sending district board of education shall pay the APSSD no

later than the first day of each month prior to the services being rendered.

(1) For a student already enrolled in the APSSD, the sending district

board of education shall pay the tentative tuition charge by the first

day of the second month after services begin. A sending district

board of education that fails to pay tuition by the 30

day after

services begin may be charged interest by the APSSD calculated at

the rate of one percent per month on the unpaid balance.

(2) For a student enrolled after the first day of the month, the sending

district board of education shall pay the tentative tuition charge for

the first two months of enrollment no later than 60 days after the first

day services begin. Payment in subsequent months is due by the first

of each month prior to the services being rendered. A sending district

board of education that fails to pay tuition by the 30th day after

services begin may be charged interest by the APSSD calculated at

the rate of one percent per month on the unpaid balance.

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ii. Option 2: A sending district board of education shall pay the APSSD no

later than 60 days after the last day of each month in which services were

rendered. A sending district board of education that fails to pay tuition by

the 60th day after the last day of a month in which services were rendered

may be charged interest by the APSSD calculated at the rate of one

percent per month on the unpaid balance.

(i) The Commissioner, or his or her designee, will issue notification of the maximum

tentative tuition rate for each APSSD no later than January 1 for the ensuing school year,

calculated as follows:

1. The maximum tentative tuition rate per student shall equal the product of the

audited actual cost per student for the school year prior to the current school year

inflated by twice the tax levy growth limitation of two percent and any applicable

change to this percentage identified in N.J.S.A. 18A:7F-38, or the consumer price

index (CPI) as defined in N.J.S.A. 18A:7F-45, whichever is greater.

2. The maximum tentative tuition rate shall include:

i. For profit-making schools, the annual surcharge permitted in accordance

with N.J.A.C. 6A:23A-18.7; and

ii. For nonprofit schools, a public school placement restricted working capital

fund in accordance with N.J.A.C. 6A:23A-18.8.

(j) The Commissioner, or his or her designee, may approve a higher tentative tuition rate for

any year in which the APSSD can demonstrate, to the Commissioner’s or designee’s

satisfaction, that the maximum tentative tuition rate for the ensuing fiscal year is

inadequate and would cause an undue financial hardship on the APSSD.

1. In the event of such hardship claim, the APSSD shall submit its request for a

higher tentative tuition rate for the entire school year to the Commissioner, or his

or her designee, no later than January 31 preceding the beginning of the ensuing

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school year. The APSSD shall submit the request with appropriate documentation,

which shall include, but may not be limited to, the following information:

i. A budget reflecting projected costs, working capital fund or surcharge,

estimated enrollment and the requested tuition rate based on this information;

ii. A detailed narrative prepared by the APSSD’s administration and/or

management demonstrating the need for increases in excess of increases

already provided in the tentative tuition rate calculation; and

iii. A properly completed interim financial report in the format prescribed by

the Commissioner, or his or her designee, for the six months of operations

ending December 31 immediately preceding the school year.

(k) Following a satisfactory compliance review of an independent auditor’s certified actual

cost per student, the Commissioner will issue an approval that the final tuition rates

charged are based on the certified actual cost per student pursuant to (a) above.

(l) If the Commissioner, or his or her designee, determines the tentative tuition rate for the

school year established pursuant to (i) and (j) above is greater than the final tuition rate

charged for the school year, the APSSD shall pay or credit the difference to subsequent

tuition bills for each sending district board of education no later than June 30 of the

school year in which the final tuition rate charged is approved by the Commissioner, or

his or her designee, or not more than 30 days after an appeal on a certified amount is

resolved. The same final tuition rate charged shall be charged to each sending district

board of education.

(m) If the tentative tuition rate for the school year established by written contractual

agreement pursuant to (h) above is less than the final tuition rate charged for the school

year, the APSSD may charge each sending district board of education all or part of the

difference owed, but the same final tuition rate shall be charged to each sending district

board of education. The sending district board of education shall pay the difference on a

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mutually agreed upon date during the second school year following the year for which the

actual certified cost per student is approved by the Commissioner, or his or her designee.

(n) The APSSD shall prepare the contract and the form to establish the tentative tuition rate

for the ensuing school year, and if applicable, the tentative tuition rate for extraordinary

services on Commissioner-prepared forms.

(o) An APSSD shall reference as guidance the Commissioner-published list of maximum

allowable salaries by job title and county, according to the job titles contained in N.J.A.C.

6A:9B relevant to APSSDs. Except for administrative job titles referenced in (p) below,

maximum allowable salaries are based on the highest contracted salaries (not including

payment of unused sick and vacation days and severance pay) of certified staff by job

title in a district board of education for any prior year, indexed by the average increase in

salary between the two preceding school years for each job title. The salaries are based on

a 12-month contract period from July 1 through June 30 and the maximum allowable

salary of an APSSD staff member shall be prorated for staff employed for less than 12

months. Under no circumstances shall the maximum allowable salary calculated be less

than the corresponding salary in the prior year for the same job title and county.

Unrecognized job titles shall be correlated to similar job titles in public schools based on

their functional activities. The maximum allowable salary of a staff member holding a

part-time or split-time position shall be prorated including the salary of staff employed in

entities defined in (e) and (f) above.

1. Effective July 1, 2017, through June 30, 2024, maximum allowable salaries

pursuant to (o) above shall be published at the rates contained in the maximum

allowable salary list published for the 2016-2017 school year, with the following

exceptions:

i. Beginning July 1, 2017, the maximum published salaries for the job titles of

occupational therapist, physical therapist, and speech and language specialist

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shall increase annually from the 2016-2017 published list of maximum

allowable salaries by CPI determined consistent with N.J.S.A. 18A:7F-45;

ii. Beginning July 1, 2017, the Commissioner, or his or her designee, shall

publish a maximum allowable salaries list that contains the total maximum

hourly rate for occupational therapists, physical therapists, and speech and

language specialists contracted by APSSDs as purchased service providers

or independent contractors. The published total hourly rates shall include

an allowance of 35 percent more than the maximum allowable salary rate

calculated and published pursuant to (o)1i above for the same job titles.

The total maximum hourly rates shall be applicable only to contracted

service providers.

iii. Beginning July 1, 2017, an APSSD may contract with an approved clinic and

agency pursuant to N.J.A.C. 6A:14-5.1(c) and 5.2 and may pay the approved

clinic or agency for the contracted services at a rate above the maximum

allowable salary published rate detailed in (o) above, so long as the APSSD:

(1) Acquires quotes for the contracted services from at least three approved

clinics or agencies prior to contracting with an approved clinic or

agency. If any of the three approved clinics or agencies are a related

party, the APSSD shall contract with the lowest of the three quotes; and

(2) Provides documentation of the three quotes required by (o)1iii(1)

above to the Department upon request.

2. Subparagraphs (o)1i and ii above shall sunset on June 30, 2024, and the

Commissioner, or his or her designee, shall resume use and publication of a list of

maximum allowable salaries calculated pursuant to (o) above.

3. Beginning with the 2021-2022 fiscal year, the Department shall initiate a study

examining the maximum allowable salary structure. In conducting the study, the

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Department may seek and/or include input from an APSSD representative(s). The

study shall include a data-driven review of maximum salaries and

recommendations, if any, for changes to the maximum allowable salary

calculation formula contained in (o) above and (p) below.

(p) An APSSD shall reference as guidance the Commissioner-published list of maximum

allowable salaries by administrative and job titles and county according to the job titles

contained in N.J.A.C. 6A:9B and 6A:23A-18.2 relevant to APSSDs. Maximum allowable

salaries are based on the highest contracted salary (not including payment of unused sick

and vacation days and severance pay) by administrative job title for the entire State in a

district board of education, special services district board of education, and educational

services commission with comparable average daily enrollments for any prior year,

indexed by the average increase in salary between the two preceding school years for

each job title. The salaries are based on a 12-month contract period from July 1 through

June 30 and the maximum allowable salary of the APSSD staff member shall be prorated

for staff employed for less than 12 months. Each district board of education, special

services district board of education, and educational services commission with an ADE

equal to or less than the highest APSSD ADE will be considered comparable. Under no

circumstances shall the maximum allowable salary calculated be less than the

corresponding salary in the prior year for the same job title. The maximum allowable

salary of a staff member holding a part-time or split-time position shall be prorated

including the salary of staff employed in entities defined in (e) and (f) above.

1. Effective July 1, 2017, through June 30, 2024, maximum allowable salaries

established pursuant to (p) above shall be published at the rates contained in the

maximum allowable salary list published for the 2016-2017 school year;

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2. Paragraph (p)1 above shall sunset on July 1, 2024, and the Commissioner, or his

or her designee, shall resume use and publication of a list of maximum allowable

salaries calculated pursuant to (p) above.

(q) An APSSD shall use the recognized position title list published annually by the

Commissioner, or his or her designee, to employ staff whose position requires

certification in accordance with N.J.A.C. 6A:9B or a bachelor's or master’s degree,

pursuant to N.J.A.C. 6A:23A-18.2. An APSSD shall hire only staff or consultants in job

titles that require certification or a bachelor's or master’s degree if the titles are included

on the recognized job titles list, or if such titles are unrecognized job titles that are

approved annually by an executive county superintendent in accordance with N.J.A.C.

6A:9B-5.5. The APSSD may use unrecognized administrative job titles, but maximum

salaries for the titles are restricted in accordance with N.J.A.C. 6A:23A-18.6(a)9. The

maximum salaries of APSSD-hired staff in administrative or support job titles, such as,

but not limited to, chief executive officer or chief financial officer, shall be limited to the

maximum salary of a director in accordance with (p) above.

(r) For non-administrative individual employees, the Commissioner, or his or her designee,

may approve a salary higher than the maximum allowable salary identified in (o), (p), or

(q) above. Approval may be given for no more than two APSSD employees in any fiscal

year in which the APSSD demonstrates, to the Commissioner’s or his or her designee’s

satisfaction, the maximum allowable salary is inadequate and would cause a hardship to

the APSSD. The hardship exception will be granted in limited circumstances and only if

the Commissioner, or his or her designee, determines the APSSD has demonstrated an

exception is warranted based upon the following:

1. The APSSD shall submit an application to the Commissioner, or his or her

designee, postmarked or electronically transmitted no later than the May 1

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preceding the applicable school year. The APSSD shall submit the application with

appropriate documentation that shall include, but not be limited to, the following:

i. Detailed information on the staff member for whom the increase is sought,

including, but not limited to, job title and related description, experience

and credentials, hire date, previous salary information and new salary

sought, accomplishments/achievements of note, and publications or the

like. If applicable, the APSSD shall include the same detailed information

for all staff employed under the same job title;

ii. A detailed budget demonstrating the impact the increased salary would have

on the projected total expenditures, ADE, and budgeted tuition rate, if any;

iii. Detailed explanation of the need for a salary above the maximum

allowable rate; and

iv. An outline of the educational impact of the employee.

2. The Commissioner, or his or her designee, shall review the application and

respond in writing to the APSSD by June 30 of the school year preceding the

applicable school year; and

3. Applications solely based on the length of service of the employee or familiarity

with the school will not be granted.

(s) For students who are transitioning back to a program of the sending district board of

education, or to a third-party location, for a portion of the enrolled school day and who

require the services of an APSSD staff person, the ADE for tuition-rate purposes shall be

computed as follows:

1. Regardless of the time period the student is enrolled in a program outside the

APSSD, the student shall be considered a full-time APSSD student, the student's

ADE shall be considered as 1.0, and the sending district board of education shall

pay the full-time tuition rate.

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2. The sending district board of education shall pay all costs associated with the

transition service if it involves a third party.

(t) For students who are transitioning back to a program of the sending district board of

education, or to a third-party location, for a portion of the enrolled school day, the

APSSD shall compute the tuition rate as follows:

1. The APSSD shall calculate the student's ADE based on the number of hours

enrolled in the APSSD’s program relative to the total number of possible hours of

the APSSD’s program.

2. The sending district board of education shall pay all costs associated with the

transition service if it involves a third party.

(u) For tuition-rate purposes for a private placement student, the APSSD shall charge not less

than the audited cost per student or shall finance by other means the costs that exceed the

tuition rate charged.

6A:23A-18.4 New approved private schools for students with disabilities

(a) A prospective applicant shall file with the Office of Special Education Programs (OSEP)

an application to establish an APSSD and shall obtain the Commissioner’s, or his or her

designee’s, approval of the application prior to operating an APSSD.

1. A current APSSD that is adding additional classrooms to an existing approved

educational program at a new location, or opening a new program, is considered a

new APSSD subject to (a) above. For the purpose of this paragraph, a new

location may include, but shall not be limited to, a new building.

2. A current APSSD that is adding additional classrooms to an existing approved

educational program, or adding a new class type(s), either of which will be

housed in another building at the current location, shall not be considered a new

APSSD and shall charge as a tentative tuition rate the tuition currently charged.

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(b) An applicant applying for approval as a new APSSD shall provide to the Department

evidence of sufficient need for the new private school as follows:

1. The applicant shall file with the OSEP an application to establish an APSSD and

shall document there is a need and the new APSSD would likely serve a minimum

of 24 public school placement students.

1. The applicant school shall receive preliminary approval to operate for a two-year period,

after which the applicant school shall provide documentation that it has a minimum

ADE of 24 public school placement students by the end of the second school year;

i. An applicant school meeting the minimum ADE of 24 public school

placement students by the end of the second school year shall receive new

APSSD approval if it meets all other Department requirements;

ii. An applicant school not meeting the minimum ADE of 24 public school

placement students by the end of the second school year shall have its

preliminary approval status revoked and shall no longer be considered an

APSSD;

iii. Any APSSD approved prior to the 2004-2005 fiscal year that falls below

the previous minimum ADE of 16 public school placement students in a

school year shall have its status as an APSSD rescinded and shall be

considered preliminarily approved. The school shall attain a minimum

ADE of 16 public school placement students by the end of the third school

year after the year in question or its approval shall be rescinded and it shall

no longer be considered an APSSD;

iv. Any APSSD approved to operate during the 2004-2005 fiscal year, or

thereafter, that falls below an ADE of 24 public school placement students

in a subsequent school year shall be considered preliminarily approved. The

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school shall attain a minimum ADE of 24 public school placement students

by the end of the third school year after the year in question or its approval

shall be rescinded and it shall no longer be considered an APSSD;

v. APSSDs operating in and affiliated with a public school district are

exempt from (b)1 and (c)1i, ii, iii, and iv above; and

vi. An APSSD operating in and affiliated with a public school district shall be

restricted to operate only in the public school district location. An APSSD

operating in and affiliated with a public school district that chooses to

move to a location other than the public school district location shall

comply with this section.

(d) An APSSD shall straight line amortize start-up costs, if any, over a 60-month period.

(e) For the first two years of operation of an APSSD, the tentative tuition rate charged at each

site shall be established annually and be based on budgeted allowable costs. An APSSD

shall submit such estimated cost(s) to the Commissioner, or his or her designee, for approval

no later than 90 days preceding the beginning of each school year. The proposed budget

shall be on a form and/or electronic system prepared by the Commissioner, or his or her

designee, that provides for, but is not limited to, the following:

1. Fiscal and programmatic data;

2. Projected allowable cost items and projected enrollments;

3. A projected budget that reflects administrative costs not in excess of, and

instructional costs not less than, the percentages identified in N.J.A.C. 6A:23A-

18.3(a)3 and as defined in the chart of accounts;

4. A report of all funding resources;

5. An affidavit of compliance; and

6. A statement of assurance as required by the Office of Special Education Programs.

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(f) If the Commissioner, or his or her designee, approves the tentative tuition rate calculated

pursuant to (e) above, each sending district board of education shall pay tentative tuition

charges based upon the approved estimated costs per student for the first two years of

operation.

(g) If the tentative tuition rate charged differs from the final tuition rate charged after each

year of operation, the tentative tuition charges will be adjusted in accordance with

N.J.A.C. 6A:23A-18.3.

(h) An APSSD approved as a new school shall not begin operations before July 1 of the school

year immediately following the school year in which the APSSD received approval to

operate, except for an APSSD operating in and affiliated with a public school district.

6A:23A-18.5 Bookkeeping and accounting

(a) An APSSD shall maintain accounting and bookkeeping systems as prescribed in the

Department’s Financial Accounting for New Jersey Private Schools for Students with

Disabilities in accordance with the following standards:

1. An APSSD shall maintain accounts in accordance with generally accepted

accounting principles (GAAP) as established by the Financial Accounting

Standards Board (FASB) and recognized as authoritative by the American Institute

of Certified Public Accountants, except as already modified in this subchapter.

2. At a minimum, an APSSD shall use accrual accounting on a quarterly basis.

3. An APSSD shall capitalize fixed asset expenditures of $2,000 or more and

depreciate such expenditures using the straight-line depreciation method and

using a useful life consistent with current Federal tax law as defined in Internal

Revenue Code Section 168 and class lives as defined in that section (also see IRS

Publication 946), except for real property that may be depreciated using a useful

life of 15 years or the term of the original mortgage, whichever is greater.

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4. An APSSD shall:

i. Capitalize leasehold improvements made to an existing structure leased by

the APSSD and depreciate the improvements using the straight-line

method and a useful life equal to the lease’s remaining term and any

extension(s), but not less than five years;

ii. Depreciate any leasehold improvement(s) to which a related party(ies) is

the lessor using the straight-line method and a useful life equal to the

lease’s remaining term and any extension(s), but not less than 10 years;

iii. Not depreciate a leasehold improvement(s) made to a structure for any

month(s) the structure is not in service as an APSSD, or in excess of

amounts determined under (a)4i or ii above for any fiscal year; and

iv. Not depreciate a leasehold improvement(s) made to a structure that does

not directly benefit public school placement students being educated or

that is in excess of amounts determined pursuant to (a)4i, ii, or iii above.

5. An APSSD shall maintain asset, liability, and net asset accounts, as well as

expenditure and revenue accounts.

6. Nonprofit organizations shall maintain financial records on a fund basis, which

requires restricted or unrestricted donations to be maintained in funds separate

from the public school restricted fund. Costs incurred as a result of restricted or

unrestricted donations shall be charged to the appropriate fund and not through

the public school restricted fund. Profit-making organizations shall maintain

financial records on a modified fund basis.

7. A chart of accounts issued by the Commissioner, or his or her designee, shall be

maintained by each APSSD. A Uniform Minimum Chart of Accounts consistent

with Financial Accounting for Local and State School Systems 2014, developed

by the National Center for Education Statistics, incorporated herein by reference,

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as amended and supplemented as prepared, published, and distributed by the

Commissioner, or his or her designee, for use in the accounting systems of all

APSSDs shall be used for financial reporting to the Department. Effective July 1,

2017, the Department will not consider requests for approval to use an alternative

chart of accounts. APSSDs that received approval prior to July 1, 2017, to use an

alternative chart of accounts may continue to do so.

i. Effective July 1, 2018, the first $15,000 of attorney’s fees or other costs per

litigation and per fiscal year of costs incurred by an APSSD shall be

included within the administrative cost category limits identified in N.J.A.C.

6A:23A-18.3(a)3. Costs for litigation above the first $15,000 per litigation

and per fiscal year shall be outside the total cost category assignment as

indicated in the Department’s chart of accounts pursuant to (a)7 above.

ii. For purposes of (a)7i above, litigation means a suit brought by or against

an APSSD for which a court of law or agency of the State or Federal

government assigns a docket or other form of tracking number.

8. If multiple facilities for an APSSD have been approved, financial information in the

bookkeeping records shall be segregated by facility. If the APSSD chooses to charge

tuition rates by class type, financial information in the bookkeeping records shall be

segregated by class type. Bookkeeping records shall include, but not be limited to:

i. Cash receipts journal;

ii. Cash disbursement journal;

iii. General ledger;

iv. Tuition ledger;

v. Payroll journal; and

vi. Fixed asset inventory.

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9. An APSSD shall maintain documentation to verify all amounts recorded in the

general ledger. Purchase orders shall be prepared in detail to document all

payments for goods and services. Invoices or cash register receipts shall be

attached to their related purchase orders to support all purchases of goods and

services. Detailed vouchers signed by the payee shall be attached to their related

purchase orders to support all payments for personal services, employee mileage

reimbursements, or any payment for which invoices or cash register receipts are

not used. All documentation shall be subject to audit by the Department and shall

support expenses charged by the APSSD in its audited financial statements.

10. An APSSD shall prepare a payroll that is supported by an accurate employee time

record in a format prescribed or approved by the Commissioner, or his or her

designee, signed by the employee and supervisor, prepared in the time period in

which the work was done and completed semi-monthly, at a minimum. An

employee time record shall be prepared for all employees of the APSSD,

including all administrative employees. Upon receipt of written approval from

the Commissioner, or his or her designee, APSSDs may use an electronic time

record system in lieu of the Commissioner-prescribed format. Approval shall

continue unless and until an APSSD alters the system or engages the services of a

new provider for the electronic time record system.

11. At least quarterly, an APSSD shall prepare a financial report in a format prescribed

or approved by the Commissioner, or his or her designee, for the school-year

program. The financial report shall be submitted to the school's governing body and

its acceptance shall be documented in the governing body’s meeting minutes.

12. An APSSD shall maintain effective internal control practices, including, but not

limited to, the separation of duties such as the recording and authorizing of checks

and purchase approvals.

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13. An APSSD shall use the Commissioner-prescribed mandated tuition contract for

each student received from a sending district board of education. The mandated

tuition contract may be revised only by the APSSD or the sending district board

of education with the Commissioner’s prior written approval.

14. An APSSD that incurs contingent pay increases shall have an employee contract

that contains the criteria by which the increase will be paid. Under no

circumstances shall the APSSD employee’s salary plus the contingent pay

increase exceed the maximum allowable salary determined pursuant to N.J.A.C.

6A:23A-18.3(o), (p), or (q). The criteria shall be submitted to the Commissioner,

or his or her designee, for approval prior to implementation. The APSSD shall

make payment of the contingent pay increase upon achievement of the contractual

contingencies as set forth in the approved plan. The payment shall be based upon

measurable criteria and shall not be at the management’s discretion. The

employee contract shall contain the following:

i. The date and signature of both the staff member and authorized APSSD

representative;

ii. The ADE contingency the APSSD must achieve to generate the increase; and

iii. The specific dollar amount or percentage of original contracted salary to

be paid pursuant to (a)14ii above.

15. An APSSD that incurs merit pay increases shall have adopted a formal policy that

outlines the criteria of the merit pay plan(s). The APSSD employee’s salary plus

the merit pay shall not exceed the maximum allowable salary determined pursuant

to N.J.A.C. 6A:23A-18.3(o), (p), or (q). The plan(s) shall be submitted for

approval to the Commissioner, or his or her designee, prior to implementation.

The APSSD shall accrue the merit pay and any resultant employer payroll tax

expense in the fiscal year in which the merit pay is awarded. Payment of such

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merit pay increase upon achievement of the criteria set forth in the approved plan

shall occur no later than the following January 31. The payment shall not be at the

management’s discretion. The plan(s) shall include the following:

i. Eligibility for all employees;

ii. Basis by which the pay is earned;

iii. The amount of the awards by plan(s);

iv. The maximum number of awards to be given by plan(s) for each year; and

v. The date of board approval and date of initiation of the plan(s).

16. An imprest balance petty cash fund shall be maintained upon annual approval in

the minutes by the APSSD’s governing body. Replenishments and

reimbursements shall be supported by documentation. Undocumented outflows

from petty cash shall be classified as a non-allowable cost. The imprest fund

balance shall not exceed $1,500 and individual disbursements made shall not

exceed $150.00, except in the case of an emergent condition.

17. A student activity fund shall be approved by the APSSD’s governing body and

supported by documentation. Revenues derived from public school placement

tuition shall be used to supplement, not supplant, student contributions.

18. Mileage records shall be maintained for each school-owned vehicle, leased

vehicle, or vehicle contained in a related party transaction involving the purchase

of transportation services in a format prescribed by the Commissioner, or his or

her designee. The mileage records shall be maintained on a trip-by-trip basis and

shall include any personal use including to/from work commutation. At the end of

the fiscal year, the percentage determined by the total personal miles to total miles

shall be applied to all costs associated with the vehicle(s) and the personal costs

shall be excluded from the actual allowable costs. Vehicle costs may include, but

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not be limited to, the following: depreciation, lease costs, gas, oil, repairs and

maintenance, and insurance.

19. Upon request from the Commissioner, or his or her designee:

i. A profit-making APSSD shall submit a copy of its Internal Revenue

Service (IRS) tax return for any fiscal year requested; and

ii. A nonprofit APSSD shall submit a copy of IRS form 990 for any fiscal

year requested.

20. An APSSD shall maintain all pertinent financial record(s) for a period of seven

years after the November 1 due date of the annual audited financial statement, or

until the Commissioner, or his or her designee, issues approval or adjustment to

an independent-auditor-certified tuition rate.

21. A nonprofit entity that has chosen to cease operations as a nonprofit APSSD shall

distribute its accumulated public school placement restricted working capital fund

to each sending district board of education that had enrolled students during the

APSSD’s last five years of operation. Public school placement restricted working

capital may be retained if an APSSD reconfigures its operations and continues to

serve a majority of the same sending district boards of education from the last five

years of operation.

i. The distribution shall be based on the ratio of each sending district board

of education's total ADE in the APSSD for the last five years of operation

to the APSSD’s total ADE for the same period.

ii. Within 90 days of filing with the Department the required year-end

audited financial statements in accordance with N.J.A.C. 6A:23A-18.10,

the APSSD shall submit to the Commissioner, or his or her designee, a

listing of the total distribution of the public school placement restricted

working capital fund, by sending district board of education.

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22. An APSSD shall ensure school staff; consultants; subcontractors, including

members of a management company; and anyone working with students hold the

proper school certification, license, or bachelor's degree required pursuant to

N.J.A.C. 6A:23A-18.2 to provide the services being rendered.

(b) An APSSD that receives a refund(s) from a current or prior-year expenditure, or that

cancels an accounts payable, shall apply the refund or accounts payable as a reduction to

the original general expenditure account charged to reduce the current-year expenditure

account even if the original expenditure was not made in the current fiscal year.

The contract shall contain the following information:

1. The employee’s name;

2. Dates of employment;

3. Work hours/durational term of employment;

4. Certification(s) and/or degree(s) held;

5. Certification(s) required for the job title;

6. A job description;

7. The job title;

8. All fringe benefits; and

9. The salary.

(d) An APSSD that operates its educational program outside of a public school district shall

request Departmental approval to purchase or rent an administrative or business office at

a location outside of the APSSD’s educational facility. Once received, an approval shall

not require renewal, unless and until the APSSD changes the location of its educational

or administrative facility. At the Department's request:

1. The county office of education may conduct an on-site facility review to determine if

there is sufficient space at the APSSD’s educational facility for these operations; and/or

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2. The APSSD shall submit to the Commissioner, or his or her designee, documents

that substantiate the need for additional space.

(e) An APSSD shall ensure its employees provide:

1. To the students, an instructional program for which the employees are

compensated during the hours the school is in session; and

2. All administrative and business functions on the APSSD’s premises whether the

premises are owned or leased by the APSSD, and during the APSSD’s normal

hours of operation, except for meetings and/or conferences held offsite related to

the job function. If the APSSD’s facilities are not deemed feasible for any

administrative or business function, the APSSD shall provide written justification

to the Commissioner, or his or her designee, and request approval of a reasonable

alternative work location.

(f) An APSSD shall establish and maintain an employee handbook that shall be distributed

to all staff each school year and made available to the Department upon request. The

APSSD’s employee handbook shall include an outline of all employee fringe benefits.

All employee fringe benefits shall be adopted at a board of directors meeting and

documented in board minutes prior to implementing the fringe benefit. Employee fringe

benefits that are consistent with N.J.A.C. 6A:23A-18.6(a)23 for which costs are deemed

allowable are as follows:

1. Health insurance coverage (including dental and vision) that complies with Federal

and State laws, rules, and regulations, including payments to employees for a

complete waiver of health insurance coverage that comply with the following:

i. The payment for waiver of health insurance coverage shall not exceed

$5,000 per fiscal year; and

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ii. The employee shall provide, and the APSSD shall keep on file,

documented evidence the employee had other valid health insurance

coverage during the fiscal year;

2. Life insurance;

3. Type(s) and qualification for retirement plan(s);

4. Severance pay;

5. Vacation;

6. Long-term disability;

7. Sick day and personal day benefits;

8. Premium-only plans;

9. Cafeteria plans;

10. Section 125 plans;

11. Tuition reimbursement;

12. Health savings accounts (HSAs), medical savings accounts (MSAs), health

flexible spending arrangements (FSAs), and health reimbursement arrangements

(HRAs) established and maintained within applicable laws and regulations; and

13. Other benefits for which an APSSD has applied and received written approval

from the Commissioner, or his or her designee.

(g) An APSSD that loans funds to any party shall charge interest at a rate equal to the prime

rate. An independent auditor shall compute imputed interest on funds that are loaned at

less than the prime interest rate or interest free. Imputed interest revenue shall be netted

first against short-term interest costs and then against long-term interest costs incurred by

an APSSD. If the APSSD has not incurred interest costs, the imputed interest revenue

shall be netted against costs incurred in account numbers classified as undistributed

expenditures—central services.

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(h) A nonprofit APSSD that has a positive public school placement restricted working capital

fund balance but reports a net deficit unrestricted fund balance for more than three

consecutive fiscal year-ends shall submit to the Commissioner, or his or her designee,

within 60 days after the third fiscal year’s end, a corrective action plan to reduce the net

overall deficit fund balance. The nonprofit APSSD shall be subject to Department

monitoring to ensure implementation of and adherence to the corrective action plan. If the

APSSD fails to eliminate the deficit by the end of year three, the APSSD shall be placed

on conditional approval status until the deficit unrestricted fund balance is eliminated.

(i) An APSSD that allows employees to accumulate and carry over from year to year unused

sick and/or vacation leave shall do so in accordance with Financial Accounting Standards

Board Statement No. 43 Accounting for Compensated Absences (FASB; 401 Merritt 7,

PO Box 5116, Norwalk, CT 06856-5116), incorporated herein by reference, as amended

and supplemented, and shall include the costs in program expenses in the appropriate cost

category only in the year of payment.

(j) An APSSD shall use job titles in use in public schools districts in accordance with

N.J.A.C. 6A:9B, and the list published each year by the Commissioner, or job titles

approved in accordance with N.J.A.C. 6A:9B-5.5.

(k) An APSSD shall limit compensation increases after the start of the fiscal year to specific

instances in accordance with N.J.A.C. 6A:23A-18.3(q), and when the increase:

1. Is due to a staff member’s promotion that results in additional job responsibilities;

2. Is due to a staff member’s attaining a higher degree or certification;

3. Is due to a staff member’s additional job responsibilities such as a coach, advisor,

or mentor;

4. Is in accordance with (a)14 or 15 above; or

5. Has been approved by the Department after review of a formal written request to the

Commissioner, or his or her designee, documenting the facts supporting the increase.

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(l) An APSSD shall ensure individuals who are newly employed by the APSSD or new to

the positions listed below on or after July 1, 2017, possess the appropriate master’s

degree or other required degree or certification as defined in N.J.A.C. 6A:23A-18.2. The

APSSD also shall ensure individuals employed or serving in the following positions on or

before June 30, 2017, currently possess the appropriate bachelor's degree or other

required degree or certification as defined in N.J.A.C. 6A:23A-18.2, or will be removed

from the position:

1. Director;

2. Assistant director;

3. Executive director; and

4. Business manager.

(m) An APSSD that incurs costs for a retirement plan(s) in accordance with N.J.A.C.

6A:23A-18.6(a)31 and/or medical benefits for retired employees in accordance with

N.J.A.C. 6A:23A-18.6(a)54 shall include the costs in the certified actual cost per student

only on the cash basis of accounting.

(n) An APSSD shall have its paraprofessional staff approved in accordance with N.J.A.C. 6A:32-

4.2 and any change(s) to an approved job description shall be resubmitted for approval.

(o) An APSSD shall comply with the maximum salaries determined pursuant to N.J.A.C.

6A:23A-18.3(o) and (p) and restricted pursuant to N.J.A.C. 6A:23A-18.6(a)6, 8, and 9

regardless of the job titles used and whether they comply with the list of job titles

published by the Commissioner, or his or her designee.

(p) Under no circumstances other than in accordance with (k) above shall an APSSD provide

compensation increases after the start of the fiscal year.

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6A:23A-18.6 Non-allowable costs

(a) Costs that are not allowable in the calculation of the certified actual cost per student shall

include the following:

1. Administrative costs in excess of, and/or instructional cost less than, the

percentages indicated in N.J.A.C. 6A:23A-18.3(a)3;

2. Costs for maintaining an administrative office in a private home or other residence;

3. Advertising costs in excess of 0.5 percent of the APSSD’s actual allowable costs,

not including advertising;

4. Costs associated with lobbying, including salaries and fringe benefits;

5. Costs other than those governed by (a)50 below associated with lobbying in an

attempt to influence:

i. The outcome(s) of any Federal, State, or local referendum, initiative or

similar activity; or

ii. The introduction, enactment, or modification of Federal or State

legislation or a State rulemaking.

6. The salary of a professional staff member, consultant, or subcontractor, including a

member of a management company, who is not certified but is functioning in, or

contracted to perform the duties of, a position requiring certification in accordance

with N.J.A.C. 6A:9B or bachelor's or master’s degree under this subchapter;

7. The salary and fringe benefits of a staff member, or any payment(s) to a

purchased service provider, for time not expended and/or services not performed

except in accordance with (a)56 and 57 below;

8. A salary in excess of the associated maximum allowable salary determined pursuant

to N.J.A.C. 6A:23A-18.3(o), (p), and (q) for a staff member or consultant whose

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position requires certification, license, or a bachelor's or master’s degree, including

a director, assistant director, executive director, and business manager.

i. An APSSD shall prorate salaries for such part-time or split-time positions,

including salaries in entities described in N.J.A.C. 6A:23A-18.3(e) and (f);

ii. The part-time and split-time maximum allowable salary shall be calculated

as follows:

(1) Multiply the staff member's total salary by the percentage of time

attributed to the APSSD position;

(2) Multiply the maximum allowable full-time salary for the position

by the percentage of time attributed to the APSSD position; and

(3) Subtract the amount calculated in (a)8ii(2) above from the amount

calculated in (a)8ii(1) above. If the result is greater than zero, this

is the non-allowable part-time or split-time salary.

9. A salary of an employee not covered by (a)6 above in excess of the lowest

maximum allowable salary in the same county according to the list of maximum

allowable salaries determined in N.J.A.C. 6A:23A-18.3(o), (p), and (q) whose

position does not require certification, license, or bachelor's degree, including an

individual with the director, assistant director, executive director, or business

manager job title whose job function(s) are not consistent with those functions

described in N.J.A.C. 6A:23A-18.2.

i. An APSSD shall prorate salaries for such part-time or split-time positions,

including salaries in entities described in N.J.A.C. 6A:23A-18.3(e) and (f).

ii. The part-time and split-time maximum allowable salary is calculated as follows:

(1) Multiply the staff member's total salary by the percentage of time

attributed to the APSSD position;

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(2) Multiply the lowest maximum allowable salary in the same county

by the percentage of time attributed to the APSSD position; and

(3) Subtract the amount calculated in (a)9ii(2) above from the amount

calculated in (a)9ii(1) above. If the result is greater than zero, this

is the non-allowable part-time or split-time salary.

10. Costs of fringe benefits when based on and/or associated with a non-allowable salary;

11. Legal, accounting, or consultant fees resulting from a frivolous challenge to a

State audit or financial review or the prosecution of a claim against the State. The

Commissioner shall determine whether the challenge is frivolous by considering

factors including, but not limited to, the following:

i. Overall merit of the claim; or

ii. Whether the challenge serves the public interests;

12. Consultant fees for services that fail to meet the following standards:

i. The work of the consultant shall be detailed in an executed written

contract signed by both parties that includes:

(1) A detailed description of the nature of the services to be provided;

(2) Duration of the contract;

(3) Detailed fee information;

(4) Fee payment schedule(s);

(5) The approximate number of days to complete the work; and

(6) The anticipated product or outcome of the work;

ii. Performed by a consultant who does not possess the appropriate school

certification when such certification exists;

13. Total contributions, donations, awards, and scholarships in excess of $750.00;

14. Depreciation unacceptable under N.J.A.C. 6A:23A-18.5(a)3 and 4 and depreciation:

i. On donated goods and assets;

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ii. Not based on estimated straight-line method;

iii. On automobiles in excess of the dollar or percentage limitation contained

under Internal Revenue Code (IRC) Section 280F, including any

passenger vehicle not used in transporting students or supplies without

regard to weight class exceptions defined in Section 280F(d)(5)(A);

iv. On a stepped-up basis resulting from the sale to a related party as defined in

IRC Section 318 for Constructive Ownership of Stock. For a nonprofit

organization, Section 318 will apply to the members of the board of

directors or related parties as defined in IRC Section 267(b) or 267(c) unless

the gain from such a sale was used to offset tuition for a prior year; or

v. On a stepped-up basis from transfer from one spouse to another upon

death as defined in IRC Section 1014;

15. The cost of:

i. Depreciation associated with the purchase and ownership of any passenger

vehicle not used for transporting students or supplies purchased on or after

July 1, 2017, if:

(1) The depreciable basis upon which depreciation is calculated

exceeds $30,000;

(2) The depreciation expensed exceeds allowable depreciation calculated

on the straight-line basis over a period of not less than five years; or

(3) The depreciation expensed is attributable to a passenger vehicle that has

been assigned to, or used on a regular basis, by an APSSD staff member

who is not the APSSD executive director, director, and/or owner.

ii. Vehicle lease payments made pursuant to the lease agreement entered into,

on, or after July 1, 2017, when:

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(1) The annual lease payment(s) exceeds the annual depreciation

allowable on an owned passenger vehicle with a maximum

depreciable basis of $30,000; or

(2) The lease payments are for a leased passenger vehicle that has been

assigned to, or used on a regular basis by, an APSSD staff member

who is not the APSSD executive director, director, and/or owner.

16. Investment expenses associated with the purchase/sale of stock, securities, other

investment instruments, or other investments not associated with the education of

students with disabilities;

17. Total costs in excess of $500.00 incurred for entertainment expenses;

18. The cost of food/beverages in excess of $1,500 for activities such as, but not

limited to, staff meetings, parent/teacher meetings, workshops, and professional

development seminars for parents or teachers;

19. Costs from a fine or penalty resulting from a violation of, or failure by, the

APSSD to comply with a Federal, State, and/or local law or rule;

20. Meal costs in excess of the limits set forth in N.J.A.C. 6A:23A-18.23.

21. The cost of keyman insurance except where a term insurance policy is required by

a lender as collateral for a loan;

22. The cost of an employee's life insurance coverage, both term and whole life

policies, in excess of 3.5 times the employee’s gross salary;

23. Costs for fringe benefits as follows:

i. When the benefits are determined in an arbitrary or capricious manner,

including, but not limited to, class of employee, whether by title or

position rather than according to an existing written uniform policy based

on an equitable standard of distribution, such as years of service or

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education. The criteria cannot be exclusionary regardless if based on an

equitable standard of distribution, such as years of service or education;

ii. When the fringe benefit has not been adopted by the APSSD’s board of

directors at a board meeting prior to the benefit’s implementation,

documented in the meeting minutes, and the employees were not made

aware of the policy; or

iii. When the benefit is not listed in N.J.A.C. 6A:23A-18.5(f) or not approved

by the Commissioner, or his or her designee;

24. The cost of fundraising, including, but not limited to, costs for a financial

campaign, an endowment drive, or solicitation of a gift and bequest to raise

capital or obtain a contribution;

25. Goodwill;

26. Interest costs on loans when:

i. Interest is in excess of the general prevailing rate at the time the loan was taken;

ii. The loan is a less-than-arm's length/related party transaction that has not

been previously approved by the Department and has not been repaid in

accordance with the Department's approval letter; or

iii. The loan is not exclusively used to meet educational program needs;

27. Interest costs on long-term loans or mortgages if:

i. The loan is used for other than financing of fixed assets;

ii. The loan is not secured by the fixed asset being financed; or

iii. The interest costs are on the portion of the loan term that exceeds the

recovery period for depreciation of the fixed asset securing the loan;

28. A loss incurred on the sale or exchange of fixed assets between related parties;

29. The write-off of uncollected accounts receivable (bad debts):

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i. Before three years has elapsed and before a reasonable effort has been

made to collect such accounts receivable; or

ii. That arise out of the APSSD’s provision of:

(1) Extraordinary services;

(2) Services to students placed by an out-of-State agency; or

(3) Services to private placement students;

30. An ordinary living expense for a student that is normally assumed by the parent of

a student attending a public day school;

31. Retirement plan costs that are:

i. Not in conformance with the Employee Retirement Income Security Act

of 1974, P.L. 93-406 and its successor legislation, and that exceed costs

allowed by the Internal Revenue Service;

ii. For a non-qualified retirement plan(s);

iii. For a defined contribution plan in excess of the maximum percentage and

maximum dollar amount, (see IRC Section 415(c)) as the lesser of 100

percent of the employee's compensation or $53,000 as adjusted annually in

IRC;

iv. For a defined benefit plan in excess of an amount, by employee, that

would allow the defined plan to provide a benefit in excess of the

percentage of the employee's number of years of service divided by 55

times the highest three-year average salary and at an age prior to age 55;

v. For contributions to a retirement plan that are not applied consistently in

accordance with (a)23 above even if in compliance with Employee

Retirement Income Security Act of 1974 (ERISA). Such excess

contributions will be deemed a non-allowable cost;

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vi. Not paid to a qualified plan within nine months of the end of the APSSD’s

fiscal tax year;

vii. Not paid in accordance with the fringe benefits criteria in (a)23 above; and

viii. If applicable, not in conformance with a church plan as defined in ERISA;

32. Costs of a contingent pay increase or merit pay award when the amount(s) was

not in accordance with N.J.A.C. 6A:23A-18.5(a)14 or 15 or the contingent pay

increase or merit pay award(s) is inconsistent with the plan(s) submitted to and

approved by the Commissioner, or his or her designee, prior to implementation;

33. Costs for the payment of a bonus;

34. Costs for a loss on an investment;

35. Costs associated with a research activity, including, but not limited to, staff

salaries, supplies, or printing and reproduction of a material;

36. Payment of Federal, State and local income taxes on income other than tuition;

37. Costs associated with travel to and from the officer's or employee's home and the

school or agency;

38. Costs for all personal expenses, such as a personal travel expense or repair on a

personal vehicle;

39. Costs associated with personal use of an APSSD-owned or -leased vehicle,

including, but not limited to, to/from work commutation as determined pursuant

to N.J.A.C. 6A:23A-18.5(a)18;

40. Costs associated with an APSSD-owned or -leased vehicle or a vehicle contained in

a related party transaction involving the purchase of transportation services where a

detailed daily mileage log documenting vehicle usage was not maintained;

41. A business-incurred charge for a privately owned vehicle in excess of the mileage

rate allowed by the IRS for automobile travel;

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42. Transportation costs for a student to and from school, except where the student's

IEP requires after-school activities;

43. Rental costs for buildings and equipment when the lessor is not a separately

identifiable legal entity;

44. Costs related to transactions between related parties in which one party to the

transaction is able to control or substantially influence the actions of the other.

Such transactions are defined by the relationship of the parties and include, but

are not limited to, transactions between divisions of an institution; institutions or

organizations under common control through common officers, directors,

members, or owners; and an institution and a director, trustee, officer, or key

employee of the institution or his or her immediate family either directly or

through corporations, trusts, or similar arrangements in which they hold a

controlling interest. Such costs shall include, but are not limited to:

i. Rental costs for buildings and equipment in excess of the actual allocated

costs of ownership (for example, straight line depreciation in accordance

with N.J.A.C. 6A:23A-18.5(a)3, mortgage interest, real estate taxes,

property insurance, and maintenance costs) incurred by the related

property owner including a 2.5 percent return calculated on the actual

costs of ownership incurred by the related party. The APSSD shall submit

a cost of ownership form in a Commissioner-supplied format. The

property or business owner shall sign and notarize the cost of ownership

form and include a copy of the lease agreement, and a list of anticipated

costs to be incurred by the property owner;

ii. Rental costs under a sub-lease arrangement with a related party for

buildings and equipment in excess of the actual allocated costs related to

the lease (such as rent, lease commission expense, and maintenance costs)

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incurred by the sub-lessor. Profit, return on investment, or windfall of any

kind shall not be included in the sub-rental cost. The sub-lease agreement

shall include a list of anticipated costs to be incurred by the sub-lessor and

shall be signed by the sub-lessor and notarized;

iii. Cost of purchasing/lease purchasing buildings, equipment or other goods

from related parties in excess of the original cost to the related party, less

depreciation calculated using the straight line method;

iv. Cost of personal services paid to a related party when the services are

provided by an employee of, or consultant to the APSSD acting as an

employee or agent of the related party. Cost of personal services includes

all remuneration, paid or accrued, for services rendered during the school

year, including, but not limited to, wages, salaries, management fees, and

fringe benefits; and

v. Cost of the purchase of goods or services from a related party in excess of

the actual allocated costs of providing the purchased goods and/or

services, including, but not limited to, salaries, fringe benefits, insurance,

operation, maintenance, straight-line depreciation incurred by the related

party owner. Costs may include a 2.5 percent return calculated on the

actual costs of ownership incurred by the related party. The APSSD shall

file a cost of ownership form in a Commissioner-prescribed format. The

cost of ownership form shall be signed by the property or business owner

and shall include a copy of the purchase agreement, and a list of

anticipated costs to be incurred by the related party;

45. Cost of a less-than-arm's length/related party transaction when the related party

and/or the APSSD, as applicable, does not:

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i. Provide to the Commissioner documentation on Commissioner-prepared

forms to support the actual costs of ownership, or does not allow the

Commissioner access to such information for review and audit during

normal business hours. Documentation shall include, but not be limited to:

(1) The related parties' tax returns;

(2) The related parties’ invoices received, payroll and payroll tax

records, bills and canceled checks, or electronic transfer records

concerning the transaction; and

(3) Any other document(s) requested by the Department; or

ii. Disclose the related party relationship on Commissioner-prepared forms

pursuant to this subchapter and N.J.A.C. 6A:23A-19;

46. Rental costs under sale and leaseback arrangements in excess of the amount that

would be allowable if the APSSD continued to own the property;

47. Indirect and direct costs that are:

i. For unrelated activities or enterprises as defined in N.J.A.C. 6A:23A-18.3(g); or

ii. Unrelated to the function, operations, and/or program of an APSSD as

defined in N.J.A.C. 6A:23A-18.3(d);

48. Costs for the year-end audited financial statements when prepared by an

individual who does not meet the requirements in N.J.A.C. 6A:23A-18.10(a);

49. Costs for membership in civic, business, technical, and professional organizations

when the cost is:

i. Not reasonably related to the value of the services or benefits received;

ii. For membership in an organization that devotes any activity(ies) to influencing

legislation or State regulation(s) not directly related to the educational

instruction program of students with disabilities and the activity(ies) is not

subsidized by sources other than membership fees from APSSDs;

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iii. Not an established annual rate charged to all members, but one that is

periodically adjusted during the year; or

iv. Not supported by an annual affidavit signed by the organization's board of

directors indicating all legal and lobbying costs not directly associated

with the educational instruction programs for students with disabilities

were funded by sources other than dues from APSSDs;

50. A staff member’s salary that is not properly supported by the employee's time

record in a format prescribed or approved by the Commissioner in accordance

with N.J.A.C. 6A:23A-18.5(a)10;

51. A salary or payment made to a member(s) of the board of directors/trustees for

services performed in his or her capacity as a member of the board of

director/trustees;

52. Cost of a pension plan contribution made on behalf of, and/or medical benefits

for, current or retired members of the board of directors/trustees;

53. Cost of medical benefits for retired employees who have not reached the age of 55

and who were employed a combination of less than 25 years in a New Jersey

public school, a New Jersey public agency, or a New Jersey APSSD and have less

than 10 years of service in an APSSD;

54. Costs of salaries and fringe benefits of unrecognized position titles not properly

approved pursuant to N.J.A.C. 6A:9B-5.5;

55. Cost of employee severance pay:

i. In excess of four weeks' salary; and

ii. If, in addition, the cost of a buyout of the employee's contract;

56. Cost of a buyout of an employee contract:

i. In excess of 90 days' salary; and

ii. If, in addition, the cost of the employee's severance pay;

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57. Cost of a salary or consultant fee paid to a full-time employee or consultant for

performing more than one administrative function in the APSSD;

58. Cost to purchase or rent an administrative office or business office at a location other

than at the APSSD location that was not approved pursuant to N.J.A.C. 6A:23A-18.5(d);

59. Cost of compensation increases paid after the start of the fiscal year not in

accordance with N.J.A.C. 6A:23A-18.5(k);

60. Start-up costs in excess of costs allowed pursuant to N.J.A.C. 6A:23A-18.4(d);

61. Costs of salaries and fringe benefits for employees providing services that are not

in compliance with N.J.A.C. 6A:23A-18.5(e)2;

62. The cost of a fine levied pursuant to N.J.S.A. 18A:6-7.5 for any staff member

who does not have:

i. A criminal history clearance prior to starting employment or;

ii. An application for employment on an emergent basis in accordance with

N.J.S.A. 18A:6-7.1c;

63. Legal costs for an APSSD and/or for an APSSD representative(s), including an

owner, employee, or agent who has plead guilty and/or is found to be guilty or

liable in a case involving the misuse of funds, fraud (criminal or civil), or

endangerment or abuse of a child(ren);

64. The salary in excess of the associated maximum salary identified in N.J.A.C. 6A:23A-

18.3(q) and determined in accordance with N.J.A.C. 6A:23A-18.5(o) and (p);

65. Costs found to be patently unreasonable by the Commissioner, or his or her

designee, or an independent auditor/accountant;

66. Cost(s) of payments made to an individual employee(s) for earned unused sick

benefit that is in excess of 2.2 percent of the individual employee’s contracted

salary amount during the fiscal year in which the payment is made;

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67. Proportional costs of salary and fringe benefits for any administrative staff

member, as defined in N.J.A.C. 6A:23A-18.3(o), with the exception of principal

and unrecognized position titles in the administrative category, that are in excess

of a total of 3.0 FTE administrative positions per APSSD, per fiscal year. If the

combined administrative positions exceed 3.0 FTE, the disallowed amount will be

apportioned equally across all of the positions;

68. Costs associated with travel, defined in N.J.A.C. 6A:23A-18.21, that:

i. Exceed .0025 of the total actual allowable costs, less travel costs, in a

fiscal year for an APSSD, or $20,000, whichever is less; and/or

ii. Violate the provisions of N.J.A.C. 6A:23A-18.21(g);

69. Costs associated with waiver of health insurance coverage that violate the

provisions of N.J.A.C. 6A:23A-18.5(f)1;

70. Costs associated with depreciation of leasehold improvements that violate

N.J.A.C. 6A:23A-18.5(a)4;

71. Costs of the salary, benefits, or other compensation provided to an APSSD

employee or contractor/consultant who is receiving retirement benefits as a result

of his or her retirement from the APSSD after two calendar years have expired

since the individual began retirement;

72. Costs associated with undocumented outflows from petty cash, pursuant to

N.J.A.C. 6A:23A-18.5(a)16; and

73. Costs associated with the failure to comply with the requirements of N.J.A.C.

6A:23A-18.5(d).

6A:23A-18.7 Surcharge

(a) For profit-making APSSDs, the tuition rate may include an annual surcharge up to 2.5

percent of the APSSD’s allowable actual costs.

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(b) For profit-making APSSDs, interest earned in accordance with N.J.A.C. 6A:23A-18.3(h)

is an unrestricted revenue and shall not be part of the school's surcharge computation.

in N.J.A.C. 6A:23A-18.6(a)36 shall be computed using only the public school placement

tuition income and all allowable and non-allowable APSSD expenses that are allowable

tax deductions on the school's Federal, State, and local income tax returns.

6A:23A-18.8 Public school placement restricted working capital fund

(a) For nonprofit APSSDs, the tuition rate may include an amount that will permit the

APSSD to establish a public school placement restricted working capital fund of up to 15

percent of the APSSD’s actual allowable costs. However, the APSSD shall not include in

the certified actual cost per student an amount in excess of 2.5 percent of the APSSD’s

actual allowable costs per year. The restricted working capital fund shall not exceed 15

percent of an APSSD’s actual annual allowable cost in a fiscal year.

(b) Interest and/or dividends earned from the investment of tuition funds shall be netted

against the APSSD’s total allowable costs incurred in account numbers classified as

undistributed expenditures-central when calculating the certified actual cost per student.

and shall not part of the APSSD’s public school placement restricted working capital

fund computation.

6A:23A-18.9 Calculation of student attendance

(a) Each APSSD shall maintain a school register in accordance with N.J.A.C. 6A:32-8, to

record all student attendance.

(b) Each APSSD shall submit to the Commissioner, or his or her designee, by September 1,

verification of the ADE for the previous school year on Department-provided forms.

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(d) Each APSSD shall maintain a separate register by class type.

6A:23A-18.10 Audit requirements

(a) Regardless of the APSSD’s fiscal year, each APSSD shall submit to the Commissioner,

or his or her designee, audited financial statements based on the July 1 to June 30 school

year. The audited financial statements shall be postmarked on or before November 1, or

the following business day if November 1 falls on a weekend or holiday.

1. The APSSD shall engage to conduct the annual audit only an independent

registered municipal accountant of New Jersey or an independent certified public

accountant of New Jersey who holds a valid registration license as a public school

accountant of New Jersey.

2. The APSSD shall ensure the auditor’s independent status in accordance with the Code

of Professional Conduct and General Principles and Responsibilities issued by, and

available from, the American Institute of Certified Public Accountants (AICPA).

3. Additionally, upon review by the Department, an auditor shall not be considered

independent if he or she may have been influenced by other parties, including, but

not limited to, APSSD directors or other staff, or by conflicting interests such as if

the independent auditor or members of his or her firm are engaged to perform

services other than the year-end audit and tax return functions for the APSSD. If

the Department determines an independent auditor engaged to conduct the

APSSD’s annual audit has not acted independently, the Department may take any

and all appropriate action.

(b) The audit shall follow generally accepted auditing standards (GAAS), as set forth by the

Auditing Standards Board (ASB) in the Codification of Statements on Auditing

Standards, 2015, published for the American Institute of Certified Public Accountants,

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(1211 Avenue of the Americas, NYC, NY 10036-8775), incorporated herein by

reference, as amended and supplemented, and when applicable; the Uniform

Administrative Requirements, Cost Principles, and Audit Requirements for Federal Audit

issued by the Federal Office of Management and Budget; or NJOMB Circular Letter 15-

08, as amended and supplemented. The APSSD shall ensure the use of the auditing

guidelines as published and distributed by the Commissioner, or his or her designee.

1. The APSSD shall ensure the audit includes basic financial statements, required

supplementary information, schedules, and narrative explanations.

cost(s) per student as determined by an independent auditor and final tuition rate(s)

charged at the end of the school year as determined by the APSSD’s management.

(d) The APSSD management representative(s) shall discuss with the auditor the results of the

auditor's determination of the certified actual cost per student for management to

determine the final tuition rate charged as a result of the audit.

1. The APSSD shall charge as the final tuition rate an amount equal to or less than

the certified actual cost per student.

2. The APSSD shall ensure the audit report contains a letter signed by both the

independent auditor and an authorized school representative indicating both

parties have met and discussed the audit, and the determination of the final tuition

rate charged was a management decision.

(e) Within 60 days of receipt of the year-end audit, APSSD management shall develop a

corrective action plan pursuant to this subchapter in response to recommendations

contained in the year-end audit, and shall submit the corrective action plan to the

Commissioner, or his or her designee, for review and approval. The corrective action

plan shall be on a form prescribed by the Commissioner, or his or her designee.

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(f) The APSSD shall not amend the final tuition rate charged after approval by the

Commissioner, or his or her designee.

(g) Any adjustment(s) that results from the approval following a compliance review of the

audited financial statements performed by the Commissioner, or his or her designee, and

that is in excess of $10.00 per sending district board of education shall be paid in

accordance with N.J.A.C. 6A:23A-18.3(l) and (m).

(h) An APSSD that files an audit postmarked after November 1 shall cause the tentative

tuition rate per student for the ensuing school year to be calculated based upon the

audited actual cost per student for the school year two years prior to the current school

year, and the provisions of N.J.A.C. 6A:23A-18.3(j) shall not apply.

(i) Failure to comply with this section may result in the Commissioner, or his or her

designee, placing the APSSD on conditional approval status.

(j) Upon request, the APSSD shall submit to the Department a copy of the APSSD

corporation's agency-wide audited financial statements.

6A:23A-18.11 Appeals

(a) The decision of the Commissioner, or his or her designee, regarding the calculation of the

tentative tuition rate, pursuant to N.J.A.C. 6A:23A-18.3(j), the approval of a tentative

tuition rate pursuant to N.J.A.C. 6A:23A-18.4, and conditional approval status pursuant

to N.J.A.C. 6A:23A-18.10(i) may be appealed in accordance with N.J.A.C. 6A:3,

Controversies and Disputes.

(b) The decision of the Commissioner, or his or her designee, regarding certification may be

appealed in accordance with N.J.A.C. 6A:3.

accordance with N.J.A.C. 6A:4. For purposes of this subchapter, a decision by the

Commissioner’s designee shall not constitute final agency action.

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6A:23A-18.12 Roundtable work group

The Commissioner, or his or her designee, may create a working group that may consist of, at the

Commissioner’s discretion, Department staff, representative(s) from the APSSD community, or

others as the Commissioner so shall designate. The working group’s purpose shall include, but

shall not be limited to, discussing issues that impact APSSDs. Any such discussions or actions of

the working group are non-binding. Such working group may be disbanded without prior notice

and at any time at the Commissioner’s discretion.

6A:23A-18.13 Out-of-State approved private schools for students with disabilities

(a) An out-of-State private school for students with disabilities shall be approved to provide

special education programs by the department of education of the state in which the private

school is located. Exceptions may be made only at the discretion of the Department’s

Office of Special Education Programs in accordance with N.J.A.C. 6A:14-7.1(f).

(b) The Commissioner shall abide by the tuition regulations for an APSSD adopted by the

department of education or other regulatory agency in the state in which the private school

for students with disabilities is located. The APSSD shall submit to the Commissioner

verification of the tuition rate’s approval either on Commissioner-prescribed forms or

verification from the out-of-State department of education or other regulatory agency.

other regulatory agency does not approve or sanction tuition rates, such tuition rates shall

be determined in the following manner:

1. The out-of-State APSSD and the sending district board of education or state

agency that determined the placement shall mutually agree to the tuition rate. The

tuition rate shall be agreed upon prior to the child's placement, and documentation

indicating agreement of the rate shall be forwarded to the Commissioner.

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2. An out-of-State APSSD that is licensed as a child care facility by the New Jersey

Department of Human Services shall determine a tuition rate through mutual

agreement between the out-of-State APSSD, the sending district board of

education, and the Department of Human Services, Office of Education. The

tuition rate shall be agreed upon prior to the child's placement and documentation

of the rate shall be forwarded to the Commissioner.

3. If a tuition rate cannot be mutually agreed upon in accordance with (c)1 or 2 above,

the out-of-State APSSD shall file a budget in a format prescribed by the

Commissioner, or his or her designee, to determine a tentative tuition rate and shall

comply with the subchapter’s provisions to collect tuition from a sending district

board of education, charter school board of trustees, or agency. The cost of the audit

required pursuant to N.J.A.C. 6A:23A-18.10 may be charged to the sending district

board of education or agency that did not mutually agree to the tuition rate.

6A:23A-18.14 Inspection of records

(a) All financial and accounting records maintained by the APSSD, as required by this

subchapter, shall be open during normal business hours for review and audit by the

Commissioner, or his or her designee, for the period indicated in N.J.A.C. 6A:23A-18.5(a)20.

(b) All financial and accounting records maintained by a related party, as defined by

N.J.A.C. 6A:23A-18.6(a)45, that pertain to a transaction(s) or the relationship between

the related party and the APSSD shall be open during normal business hours for review

and audit by the Commissioner, or his or her designee, for the period indicated in

N.J.A.C. 6A:23A-18.5(a)20.

statements shall be open during normal business hours for review by the Commissioner,

or his or her designee, for the period indicated in N.J.A.C. 6A:23A-18.5(a)20.

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6A:23A-18.15 Fiscal monitoring of approved private schools for students with disabilities

and corrective action plans

(a) The Commissioner, or his or her designee, shall monitor APSSDs in accordance with this

subchapter. On-site monitoring shall be conducted at least every six years.

(b) The monitoring process may include, but is not limited to, all financial information

required in this subchapter.

APSSD, the executive county superintendent, and the APSSD’s independent auditor for

the period(s) under audit.

(d) If the APSSD receives a final report that indicates noncompliance, a corrective action plan

shall be developed and submitted, on a form prepared by the Commissioner, or his or her

designee, to the Department for approval within 30 days of the final report’s receipt.

(e) The corrective action plan shall include, but not be limited to, the following:

1. Objective and strategies for correcting each noncompliance item; and

2. The dates by which noncompliance will be corrected.

(f) When an APSSD is determined to be in noncompliance, the Commissioner may:

1. Issue a conditional approval status when noncompliance with State regulations and

requirements and/or implementation of the corrective action plan is demonstrated;

2. Immediately remove program approval when it is documented that the health,

safety, or welfare of students is in danger.

(g) The actions of the Commissioner, or his or her designee, may be appealed according to

N.J.A.C. 6A:3 and/or 6A:23A-18.11, as applicable.

(h) The Department annually shall publish the results of the fiscal monitoring of APSSDs, as

well as the audited financial statements and associated reports or documents.

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6A:23A-18.16 Fiscal and budget information

(a) In accordance with a timeline and format prescribed by the Commissioner, or his or her

designee, each APSSD shall submit information to the Commissioner, or his or her

designee, including, but not limited to:

1. Fiscal and program information, including:

i. The number of students served;

ii. The number of each class type;

iii. Number of schools days;

iv. The daily hours in session; and

v. Revenues, appropriations, and supporting documents;

2. Staffing information, including, but not limited to:

i. A staff roster, which may include requested information, such as names, job

titles, salaries, hours worked, and certification(s), degree(s), and license(s) held;

3. An affidavit the program meets the standards of, and is conducted in full compliance

with, the Individuals with Disabilities Education Act; Section 504 of the

Rehabilitation Act of 1973; Title II and III of the Americans with Disabilities Act,

P.L. 101-336; N.J.S.A. 18A:46-1 et seq.; this subchapter; and N.J.A.C. 6A:14; and

4. An affidavit the owner(s)/operator(s) of the program is aware of the non-allowable

costs contained in N.J.A.C. 6A:23A-18.6 and the costs charged as allowable costs

in the APSSD tuition rate are consistent with a student with disabilities’ IEP and

shall be reasonable, that is, ordinary and necessary and not in excess of the cost

incurred by an ordinarily prudent person in the administration of public funds.

(b) The Department annually shall publish a Taxpayer’s Guide to Education Spending for APSSDs.

partners meetings for a partnership, available upon the Department’s request.

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6A:23A-18.17 Failure to comply with Department directives

The Department may place an APSSD on conditional approval status if the APSSD fails to

comply with Department regulations such as, but not limited to, failure to refund tuition funds as

a result of a Department tuition audit or failure to provide requested documentation.

6A:23A-18.18 Sale or disposition of assets of an approved private school for students with

disabilities

(a) In the event of the bulk sale or non-bulk sale of the capital assets of an APSSD to any

individual or entity, including another APSSD, the selling APSSD shall:

1. Agree to an independent valuation of the acquired assets for the purpose of

allocation of the total purchase price to the various acquired capital assets;

2. Enter into a written agreement of sale that references and incorporates the values

presented in the independent valuation of the acquired capital assets. The written

agreement of sale shall clearly identify the transferred capital assets and, at a

minimum, include the date(s) of acquisition and historical cost(s), the dates of

capital improvement(s) and historical cost(s), the term of depreciation, the method

of depreciation, and the accumulated depreciation for financial purposes of each

transferred capital asset. The written agreement of sale shall allocate the total

consideration provided to the selling APSSD based upon the independent

valuation of the acquired assets;

3. Within 30 days of sale, the selling APSSD shall provide the Department with a

copy of the sale agreement, the independent valuation of the capital assets, and the

allocation of the purchase price as defined in Internal Revenue Code (IRC) Section

1060 and documented by Internal Revenue Service Form 8594 or successor form;

4. The selling APSSD shall include in the annual audited financial statement as

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required by N.J.A.C. 6A:23A-18.10 in the year of sale, a separate schedule showing

the sale or disposition of its assets and any corresponding tuition refund(s) to the

sending district(s) based on the sale of assets (books, supplies, desks, computers,

equipment under $ 2,000, depreciable equipment, etc.) other than Class VI or VII as

defined in the IRC cited above (goodwill, going concern, etc.);

5. If the buying entity is a new or existing APSSD, establish the APSSD’s beginning

book value for each acquired asset using the independent valuation and the

written agreement of sale, except as provided for in (a)6 below; and

6. If the buyer is an APSSD that is a less-than-arm’s-length buyer or a related party

to the selling APSSD, the buying APSSD shall carry forward the selling APSSD’s

acquisition dates(s), historical cost(s) plus improvements, term and method of

financial depreciation, accumulated depreciation, and book value of the acquired

asset(s) for purposes of determining the allowable annual depreciation or

amortization pursuant to the acquisition.

(b) In the fiscal year of the sale or disposition pursuant to (a) above, the gain or loss on the

sale of capital or non-capital asset(s) shall not be included in the calculation of allowable

costs used to determine the certified actual cost per student, the calculation of surcharge

pursuant to N.J.A.C. 6A:23A-18.7, or public school placement restricted working capital

pursuant to N.J.A.C. 6A:23A-18.8.

event of a sale of real property by an APSSD:

1. If the selling APSSD acquires real property placed in service for the express

purpose of operating the APSSD using all of the proceeds from the sale of real

property within 30 business days of the sale, the selling APSSD shall not be

subject to (c)2 through 4 below.

2. The selling APSSD shall immediately deposit the proceeds received upon the sale

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at settlement into a bank account maintained by the APSSD and credited to the

retained earnings of the profit-making APSSD or the working capital from sale of

real property account of the nonprofit APSSD, except for the simultaneous

purchase of real property placed in service for the express purpose of operating

the APSSD. The sale and treatment of the proceeds shall be included in a

separate schedule in the annual audited financial statement as required by

N.J.A.C. 6A:23A-18.10 in the year of sale and all subsequent years through the

fiscal year in which any corresponding tuition refund(s) has been completed.

3. The selling profit-making APSSD shall:

i. Not withdraw any amount deposited pursuant to (c)1 above from the

APSSD-maintained bank account and/or retained earnings for a period of

12 months, except to acquire real property to be owned by the APSSD and

to be placed in service for the express purpose of operating the APSSD, or

to distribute proceeds as provided for in (c)3ii below; and

ii. Within 13 months after the sale, distribute the proceeds not used to acquire

real property owned by the APSSD and placed in service for the express

purpose of operating the APSSD from retained earnings to sending school

districts that paid tuition to the APSSD during the five years of operation

prior to and including the year of sale as set forth below:

(1) The amount of sale proceeds to be refunded to the sending school

districts shall be equal to, but shall not exceed, the allowable

accumulated depreciation of the property;

(2) The distribution shall be based on the ratio of each sending district

board of education’s total ADE in the APSSD to the APSSD’s

total ADE for the five years of operation prior to and including the

year of sale or disposition of the real property;

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(3) Remaining proceeds may remain in the APSSD’s retained earnings

for use at the discretion of the profit-making APSSD’s management;

(4) Interest earned on the sale proceeds shall be subject to the

provisions of N.J.A.C. 6A:23A-18.7; and

(5) The APSSD shall provide a listing of the total distribution of

retained earnings to the Department within 90 days of filing the

required year-end audited financial statements for the year the

required distribution of retained earnings is reported.

4. The selling nonprofit APSSD shall:

i. Not withdraw any amount deposited pursuant to (c)1 above from the

APSSD-maintained bank account and/or working capital for a period of 12

months, except to acquire real property to be owned by the APSSD and to

be placed in service for the express purpose of operating the APSSD, or to

distribute working capital as required by N.J.A.C. 6A:23A-18.5(a)21.

ii. Within 13 months after the sale by the APSSD, distribute the proceeds not

used to acquire real property owned by the APSSD and placed in service

for the express purpose of operating the APSSD, or distributed as required

by N.J.A.C. 6A:23A-18.5(a)21 to sending school districts that paid tuition

to the APSSD during the five years of operations prior to and including

the year of sale as set forth below:

(1) The amount of sale proceeds to be refunded to the sending school

districts shall be equal to, but shall not exceed, the allowable

accumulated depreciation of the property;

(2) The distribution shall be based on the ratio of each sending district

board of education’s total ADE in the APSSD to the APSSD’s

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total ADE for the five years of operation prior to and including the

year of sale or disposition of the real property;

(3) Remaining proceeds may be transferred to the APSSD’s working

capital account within the limitations at N.J.A.C. 6A:23A-18.8 for

use at the discretion of the APSSD’s management; and

(4) Interest earned on the sale proceeds shall be subject to the

provisions of N.J.A.C. 6A:23A-18.8.

(d) In the event of a sale of stock representing ownership of a profit-making APSSD, the new

owner of the APSSD assumes the carryover book value of all assets and liabilities held by

the profit-making APSSD. Any gain or loss on the sale of the stock shall be outside of the

operations of the APSSD and shall not impact the calculation of the certified actual cost per

student or the surcharge pursuant to N.J.A.C. 6A:23A-18.7 in the year of sale or disposition.

6A:23A-18.19 Annual disclosure statement

(a) Annually, each APSSD shall file a management disclosure of information statement with

the Department on a form prescribed by the Commissioner, or his or her designee. The

statement shall be signed by the director, owner, or president of the APSSD who is filing

the statement. The signature shall constitute a representation of the accuracy of the

statement’s contents.

(b) All disclosure statements filed shall include, but shall not be limited to, salary, pension,

and other information regarding staff members, related staff, related parties, vendors, and

business interests.

before November 1 of each subsequent calendar year.

(d) All annual disclosure statements filed shall be considered public records.

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(e) An APSSD that fails to file a statement, or files an annual disclosure statement containing

information the statement filer knows to be false, shall be subject to reporting to

appropriate State agencies and/or be assessed non-allowable costs documented in its

annual audited financial statements as applicable in this subchapter. Nothing in this

subsection shall be construed to prevent or limit criminal prosecution.

6A:23A-18.20 Nepotism

(a) Each APSSD shall develop and implement a nepotism policy to be included in the employee

handbook, pursuant to N.J.A.C. 6A:23A-18.5(f). The policy shall include the following:

1. A definition of “relative” consistent with N.J.S.A. 52:13D-21.2 and N.J.A.C.

6A:23A-1.2, and a definition of “member of immediate family” consistent with

N.J.S.A. 52:13D-13 and N.J.A.C. 6A:23A-1.2;

2. A provision prohibiting any relative of an APSSD official from being employed

in an office or position at the APSSD, unless:

i. The relative is properly qualified for the position;

ii. The relative is properly licensed for the position; and

iii. The relative’s salary and fringe benefits are comparable to a person of like

experience and education.

(b) Nepotism shall be disclosed in the annual disclosure statement filed pursuant to N.J.A.C.

6A:23A-18.19. If the relative relationship is unknown at the time the disclosure form is

filed, the APSSD shall file an updated annual disclosure form immediately upon the

statement filer obtaining knowledge of the relationship.

6A:23A-18.21 Travel

(a) Each APSSD shall ensure the effective and efficient use of funds by adopting and implementing

policies and procedures related to the use of funds for travel by its employees and officials.

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(b) Travel expenditures shall be defined as the costs paid by the APSSD, whether directly by

the APSSD or by employee reimbursement, for travel by APSSD employees to training

and seminars, conventions and conferences, and APSSD-sponsored events or attendance

at meetings or conferences. Costs may include transportation, meals, lodging, and

registration or conference fees directly related to participation in an event. Travel

expenditures shall not include the cost of mileage reimbursement or tolls for travel

carried out in the performance of regularly assigned job functions such as, but not limited

to, travel between commonly owned APSSDs.

and shall be directly related to, and within the scope of, the employee’s or APSSD’s

current responsibilities and/or professional development plan(s).

(d) The amount of travel expenditures included within the certified actual cost per student

each year shall be the lesser of the following:

1. One-quarter of one (.25) percent of an APSSD’s total actual allowable costs in the

current fiscal year, not including travel expenditures; or

2. Twenty thousand dollars ($20,000).

(e) APSSDs may apply for a waiver of the travel expenditure limitations in (d) above.

Waiver requests shall be in writing and submitted to the Commissioner, or his or her

designee, prior to the end of the fiscal year for which the waiver is sought. Waivers

requests shall be submitted in advance of the travel and will be approved only in

instances where the APSSD demonstrates that, due to the limitations imposed under (d)

above, APSSD staff attendance at a necessary or required professional development

opportunity or training will result in non-allowable costs.

1. The name, location, and date(s) of the event supported by a copy of the agenda or

program for the event;

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2. A statement justifying the necessity for each staff member(s) attendance,

including the primary purpose of the event, the relevance of the event to the staff

member’s work duties, and how the event will improve instruction or the

operation of the APSSD; and

3. A detailed budget for the event, including, but not limited to, the travel method(s)

and cost, identification of the hotel or other accommodation and the rate per night,

total meal allowance, and the cost of registration.

(f) Any travel expenditure(s) that exceeds the limits in (d) above without an approved waiver

shall be considered a non-allowable cost consistent with N.J.A.C. 6A:23A-18.6(a)70.

(g) The following types of expenditures shall not be eligible for inclusion in the certified

actual cost per student:

1. Travel expenditures by employees whose duties are unrelated to the travel event’s

purpose or who are not required to attend to meet continuing education

requirements or to comply with law or regulation;

2. Travel by spouses, civil union partners, domestic partners, immediate family

members, or other relatives or unrelated persons who are not school employees;

3. Costs for employee attendance for coordinating other attendees’ accommodations

at the travel event;

4. Lunch or refreshments for training sessions, professional development, and

retreats held within the APSSD, including in-service days beyond the limitations

at N.J.A.C. 6A:23A-18.6(a)18;

5. Training to maintain a certification that is not required as a condition of employment;

6. Charges for laundry, valet service, or entertainment;

7. Limousine services and chauffeuring costs to or during an event;

8. Alcoholic beverages;

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9. Entertainment costs, including, but not limited to, amusement, diversion, and

social activities, and any directly associated costs;

10. Gratuities or tips in excess of those permitted by the Federal per diem rates;

11. Hospitality rooms;

12. Souvenirs, memorabilia, promotional items, or gifts;

13. The cost associated with a conference, meeting, or seminar held in countries not

contiguous to the United States; and

14. Other travel expenditures that are unnecessary and/or excessive.

6A:23A-18.22 Behavior modification

(a) APSSDs recording expenditures for behavior modification shall adopt a policy that

defines the procedures, evidence-based strategies, techniques, and approaches used in the

APSSD’s behavior modification program.

(b) Behavior modification, provided pursuant to (a) above, shall not include:

1. Cash or checks;

2. The replacement of meals or components of meals on a regular basis outside of

special achievements outlined in the policy described in (a) above; or

3. High-dollar value items such as personal electronics.

6A:23A-18.23 Child nutrition

(a) APSSDs may provide meals to students that align to the Dietary Guidelines for

Americans, using United States Department of Agriculture’s meal patterns reviewed

and/or approved by the New Jersey Department of Agriculture. The costs associated with

providing meals may be included in the certified actual cost per student if the following

requirements are met:

1. Nonprofit APSSDs shall:

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i. Ensure the menu is approved by the New Jersey Department of Agriculture;

ii. Apply for and receive funding from the Child Nutrition Program

administered by the New Jersey Department of Agriculture;

iii. Charge students for a reduced and/or paid meal; and

iv. Not have total food service costs, net of the reimbursement and/or sales

pursuant to (a)1iii above, that exceed the maximum daily price schedule for a

high school published annually by the New Jersey Department of Agriculture.

Excess expenditures are non-allowable costs, except for where they are solely

attributable to substitutions to meals when the disability restricts the child’s diet.

2. For-profit APSSDs shall:

i. Ensure the menu is approved by the New Jersey Department of Agriculture;

ii. Charge students for a reduced and/or paid meal; and

iii. Not have total food service costs, net of the reimbursement and/or sales

pursuant to (a)2ii above, that exceed the maximum daily price schedule for

a high school published annually by the New Jersey Department of

Agriculture. Excess expenditures shall be deemed non-allowable costs,

except for where they are solely attributable to substitutions to meals when

the disability restricts the child’s diet.

(b) The cost of meals for staff shall not be included in the certified actual cost per student.

Subchapter 19. Emergency State Aid and Residency Determination

6A:23A-19.1 Emergency aid

(a) For the purposes of this subchapter, a district board of education does not include an

educational services commission or jointure commission.

(b) A district board of education may request emergency aid pursuant to N.J.S.A. 18A:58-11

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as follows:

1. The district board of education shall submit to the executive county superintendent

as follows:

i. A resolution that indicates the specific requested amount of emergency aid

and identifies the emergency condition that exists within the school district;

ii. A detailed statement about the emergency condition, which indicates the

reason why the condition was unforeseeable and/or why the costs

associated with the condition were unforeseeable;

iii. The board secretary's latest monthly financial report, accompanied by a

statement showing the projected end-of-the-year general fund free balance

and a detailed accounting of how the emergency aid will be expended; and

iv. A statement included in the board's minutes that no other funds can be

reallocated within the existing budget for the emergency condition without

adversely impacting the district board of education's ability to meet the

New Jersey Student Learning Standards.

2. The district board of education shall separately account for disbursements against

emergency aid funds in its general fund accounting records.

necessary to support a district board of education's request for emergency aid.

(d) The executive county superintendent shall submit a recommendation regarding a request

for emergency aid and all of the information submitted by the district board of education

making the request to the Office of School Facilities and Finance to determine whether to

recommend to the Commissioner that a request be sent to the State Board of Education

for approval.

1. In determining whether a recommendation for emergency aid will be sent to the

State Board of Education, the Department will consider the extent the district board

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of education budgeted an adequate level of surplus for unexpected expenditures.

2. If the district board of education did not budget an adequate level of surplus, the

Department will not recommend the emergency aid request.

(e) The State Board of Education will review any emergency aid requests that have been

recommended and will fully approve, partially approve, conditionally approve, or deny

an emergency aid request.

6A:23A-19.2 Method of determining the district of residence

(a) The district of residence for school funding purposes shall be determined according to the

following criteria:

1. The "present district of residence" of a child in a residential State facility, defined

in N.J.S.A. 18A:7F-45 and referred to in the first paragraph of N.J.S.A. 18A:7B-

12.b, means the New Jersey district of residence of the child's parent(s) or

guardian(s) as of the last school day prior to October 16.

2. The "present district of residence" of a child placed by a State agency in a group

home, skill development home, approved private school for students with

disabilities or out-of-State facility, also referred to in N.J.S.A. 18A:7B-12.b

means the New Jersey district of residence of the child's parent(s) or guardian(s)

as of the date of the child's most recent placement by the State agency. In

subsequent school years spent in the educational placement made by a State

agency, the child's "present district of residence" shall be determined in the same

manner as for a child in a residential State facility as set forth in (a)1 above.

3. If the State becomes the child’s legal guardian after the date of the child’s initial

placement by a State agency, the State will assume financial responsibility for the

child’s educational costs in subsequent school years.

(b) The "present district of residence" or "district of residence" referred to in N.J.S.A. 18A:7B-12.b

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shall be determined by the Commissioner or his or her designee based upon the address

submitted by the Department of Corrections, the Department of Children and Families, or the

Juvenile Justice Commission on forms prepared by the Department of Education.

of the district of residence. In order to prevent a lapse in the child’s education and/or

child study services, the district board of education shall be bound by such determination

unless and until it is reversed on redetermination or appeal pursuant to the provisions of

(e) and (f) below.

(d) A district board of education contesting the Department's determination of district of

residence shall submit a written notification of a dispute to the Office of School Facilities

and Finance within 30 days of the receipt of a final notice that a child was determined to

be a resident of the district for purposes of State funding. As part of this written notice,

the following information shall be submitted:

1. A written statement detailing the effort of the district board of education to verify

the determination of the Department;

2. Written rationale for rejecting the determination of the Department; and

3. Any additional information the district board of education has obtained that might

enable redetermination of the district of residence.

(e) The Office of School Facilities and Finance shall attempt to resolve the dispute

administratively and shall notify the district board of education whether a redetermination

of district of residence will be made within 90 days of the receipt of written notification

that a dispute exists.

(f) A district board of education may initiate a formal proceeding before the Commissioner

to resolve such a dispute if the Office of School Facilities and Finance is unable to

resolve a dispute within the 90-day time limit, by filing a Petition of Appeal with the

Commissioner pursuant to the provisions of N.J.A.C. 6A:3, Controversies and Disputes.

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(g) As prescribed by N.J.S.A. 18A:7B-12, the "district of residence" for a homeless child

whose parent(s) or guardian(s) temporarily moves from one school district to another is

the district in which the parent(s) or guardian(s) last resided prior to becoming homeless.

This district shall be designated as the district of residence for as long as the parent(s) or

guardian(s) remains homeless.

6A:23A-19.3 Address submission for determining the district of residence

(a) The address submitted to the Department for determining the district of residence for

school funding purposes for a child described below shall be the address defined below:

1. If the State has custody of the child or if a court or the State has appointed a third

party as the custodian of the child, the present address of the parent(s) or

guardian(s) with whom the child resided immediately prior to his or her most

recent admission to a State facility or placement by a State agency shall be

submitted. If the child resides in a resource family home, the present address of

the resource family parent(s) shall be submitted pursuant to N.J.S.A. 18A:7B-12.

2. If the child's parents are divorced with joint guardianship, the present address of

the individual parent with whom the child resided as of the date required by

N.J.A.C. 6A:23A-19.2(a)1 or 2 shall be submitted.

3. If the child’s parents are divorced with joint guardianship and the child resides

with each parent equally, the present address of both the child’s father and mother

as of the date required by N.J.A.C. 6A:23A-19.2(a)1 or 2 shall be submitted.

4. If the child's sole parent or legal guardian resides in a State facility, the State will

assume financial responsibility for the child’s educational costs until such time as

the parent or guardian no longer resides in the State facility.

5. If the child resides in a non-resource family home with a relative for less than one

year immediately prior to the child’s most recent admission to a State facility or

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most recent placement by a State agency, the present address of the child’s

parent(s) or guardian(s) at the time this placement is submitted.

6. If the child resides in a non-resource family home with a relative pursuant to

N.J.S.A. 18A:38-1.d for one or more years immediately prior to the child’s most

recent admission to a State facility or most recent placement by a State agency, the

present address of the child’s relative(s) at the time of this placement is submitted.

7. If the child is age 18 or older or has been legally emancipated; and has lived on

his or her own before the initial placement, the present address of the child as of

the date required by N.J.A.C. 6A:23A-19.2(a)1 or 2 is submitted.

Subchapter 20. Purchase and Loan of Textbooks

6A:23A-20.1 Eligibility

(a) For the purposes of this subchapter, a district board of education does not include an

educational services commission or jointure commission.

(b) N.J.S.A. 18A:58-37.1 et seq. requires each district board of education in which a

nonpublic school is located, to purchase and to loan, without charge, upon individual

requests, textbooks to students in the nonpublic school or schools located within the

school district when such students are residents of the State.

maintain a residence in this State are not eligible to receive such textbooks. Children who

are enrolled in a nonpublic school whose tuition is paid by a district board of education

are not eligible to receive such textbooks.

6A:23A-20.2 Responsibility of the district board of education

A district board of education shall distribute to all students on an equitable basis existing book stocks

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and newly purchased textbooks purchased pursuant to N.J.S.A. 18A:58-37.1 et seq. A district board

of education shall not discriminate against students in either public or nonpublic schools.

6A:23A-20.3 Individual requests

(a) Individual written requests signed by the parent(s) or legal guardian(s) of nonpublic

school students for the loan of textbooks are addressed to the district board of education

in which the nonpublic school is located.

(b) Individual requests are submitted directly to the district board of education in which the

nonpublic school is located or to the nonpublic school. In the latter case, the nonpublic

school official shall forward such requests collectively to the district board of education.

(d) A district board of education shall purchase textbooks in accordance with district board

of education policy and purchasing practices.

(e) Students attending public schools are not required to submit such requests.

6A:23A-20.4 Ownership and storage of textbooks

(a) All textbooks purchased under the provisions of N.J.S.A. 18A:58-37.1 et seq. remain the

property of the district board of education, which shall indicate such ownership in each

book by a label.

(b) The district board of education shall be responsible for the receipt of the textbooks from

the vendor and inventory of such textbooks.

board of education at the end of the school year, or may enter into agreements with the

nonpublic schools to store such books. In the event of such an agreement, the district

board of education shall not pay storage charges of any kind to a nonpublic school for

this service.

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6A:23A-20.5 Accounting entries

(a) Expenditures for the purchase of textbooks may include the cost of freight or postage for

transporting such books from the vendor to the district board of education.

(b) The district board of education shall enter the cost of textbooks for students enrolled in

the public schools in the general current expense fund in the account designated in the

minimum chart of accounts.

students in the special revenue fund in the account designated in the minimum chart of

accounts. The district board of education shall record State aid received pursuant to

N.J.S.A. 18A:58-37.1 et seq. separately in the special revenue fund as State aid.

6A:23A-20.6 Charge for textbook loss or damage

(a) Each district board of education shall make reasonable rules and regulations governing

the loan of textbooks, which may contain requirements for reimbursement by students to

the district board of education for damage, loss, or destruction of the loaned textbooks.

(b) Such rules and regulations are applicable to both public and nonpublic school students.

Subchapter 21. Management of Public School Contracts

6A:23A-21.1 Change orders and open-end contracts

(a) Changes in quantities, work performed, services rendered, materials, supplies, or

equipment delivered or provided shall not be authorized, permitted, or accepted, except by

the procedures established in this section. All change orders are subject to N.J.A.C. 5:30-11

as applicable, and the following:

1. Each change order shall be in writing and shall be numbered consecutively

(beginning with the number one) for each project or contract;

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2. Change orders that result in payment reduction below the originally contracted price

may be made by locally established procedure, provided that any change orders

increasing costs on the same contract shall include reference to such reductions;

3 Quantities of items or work shall not be changed in such a manner as to nullify the

effect of the competitive determination of lowest responsible price that was made

at the time of contract award, provided that at said time the changes could have

been reasonably foreseen; and

4. Responsibility required by this section to be exercised specifically by the district board

of education or charter board of trustees may not be delegated. In those instances in

which authority is to be exercised by a school official, the authority, responsibility, and

required procedures should be clearly spelled out in advance, by resolution.

(b) Orders placed under open-end contracts are not considered change orders for purposes of

this section.

(d) Change orders for contracts for materials, supplies, and equipment that are not part of a

capital project contract are governed by the following:

1. Change orders may be used to change the number of units or items originally

advertised and contracted for, provided:

i. Unit prices were sought at the time of advertising and included in the

contract; and

ii. The advertising and the contract included a provision that the unit prices

could be so used.

2. Change orders may not be used to substantially change the quality or character of

the items to be provided, inasmuch as such factors would have been a factor in the

original bidding.

3. Such changes shall not cause the originally awarded contract price to be exceed

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cumulatively by more than 20 percent net.

4. Availability of funds shall be certified by the school business administrator/board

secretary prior to authorizing any change orders that increase costs.

5. Changes may be effectuated by the school official authorized to serve as

purchasing agent, subject to such contracts or approval requirements as the district

board of education or charter school board of trustees may lawfully impose.

6. Change orders may be authorized by the purchasing agent for price adjustment for

petroleum products, provided:

i. There has been a determination by the school board attorney that such a

price adjustment is authorized by law;

ii. The original bidding specifications and contract so authorize;

iii. An objective price benchmark not under the direct control of the supplier

is utilized to establish the price changes, and the changes are not for the

purpose of correcting asserted bidding errors; and

iv. Adequate funds have been certified as being available.

(e) Change order for professional and extraordinary unspecified services (EUS) contracts are

governed by the following:

1. Changes shall be within the scope of activities of the original contract, and not for

the purpose of undertaking new or different work or projects. Changes in

payments for activities within the scope of activities of the contract shall be in

accordance with a schedule of specific charges or rates contained in the contract

and shall be effectuated by a written change order authorized by the appropriate

school official. If such a schedule is not included in the contract, the contract shall

be amended to provide for same.

2. If the change is not within the scope of activities of the original contract:

i. If the contract was awarded without competitive bidding being required by

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law or rule (as in the case for professional services and certain authorized

extraordinary, unspecifiable services per N.J.S.A. 18A:18A-5.a(2)), any

change beyond the original scope of activities may be made by

amendatory contract; and

ii. If the consulting contract was not a professional service and was required

to be subject to competitive bidding, any change beyond the original scope

of activity shall be by new contract based on new bidding.

3. The school business administrator/board secretary shall certify the availability of funds

and that all required approvals have been received pursuant to N.J.A.C. 6A:23A-13 prior

to authorizing any change order that increases costs.

4. An amendatory contract may be effectuated by the same method required for the

authorization of the original contract.

(f) The issuance of purchase orders pursuant to an open-end contract is considered to be the

carrying out of the contract and not a change order. The following requirements apply:

1. A district board of education or charter school board of trustees shall not use

orders under open-end contracts for purposes such as changing the quality or

character of items to be provided, or exceed the maximum number(s) of items or

units provided for in the original specifications and contract. Such changes would

constitute a change order;

2. The district board of education or charter school board of trustees shall execute

such contract for a period not to exceed the requirements of N.J.S.A. 18A:18A-1

et seq., the Public School Contracts Law, unless specifically authorized by law;

3. The district board of education or charter school board of trustees shall execute a

certificate of availability of funds each time an order is placed covering the amount

of the order, unless the district board of education or charter school board of

trustees wishes to commit and certify the full amount of the open-end contract at the

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outset. The certificate must be executed before the district board of education or

charter school board of trustees incurs a contractual liability on its part; and

4. The school official authorized to serve as purchasing agent pursuant to N.J.S.A.

18A:18A-2 shall place such orders subject to such controls or approval

requirements as the district board of education or charter school board of trustees

may lawfully impose.

6A:23A-21.2 Acceptance of bonds under the Public School Contracts Law

(a) A district board of education or charter school board of trustees may require the

following bonds, as authorized by N.J.S.A. 18A:18A-23 to 25:

1. A performance bond;

2. A bid bond; and/or

3. A labor and material bond.

(b) A district board of education or charter school board of trustees may require in the notice to

bidders or in the specifications that bidders guarantee they will enter into a contract with

the district board of education or charter school board of trustees and will furnish any

prescribed performance bond or other security required as a guarantee or indemnification.

The guarantee may be given, at the option of the bidder, by certified check, cashier's check,

or bid bond. When the guarantee is given in the form of a bid bond, the district board of

education or charter school board of trustees shall ensure that such bid bond:

1. Be given by a responsible surety or insurance company licensed to operate in

New Jersey. A district board of education or charter school board of trustees is

prohibited from requiring that bidders submit a bid bond from a particular surety

or insurance company; or

2. Be given by a responsible individual residing in New Jersey. The district board of

education or charter school board of trustees may reject such individual bid bond

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if not satisfied with the sufficiency of the individual surety offered.

bond is in the form of a certificate, identifying the bidder whose acts are guaranteed, the

name of the surety company, insurance company or individual surety, and the district

board of education or charter school board of trustees in whose favor the bonds are given.

(d) The district board of education or charter school board of trustees shall ensure that the

"penalty" or "penal sum" on performance bonds, labor and material bonds, and all other

such bonds is expressed in words and figures as a specific number of dollars and not as a

percentage of the bid.

(e) The district board of education or charter school board of trustees shall ensure that the

"penalty" or "penal sum" on performance and labor and material bonds is in the amount

of 100 percent of the contract price.

6A:23A-21.3 Public sale of bonds

(a) A district board of education may accept a financial surety bond in lieu of a certified,

cashier’s, or treasurer’s check as a bid deposit pursuant to N.J.S.A. 18A:24-41.a, and in

accordance with the rule adopted by the Local Finance Board at N.J.A.C. 5:30-2.10.

(b) A district board of education may choose to conduct the public sale of bonds through the

submission of electronic bids or proposals, as authorized at N.J.S.A. 18A:24-36.a, and in

accordance with the rules adopted by the Department of Community Affairs at N.J.A.C.

5:30-2.9 and 2.10.

6A:23A-21.4 Contracts for behind-the-wheel driver education

(a) A district board of education or charter school board of trustees shall negotiate or award by

resolution at a public meeting contracts with private driver education schools providing

behind-the-wheel driver education for any term not exceeding in the aggregate three years,

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pursuant to N.J.S.A. 18A:18A-42.i, without public advertising for bids. The district board

of education or charter school board of trustees shall indicate in such resolution the private

driver education school is required to provide behind-the-wheel driver education that is

substantially equivalent to that provided by the district board of education or charter school

board of trustees at less cost than current or other proposed programs.

(b) A district board of education or charter school board of trustees shall negotiate or award

such contracts with approved private driver education schools. A driver education school

holding a current license or certificate of approval issued by the Chief Administrator of

the Motor Vehicle Commission is considered approved by the Commissioner of

Education for the purpose of providing behind-the-wheel driver education. The district

board of education or charter school board of trustees shall obtain from the private driver

education school a copy of such current license or certificate of approval and maintain the

copy on file with the contract.

6A:23A-21.5 Joint purchasing systems

A district board of education or charter school board of trustees may by resolution establish joint

purchasing systems pursuant to N.J.S.A. 40A:11-11. Such joint purchasing system is effective

only upon approval of the Director of the Division of Local Government Services in the

Department of Community Affairs.

6A:23A-21.6 Multi-year leasing

A district board of education or charter school board of trustees shall execute multi-year leases only

as authorized by the Public School Contracts Law at N.J.S.A. 18A:18A-42.f and 18A:20-4.2(f) and

in accordance with rules promulgated by the Department of Community Affairs at N.J.A.C. 5:34-3.

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Subchapter 22. Financial Operations of Charter Schools

6A:23A-22.1 Definitions

The words and terms as used in this subchapter are defined in N.J.A.C. 6A:23A-15.1.

6A:23A-22.2 Bookkeeping and accounting for charter schools

A charter school board of trustees shall comply with GAAP and other requirements and

provisions as set forth in N.J.A.C. 6A:23A-16.

6A:23A-22.3 Certification

A charter school board of trustees shall employ or contract with a person who holds a New

Jersey standard or provisional school business administrator certificate in accordance with

N.J.A.C. 6A:9B-12.7 to oversee fiscal operations of the charter school.

6A:23A-22.4 Financial requirements

(a) A charter school board of trustees may incur debt for a period no greater than 12 months except:

1. During the first year the charter school is approved when the debt is incurred by

the charter school board of trustees for a period no longer than January 15 of the

preceding school year to June 30 of the first school year of the charter; and

2. For all other years the charter school is approved when the debt incurred by the

charter school board of trustees for a period of 12 months or greater is:

i. Fully secured by the value of the real property or other asset, so the total

value of all such debt does not exceed the total appraised value of the

property or asset by which the debt is secured; and

ii. Non-recourse to the charter school.

(b) A charter school board of trustees may acquire real property by a lease or a lease with an

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option to purchase for use as a school facility providing that the charter school board of

trustees shall ensure:

1. The lease contains a provision terminating the obligation to pay rent upon the

denial, revocation, non-renewal, or surrender of the charter; and

2. The lease does not contain a provision accelerating the obligation to pay rent in

the event of default.

school only after the final granting of the charter by the Commissioner has occurred. If

funds are withheld pending the final granting of the charter, the district board of

education shall pay all withheld funds to the charter school with the first scheduled

payment after the effective date of the charter.

(d) A charter school shall be subject to monitoring by the Commissioner to ensure that the

percentage of school funds spent in the classroom is at least comparable to the average

percentage of school funds spent in the classroom in all other public schools in the State.

The calculation for this percentage in both the annual budget and the Comprehensive

Annual Financial Report is based on National Center for Educational Statistics as

published by the U.S. Department of Education.

(e) If, at any time, the Commissioner denies, revokes, or does not renew a school's charter, or

a charter school board of trustees surrenders its charter or becomes insolvent, all assets of

the charter school board of trustees, after satisfaction of all outstanding claims by

creditors, are subject to equitable distribution by the Commissioner among the

participating district of residence and non-resident district(s). A charter school board of

trustees shall include a provision in its bylaws concerning distribution of assets upon

denial, revocation, non-renewal, or surrender of its charter or insolvency of the charter

school that is consistent with this rule.

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6A:23A-22.5 Public school contract law

(a) A charter school board of trustees shall be subject to the provisions of the public school

contracts law, N.J.S.A. 18A:18A-1 et seq.

(b) Any agency, corporation, person, or entity that enters into a contract or agreement on

behalf of a charter school to provide administrative, educational, or other services shall

be subject to the provisions of the public school contract law, N.J.S.A. 18A:18A-1 et seq.

6A:23A-22.6 Public relations and professional services; board policies; efficiency

(a) Each charter school board shall establish by policy or policies a strategy or strategies in

order to minimize the cost of public relations, as defined in N.J.A.C. 6A:23A-9.3(c)14,

and professional services. The policy or policies shall include, to the extent practicable

and cost effective, but need not be limited to, the following provisions:

1. A maximum dollar limit, established annually prior to budget preparation, for public

relations, as defined in N.J.A.C. 6A:23A-9.3(c)14, and each type of professional

service, with appropriate notification to the board of trustees if it becomes necessary

to exceed the maximum. Upon such notification, the board of trustees may adopt a

dollar increase in the maximum amount through formal board action;

2. Establishment of procedures to ensure the prudent use of legal services by employees

and board of trustees members and the tracking of the use of those services;

3. Charter schools shall establish procedures to effectively manage legal costs.

Procedures may include:

i. A limitation on the number of contact persons with the authority to request

services or advice from contracted legal counsel;

ii. Criteria or guidance to prevent the use of legal counsel unnecessarily for

management decisions or readily available information contained in

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charter school materials such as policies, administrative regulations, or

guidance available through professional source materials;

iii. A provision that requests for legal advice shall be made in writing and shall be

maintained on file in the business office and a process to determine whether

the request warrants legal advice or if legal advice is necessary; and

iv. A provision to maintain a log of all legal counsel contact, including name

of legal counsel contacted, date of contact, issue discussed, and length of

contact. Legal bills shall be compared to the contact log and any variances

shall be investigated and resolved;

4. A provision that requires that contracts for legal services comply with payment

requirements and restrictions pursuant to N.J.S.A. 18A:19-1 et seq. and as follows:

i. Advance payments shall be prohibited;

ii. Services to be provided shall be described in detail in the contract;

iii. Invoices for payment shall itemize the services provided for the billing

period; and

iv. Payment shall be only for services actually provided;

5. Professional services contracts are issued in a deliberative and efficient manner

that ensures the charter school receives the highest quality services at a fair and

competitive price or through a shared service arrangement. This may include, but

is not limited to, issuance of such contracts through a request for proposals (RFP)

based on cost and other specified factors or other comparable process; and

6. Professional services contracts are limited to non-recurring or specialized work

for which the charter school does not possess adequate in-house resources or in-

house expertise to conduct.

i. Charter schools are prohibited from contracting with legal counsel or using

in-house legal counsel to pursue any affirmative claim or cause of action on

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behalf of charter school administrators and/or any individual board members

for any claim or cause of action in which the damages to be awarded would

benefit an individual rather than the charter school as a whole.

ii. Charter school publications shall be produced and distributed in the most

cost-efficient manner possible that will enable the charter school to inform

and educate the target community. The use of expensive materials or

production techniques where lower cost methods are available and

appropriate, such as the use of multi-color glossy publications instead of

suitable, less expensive alternatives, is prohibited.

iii. Public relations activities, such as booths at Statewide conferences,

marketing activities and celebrations for opening schools and community

events, and TV productions that are not part of the instructional program

or do not provide, in a cost-effective way, information about charter

school or board operations to the public, that are excessive in nature are

prohibited. All activities involving promotional efforts to advance a

particular position on elections or any referenda are prohibited.

iv. Nothing in this section shall preclude boards of trustees from accepting

donations or volunteer services from community members, local private

education foundations, and local business owners to conduct or assist in

public relations services. Examples include, but are not limited to:

(1) Providing charter school flyers, newsletters, or other materials

containing charter school related information of public concern to

local businesses, public meeting places, or other local

organizations to display or make available for dissemination;

(2) Making charter school related information of public concern

available to local newspapers to publish related articles; and

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(3) Utilizing volunteered services of local community members,

charter school employees, members of parent organizations, or

local businesses with expertise in related areas such as printing,

advertising, publishing, or journalism.

6A:23A-22.7 Charter school response to Office of Fiscal Accountability and Compliance (OFAC)

investigation report

(a) Any charter school that has been subject to an audit or investigation by the Department's

Office of Fiscal Accountability and Compliance (OFAC) shall discuss the findings of the

audit or investigation at a public meeting of the charter school board of trustees no later

than 30 days after receipt of the findings.

(b) Within 30 days of the public meeting required in (a) above, the charter school board of

trustees shall adopt a resolution certifying that the findings were discussed in a public

board meeting and approving a corrective action plan to address the issues raised in the

findings. This resolution shall be submitted to OFAC within 10 days of adoption by the

board of trustees.

6A:23A-22.8 Verification of payroll check distribution

(a) At least once every three years between the months of September through May, charter

schools shall require each charter school employee to report to a central location(s) and

produce picture identification and sign for release of his or her paycheck or direct deposit

voucher. The charter school may exclude per diem substitutes from the required verification.

(b) Picture identification shall be in the form of a charter school issued identification card,

valid drivers' license, official passport, or other picture identification issued by a state,

county, or other local government agency.

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member to match the picture identification to the employee roster maintained by the office

of personnel or human resources prior to release of the pay check or direct deposit voucher.

(d) Where no appropriate identification can be produced, the school business administrator

shall withhold paychecks or stop direct deposits until such time that the payee/charter

school employee can produce appropriate identification or until an investigation and

corrective action is concluded, as appropriate to the circumstances.

(e) Upon completion of the payroll check distribution verification procedures set forth in this

section, the chief school administrator/lead person shall submit a certification of

compliance, in a form prescribed by the Department, to the executive county

superintendent. Verification of the charter school's compliance with the provisions of this

section will be required as part of the annual audit.

6A:23A-22.9 Board of trustees expenditures for non-employee activities, meals, and refreshments

(a) The following words and terms used in this section shall have the following meanings,

unless the context clearly indicates otherwise:

1. “Activities” means events or functions provided or held for the benefit of

students, dignitaries, and other “non-charter school” employees (for example,

parents) that are paid from public funds.

2. “Dignitary” means a notable or prominent public figure; a high-level official; or

one who holds a position of honor. A dignitary, for purposes of this section, is not

a charter school employee or board of trustees member.

(b) Allowable expenditures for non-employee charter school board of trustees activities shall

include:

1. All reasonable costs, including light meals and refreshments, directly related to

activities that benefit students and are part of the instructional program, including

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expenditures for field trips and extracurricular programs that are not solely for

entertainment. Nothing in this subsection shall preclude boards of trustees from

using student activity funds or accepting donations to support student activities

that are solely for student entertainment;

2. All reasonable costs directly related to activities of dignitaries and other “non-

charter school” employees (for example, parents), including light meals,

refreshments, and any other directly related expense. It is expected that

expenditures for this purpose will be minimal and infrequent;

3. All reasonable costs of commencement and convocation activities for students; and

4. Expenditures related to charter school employees to the extent such employees are

essential to the conduct of the activity.

1. Pre-approve field trip destinations;

2. Establish dollar thresholds for awards to recognize special accomplishments; and

3. Establish a budget supported by general fund revenues for each category of

activity in a non-discriminatory manner (for example, football, boys soccer, girls

soccer, photography club). Student activity funds are excluded.

(d) Pursuant to N.J.S.A. 18A:11-12 and New Jersey Department of the Treasury, Office of

Management and Budget Circular 16-11-OMB, Travel Regulations, and 11-09-OMB,

Entertainment, Meals, and Refreshments, the following costs shall not be permitted using

public funding

1. Receptions, dinners, or other social functions held for or honoring any employee

or group of employees of the charter school (for example, breakfast, luncheon,

dinner, or reception for retirees or award recipients). This does not prohibit

charter schools from honoring employees without a social function or using

public funds to support reasonable costs of employee recognition awards (for

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example, teacher of the year awards, years of service awards). Use of public funds

for reasonable costs of employee awards is a local discretionary expenditure;

2. Meals or refreshments served to guests at any athletic event or other games or

contests; and

3. Expenses for alcoholic beverages.

(e) Documentation required to support activities, meals, and refreshments at charter school

events shall be:

1. A description of the activity;

2. The purpose/justification of the activity, expressed in terms of the goal(s) or

objective(s) of the charter school;

3. The make-up of the group participating in the activity; and

4. The names and titles of board members or employees included in the group.

6A:23A-22.10 Nepotism policy

(a) As a condition of receiving charter school aid, charter school board of trustees shall

implement the nepotism policy established by this subsection. The nepotism policy shall

include the following:

1. A definition of "relative" that is consistent with N.J.S.A. 52:13D-21.2 and

N.J.A.C. 6A:23A-1.2 and a definition of "immediate family member" that is

consistent with N.J.S.A. 52:13D-13 and N.J.A.C. 6A:23A-1.2;

2. A provision prohibiting any relative of a board member, lead person, or chief

school administrator from being employed in an office or position in the charter

school except that a person employed or to be promoted by the charter school on

the effective date of the policy or the date a relative becomes a board member or

chief school administrator shall not be prohibited from continuing to be employed

or to be promoted in the school, and a charter school may employ a relative of a

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board member, lead person, or chief school administrator provided the charter

school has obtained approval from the executive county superintendent of

schools. Such approval shall be granted only upon demonstration by the charter

school that it conducted a thorough search for candidates and the proposed

candidate is the only qualified and available person for the position;

3. A provision prohibiting the chief school administrator/lead person from

recommending to the board, pursuant to N.J.S.A. 18A:12-21 through 34, any

relative of a board member or chief school administrator/lead person unless the

person is subject to the exception of (a)2 above;

4. A provision prohibiting a charter school administrator from exercising direct or

indirect authority, supervision, or control over a relative of the administrator.

Where it is not feasible to eliminate such a direct or indirect supervisory

relationship, appropriate screens and/or alternative supervision and reporting

mechanisms must be in place;

5. A provision prohibiting a charter school administrator or board member who has a

relative who is a member of the bargaining unit from discussing or voting on the

proposed collective bargaining agreement with that unit or from participating in any

way in negotiations, including, but not limited to, being a member of the negotiating

team; nor should that charter school administrator be present with the school board in

closed session when negotiation strategies are being discussed; provided, however,

the administrator may serve as a technical resource to the negotiating team and may

provide technical information necessary to the collective bargaining process when no

one else in the charter school can provide such information; and

6. A provision prohibiting a charter school administrator who has an immediate

family member who is a member of the same Statewide union in a school district

or another charter school from participating in any way in negotiations, including,

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but not limited to, being a member of the negotiating team or being present with

the board in closed sessions when negotiation strategies are being discussed, prior

to the board attaining a tentative memorandum of agreement with the bargaining

unit that includes a salary guide and total compensation package; once the

tentative memorandum of agreement is established, a charter school administrator

with an immediate family member who is a member of the same Statewide union

in a school district or another charter school may fully participate in the process,

absent other conflicts. Notwithstanding the above in this paragraph, a charter

school administrator who has an immediate family member who is a member of

the same Statewide union in another charter school may service as a technical

resource to the negotiating team and may provide technical information necessary

to the collective bargaining process when no one else in the charter school can

provide such information.

(b) A charter school may exclude per diem substitutes and student employment from its

board nepotism policy.

6A:23A-22.11 Contributions to board members and contract awards

(a) As a condition of receiving charter school aid, charter schools shall have policies that

comply with the provisions of this section to ensure that the charter school shall maintain

honest and ethical relations with vendors and shall guard against favoritism, improvidence,

extravagance, and corruption in its contracting processes and practices. The terms

"business entity" and "interest" as used below are defined as set forth in P.L. 2004, c. 19.

1. No board will vote upon or award any contract in the amount of $17,500 or

greater to any business entity that has made a contribution reportable by the

recipient under P.L. 1973, c. 83 (N.J.S.A. 19:44A-1 et seq.) to a member of the

charter school board of trustees during the preceding one-year period.

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2. Contributions reportable by the recipient under P.L. 1973, c. 83 (N.J.S.A. 19:44A-1 et

seq.) to any member of the charter school board of trustees from any business entity

doing business with the charter school are prohibited during the term of a contract.

3. When a business entity referred to in (a)2 above is a natural person, a contribution

by that person's spouse or child who resides therewith shall be deemed to be a

contribution by the business entity. Where a business entity is other than a natural

person, a contribution by any person or other business entity having an interest

therein shall be deemed to be a contribution by the business entity.

4. The disclosure requirement set forth in section 2 of P.L. 2005, c. 271 (N.J.S.A.

19:44A-20.26) also shall apply when the contract is required by law to be publicly

advertised for bids.

5. This subsection shall not apply to a contract when a charter school emergency

requires the immediate delivery of goods or services.

6A:23A-22.12 Internal controls

(a) As a condition of receiving charter school aid, each charter school shall establish specific

policies and procedures on internal controls to provide management with reasonable assurance

that the charter school's goals and objectives will be met and that meet the requirements of

N.J.A.C. 6A:23A-22.6 through 22.15. Internal controls shall promote operational efficiency

and effectiveness, provide reliable financial information, safeguard assets and records,

encourage adherence to prescribed policies, and comply with law and regulation.

(b) The specific internal controls contained in this subchapter shall be established together

with other internal controls contained in N.J.A.C. 6A and other law and regulations,

required by professional standards, including auditing standards generally accepted in the

United States under Generally Accepted Accounting Principles (GAAP), standards

contained in Government Auditing Standards (GAS) issued by the Comptroller General

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of the United States, and as deemed necessary and appropriate by charter school

management. Any charter school may submit a written request to the Commissioner to

approve an alternate system, approach, or process for implementing the internal controls

required in this subchapter. The application must include documented evidence that

includes, but is not limited to, an independent, third-party written assessment that the

alternative system, approach, or process will achieve the same safeguards, efficiency, and

other purposes as the specified internal control requirement(s).

6A:23A-22.13 Segregation of duties; organization structure

(a) All charter schools shall evaluate business processes annually and allocate available

resources appropriately in an effort to establish a strong control environment.

(b) The school business administrator shall identify processes that, when performed by the same

individuals, are a violation of sound segregation of duties. The school business administrator

shall segregate the duties of all such processes among business office staff based on available

charter school resources, assessed vulnerability, and the associated cost-benefit.

6A:23A-22.14 Standard operating procedures (SOPs) for business functions

(a) Each charter school shall establish SOPs for each task or function of the business

operations of the charter school.

(b) An SOP manual shall include sections on each routine task or function of the following areas:

1. Accounting, including general ledger, accounts payable, accounts receivable,

payroll, fixed assets, and year-end procedures for each;

2. Cash management;

3. Budget development and administration, including tasks such as authorization of

transfers and overtime;

4. Position control;

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5. Purchasing, including such tasks as preparation of requisitions, approval of

purchase orders and encumbering of funds, bid and quote requirements; and

verification of receipt of goods and services;

6. Facilities, including administration of work and health and safety;

7. Security;

8. Emergency preparedness;

9. Risk management;

10. Transportation;

11. Food service;

12. Technology systems; and

13. Information management.

maintained in appropriate storage facilities, and monitored to keep track of inventory.

6A:23A-22.15 Approval of amounts paid in excess of approved purchase orders; board policy

(a) A charter school board shall adopt a policy establishing the approval process for any

remittance of payment for invoice amounts greater than the approved purchase order. The

policy shall require the school business administrator, or assistant school business

administrator, to identify and investigate, if necessary, the reason for any increase to a

purchase order. If it is found that such an increase is warranted, the school business

administrator, or assistant school business administrator, shall either approve a revision to the

original purchase order with the reason noted, approve the issuance of a supplemental

purchase order for the difference, or cancel the original purchase order and issue a new

purchase order. If it is found that such an increase is not warranted, the purchase order shall

be canceled and the goods returned. In no instance shall an adjustment be made to a purchase

order that changes the purpose or vendor of the original purchase order or a bid award.

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(b) Financial systems shall be programmed to:

1. Limit system access so only appropriate business office staff may make purchase

order adjustments;

2. Reject adjustments in excess of any established approval thresholds;

3. Prevent unauthorized changes to be processed;

4. Reject payments where the sum of the invoice amount plus any previous invoices

charged to the purchase order exceeds the sum of the original purchase order

amount plus any authorized adjustments;

5. Reject duplicate purchase order numbers;

6. Reject duplicate invoice numbers; and

7. Prepare an edit/change report listing all payments made in excess of the originally

approved purchase order amount.

listing all payments made in excess of the originally approved purchase order amount to

ensure all payments made are properly authorized.