N.J. Admin. Code § 6A:23A-16.10

Current through Register Vol. 57, No. 1, January 6, 2025

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

(a) A district board of education or charter school or renaissance school project board of trustees shall implement controls over budgeted revenues and appropriations as follows:

1. A district board of education or charter school or renaissance school project board of trustees shall approve an encumbrance or expenditure (liability or payment) only after ensuring that, when added to the total of existing encumbrances and expenditures, the encumbrance or expenditure does not exceed the amount appropriated by the district board of education or charter school or renaissance school project board of trustees in the applicable line item account established pursuant to the minimum chart of accounts referenced at N.J.A.C. 6A:23A-16.2(f)1.

2. A district board of education or charter school or renaissance school project 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. A district board of education or charter school or renaissance school project board of trustees that adopts an expanded chart of accounts, pursuant to N.J.A.C. 6A:23A-16.2(f)2, shall also 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. A district board of education or charter school or renaissance school project board of trustees that fails to adopt such a policy shall apply the restrictions at (a)1 above to line item accounts that exceed the minimum level of detail.

4. A district board of education or charter school or renaissance school project board of trustees, unless otherwise restricted by law or Commissioner directive, may transfer amounts from line item accounts with available appropriation balances to permit the approval of encumbrances or expenditures otherwise prohibited at (a)1 and 3 above. A district board of education or charter school or renaissance school project board of trustees shall make the transfers prior to the approval of encumbrances or expenditures, and shall make all transfers in accordance with N.J.S.A. 18A:22-8.1, 18A:22-8.2, and N.J.S.A. 18A:7G-31, and N.J.A.C. 6A:23A-13.14.

(b) A district board of education or charter school or renaissance school project 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 pursuant to N.J.A.C. 6A:23A-16.2(c), shall proceed in the following manner:

1. The district board of education or charter school or renaissance school project board of trustees shall direct the chief school administrator to notify the executive county superintendent, or the Department in the case of charter schools or renaissance school projects, 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 or renaissance school project 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 ACFR for that year. The corrective action plan shall include:

i. The projected or actual amount of the fund deficit;

ii. A detailed accounting of the line items and the actual or projected deficit amount comprising the overall fund deficit;

iii. The conditions producing the deficit; and

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 and renaissance school projects, shall immediately investigate to determine if the corrective action being taken by the district board of education or charter school or renaissance school project 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 or renaissance school project board of trustees in determining what further corrective action can be taken, or request assistance from the Office of School Finance.

5. The executive county superintendent, or the Department in the case of charter schools or renaissance school projects, 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 or renaissance school project board of trustees is not taking adequate action to avoid the overexpenditure/deficit.

(c) Each district board of education or charter school or renaissance school project board of trustees shall ensure the following occurs at each of its regular meetings:

1. The school business administrator/board secretary shall present to the district board of education or charter school or renaissance school project 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 shall be in addition to the report required pursuant to 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 or renaissance school project board of trustees any change(s) in anticipated revenue amounts and revenue sources.

3. A district board of education or charter school or renaissance school project board of trustees shall obtain a certification from the school business administrator/board secretary each month stating 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 or renaissance school project 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 or renaissance school project lead person, as appropriate, to request Department 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 the Department with 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 district board of education or charter school or renaissance school project board of trustees shall make such transfers in accordance with this subchapter, N.J.A.C. 6A:23A-13 and 14, and N.J.S.A. 18A:22-8.1, 18A:22-8.2, and N.J.S.A. 18A:7G-31.

4. A district board of education or charter school or renaissance school project 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 or school district 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 or renaissance school project board of trustee's financial obligations for the remainder of the fiscal year.

i. If the district board of education or charter school or renaissance school project board of trustees is unable to make such a certification, the board shall direct the chief school administrator or charter or renaissance school lead person to initiate the steps at (b) above and shall reflect such directive in the minutes of the board.

ii. If the district board of education or charter school or renaissance school project board of trustees is able to make such certification, but one or more members of the board votes no to the certification, the board 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 or charter school or renaissance school project boards of trustees selected at the Commissioner's discretion, and district boards of education subject to N.J.S.A. 18A:7F-6.b 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, shall provide to the executive county superintendent a copy of the school business administrator/board secretary's and treasurer's monthly financial reports as submitted to the district board of education or charter school or renaissance school project board of trustees pursuant to (c)1 above and 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 and charter school or renaissance school project board of trustees 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 district board of education pursuant to (c)1 above and 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 or renaissance school project board of trustees shall provide to the executive county superintendent, a copy of the monthly financial reports submitted to the charter school or renaissance school project board of trustees pursuant to (c)1 above and 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 to a district board of education or charter school or renaissance school project board of trustees the report required pursuant to N.J.S.A. 18A:17-9 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 or charter school or renaissance school project board of trustees shall immediately develop and adopt an acceptable remedial plan to address any fund(s) deficits consistent with (b) above.

2. If necessary, the executive county superintendent shall assist the district board of education or charter school or renaissance school project board of trustees in determining what further action can be taken, or request assistance from the Office of School Finance.

3. The executive county superintendent shall immediately notify the Commissioner, in writing, if it appears the district board of education or charter school or renaissance school project board of trustees is not taking adequate action to remediate the fund(s) deficit.

(e) A district board of education or charter school or renaissance school project board of trustees that fails to develop a corrective action plan or fails to take adequate action 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 N.J.S.A. 18A:7F-51, or, in the case of a charter school, a reduction in the charter school aid. Reductions in State aid 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 or renaissance school project 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 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) If the Commissioner determines that the failure to develop a corrective action plan or take adequate action 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. In the case of a charter school, the Commissioner may revoke the charter, pursuant to N.J.S.A. 18A:36A-17.

N.J. Admin. Code § 6A:23A-16.10

Amended by R.2004 d.322, effective 8/16/2004.
See: 36 N.J.R. 1313(a), 36 N.J.R. 3895(a).
Rewrote the section.
Recodified from N.J.A.C. 6A:23-2.11 and amended by R.2006 d.361, effective 10/2/2006.
See: 38 N.J.R. 2333(a), 38 N.J.R. 4178(b).
Rewrote the section. Former N.J.A.C. 6A:23-2.12, Debt service fund balance, recodified to N.J.A.C. 6A:23-2.15.
Recodified from N.J.A.C. 6A:23-2.12 and amended by R.2009 d.395, effective 12/21/2009.
See: 41 N.J.R. 2850(a), 41 N.J.R. 4706(a).
Rewrote (b); in (c)3i, substituted "6A:23A-13" for "6A:23-2.11" twice; in (c)4ii through (c)4vi, (d)2 and (d)3, inserted "executive" throughout; in (c)4iii through (c)4v, substituted "60" for "30"; in (d) 1, inserted "consistent with the provisions of (b) above"; rewrote (e); in (f), substituted "in order" for "under (b), (c) or (d) above" and "action be taken pursuant to (b) above as deemed warranted by the Commissioner" for "the school district's certification be rescinded pursuant to N.J.A.C. 6A:30-1", and inserted "upon".
Amended by R.2017 d.088, effective 5/1/2017.
See: 48 N.J.R. 2719(a), 49 N.J.R. 1079(a).
Rewrote the section.
Amended by R.2017 d.147, effective 8/7/2017.
See: 49 N.J.R. 357(a), 49 N.J.R. 2521(a).
Rewrote (b) through (d).
Administrative correction.
See: 50 N.J.R. 1715(a).

Amended by 56 N.J.R. 2166(a), effective 11/4/2024