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GARDEN STATE COALITION OF SCHOOLS/GSCS
EMAILNET 7-8-04
Dr. Walter Mahler, President Lynne Strickland, Executive Director
Betsy Ginsburg, Parent Network Representative/GSPN
Phone 609 394 2828 Fax 609 396 7620 Website ‘gscschools.org’ email ‘gscs@ebnet.org’
Next GSCS Board of Trustees Meeting: Wednesday, July 14 10:30 am – 12:30 pm at the
______________________________________________
Below is the just-released Department of Education [DOE] Q&A re: The Implementation of S1702, the School Spending Reduction bill signed into law by Governor McGreevey. It is also attached in full to this EMAILNET for your convenience.
GSCS vigorously opposes this legislation. For a good example of how the citizens of one GSCS member district responded to legislators and the Governor on S1701, look for the Haddonfield June 29 letter following the DOE Q&A. A number of districts have already struck resolutions similar to the one that Haddonfield submitted with its letter, as immediately follows. GSCS encourages all member districts to follow the Haddonfield lead:
WHEREAS, the residential homeowners of the Borough of Haddonfield support about 90% of the Haddonfield District school budget,
WHEREAS, the State of New Jersey supports only about 7% of the Haddonfield District school budget,
WHEREAS, Legislative Bills A99 and S1701 move substantial control of the Haddonfield District school budget from the locally elected Board of Education and District voters to the Commissioner of Education of the State of New Jersey,
The Haddonfield Board of Education strongly objects to Legislative Bills A99 and S1701 as unfair legislation, which takes local choice in education away from the voters who pay for it, while continuing to fail to provide any reasonable or adequate state financial support.
This resolution was approved by the Haddonfield Board of Education on June 24, 2004.
See Haddonfield letter below.
DOE Q & A on S1701 Implementation Procedures for Districts
A. Revision of A4F to Appropriate Surplus down to 3%
A1 Must districts recertify A4Fs for 2004-05?
Yes, all regular, non-vocational districts that estimated surplus balances over 3% on line 1670 of recap (except for those with excess amounts less than $50,000 as explained below) in their
Districts that estimated surplus amounts in their proposed
A2 How does a district know the additional amount of surplus to appropriate?
The amount of additional unreserved, undesignated fund balance to be appropriated is the amount on line 1670 of recap of balances in a district’s proposed
A3 Are affected districts required to revise their
Yes. Every affected district must revise their
A4 When does the municipal clerk sign the revised A4F?
Following the
A5 How/where does the
The
A6 What happens following
The
A7 Must affected districts retransmit the
Yes. All districts required to revise their
Districts with defeated
A8 Is there a deadline for A4Fs to be revised?
The department strongly recommends this entire process to be completed within 10 working days. County boards of taxation are pending issuance of tax bills to reflect these changes. The
B. Post-April Election Surplus Appropriation to Capital/Maintenance Reserve and/or to Increase Spending
B1 What does the new law mean when it states under N.J.S.A. 18A:7F-7 that for 2004-05 all transfers of surplus (undesignated, unreserved fund balance) to either the capital reserve, maintenance reserve or to increase spending are “null and void”?
The department is still reviewing the full scope of this provision, however, it is clear that transfers of undesignated, unreserved fund balance made after the April 2004 election (after April 8 for Type I districts) to either the capital or maintenance reserve or to increase spending are not considered valid or legal transactions under this law and would not justify a valid Certification (see answer to B3 below) to reduce a district’s required surplus appropriation over 3% to offset 2004-05 tax levy.
Therefore, the provision requires that all post-election transfers of surplus (undesignated, unreserved fund balance) to the capital and/or maintenance reserve must be reversed and reclassified as undesignated, unreserved fund balance (see answer to D2 below). This would exclude amounts identified on line 1653 (transfer to capital and/or maintenance reserve) in the recap of balances (see answer to B2 below). The provision also requires that all post-election transfers of surplus (undesignated, unreserved fund balance) to increase spending for needs beyond 2003-04 be reversed, if possible, or at a minimum, adjusted in the excess surplus calculation (see answer to D3 below).
All districts should be aware that moving forward, the new law (N.J.S.A. 7G-31) no longer permits districts to transfer surplus by board resolution to either the capital or maintenance reserve at any time during the year; all transfers of surplus to these reserve accounts now require authorization at
B2 Is a post-April election transfer of surplus to either the capital reserve or maintenance reserve “null and void” if such transfer was identified on line 1653 on the recap of balances?
No. If the transfer was identified in a district’s proposed
B3 If a district transferred surplus after the April election (or April 8 for Type I districts) to increase spending or to either the capital/maintenance reserve and subsequently withdrew the funds for a 2003-04 T&E need, can the district deduct that transferred amount from the required appropriation over 3% in the revised A4F?
Yes, if the district can certify (see B4 below on how to certify) that the transferred surplus appropriation increased spending for a 2003-04 T&E need and no other line item account balances were available.
Under the revision to N.J.S.A. 18A:7F-7 in the new law, all transfers of surplus to capital or maintenance reserve or to increase spending after the April 2004 election are “null and void” unless the district can demonstrate that the appropriation was necessary for use in the 2003-04 school year for T&E and no other line item account balances were available. Any capital or maintenance reserve transfer to be certified for such purposes must have been subsequently withdrawn and expended for a 2003-04 need prior to the passage of the new law. If the funds were withdrawn and committed (encumbered) but not expended, this would not be considered an appropriation for a 2003-04 need for purposes of the Certification. Similarly, if surplus was appropriated to increase spending for a T&E need and not fully expended, this would not be considered an appropriation for a 2003-04 need for purposes of the Certification.
B4 What is required for a district to “certify” that a post April election transfer to either the capital or maintenance reserve (and subsequently withdrawn) and/or to increase spending was for a 2003-04 T&E need in order to submit a different tax levy on the revised A4F?
A district must submit a signed Certification to the
The signed Certification must specify the specific purpose of the appropriation, why it was necessary for a 2003-04 T&E need, and that no other line items balances was available for reallocation. The Chief School Administrator, Business Administrator and the Board President must sign the Certification. The Certification will be subject to audit and any amounts determined to be for a purpose beyond 2003-04 or not necessary due to available line-item balances shall be reserved and designated for tax relief in 2005-06.
The Certification’s only purpose is to justify a different A4F amount than the amount of excess surplus required for tax relief in 2004-05 as identified on the list provided to the
C. Appropriation of Underbudget ed/Unbudget ed Revenue and Transfers
C1 Can a board approve a post-April election increase in spending due to an increase in unrestricted miscellaneous revenue?
Yes, with no restrictions if completed prior to the passage of the law. An increase in miscellaneous revenue, or any other revenue other than
However, note that effective with the passage of the new law, a board of education may only increase spending through appropriation of un
Regulations to be issued will specify the process for petitioning the commissioner for an emergency appropriation during the first nine months and for requesting approval for a T&E need during the last three months. Prior to issuance of regulations, any district that has an immediate need to appropriate under
C2 Can a board still approve line-item appropriation transfers after the April election that do not increase spending without Commissioner approval?
Yes, with no new restrictions if completed prior to the passage of the law. Effective with the passage of the new law, a board of education must receive Commissioner approval for transfers of any “general fund account” that exceeds 10%, on a cumulative basis. See C3 below on the department’s preliminary guidance on this new section.
C3 How will the department define “general fund account” transfers that require Commissioner approval if transfers exceed 10%, on a cumulative basis?
It is the department’s intent to define general fund appropriation account, at a maximum, as those reported in the advertised appropriations in the original
D. 2003-04 Audit Program
D1 What guidance will the auditors be provided for review of the Certifications (see B3 and B4 on discussion of Certifications) for a 2003-04 T&E need?
The annual audit program will include guidance to review the Certifications (see B3 and B4 for discussion of Certifications) for proper reporting of fund balance and calculation of excess surplus. The procedures will include at a minimum, a review that no other line-item balances were available and that such appropriation was for a 2003-04 T&E need. If the review determines that available balances existed and/or an appropriation was for a need beyond 2003-04 (e.g. textbooks for 2004-05, computers and other equipment that will be delivered in 2004-05, summer programs) then the amount (which should have been appropriated for tax relief in 2004-05) must be reserved and designated for tax relief in 2005-06.
D2 What guidance will the department provide the auditors for a post-April election (or for Type I districts, post April 8
The annual audit program will include guidance to review transfers of undesignated, unreserved fund balance to capital and maintenance reserve and reverse all post-April election (or for Type I districts, post April 8) transfers not subsequently withdrawn by June 30, 2004, and reclassify as undesignated, unreserved fund balance for purposes of calculating audited excess surplus at 3%. Post-election transfers to either of these two reserves subsequently withdrawn will be reviewed as a post-election transfer to increase spending (see D3 below).
The department has no discretion in the application of this new provision and transfers to the capital or maintenance reserve must be reversed under the new law, even if designated for a purpose included in the long range facilities plan or maintenance plan.
D3 What guidance will the department provide the auditors for a post-April election (or for Type I districts, post April 8
The annual audit program will include guidance to review post-April election (or for Type I districts, post April 8) transfers of undesignated, unreserved fund balance to increase spending. The procedures will include at a minimum, a review that no other line-item balances were available (that legally could be used to fund the appropriation) and that such appropriation was for a 2003-04 T&E need.
If the review determines that no other line-item balances existed and the appropriation was for a need beyond 2003-04 (e.g. textbooks for 2004-05, computers and other equipment that will be delivered in 2004-05, summer programs) then the appropriation must be reversed, if possible, or it will be adjusted in the excess surplus calculation accordingly.
D4 When will the annual audit program be available?
The department plans to issue the annual audit program within the next few weeks given the numerous impacts of the new law on end of year reporting that need to be incorporated.
HADDONFIELD LETTER
The Honorable James E. McGreevey June 29, 2004
Governor, State of
The State House, CN 001