N.J. Stat. tit. 18A, ch. 56

N.J. Stat. tit. 18A, ch. 56
in effect

N.J. Stat. § 18A:56-1 "Trustees for support of public schools" ; how constituted

The governor, the attorney general, the secretary of state, the state comptroller, the state treasurer and the commissioner of education, shall constitute a board of trustees of the fund for the support of public schools arising from appropriations made by law, or which may arise from gift, grant, bequest, or devise, in the division of investment of the department of the treasury. The board shall be known as "the trustees for the support of public schools." No compensation shall be paid to the trustees for any services under this chapter. L.1967, c.271

N.J. Stat. § 18A:56-2 Secretary of board; records

The secretary of state shall be the secretary of the board of trustees. He shall record in a book to be kept for that purpose the proceedings of the board and the accounts to be furnished by the state treasurer as directed in this chapter. L.1967, c.271.

N.J. Stat. § 18A:56-3 Statement of fund by state treasurer to board

The state treasurer shall make annually to the board of trustees on the first day of the annual meeting of the legislature, and at such other times as the board shall require, a statement of the school fund, containing an account of the securities belonging thereto with the dates of investment, their values, and the interest arising from each class of securities, together with an account of the moneys in the treasury belonging to the fund. L.1967, c.271

N.J. Stat. § 18A:56-4 Account to legislature of management of fund

An account of the management of the fund shall be laid before the legislature with the annual statements of the state treasurer's accounts. No compensation shall be paid to the treasurer for any services under this chapter. L.1967, c.271.

N.J. Stat. § 18A:56-5 State lands under water and revenue from sales thereof; restriction on revenue

All lands belonging to this State now or formerly lying under water are dedicated to the support of public schools. All moneys hereafter received from the sales of such lands shall be paid to the board of trustees, and shall constitute a part of the permanent school fund of the State. To the extent that moneys received from the sales of these lands may, by law, be made payable to any purposes other than the school fund, these moneys shall not be paid to other purposes so long as there is a deficiency in the school bond reserve. L.1967, c.271; amended by L.1980, c. 72, s. 3, eff. July 16, 1980.

N.J. Stat. § 18A:56-6 Leases of lands under water; principal or income

All leases of lands so dedicated to the support of public schools shall be held by the board of trustees as a part of the principal of the school fund, and the income arising from such leases shall be a part of the income of the school fund. L.1967, c.271.

N.J. Stat. § 18A:56-7 Deducting expenses of administering lands under water

The sum appropriated for the expenses incurred in the administration of the lands so dedicated to the support of public schools shall be first deducted by the director of the division of budget and accounting in the department of the treasury from moneys derived from the sales, grants, leases, and rentals of such lands. L.1967, c.271

N.J. Stat. § 18A:56-8 Investments

Moneys belonging to the school fund shall be invested by the division of investment in the department of the treasury in the bonds of the several school districts of this state, or in the bonds of the United States, this state, or any county or municipality of this state. No investment shall be made in the bonds of any municipality the total indebtedness of which, including the school debt, shall exceed 30% of the assessed valuation of all the real and personal property therein; but in ascertaining the total indebtedness credit shall be allowed only for such moneys or property as shall be in the sinking fund. No investment shall be made in the bonds of any county the total indebtedness of which shall exceed in the aggregate 15% of the total assessable valuation of all taxable property therein. Interest on such bonds shall be a part of the income of the school fund. L.1967, c.271.

N.J. Stat. § 18A:56-9 Changing municipal bonds owned by trustees from coupon to registered

The trustees for the support of public schools may arrange with any municipality to change any bonds owned by said trustees from coupon to registered bonds, and the municipality which issued the bonds may detach from the bonds the coupons thereon and cancel the same, and stamp upon the bonds the registration thereof, and make the necessary agreement for the payment of the interest thereon. L.1967, c.271.

N.J. Stat. § 18A:56-10 Stamp of ownership on coupon bonds

Every coupon bond acquired by the board of trustees shall have stamped thereon and upon each coupon, immediately upon the receipt thereof, the following words: "This is the property of the trustees for the support of public schools." L.1967, c.271.

N.J. Stat. § 18A:56-11 Investment in bonds secured by mortgages

No part of the principal or interest of the fund shall be invested in bonds secured by mortgage on lands except as hereinafter provided in the case of purchase money mortgages. L.1967, c.271

N.J. Stat. § 18A:56-12 Mortgage foreclosure proceedings

The board of trustees shall cause actions to foreclose to be commenced without delay whenever the interest on bonds secured by mortgage held by the board as part of the school fund shall remain unpaid for six months. The board may discontinue the actions upon the payment of accrued interest and the costs of such actions. L.1967, c.271.

N.J. Stat. § 18A:56-13 Purchase of lands by board on foreclosure

The board of trustees may bid for and purchase any lands and premises exposed to sale under the order and judgment of any court for the payment and satisfaction of any mortgage thereon held by the board, and may take and hold title to the lands and premises so purchased in and by its official name as a part of the principal of the school fund; but the board shall not bid a higher price for such lands and premises than shall be sufficient to produce the amount due upon the mortgage and costs. The taxed costs of the foreclosure action and sale, if any, shall be paid by the state treasurer on the warrant of the director of the division of budget and accounting. L.1967, c.271.

N.J. Stat. § 18A:56-14 Sale of real estate held or acquired

All real estate held by the trustees for the support of public schools and all real estate that may be acquired by them under foreclosure proceedings shall be sold, either at private or public sale, at such times and at such prices as will, in the judgment of the board of trustees, be for the best interest of the state. The board may advertise such properties, either at private or public sale, in such manner as it shall determine. The proceeds of the sale shall be paid into the school fund, and shall be invested as other moneys of the fund are invested. The board may lend to the purchaser of any such real estate, one half of the amount of purchase money, the loan to be secured by bond and mortgage on the premises so purchased. L.1967, c.271.

N.J. Stat. § 18A:56-15 Income of funds; use of; payment of premiums on bonds

The income of the school fund shall be paid into the general fund of the state treasury, and shall be used for the support of public schools, the payment of salaries of county superintendents and the payment of accrued interest on bonds purchased for the fund, the payment of interest on, and the purchase of, bonds issued locally for school purposes to the extent and within the limits provided by law, and for no other use or purpose whatsoever. The payment of premiums on bonds purchased shall be made out of the investment account. L.1967, c.271.

N.J. Stat. § 18A:56-16 Certification of anticipated default; purchase of bonds, payment of interest by trustees; State aid treatment.

18A:56-16. In the event that a school district or a county or municipality anticipates that it will be unable to meet the payment of principal or interest on any of its bonds issued for school purposes after December 4, 1958, it shall certify such liability to the commissioner and the Director of the Division of Local Finance at least 10 days prior to the date any such payment is due. If the commissioner and director shall approve said certification, they shall immediately certify the same to the trustees of the fund for the support of public schools. Upon the receipt thereof, or in the event any such district, county or municipality fails to certify its anticipated inability to meet any such payments, upon notice and verification of such inability, the trustees shall, within the limits of the school bond guaranty reserve established within the fund purchase any such bonds at a price equivalent to the face amount thereof or pay to the holder of any such bond the interest due or to become due thereon, as the case may be, and such purchases and payments of interest may continue so long as the district, county or municipality remains unable to make such payments. Upon making any such payment of interest, the trustees of the fund shall be subrogated to all rights of the bondholder against the issuer in respect to the collection of such interest and if such interest is represented by a coupon such coupon shall be delivered to the trustees of the fund. The State Treasurer shall act as agent of the trustees of the fund in making any such payments or purchases, and he shall prescribe, in consultation with the commissioner, such rules and regulations as may be necessary and proper to effectuate the purposes of this section. The amount of any payment of interest or purchase price pursuant to this section shall be deducted from the appropriation or apportionment of State aid, other than any State aid which may be otherwise restricted pursuant to the provisions of P.L.2007, c.260 (C.18A:7F-43 et al.), payable to the district, county or municipality and shall not obligate the State to make, nor entitle the district, county or municipality to receive, any additional appropriation or apportionment. Any amount so deducted shall be applied by the State Treasurer to satisfy the obligation of the district, county or municipality arising as a result of the payment of interest or purchase price pursuant to this section. Amended 1980, c.72, s.4; 2003, c.118, s.1; 2007, c.260, s.75.

N.J. Stat. § 18A:56-17 Short title

This act shall be known and may be cited as the "New Jersey School Bond Reserve Act." L.1980, c. 72, s. 1, eff. July 16, 1980.

N.J. Stat. § 18A:56-18 Legislative finding and declaration

The Legislature finds and declares that: a. It has the authority pursuant to Article VIII, Section IV, paragraph 2 of the State Constitution to secure the payment of principal of and interest on bonds issued for school purposes by counties, municipalities or school districts by means of a pledge of a portion of the assets of the fund for the support of free public schools created by that paragraph of the Constitution; b. It wishes to exercise its authority under that paragraph in the manner specified in this act to provide a source of funds to act as a reserve for the prompt payment of principal of and interest on bonds issued for school purposes, in the event of the inability of the issuer to make payment, out of that portion of the resources of the fund for the support of free public schools hereinafter pledged for that purpose. L.1980, c. 72, s. 2, eff. July 16, 1980.

N.J. Stat. § 18A:56-19 School bond reserve accounts; establishment; composition; funding of accounts.

5. a. There is established within the fund for the support of free public schools a school bond reserve. The school bond reserve shall consist of two accounts, the old school bond reserve account and the new school bond reserve account. The old school bond reserve account shall be funded in an amount equal to at least 1 1/2 % of the aggregate issued and outstanding bonded indebtedness of counties, municipalities or school districts for school purposes for all such indebtedness issued prior to the effective date of P.L.2003, c.118, exclusive of bonds the debt service for which is provided by State appropriations but not to exceed the moneys available in the account. The new school bond reserve account shall be funded in an amount equal to at least 1% of the aggregate issued and outstanding bonded indebtedness of counties, municipalities or school districts for school purposes for all such indebtedness issued on and after the effective date of P.L.2003, c.118, exclusive of bonds the debt service for which is provided by State appropriations. The school bond reserve shall be composed entirely of direct obligations of the United States Government or obligations guaranteed by the full faith and credit of the United States Government. b. Securities representing at least one-third of the minimum market value to be held in the school bond reserve shall be due to mature within one year of the date of issuance or purchase. It shall be the duty of the trustees of the fund to determine that the school bond reserve is established at the proper level, based on the market value of the obligations on the effective date of this act, to ascertain annually on or before September 15 the aggregate amount of bonds issued and outstanding and to maintain the old school bond reserve account and the new school bond reserve account at the appropriate levels for the ensuing year based on annual market valuations of the obligations. The trustees are authorized to retain so much of the income earned by the fund in the preceding year as they may determine to be required to maintain each account in the reserve at the levels herein specified. The amount of the reserve held in the old school bond reserve account so established is pledged as security for prompt payment, in accordance with the provisions of N.J.S.18A:56-16, to holders of bonds issued prior to the effective date of P.L.2003, c.118, for school purposes by counties, municipalities or school districts of principal of and interest on the bonds in the event of the inability of the issuer to make payment. The amount of the reserve held in the new school bond reserve account so established is pledged as security for prompt payment, in accordance with the provisions of N.J.S.18A:56-16, to holders of bonds issued on and after the effective date of P.L.2003, c.118, for school purposes by counties, municipalities or school districts of principal of and interest on the bonds in the event of the inability of the issuer to make payment. In the event the amount held in the old school bond reserve account exceeds the amount required to be held pursuant to subsection a. of this section, the excess may be transferred by the State Treasurer to the new school bond reserve account. In the event the amounts in either the old school bond reserve account or the new school bond reserve account fall below the amount required to make payments on bonds, the amounts in both the old school and new school bond reserve accounts shall be available to make payments for bonds secured by the reserve. c. Beginning with the fiscal year ending on June 30, 2003 and continuing on each June 30 thereafter, the State Treasurer shall calculate the amount necessary to fully fund the old school bond reserve account and the new school bond reserve account as required pursuant to subsection a. of this section. To the extent moneys available under P.L.1967, c.271 (C.18A:56-1 et seq.) are insufficient to maintain each account in the reserve at the required levels, the State hereby agrees that the State Treasurer shall, no later than September 15 of the fiscal year following the June 30 calculation date, pay to the trustees for deposit in the school bond reserve such amounts as may be necessary to maintain the old school bond reserve account and the new school bond reserve account at the levels set forth in subsection a. of this section. No moneys may be borrowed from the fund to provide liquidity to the State unless the 1 1/2% and 1% accounts are at the levels certified as full funding on the most recent June 30 calculation date. L.1980,c.72,s.5; amended 2003, c.118, s.2.

N.J. Stat. § 18A:56-20 School bond legend.

6. a. Bonds issued for school purposes by counties, municipalities or school districts subsequent to the effective date of P.L.1980, c.72 (C.18A:56-17 et seq.) and prior to the effective date of P.L.2003, c.118, shall bear the following legend: "Payment of this obligation is secured under the provisions of the 'New Jersey School Bond Reserve Act' in accordance with which an amount equal to 1 1/2 % of the aggregate outstanding bonded indebtedness (but not to exceed the moneys available in the fund), of New Jersey counties, municipalities and school districts for school purposes as of September 15 of each year, is held within the State Fund for the Support of Free Public Schools as a school bond reserve pledged by law to secure payments of principal and interest due on such bonds in the event of the inability of the issuer to make payment." b. Bonds issued for school purposes by counties, municipalities or school districts on and after the effective date of P.L.2003, c.118, shall bear the following legend: "Payment of this obligation is secured under the provisions of the 'New Jersey School Bond Reserve Act' in accordance with which an amount equal to 1% of the aggregate outstanding bonded indebtedness (but not to exceed the moneys available in the fund), of New Jersey counties, municipalities and school districts for school purposes as of September 15 of each year, is held within the State Fund for the Support of Free Public Schools as a school bond reserve pledged by law to secure payments of principal and interest due on such bonds in the event of the inability of the issuer to make payment." L.1980,c.72,s.6; amended 2003, c.118, s.3.

N.J. Stat. § 18A:56-21 Schools facilities financing reserve

6. a. There is hereby established within the fund for the support of free public schools a school facilities financing reserve, to which shall be credited an amount necessary to secure the principal of and interest on school bonds issued to represent the loans that secure the bonds issued by the New Jersey Economic Development Authority pursuant to section 7 of this 1993 amendatory and supplementary act. The amount of the reserve so established shall not exceed the moneys available in the fund or include those amounts in the fund that are obligated for the purposes of the school bond reserve fund established pursuant to section 5 of P.L.1980, c.72 (C.18A:56-19). The reserve shall be pledged as security for prompt payment to the authority by the school districts of the principal and interest on the school bonds issued to represent the loans made under section 7 of this 1993 amendatory and supplementary act in the event of the inability of the school districts to make timely payment. These amounts shall be used by the authority for payment to holders of bonds issued pursuant to section 7 of this 1993 amendatory and supplementary act. The school facilities financing reserve shall be composed entirely of direct obligations of the United States Government or obligations guaranteed by the full faith and credit of the United States Government. Securities representing at least one-third of the minimum market value to be held in the school facilities financing bond reserve shall be due to mature within one year of the date of issuance or purchase. b. It shall be the duty of the trustees of the fund to determine that the school facilities financing bond reserve is established at the proper level, based on the market value of the obligations to be held therein on the effective date of this 1993 amendatory and supplementary act, to ascertain annually on or before September 15 of each year the aggregate amount of bonds issued by the New Jersey Economic Development Authority pursuant to section 7 of this 1993 amendatory and supplementary act and the amount outstanding, and to maintain the school facilities financing bond reserve at an appropriate level for the ensuing year based on annual market valuations of the obligations. The State Treasurer, acting as agent of the trustees, is authorized to retain as much of the income earned by the fund in the preceding year as he may determine to be required to maintain the school facilities financing bond reserve at the level herein specified. c. Bonds issued by the New Jersey Economic Development Authority pursuant to section 7 of this 1993 amendatory and supplementary act shall contain, in addition to any other language required to issue the bonds, a statement, in bold print, that the loans that secure the bonds are secured by monies reserved in the fund for the support of free public schools pursuant to the provision of the "Public School Capital Finance Assistance Act." L.1993,c.102,s.6.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026

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