Atlantic City Schools Regain Local Fiscal Control After Decade of State Oversight

State monitoring that began during Atlantic City's financial crisis ended in August; school board member Ron Bailey says the change gives the district greater control over its decisions

ATLANTIC CITY — For the first time in more than a decade, the Atlantic City Board of Education is making its financial decisions without a state fiscal monitor holding the power to override them.

New Jersey ended enhanced state fiscal monitoring of Atlantic City Public Schools effective Aug. 3, closing a chapter that began in 2015 as the city's collapsing property-tax base threatened the school district's finances.

The significance of that change came up Wednesday when school board member Ron Bailey appeared on Klein Time with Dan Klein on News Talk 1400 & 92.3 WOND.

“Up till about a month ago, we were under a state monitor,” Bailey said. “Any decisions we made were able to be overridden by the monitor.”

Bailey said the end of monitoring gives the locally elected board greater authority over district decisions.

“We're no longer under the state monitor's purview,” Bailey said. “So we're able to make policies and follow the guidance that's given to us, different things, and pass policies that need to be passed.”

Oversight Began During Atlantic City's Financial Crisis

The state intervention dates to February 2015, when then-New Jersey Education Commissioner David Hespe appointed a fiscal monitor for Atlantic City schools.

At the time, Atlantic City's tax base was rapidly deteriorating amid casino closures and declining property values. The state determined the district faced potential cash-flow problems and that its remedial financial plan was insufficient.

The monitor was given broad authority over district finances.

According to the school district's account of the original state order, the monitor's responsibilities included oversight of budgets and budget transfers, internal financial controls and staffing decisions involving hiring, promotions and terminations.

The position also carried the power to override actions taken by the superintendent or Board of Education when those decisions involved the district's financial operations.

That arrangement remained in place for roughly a decade.

The district announced in July that Education Commissioner Lily Laux had determined Atlantic City's financial condition had improved sufficiently to end the enhanced monitoring. The change became effective Aug. 3.

Atlantic City Public Schools announcement on the end of state fiscal monitoring

What Changed?

The end of monitoring does not mean Atlantic City schools are free from state education requirements that apply to public school districts across New Jersey.

What changed is the additional layer of fiscal oversight imposed specifically on Atlantic City.

Bailey said that distinction gives the school board greater latitude to make decisions locally without the possibility of a fiscal monitor intervening.

He also credited the district's financial progress with bringing the oversight to an end.

“Thankfully, because we've been doing things the right way, we've been financially responsible,” Bailey said. “We were released from having a state monitor.”

The state's decision provides independent support for the broader point that the financial conditions that prompted the enhanced monitoring had improved enough for the additional oversight to end.

Former Monitor Remains With District in Different Role

Although the state monitoring arrangement has ended, the district retained the person who most recently served in that role.

Former state fiscal monitor Carol Morris was subsequently hired by the Atlantic City Board of Education as the district's strategy officer.

The distinction is important: Morris remains involved with the school system, but no longer serves as the state-appointed fiscal monitor with the special authority that accompanied that position.

District officials said when announcing the end of monitoring that maintaining continuity would help Atlantic City schools continue the financial practices developed during the period of state oversight.

School District's Status Differs From City Government

The change also should not be confused with New Jersey's separate oversight of Atlantic City municipal government.

The state continues to exercise substantial authority over city government through the Municipal Stabilization and Recovery Act. New Jersey's Department of Community Affairs announced in January that state supervision of the municipality would continue.

The school district's enhanced fiscal monitoring was a separate arrangement administered through the state Department of Education.

That school oversight has now ended.

District Looking Ahead

The transition comes as Atlantic City Public Schools undertake significant investments in district facilities and consider expanding educational programs.

Bailey said Wednesday that the district has a little more than 6,000 students and is looking at additional technical and educational opportunities at Atlantic City High School, including programs that could make the school more attractive to students from its Downbeach sending districts.

He also discussed opportunities that could allow students to begin earning college credits while still attending high school.

For Bailey, however, the return of greater local control is itself a significant milestone.

He said state officials largely allowed the district room to operate during his two years on the board and did not micromanage educational programming.

“As long as we're staying on track of what we're doing,” Bailey said, “we're seeing the state give us the room that we need to improve the district and do what needs to be done.”

After approximately a decade in which a state-appointed fiscal monitor could intervene in major financial decisions, that authority now rests once again with the district and its Board of Education.

Bailey discussed Atlantic City schools Wednesday on Klein Time with Dan Klein, heard weekdays from 2 to 4 p.m. on News Talk 1400 & 92.3 WOND.