New Jersey § 18a:56-16

§ 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.