Which type of school district's debt is considered the debt of the municipality?

In New Jersey, a Type 1 School District, which is also known as a "First Class" school district, is governed directly by the mayor and council of the municipality. This unique structure means that the financial obligations, including any debt incurred by the school district, are ultimately the responsibility of the municipality. Therefore, when a Type 1 School District issues bonds or incurs debt, it is considered the debt of the municipality, as the municipal government is accountable for the financial management of the district.

In contrast, a Type 2 School District operates independently from municipal governance, meaning its debt is not automatically the responsibility of the municipality. Charter School Districts and County School Districts also have different governance structures that do not tie their debt to the municipality in the same way Type 1 School District debt does. Thus, the characteristics of a Type 1 School District’s governance distinctly link its financial obligations to the municipality.