UNION CITY - The city's school district has accumulated a $38.3 million surplus over the years.

District officials attribute the funds - about 17 percent of the total budget - to frugality and hoped to use it for things like technology upgrades. But because of that surplus, Gov. Chris Christie is withholding $29.3 million in state aid still owed to the district.

Christie can tap into those surpluses because of a state law that says districts cannot keep more than 2 percent of their overall budget in surplus. If they have more than 2 percent, which in Union City's case would be about $4million, they're supposed to spend it.

District officials say the state knew about the surplus and signed off on the budget annually.

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