(1) Any school district which employs a teacher or administrator whom the school district knows, or should have known, is contractually obligated to another school district shall be liable to the other school district for an amount of money equal to the salary in the violated contract exclusive of fringe benefits.
(2) Either school district may petition the Division of Elementary and Secondary Education to satisfy the liability by transferring such amount to the entitled school district from funds which the division would have distributed to the liable school district.
(3) Upon receipt of such a petition, the division shall determine the amount of the liability and satisfy the same by such transfer.
(4) If a substantial question arises as to the existence of a contract, the State Board of Education may decline to assess the penalty.