At Mrs. Puff's Boating School, it is time to select the hall monitor for the day. Mrs. Puff notices that SpongeBob is the only one who has yet to serve as hall monitor. SpongeBob then moves forward, and after desperately attempting to find another candidate, she is forced to give the hall monitor duties to SpongeBob.
After being elected as Boating School Hall Monitor, SpongeBob gives a very long speech, which ends up lasting the entire school day, and also his entire time as the hall monitor. Out of sympathy, Mrs. Puff allows SpongeBob to at least wear his uniform until the next day.
However, SpongeBob goes above and beyond the call of duty, and decides to become the hall monitor of the city, with disastrous results. His activities include giving directions to traffic, resulting in a massive pile-up, and attacking a couple in the guise of the "Open Window Maniac," with the intention of showing them the dangers of leaving a house window open. Later, SpongeBob finds Patrick eating a strawberry ice cream, which drips onto the ground, and labels him as a criminal. Then, a newspaper boy comes up to SpongeBob and Patrick gives them newspaper titled "Maniac strikes Bikini Bottom." SpongeBob looks at the newspaper headline alerting about a maniac causing trouble around town without realizing it's himself. SpongeBob suggests they stop this maniac and turns Patrick over a new leaf as a deputy.
They end up getting ice cream twice (Patrick's idea of a scandal), and then decide to split up to find the maniac, communicating using walkie-talkies. Two policemen ask Patrick if he's seen the maniac, and show him a picture of SpongeBob, which he at first mistakes for the actual maniac, but fails to recognize as SpongeBob. Soon, night suddenly falls and Patrick gets frightened. He sees SpongeBob in the distance across the street, who he recognizes as the maniac but not as SpongeBob.
He alerts SpongeBob to this through his walkie-talkie, and SpongeBob attempts to escape the maniac. Everywhere he goes, Patrick tells him the maniac is there, making SpongeBob believe that the maniac is following him. Eventually, SpongeBob sees a wanted poster for himself and realizes that he is the maniac.
The police arrive to arrest him, but Mrs. Puff appears to explain the situation to them, saying that he is her responsibility. The police interpret this as taking responsibility for the crimes, so she is arrested. She is working with the whole class on their essay while she is being taped on TV until she tells SpongeBob that he needs to see her after class, 6 months from now.
The cover shows SpongeBob in his hall monitor uniform, standing confidently, holding his walky talky. The lamp post in the background is shining where he is and it is night time on the cover. Patrick can be seen on the right of the cover wearing an ice cream cone on his head and holding a wanted poster of SpongeBob looking scared.