Sponsored by:
Assemblyman P. CHRISTOPHER TULLY
District 38 (Bergen and Passaic)
SYNOPSIS
Expands permitted investments of school district and local unit funds.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the permitted investment of school district and local unit funds and amending P.L.1977, c.177 and P.L.1977, c.396.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1977, c.177 (C.18A:20-37) is amended to read as follows:
1. a. When authorized by resolution adopted by a majority vote of all its members the board of education of any school district may use moneys, which may be in hand, for the purchase of the following types of securities which, if suitable for registry, may be registered in the name of the school district:
(1) Bonds or other obligations of the United States of America or obligations guaranteed by the United States of America;
(2) Government money market mutual funds;
(3) Any obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, which security has a maturity date not greater than 397 days from the date of purchase, provided that such obligations bear a fixed rate of interest not dependent on any index or other external factor;
(4) Bonds or other obligations of the school district or bonds or other obligations of the local unit or units within which the school district is located;
(5) Bonds or other obligations, having a maturity date of not more than 397 days from the date of purchase, issued by New Jersey school districts, municipalities, counties, and entities subject to the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.). Other bonds or obligations having a maturity date not more than 397 days from the date of purchase may be approved by the Division of Investment in the Department of the Treasury for investment by school districts;
(6) Local government investment pools;
(7) Deposits with the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L.1977, c.281 (C.52:18A-90.4);
(8) Agreements for the repurchase of fully collateralized securities, if:
(a) the underlying securities are permitted investments pursuant to paragraphs (1) and (3) of this subsection a. or are bonds or other obligations, having a maturity date of not more than 397 days from the date of purchase, issued by New Jersey school districts, municipalities, counties, and entities subject to the requirements of the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.);
(b) the custody of collateral is transferred to a third party;
(c) the maturity of the agreement is not more than 30 days;
(d) the underlying securities are purchased through a public depository as defined in section 1 of P.L.1970, c.236 (C.17:9-41) and for which a master repurchase agreement providing for the custody and security of collateral is executed; [or]
(9) Deposit of funds in accordance with the following conditions:
(a) the funds are initially invested through a public depository as defined in section 1 of P.L.1970, c.236 (C.17:9-41) designated by the school district;
(b) the designated public depository arranges for the deposit of the funds in deposit accounts in one or more federally insured banks, savings banks, savings and loan associations, or credit unions for the account of the school district;
(c) 100 percent of the principal and accrued interest of each deposit is insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund;
(d) the designated public depository acts as custodian for the school district with respect to those deposits; and
(e) on the same date that the school district's funds are deposited pursuant to subparagraph (b) of this paragraph, the designated public depository receives an amount of deposits from customers of other financial institutions, wherever located, equal to the amount of funds initially invested by the school district through the designated public depository;
(10) Negotiable certificates of deposit or other evidences of deposit, with a remaining maturity of three years or less, issued by a nationally or State-chartered bank, a federal or State savings and loan association, or a State-licensed branch of a foreign bank. For obligations with a maturity of one year or less, the debt obligations of the issuing institution or its parent shall be rated in the top short-term rating category by at least two nationally recognized statistical ratings organizations. For obligations with a maturity of more than one year, the senior debt obligations of the issuing institution or its parent shall be rated at least "A" or its equivalent by at least two nationally recognized statistical ratings organizations;
(11) Corporate debt obligations, denominated in U.S. dollars, with a remaining maturity of five years or less. Obligations shall be rated at least A or its equivalent by at least two nationally recognized statistical ratings organizations;
(12) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers' acceptances, if the bankers' acceptances do not exceed 180 days' maturity and the accepting bank is rated in the top short-term category by at least two nationally recognized statistical ratings organizations; or
(13) Commercial paper issued by corporations or other business entities organized in accordance with federal or State law, with a maturity not to exceed 270 days, if the issuing corporation or business entity is rated in the top short-term category by at least two nationally recognized statistical ratings organizations.
b. Any investment instruments in which the sec