LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
SENATE, No. 3838
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: OCTOBER 31, 2024
SUMMARY
Synopsis: Permits Director of Division of Pensions and Benefits to initiate
temporary transfer of funds in certain circumstances.
Type of Impact: Potential expenditure increase to State Health Benefits Program Fund
– State part; potential revenue loss to State Health Benefits Program
Fund – State part; potential expenditure reduction to State Health
Benefits Program Fund – local part.
Agencies Affected: Department of the Treasury; Local government employers that
participate in State Health Benefits Program.
Office of Legislative Services Estimate
Fiscal Impact Annual
Potential State Expenditure Increase Indeterminate
Potential State Revenue Loss Indeterminate
Potential Local Expenditure Reduction Indeterminate
 The Office of Legislative Services (OLS) lacks the informational basis to quantify the fiscal
impacts of this bill. The bill, however, newly creates a limited exposure of the State to the
financial condition of the State Health Benefits Program Fund – local part. The bill provides
a temporary cash flow mechanism to cover unexpected, mid-year shortfalls in the fund that
might otherwise require precipitous corrective actions on the fund’s revenue or expenditure
side. The mechanism would transfer reserves from the State Health Benefits Program Fund –
State part and loan the reserves without interest to the State Health Benefits Program Fund –
local part.
 Assuming any short-term loan would be repaid, the fiscal impacts of the loan would be a State
revenue loss from interest earnings on the cash balances in the State Health Benefits Program
Fund – State part that instead of being invested would be loaned interest-free to the State Health
Benefits Program Fund – local part. To local governments participating in the State Health
Benefits Program, the loan would potentially delay the fiscal impact on employer contributions
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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to the fund to mitigate the fund’s financial imbalance without necessarily causing a net change
in local governmental expenditures over time.
BILL DESCRIPTION
This bill permits the Division of Pensions and Benefits to transfer funds from the State Health
Benefits Program Fund – State part to the State Health Benefits Program Fund – local part when
the balance of the latter fund falls to a level that is insufficient to cover 10 days of anticipated
payments for costs including, but not limited to, any portion of premiums, claims, or other periodic
charges.
The bill limits the amount of the transfer to a sum of up to 30 days of anticipated payments
from the State Health Benefits Program – local part. The bill requires the State Health Benefits
Program – local part to repay borrowed monies within 120 days. The division may extend the loan
repayment by up to an additional year to ensure sufficient funds are available to pay claims
incurred by employees enrolled in the State Health Benefits Program Fund – local part.
Additionally, the bill requires the division to notify the Department of the Treasury of transfers
within 30 days. The division is also required to provide the department with a monthly accounting
of the outstanding balance of all transfers initiated under the bill, any repayment of monies, and
the current balance of the State Health Benefits Program Fund – local part.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS lacks the informational basis to quantify the fiscal impacts of this bill. The bill,
however, newly creates a limited exposure of the State to the financial condition of the State Health
Benefits Program Fund – local part. The bill provides a temporary cash flow mechanism to cover
unexpected, mid-year shortfalls in the fund that might otherwise require precipitous corrective
actions on the fund’s revenue or expenditure side. The mechanism would transfer reserves from
the State Health Benefits Program Fund – State part and loan the reserves without interest to the
State Health Benefits Program Fund – local part.
Assuming any short-term loan would be repaid, the fiscal impacts of the loan would be a State
revenue loss from interest earnings on the cash balances in the State Health Benefits Program Fund
– State part that instead of being invested would be loaned interest-free to the State Health Benefits
Program Fund – local part. To local governments participating in the State Health Benefits
Program, the loan would potentially delay the fiscal impact on employer contributions to the fund
to mitigate the fund’s financial imbalance without necessarily causing a net change in local
governmental expenditures over time.
However, if the local fund were not to repay the loan to the State Health Benefits Program
Fund – State part, the State in effect would support local governments participating in the State
Health Benefits Program – local part. Any such support could result in increased State employer
contributions to the fund and an expenditure reduction to local governments.
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According to the most recent Rate Renewal Report, in Plan Year 2024 expenditures of the
State Health Benefits Program Fund – local part are projected to exceed premium payments
received from local governments and their employees by $49.6 million. This is on top of the $50
million deficit of the fund at the beginning of Plan Year 2024, bringing the projected deficit at the
end of Plan Year 2024 to about $100 million.
According to the Department of the Treasury, 10 days of claims at current Plan Year 2024 cost
levels is $68 million. Under the bill, if available funds in the State Health Benefits Program Fund
– local part fall to a level that is insufficient to cover 10 days of claims, the Division of Pensions
and Benefits can initiate transfers from the State Health Benefits Program Fund – State part to the
State Health Benefits Program Fund – local part.
Section: State Government
Analyst: Anna Harris
Associate Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).


Statutes affected:
Introduced: 52:14-17.30
Advance Law: 52:14-17.30