New Jersey-2024-A4096-Introduced

An Act concerning an independent audit of the New Jersey Transit Corporation.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the "New Jersey Transit Accountability Act."

2. a. Within 90 days of the effective date of P.L. ,
c. (C. ) (pending before the Legislature as this bill), the New Jersey Transit Corporation shall hire an independent firm to conduct an audit of the financial management practices and budget reporting practices of the corporation since the date of the issuance of the report conducted pursuant to Executive Order No. 5 of 2018 and prepare and issue a report on the firm's findings, which report shall:

(1) include findings on the financial management and budget reporting of the corporation since the date of the issuance of the report conducted pursuant to Executive Order No. 5 of 2018;

(2) summarize the impact of the coronavirus pandemic (COVID-19) on the demand for the corporation's services and on the financial and practical needs of the corporation to meet current and projected long-term demand;

(3) evaluate the corporation's current sources of funding and their adequacy in relation to demand for the corporation's services; and

(4) recommend policies and best practices for the corporation to adopt based upon the findings of the independent firm, including, but not limited to, recommendations on the decision-making process, corporate governance, personnel hiring and protocols, and improvement of the customer experience.

b. The report prepared by the independent firm pursuant to this section shall be submitted to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature.

c. Within six months of the issuance of the report required pursuant to this section, the corporation shall adopt any individual policies and best practices recommended in the report issued pursuant to this section and in the report issued pursuant to Executive Order No. 5 of 2018.

d. Upon the affirmative vote of seven members of the board of directors of the corporation, the corporation may opt not to adopt an individual policy or best practice pursuant to subsection c. of this section. If the corporation exercises this option, the corporation shall provide a detailed explanation of why adoption of that policy or practice is not in the best interest of the corporation within six months of the issuance of the report required pursuant to this section.

e. This section shall not affect any existing obligation of the corporation under law to conduct, or hire an independent firm to complete, an audit or study, including, but not limited to, as required pursuant to section 6 of P.L.2018, c.162 (C.27:25-5.24).

3. This act shall take effect immediately and shall expire one year after the issuance of the report required pursuant to section 2 of this act.

STATEMENT

This bill, to be known as the "New Jersey Transit Accountability Act," requires that the New Jersey Transit Corporation (corporation) hire an independent firm to conduct an audit of the financial management practices and budget reporting practices of the corporation since the date of the issuance of the report conducted pursuant to Executive Order No. 5 of 2018 and prepare and issue a report on the independent firm's findings and recommendations, which report is to be submitted to the Governor and the Legislature.

Executive Order No. 5 of 2018 resulted in the issuance of the Comprehensive Strategic, Financial & Operational Assessment of NJ Transit on October 5, 2018. Among the issues identified in the assessment is that, for eight years preceding its publication and despite increasing operation and maintenance costs, the corporation had been forced to transfer much needed capital funds for capital maintenance due to dramatically reduced State Operating Assistance. Through its requirement of an independent audit, this bill is intended to shed light on the financial needs and practices of the corporation since the issuance of the 2018 assessment, including the diversion of capital funds for operations.

The report for which the corporation is required to hire an independent firm under this bill is to: (1) include findings on the financial management and budget reporting practices of the corporation since the date of the issuance of the report conducted pursuant to Executive Order No. 5 of 2018; (2) summarize the impact of the coronavirus pandemic (COVID-19) on the demand for the corporation's services and on the financial and practical needs of the corporation to meet current and projected long-term demand; (3) evaluate the corporation's current sources of funding and their adequacy in relation to demand for the corporation's services; and (4) recommend policies and best practices for the corporation to adopt based upon the findings of the independent firm, including, but not limited to, recommendations on the decision-making process, corporate governance, personnel hiring and protocols, and improvement of the customer experience.

Within six months of the issuance of the report, the corporation is required to adopt any individual policies and best practices recommended in the report. Under the bill, the corporation is permitted to opt not to adopt an individual policy or best practice, provided that the corporation provides a detailed explanation of why the adoption of that policy or practice is not in the best interest of the corporation within six months of the issuance of the report issued by the independent firm.

This bill does not affect any obligation of the corporation to conduct, or hire an independent firm to complete, an audit or study under existing law.