Bill Text: NJ A4234 | 2016-2017 | Regular Session | Introduced
Bill Title: Allows certain joint insurance funds to make certain investments and to form certain investment programs; authorizes school districts and local units of government to deposit public funds into multiple FDIC-insured accounts.*
Spectrum: Moderate Partisan Bill (Democrat 10-2)
Status: (Introduced - Dead) 2017-11-30 - Reported out of Assembly Comm. with Amendments, 2nd Reading [A4234 Detail]
Download: New_Jersey-2016-A4234-Introduced.html
Sponsored by:
Assemblyman JOHN J. BURZICHELLI
District 3 (Cumberland, Gloucester and Salem)
SYNOPSIS
Allows certain joint insurance funds to invest in bonds of State and federal agencies and to form joint cash management and investment programs.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning certain joint insurance funds and amending and supplementing P.L.1983, c.372 and P.L.1983, c.108.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.1983, c.372 (C.40A:10-38) is amended to read as follows:
3. a. The commissioners of a joint insurance fund shall have the powers and authority granted to commissioners of individual local insurance funds under the provisions of subsections a., b., c., and e. of N.J.S.40A:10-10.
b. The commissioners may invest and reinvest the funds, including workers' compensation funds, as authorized under the provisions of subsection b. of N.J.S.40A:10-10. The commissioners may, subject to the cash management plan of the joint insurance fund adopted pursuant to N.J.S.40A:5-14, delegate any of the functions, powers and duties relating to the investment and reinvestment of these funds, including the purchase, sale or exchange of any investments, securities or funds to an investment or asset manager. Any transfer of investment power and duties made pursuant to this subsection shall be detailed in a written contract for services between the joint insurance fund and an investment or asset manager. The contract shall be filed with the Commissioner of Banking and Insurance and the Commissioner of Community Affairs. Compensation under such an arrangement shall not be based upon commissions related to the purchase, sale or exchange of any investments, securities or funds. In addition to the types of securities in which the joint insurance fund may invest pursuant to section 8 of P.L.1977, c.396 (C.40A:5-15.1), a joint insurance fund may invest in debt obligations of any governmental entity established under the laws of the State of New Jersey and federal agencies or government corporations.
c. The commissioners may transfer moneys held in the fund to the Director of the Division of Investment in the Department of the Treasury for investment on behalf of the fund, pursuant to the written directions of the commissioners, signed by an authorized officer of the joint insurance fund, or any investment or asset manager designated by them. The commissioners shall provide a written notice to the director detailing the extent of the authority delegated to the investment or asset manager so designated to act on behalf of the joint insurance fund. Moneys transferred to the director for investment shall be invested subject to section 8 of P.L.1977, c.396 (C.40A:5-15.1), and in accordance with the standards governing the investment of other funds which are managed under the rules and regulations of the State Investment Council. In addition to the types of securities in which the joint insurance fund may invest pursuant to section 8 of P.L.1977, c.396 (C.40A:5-15.1), a joint insurance fund may invest in debt obligations of federal agencies or government corporations with maturities not to exceed 10 years from the date of purchase, excluding mortgage backed or derivative obligations, provided that the investments are purchased through the Division of Investment and are invested consistent with the rules and regulations of the State Investment Council.
d. Moneys transferred to the director for investment may not thereafter be withdrawn except: (1) pursuant to the written directions of the commissioners signed by an authorized officer of the joint insurance fund, or any investment or asset manager designated by them; (2) upon withdrawal or expulsion of a member local unit from the fund; (3) termination of the fund; or (4) in specific amounts in payment of specific claims, administrative expenses or member dividends upon affidavit of the director or other chief executive officer of the joint insurance fund.
e. The commissioners or the executive board, as the case may be, of any joint insurance fund established pursuant to the provisions of this act shall be subject to and operate in compliance with the provisions of the "Local Fiscal Affairs Law" (N.J.S.40A:5-1 et seq.), the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.) and such other rules and regulations as govern the custody, investment and expenditure of public funds by local units.
(cf: P.L.1995, c.374, s.1)
2. (New section) Notwithstanding the provisions of any other law to the contrary, and in addition to the powers otherwise conferred by law, the commissioners of a joint insurance fund established pursuant to P.L.1983, c.372 (C.40A:10-36 et seq.), and the trustees of a joint insurance fund established pursuant to P.L.1983, c.108 (C.18A:18B-1 et seq.) may amend the plan of risk management of their respective funds to participate in a joint cash management and investment program with other joint insurance funds similarly established pursuant to P.L.1983, c.372 (C.40A:10-36 et seq.), and P.L.1983, c.108 (C.18A:18B-1 et seq.). The joint insurance funds participating in this program shall jointly file a cash management plan for prior approval by the Commissioner of Banking and Insurance and the Commissioner of Community Affairs and shall comply with all provisions of P.L.1983, c.372 (C.40A:10-36 et seq.) and. P.L.1983, c.108 (C.18A:18B-1 et seq.), as appropriate.
3. Section 4 of P.L.1983, c.108 (C.18A:18B-4) is amended to read as follows:
4. Bylaws of the group; trustees; powers.
a. The bylaws of any school board insurance group shall:
(1) Set forth a statement of purposes of the group;
(2) Set forth provisions for organization of the group, including governance by a board of trustees;
(3) Provide for the delivery of a risk management program in conjunction with any joint self-insurance fund or funds which the board of trustees shall establish. The risk management program shall include, but not be limited to:
(a) the perils of liabilities to be insured against;
(b) limits of coverage, whether self-insurance, direct insurance purchased from a commercial carrier or reinsurance;
(c) the amount of risk to be retained by the fund;
(d) the amount of reserves to be established;
(e) the proposed method of assessing contributions to be paid by each member of the fund;
(f) procedures governing loss adjustment and legal fees;
(g) coverage to be purchased from a commercial insurer, if any;
(h) reinsurance to be purchased, if any, and the amount of premium therefor; and
(i) such other procedures and information as the commissioner may require by rule or regulation;
(4) Set forth procedures to enforce the collection of any contributions or payments in default;
(5) Set forth membership standards as required in section 3 of P.L.1983, c.108 (C.18A:18B-3);
(6) Require that, for each joint self-insurance fund, a contract or contracts of specific and aggregate excess insurance or reinsurance is maintained;
(7) Set forth procedures for:
(a) Withdrawal from the group and a fund by a member;
(b) Termination of the group or fund and disposition of assets; and
(c) Determining the obligations, if any, of a member in the event that the group is unable to pay indemnification obligations and expenses payable from a fund administered by it;
(8) Require an annual certified audit to be prepared and filed with the commissioner;
(9) Require that any joint self-insurance fund or funds be developed and operated in accordance with accepted and sound actuarial practices;
(10) Provide that any expenditure of moneys in a fund be in furtherance of the purpose of the fund;
(11) Set forth other provisions as desired for operation and governance of the group;
(12) Provide for expulsion of a member; and
(13) Comply with any requirement established by the commissioner by rule or regulation.
b. The bylaws of a group shall provide for governance of the group by a board of trustees selected in accordance with the provisions of the bylaws. The bylaws shall provide for trustee powers and duties and shall include, but not be limited to, the following powers of the board of trustees:
(1) To determine and establish contributions and rates, loss reserves, surplus, limits of coverage, limits of excess or reinsurance, coverage documents, dividends and other financial and operating policies of the group or fund;
(2) To invest moneys held in trust under any fund in investments which are approved for investment by regulation of the State Investment Council for surplus moneys of the State or, at the discretion of the board, to transfer moneys held in trust under any fund to the Director of the Division of Investment in the Department of the Treasury for investment on behalf of the board in accordance with the standards governing the investment of other funds which are managed under the rules and regulations of the State Investment Council. However, any moneys transferred to the director for investment may not thereafter be withdrawn except upon withdrawal of a member from the group or a fund or termination of the group or a fund or in specific amounts in payment of specific claims, administrative expenses or member dividends upon affidavit of the director or other chief executive officer of the group. In addition to the types of securities in which the joint insurance fund may otherwise invest, a joint insurance fund may invest in debt obligations of any governmental entity established under the laws of the State of New Jersey and federal agencies or government corporations;
(3) To purchase, acquire, hold, lease, sell and convey real and personal property, all of which property shall be exempt from taxation under chapter 4 of Title 54, Taxation, of the Revised Statutes;
(4) To collect and disburse all money due to or payable by the group, or authorize such collection and disbursement;
(5) To enter into contracts with other persons or with public bodies of this State for any professional, administrative or other services as may be necessary to carry out the purposes of the group or any fund;
(6) To purchase and serve as the master policyholders if desired, for any insurance, including excess or reinsurance;
(7) To prepare, or cause to be prepared, a risk management program for the joint insurance group;
(8) As the need arises, from time to time, to amend the bylaws or risk management program of the fund; except that no such amendment shall take effect until approved in the following manner:
(a) The trustees shall file with the commissioner, for his approval: a copy of any amendment to the bylaws of the fund, upon approval by resolution of three-fourths of the member school boards or in such other manner as established by the fund and approved by the commissioner; or any amendment to the risk management program, upon adoption by the trustees.
(b) Within 60 days of receipt, the commissioner shall either approve or disapprove any amendment to the bylaws or risk management program. If the commissioner fails to either approve or disapprove the amendment within that 60 day period, the amendment shall be deemed approved;
(c) If any amendment is disapproved, the commissioner shall set forth, in writing, the reasons for disapproval. Upon the receipt of the notice of disapproval, the trustee of the affected joint insurance fund may request a public hearing. The public hearing shall be convened by the commissioner in a timely manner;
(d) Within 90 days after the effective date of any amendment to the bylaws, a member school board which did not approve the amendment may withdraw from the fund, except that it shall remain liable for its share of any claim or expense incurred by the fund during its period of membership;
(9) To do all other things necessary and proper to carry out the purposes for which the group is established.
(cf: P.L.1995, c.74, s.2)
4. (New section) Notwithstanding the provisions of any other law to the contrary, and in addition to the powers otherwise conferred by law, the trustees of a joint insurance fund established pursuant to P.L.1983, c.108 (C.18A:18B-1 et seq.) and the commissioners of a joint insurance fund established pursuant to P.L.1983, c.372 (C.40A:10-36 et seq.), may amend the plan of risk management of their respective funds to participate in a joint cash management and investment program with other joint insurance funds similarly established pursuant to P.L.1983, c.108 (C.18A:18B-1 et seq.) and P.L.1983, c.372 (C.40A:10-36 et seq.). The joint insurance funds participating in this program shall jointly file a cash management plan for prior approval by the Commissioner of Banking and Insurance and the Commissioner of Community Affairs and shall comply with all provisions of P.L.1983, c.108 (C.18A:18B-1 et seq.) and P.L.1983, c.372 (C.40A:10-36 et seq.), as appropriate.
5. This act shall take effect immediately.
STATEMENT
This bill authorizes certain joint insurance funds to invest in bonds of local units and other New Jersey and federal governmental agencies.
Specifically, the bill amends current law to allow both local unit joint insurance funds, and board of education joint insurance funds, all commonly referred to as "JIFs," to invest in bonds of any governmental entity established under State law, or of any federal agencies or government corporations. It is anticipated that this expansion of the types of bonds in which these JIFs may invest will increase the yield that the JIFs may realize, while still limiting their investments to very safe instruments.
The bill also allows the local unit and board of education joint insurance funds to amend their respective risk management plans to form joint cash management and investment programs. This change will give these JIFs the ability to increase investment yield by reducing the amount of assets that must be held in short term instruments to cover their cash flow needs.
