Governor Signs Revised Joint Insurance Fund Investment Measure, Strengthens NJCUL-requested Amendments

Governor Phil Murphy last week gave final approval to legislation to allow joint insurance funds (JIFs) more leeway in how they invest their money. He had issued a conditional veto earlier this month and the Legislature concurred with his recommended changes.

The bi-partisan legislation (A3122) authorizes certain JIFs to invest in various bonds, notes, and other obligations and to form joint cash management and investment programs.

The legislation was amended at the New Jersey Credit Union League’s request to include federally-insured credit unions. 

In addition to changes in allowable investments by JIFs, the legislation also authorizes local government units and school districts to deposit public funds into multiple federally-insured accounts, such as CDARS (Certificate of Deposit Account Registry Service) or similar depository syndications.

Current law does not expressly permit JIFs, local governments or school districts to deposit funds into multiple federally-insured accounts. Those deposits would be allowed under this legislation.

Specifically, the bill provides that JIFs, local government units and school districts and may deposit funds in multiple federally-insured accounts under the following conditions: 

  • The funds are initially invested through a public depository designated by the school district or local unit; 
  • The designated public depository arranges for the deposit of the funds in deposit accounts in one or more federally-insured banks, savings and loan associations or credit unions, for the account of the school district or local unit;
  • 100 percent of the principal and accrued interest of each deposit is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration;
  • The designated public depository acts as custodian for the school district or local unit with respect to those deposits; and
  • On the same date that the funds are deposited, 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.

JIFs are self-insurance funds. The first JIF was formed in 1985 when municipalities in Bergen County began having difficulty securing insurance in the open market or it was just too costly. Today, there are 48 JIFs serving New Jersey’s 566 municipalities and 611 school districts.