A152

ASSEMBLY, No. 152

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblywoman CRUZ-PEREZ and Assemblyman GARCIA

An Act concerning the investment powers of boards of education and local units 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. 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:

a. Bonds or other obligations of the United States of America or obligations guaranteed by the United States of America, including securities of, or other interests in, any open-end or closed-end management type investment company or investment trust registered under the "Investment Company Act of 1940," 54 Stat. [847] 789 (15 U.S.C.§80a-1 et seq.), purchased and redeemed only through the use of National or State banks located within this State or other financial intermediaries registered pursuant to section 9 of P.L.1967, c.93 (C.49:3-56), if the portfolio of that investment company or investment trust is limited to bonds or other obligations of the United States of America, bonds or other obligations guaranteed by the United States of America and repurchase agreements fully collateralized by bonds or other obligations of the United States of America or bonds or other obligations guaranteed by the United States of America, which collateral shall be delivered to or held by the investment company or investment trust, either directly or through an authorized custodian;

b. Bonds of any Federal Intermediate Credit Bank, Federal Home Loan Bank, Federal Land Bank, Federal National Mortgage Associates or of any United States Bank for Cooperatives which have a maturity date not greater than 12 months from the date of purchase; or

c. Bonds or other obligations of the school district.

(cf: P.L.1991, c.458, s.1)

2. Section 8 of P.L.1977, c.396 (C.40A:5-15.1) is amended to read as follows:

8. When authorized by resolution adopted by a majority vote of all its members, the governing body of any local unit 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 local unit:

c. Bonds or other obligations of the local unit or bonds or other obligations of school districts of which the local unit is a part or within which the school district is located; or

d. Bonds or other obligations, having a maturity date not more than 12 months from the date of purchase, approved by the Division of Investment of the Department of the Treasury for investment by local units.

(cf: P.L.1991, c.458, s.2)

3. This act shall take effect immediately.

STATEMENT

This bill expands the range of agents through whom school boards and local units may purchase and redeem authorized mutual funds by permitting the use of broker-dealers and agents registered pursuant to the "Uniform Securities Law (1967)." Currently, the only avenue through which a school board or local unit may purchase such securities is a national or State bank located within this State. Thus, the bill would make a safe and flexible type of investment more accessible to the fiscal officers of school boards and local units in this State.

Allows school boards and local units to invest mutual funds through certain financial intermediaries other than banks.