LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 4875
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JANUARY 5, 2026
SUMMARY
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Synopsis: |
“Citizen’s Fund Act”; establishes trust fund for conveyance of certain public entity assets, as permitted, for interest of public benefit plans. |
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Type of Impact: |
Annual impact on State and local expenditures and revenues. |
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Agencies Affected: |
Division of Pensions and Benefits and Division of Investment in the Department of the Treasury; participating State and local units. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
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Annual |
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Net State Expenditure Impact |
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Indeterminate |
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Net State Revenue Impact |
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Indeterminate |
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Net Local Revenue Impact |
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Indeterminate |
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Potential Local Expenditure Decrease |
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Indeterminate |
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· The Office of Legislative Services (OLS) estimates that establishing the “Citizens Fund” trust fund for the conveyance of certain assets for the benefit of public benefit plans will increase annual State expenditures and, following the conveyance of any asset to the fund, State revenues, by an indeterminate amount to provide for the operation, administration, and management of the fund and its assets.
· A participating State or local unit will experience an annual indeterminate revenue decrease, following the conveyance of an asset to the fund in whole or in part.
· A participating State or local unit may experience an annual indeterminate revenue increase by virtue of investment gains allocated proportionally to that unit within the structure of a public benefit plan pursuant to a transfer agreement.
· A participating State or local unit may also experience an annual indeterminate expenditure decrease if net fund distributions to a public benefit plan for the benefit of a public entity decrease the annual actuarially determined contribution payable by a public employer for the provision of retirement and other post-employment benefits.
BILL DESCRIPTION
This bill establishes the “Citizens Fund,” a trust fund for the conveyance of certain assets for the benefit of public benefit plans.
Under the bill, a public entity may contribute, transfer, or sell its revenue-producing assets to a segregated or commingled account (e.g. the trust) to share in the risks and benefits of the performance of those assets, maximize their performance and long-term value, which will be deemed the special asset value, and otherwise benefit a public entity by facilitating the improvement of those assets and, pursuant to a transfer agreement, increasing the funded ratio of any public benefit plan in which that entity or an associated public entity participates.
The bill provides that assets may be conveyed to the fund in whole or in part. The bill requires any asset proposed for conveyance to undergo an “all-inclusive review,” defined as a comprehensive analysis of the asset and the asset conveyance that includes an assessment of a public entity’s fiscal condition, an inventory of asset and liability optimization opportunities, and an initial due diligence assessment.
The bill establishes a Common Pension Fund, comprised of an asset holding account and an asset investment account, within the Division of Investment in the Department of the Treasury to receive conveyed assets.
Citizens Fund assets and investment earnings thereon may only be used to maximize the value of fund assets, comply with safety and environmental requirements for asset operation under State and federal law and regulation, and defray the reasonable costs of administering the fund.
Fund assets net of financing and operating costs will be invested and distributed to a public benefit plan for the benefit of a public entity on a proportional basis, pursuant to a transfer agreement.
Under the bill, a benefitting public entity’s funding ratio may be calculated by the sum of its actuarial value of assets, including amounts held in or transferred from the investment account and the value of special assets held in its holding account divided by its actuarial accrued liabilities. For any State-administered retirement system, current law will govern the determination of the special asset value.
The bill prohibits a public benefit plan from paying any expenses incurred in connection with the conveyance of an asset.
Under the bill, the fund will have a board of five members, who will serve as fiduciaries and forgo compensation, but receive reimbursement from the fund for actual and necessary expenses incurred in the performance of their duties. The fund will also have an advisory board and enterprise advisory boards whose members will serve without compensation.
The fund board will select and contract various consultants and other professionals for the management, operation, and administration of the fund, which will include an independent fund manager and a qualified independent valuation agent.
Under the bill, the fund may engage in various activities in connection with the performance of its duties, which include asset improvement and disposition and the raising and securing of capital.
The bill also amends the Water Infrastructure Protection Act to allow a municipality with a water or wastewater asset under emergent conditions to include conveyance of the asset to the fund as an option under that law.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that establishing the “Citizens Fund” trust fund for the conveyance of certain assets for the benefit of public benefit plans will increase annual State expenditures and, following the conveyance of any asset to the fund, State revenues, by an indeterminate amount to provide for the operation, administration, and management of the fund and its assets, including the services of various consultants and other professionals, required asset reviews and valuations, and any resultant asset improvements, operating efficiencies, and financing or securitization opportunities.
A participating State or local unit will experience an annual indeterminate revenue decrease, following the conveyance of an asset to the fund in whole or in part.
A participating State or local unit may experience an annual indeterminate revenue increase by virtue of investment gains allocated proportionally to that unit within the structure of a public benefit plan pursuant to a transfer agreement.
A participating State or local unit may also experience an annual indeterminate expenditure decrease if net fund distributions to a public benefit plan for the benefit of a public entity decrease the annual actuarially determined contribution payable by a public employer for the provision of retirement and other post-employment benefits.
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Section: |
State Government |
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Analyst: |
Associate Fiscal Analyst |
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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.).