ASSEMBLY BUDGET COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5330

STATE OF NEW JERSEY

DATED:  JUNE 28, 2026

      The Assembly Budget Committee reports favorably Assembly Bill No. 5330.

      As reported, this bill establishes a mechanism to provide necessary funds if the available funds in the health benefits fund for active education employees and their dependents fall to a level that is insufficient to cover 10 days of anticipated payments from the fund.  The bill permits the Director of the Division of Pensions and Benefits to initiate a temporary transfer of available funds from the health benefits fund for qualified local education retirees and their dependents to the health benefits fund for active education employees and their dependents.  The bill requires the Director of the Division of Pensions and Benefits to notify the School Employees’ Health Benefits Commission within 30 days of the transfer.

      Under the bill, the amount transferred must not exceed the amount necessary to cover 30 days of anticipated payments from the fund.  The amount transferred is to be reimbursed from the active education employee and dependent fund on or before the 120th day following the date of the transfer unless the Director of the Division of Pensions and Benefits determines that an extension of the reimbursement date is necessary to ensure that sufficient funding is available to pay claims incurred by employees of local education employers and their dependents; provided, however, in no case may the reimbursement date be extended for more than an additional 365 days.

      The bill requires the Director of the Division of Pensions and Benefits to provide to the State Treasurer a monthly accounting of any transfers initiated in the prior 30 days, the outstanding balances of all transfers initiated, any repayments for past transfers received, and the current balance of the active education employee and dependent health benefits fund.

FISCAL IMPACT:

      The Office of Legislative Services lacks the informational basis to quantify the fiscal impacts of this bill.  The bill, however, newly creates a limited exposure of the State to the financial condition of the School Employees’ Health Benefits Program Fund for active education employees.  The bill provides a temporary cash flow mechanism to cover unexpected, mid-year shortfalls in the fund that might otherwise require precipitous corrective actions on the fund’s revenue or expenditure side.  The mechanism would transfer reserves from the School Employees’ Health Benefits Program Fund for qualified education retirees, which is primarily funded by the State and loan the reserves without interest to the School Employees’ Health Benefits Program Fund for active education employees, which is funded by participating local education employers.

      Assuming any short-term loan would be repaid, the fiscal impacts of the loan would be a State revenue loss from interest earnings on the cash balances in the School Employees’ Health Benefits Program Fund for qualified education retirees that instead of being invested would be loaned interest-free to the School Employees’ Health Benefits Program Fund for active education employees.  To local education employers participating in the School Employees’ Health Benefits Program, the loan would potentially delay the immediate fiscal impact on employer contributions to the fund to mitigate the active fund’s financial imbalance.