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S4507 FISCAL ESTIMATE
LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 4507
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JUNE 29, 2026
SUMMARY
Synopsis:
Permits Director of Division of Pensions and Benefits to
initiate temporary transfer of funds in certain circumstances.
Type of Impact:
Potential expenditure increase to School Employees� Health
Benefits Program Fund for qualified education retirees; potential revenue
loss to School Employees� Health Benefits Program Fund for qualified
education retirees; potential expenditure reduction to School Employees�
Health Benefits Program Fund for active education employees.
Agencies Affected:
Department of the Treasury; Local education employers that
participate in the School Employees� Health Benefits Program.
Office of
Legislative Services Estimate
Fiscal Impact
Annual�
Potential State Expenditure Increase
Indeterminate
Potential State Revenue Loss
Indeterminate
Potential Local Expenditure Reduction
Indeterminate
�
The Office of Legislative Services (OLS) 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.
BILL DESCRIPTION
����� This bill permits the Division of Pensions and
Benefits to transfer funds from the School Employees� Health Benefits Program
Fund for qualified education retirees to the School Employees� Health Benefits
Program Fund for active education employees when the balance of the latter fund
falls to a level that is insufficient to cover 10 days of anticipated payments
for costs including, but not limited to, any portion of premiums, claims, or
other periodic charges.
����� The bill limits the amount of the transfer to a sum of
up to 30 days of anticipated payments from the School Employees� Health
Benefits Fund for active education employees. �The bill requires the School
Employees� Health Benefits Fund for active education employees to repay
borrowed monies within 120 days. �The division may extend the loan repayment by
up to an additional year to ensure sufficient funds are available to pay claims
incurred by members enrolled in the School Employees� Health Benefits Fund for
active education employees. �
����� Additionally, the bill requires the division to notify
the Department of the Treasury of transfers within 30 days. �The division is
also required to provide the department with a monthly accounting of the
outstanding balance of all transfers initiated under the bill, any repayment of
monies, and the current balance of the School Employees� Health Benefits Fund
for active education employees.
FISCAL ANALYSIS
EXECUTIVE BRANCH
����� � None received.
OFFICE OF LEGISLATIVE SERVICES
����� The OLS 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.
����� However, if the active education employee fund were
not to repay the loan to the qualified education retiree fund, the State in
effect would support local education employers participating in the School
Employees� Health Benefits Program. �Any such support could result in increased
State employer contributions to the qualified retiree fund and an expenditure
reduction to local education employers.
����� According to the most recent Mid-Year Experience
Report, in Plan Year 2026 the active education employee fund is projected to
experience a loss of $80.5 million since the original Plan Year 2026 Rate
Setting Analysis.� This is on top a $112.8 million loss in Plan Year 2024 and a
projected loss of $155.5 million in Plan Year 2025.
����� As a result, the Claim Stabilization Reserve is
projected to be ($32.3 million) by December 31, 2026, which is a $111.1 million
loss since the original projection.�
����� According to the report, 10 days of claims at current
Plan Year 2026 cost levels is $63.7 million. �Under the bill, if available
funds in the active education employee fund fall to a level that is
insufficient to cover 10 days of claims, the Division of Pensions and Benefits
can initiate transfers from the qualified education retiree fund to the active
education employee fund.
Section:
State Government
Analyst:
Anna Harris
Associate Fiscal Analyst
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.).