{"data":{"id":"us-nj/n.j.-stat.-40a-5-15.1","jurisdiction":"us-nj","citation":"N.J. Stat. § 40A:5-15.1","heading":"Securities which may be purchased by local units.","body":"8.\tSecurities which may be purchased by local units.\na.\tWhen authorized by a cash management plan approved pursuant to N.J.S.40A:5-14, 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:\n(1)\tBonds or other obligations of the United States of America or obligations guaranteed by the United States of America;\n(2)\tGovernment money market mutual funds;\n(3)\tAny obligation that a federal agency or a federal instrumentality has issued in accordance with an act of Congress, which security has a maturity date not greater than 397 days from the date of purchase, provided that such obligation bears a fixed rate of interest not dependent on any index or other external factor;\n(4)\tBonds 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;\n(5)\tBonds or other obligations, having a maturity date not more than 397 days from the date of purchase, issued by New Jersey school districts, municipalities, counties, and entities subject to the \"Local Authorities Fiscal Control Law,\" P.L.1983, c.313 (C.40A:5A-1 et seq.).  Other bonds or obligations having a maturity date not more than 397 days from the date of purchase may be approved by the Division of Local Government Services in the Department of Community Affairs for investment by local units;\n(6)\tLocal government investment pools;\n(7)\tDeposits with the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L.1977, c.281 (C.52:18A-90.4); or\n(8)\tAgreements for the repurchase of fully collateralized securities, if:\n(a)\tthe underlying securities are permitted investments pursuant to paragraphs (1) and (3) of this subsection a. or are bonds or other obligations, having a maturity date not more than 397 days from the date of purchase, issued by New Jersey school districts, municipalities, counties, and entities subject to the \"Local Authorities Fiscal Control Law,\" P.L.1983, c.313 (C.40A:5A-1 et seq.);\n(b)\tthe custody of collateral is transferred to a third party;\n(c)\tthe maturity of the agreement is not more than 30 days;\n(d)\tthe underlying securities are purchased through a public depository as defined in section 1 of P.L.1970, c.236 (C.17:9-41); and\n(e)\ta master repurchase agreement providing for the custody and security of collateral is executed.\nb.\tAny investment instruments in which the security is not physically held by the local unit shall be covered by a third party custodial agreement which shall provide for the designation of such investments in the name of the local unit and prevent unauthorized use of such investments.\nc.\tPurchase of investment securities shall be executed by the \"delivery versus payment\" method to ensure that securities are either received by the local unit or a third party custodian prior to or upon the release of the local unit's funds.\nd.\tAny investments not purchased and redeemed directly from the issuer, government money market mutual fund, local government investment pool, or the State of New Jersey Cash Management Fund, shall be purchased and redeemed through the use of a national or State bank located within this State or through a broker-dealer which, at the time of purchase or redemption, has been registered continuously for a period of at least two years pursuant to section 9 of P.L.1967, c.93 (C.49:3-56) and has at least $25 million in capital stock (or equivalent capitalization if not a corporation), surplus reserves for contingencies and undivided profits, or through a securities dealer who makes primary markets in U.S. Government securities and reports daily to the Federal Reserve Bank of New York its position in and borrowing on such U.S. Government securities.\ne.\tFor the purposes of this section:\n(1)\ta \"government money market mutual fund\" means an investment company or investment trust:\n(a)\twhich is registered with the Securities and Exchange Commission under the \"Investment Company Act of 1940,\" 15 U.S.C. s.80a-1 et seq., and operated in accordance with 17 C.F.R. s.270.2a-7, except that a government money market mutual fund may not impose liquidity fees or redemption gates regardless of whether permitted to do so under 17 C.F.R. s.270.2a-7;\n(b)\tthe portfolio of which is limited to U.S. Government securities that meet the definition of an eligible security pursuant to 17C.F.R.s.270.2a-7, securities that have been issued by New Jersey school districts, municipalities, counties, and entities subject to the \"Local Authorities Fiscal Control Law,\" P.L.1983, c.313 (C.40A:5A-1 et seq.) that meet the definition of an eligible security pursuant to 17 C.F.R. s.270.2a-7, and repurchase agreements that are collateralized by such securities in which direct investment may be made pursuant to paragraphs (1), (3), and (5) of subsection a. of this section; and\n(c)\twhich is rated by a nationally recognized statistical rating organization.\n(2)\ta \"local government investment pool\" means an investment pool:\n(a)\twhich is managed in accordance with generally accepted accounting and financial reporting principles for local government investment pools established by the Governmental Accounting Standards Board;\n(b)\twhich is rated in the highest category by a nationally recognized statistical rating organization;\n(c)\twhich is limited to U.S. Government securities that meet the definition of an eligible security pursuant to 17 C.F.R. s.270.2a-7, securities that have been issued by New Jersey school districts, municipalities, counties, and entities subject to the \"Local Authorities Fiscal Control Law,\" P.L.1983, c.313 (C.40A:5A-1 et seq.) that meet the definition of an eligible security pursuant to 17 C.F.R. 270.2a-7 and repurchase agreements that are collateralized by such securities in which direct investment may be made pursuant to paragraphs (1), (3), and (5) of subsection a. of this section;\n(d)\twhich is in compliance with such rules as may be adopted pursuant to the \"Administrative Procedure Act,\" P.L.1968, c.410 (C.52:14B-1 et seq.) by the Local Finance Board of the Division of Local Government Services in the Department of Community Affairs, which may promulgate rules providing for disclosure and reporting requirements, and other provisions deemed necessary by the board to provide for the safety, liquidity and yield of the investments;\n(e)\twhich does not permit investments in instruments that: are subject to high price volatility with changing market conditions; cannot reasonably be expected, at the time of interest rate adjustment, to have a market value that approximates their par value; or utilize an index that does not support a stable net asset value;\n(f)\twhich purchases and redeems investments directly from the issuer, government money market mutual fund, or the State of New Jersey Cash Management Fund, or through the use of a national or State bank located within this State, or through a broker-dealer which, at the time of purchase or redemption, has been registered continuously for a period of at least two years pursuant to section 9 of P.L.1967, c.93 (C.49:3-56) and has at least $25 million in capital stock (or equivalent capitalization if not a corporation), surplus reserves for contingencies and undivided profits, or through a securities dealer who makes primary markets in U.S. Government securities and reports daily to the Federal Reserve Bank of New York its position in and borrowing on such U.S. Government securities ; and\n(g)\twhich does not impose liquidity fees or redemption gates.\nf.\tInvestments in, or deposits or purchases of financial instruments made pursuant to this section shall not be subject to the requirements of the \"Local Public Contracts Law,\" P.L.1971, c.198 (C.40A:11-1 et seq.).\nL.1977, c.396, s.8; amended 1991, c.458, s.2; 1997, c.148, s.3; 2015, c.95, s.16; 2017, c.310, s.2.","path":["TITLE 40A MUNICIPALITIES AND COUNTIES"],"source_url":"https://pub.njleg.state.nj.us/statutes/STATUTES-TEXT.zip","current_through":"P.L.2025, c.405, and J.R.22","vintage":"","retrieved_at":"2026-08-27T17:54:13Z","sha256":"57362b42a15edadfc69bf6c9c4790c6d74971d1fb7f8305b22ea2d270996c141","source_id":"us-nj","stale":true,"prev":"us-nj/n.j.-stat.-40a-5-15","next":"us-nj/n.j.-stat.-40a-5-15.2"},"notice":"GroundRules: Original legal text. Not legal advice."}