18A:71A-25 Capital Reserve Fund; use; investment.

18A:71A-25. Capital Reserve Fund; Use; Investment.

a. The authority shall establish and maintain a special fund called the "New Jersey Higher Education Student Assistance Capital Reserve Fund" in which there shall be deposited: (1) all moneys appropriated by the State for the purpose of the fund; (2) all proceeds of bonds required to be deposited therein by terms of any contract between the authority and its bondholders or any resolution of the authority with respect to the proceeds or bonds; and (3) any other moneys or funds of the authority which it determines to deposit therein. Moneys in the capital reserve fund shall be held and applied solely to the payment of the interest on and principal of bonds of the authority as the same shall become due and payable and for the retirement of bonds, and shall not be withdrawn therefrom if the withdrawal would reduce the amount in the capital reserve fund to an amount equal to less than the maximum debt service reserve, except for payment of interest then due and payable on bonds and the principal of bonds then maturing and payable and for the retirement of bonds in accordance with the terms of any contract between the authority and its bondholders and for the payments on account of which interest or principal or retirement of bonds other moneys of the authority are not then available in accordance with the terms of the contract. As used in this section, "maximum debt service reserve" means, as of any date of computation, the lesser of: the largest amount of money required by the terms of all contracts between the authority and its bondholders to be raised in any succeeding calendar year for the payment of interest on and maturing principal of outstanding bonds and payments required by the terms of the contracts to sinking funds established for the payment or redemption of the bonds, all calculated on the assumption that bonds will cease to be outstanding after the date of the computation by reason of the payment of bonds at their respective maturities and the payments of the required moneys to sinking funds and the application thereof in accordance with the terms of the contracts to the retirement of bonds; or the amount of money required by the terms of all contracts between the authority and its bondholders to be maintained in the fund.

b. Moneys in the fund at any time in excess of the maximum debt service reserve, whether by reason of investment or otherwise, may be withdrawn at any time by the authority and transferred to any other fund or account of the authority.

c. Moneys at any time in the fund may be invested in any direct obligations of, or obligations as to which the principal and interest thereof is guaranteed by, the United States of America or such other obligations as the authority may approve.

d. For purposes of valuation, investments in the capital reserve fund shall be valued at the lowest of the par value, cost to the authority or market value of the investments. Valuation on any particular date shall include the amount of interest then earned or accrued to the date on any moneys or investments in the reserve fund.

e. Notwithstanding any other provisions contained in this act, no bonds shall be issued by the authority unless there is in the capital reserve fund the maximum debt service reserve for all bonds then issued and outstanding and the bonds about to be issued; provided that nothing herein shall prevent or preclude the authority from satisfying the foregoing requirement by depositing so much of the proceeds of the bonds about to be issued, upon their issuance, as is needed to achieve the maximum debt service reserve. The authority may at any time issue its bonds, notes or other obligations for the purpose of providing any amount necessary to increase the amount in the capital reserve fund to the maximum debt service reserve, or to meet such higher or additional reserve as may be fixed by the authority with respect to the fund.

f. In order to assure the maintenance of the maximum debt service reserve in the capital reserve fund, there shall be appropriated annually and paid to the authority for deposit in the fund, such sum, if any, as shall be certified by the chairperson of the Board of Higher Education Student Assistance Authority to the Governor as necessary to restore the fund to an amount equal to the maximum debt service reserve. The chairperson shall annually, on or before December 1, make and deliver to the Governor a certificate stating the sums, if any, required to restore the fund to the amount equal to the maximum debt service reserve, and the sum or sums so certified shall be appropriated and paid to the authority during the then current State fiscal year.

g. The capital reserve fund shall be kept separate from any other reserve fund established by the authority and shall not be subject to the provisions of N.J.S.18A:71A-24.

L.1999,c.46,s.1.