New Jersey Assembly Bill A1093

New Jersey 2024-2025 Regular Session

• Introduced: 1/9/24
• Refer: 1/9/24

Caption

Requires third-party disbursement service organization that contracts with local government unit or board of education to post bond against failure to meet obligations.

Impact

The introduction of A1093 aims to address specific vulnerabilities exposed by past incidents involving third-party disbursement services, particularly citing the case of Ameripay. Ameripay, which is under investigation for fraud, allegedly failed to fulfill its payroll obligations and neglected to make substantial tax deposits on behalf of its clients. By mandating bonding, the bill not only seeks to protect public funds but also builds trust between local governments, educational boards, and the service organizations they contract. This measure has the potential to influence how such organizations operate within the state, ensuring stricter oversight and financial reliability.

Summary

Assembly Bill A1093 requires any third-party disbursement service organization that contracts with local government units or boards of education to post a bond as a safeguard against failing to meet their financial obligations. This legislative measure is intended to ensure that these organizations are held accountable for executing transactions and making payments accurately, including federal or state tax deposits. The bill amends previously established laws related to local fiscal affairs and introduces a new level of financial security for public entities that depend on these services.

Contention

While the bill is a proactive step toward enhanced financial security, it may also lead to increased operational costs for third-party disbursement service organizations, which could be reflected in their service fees. Some stakeholders might express concern over the financial burden this requirement imposes, especially on smaller firms that may find it challenging to secure bonding at the required levels. Nonetheless, advocates for the bill argue that the benefits of preventing financial mismanagement and the potential loss of taxpayer and public funds far outweigh any additional costs associated with compliance.