New Jersey Statutes Title 40A. Municipalities and Counties 40A § 2-60

Moneys or investments in any sinking fund or reserve fund of the local unit established or held for any obligations to be paid, funded or refunded by issuance of refunding bonds shall, unless the refunding bond ordinance provides otherwise, be applied to the payment or retirement of any such obligations. The refunding bond ordinance may provide that the proceeds from the sale of any refunding bonds shall be deposited in such sinking fund or reserve fund in trust to provide for the payment and retirement of the obligations being refunded at the maturity dates thereof or by redemption prior to the maturity dates and provision may be made for the pledge and disposition of any amounts in excess of the amounts required for such purposes. Money in any such sinking fund may be invested in (a) direct obligations of the United States Government, (b) obligations the principal of and interest on which are guaranteed by the United States Government, (c) to the extent then permitted by law in obligations of any agency or instrumentality of the United States Government, or (d) in certificates of deposit issued by a bank or trust company located in this State if such certificates shall be secured by a pledge of any of said obligations described in (a), (b) or (c) above having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. Nothing herein shall be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refunded but which shall not have matured and which shall not be presently redeemable or, if presently redeemable, shall not have been called for redemption.