New Jersey has $3.4 billion of auction-rate debt that state Treasury officials are considering whether to convert or refinance into variable- or fixed-rate mode as $493 million of the state's auction-rate bonds failed to gain sufficient buyers over the past week.

Failed auctions have cost the Garden State an additional $2 million in interest payments so far. Helping to absorb that added cost is a roughly $5 million cushion from swap agreements that proved positive for New Jersey during the first half of fiscal 2008, which began July 1. But the $5 million will only go so far and the Treasury Department is evaluating different strategies for changing the state's existing auction-rate bonds into other forms of debt, according to Nancy Feldman, director of public finance.

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