newjerseynewsroom.com

Full upper house vote could come by end of month

BY TOM HESTER SR.

NEWJERSEYNEWSROOM.COM

SECOND UPDATE

A state Senate committee Thursday unanimously approved four bipartisan bills that legislators describe as designed to reform the state's financially struggling public employee pension and benefits system.

The legislation was approved by the State Government, Wagering, Tourism and Historic Preservation Committee amid requests by union leaders to go slow and make what they argued is a need to closely examine the systems before acting.
Senate President Stephen M. Sweeney (D-Gloucester) said three of measures, which require no additional public hearings, will be voted on by the full upper house on Monday.

"These reforms are necessary to restore New Jersey's long-term fiscal footing and return sanity to a pension and benefit system that was allowed to spiral out of control,'' Sweeney said. "They were conceived in the spirit of bipartisanship, and I believe they will pass in bipartisan fashion as well.''

The various state pension plans are underfunded by at least $30 billion after years of skipped or partial payments.

The bills are described by legislators as an attempt to return the pension and benefits system to its original goal of ensuring the retirements of rank-and-file public employees and constitutionally require government to meet its annual pension obligations.

Charles Wowkanech, New Jersey AFL-CIO president, urged lawmakers not to approve the bills without determining the extent of pension system problems.

"In essence, our argument is that New Jersey has had a long-standing tradition of bargaining with public employees,‘' he said. "These employees are willing to work with the state and local communities (on pension and benefit issues) and that is really the way to go. Our concern here is that there is a lot of information out there we are not getting. It is a very vogue thing to reform the pension system but if you push it through and innocent people get hurt and property taxes don't go down what have you accomplished?''

Anthony Wieners, New Jersey State Policemen's Benevolent Association president, appeared before the committee with other police and firefighter union leaders.
Wieners angrily read a letter the PBA received from Chris Christie during the gubernatorial campaign that the union leader said promised police and firefighter pensions and benefits would be protected.

"Christie's promise before the election that no harm will come to your pension is a lie,'' Wiener said. "So much for a sacred trust. The promise that no harm will come to your pensions is a lie. We are about to be overwhelmed by a rush to pass these bills."

Wiener said the potential changes in pension and benefit standards are leading what he described as many veteran police officers to retire early, an action that leads to higher pension costs.

William G. Dressel, New Jersey State League of Municipalities director, told the committee his organization strongly supports the large majority of the proposed pension and benefit changes proposed in the bills.

"We encourage the Legislature to go even further,'' Dressel said. "The final legislation should ensure consistent benefits provisions in all pension systems.''

Michelle Gasparian, New Jersey Assistant Prosecutors Association president, told the committee, that assistant prosecutors and deputy attorney generals should not be bumped from the Police and Fire Retirement System because they play a role in providing public safety just as police officers and firefighters do.

She said assistant prosecutor pensions or benefits will lead young attorneys not to enter government or make it a career and hinder the quality of state and county prosecutors.

The legislation adopts recommendations from the 2006 Special Session on Property Tax Reform's Joint Legislative Committee on Pension and Benefits Reform. That committee made 41 proposals for overhauling the public pension and benefits system to ensure its long-term viability for career state employees. Fifteen recommendations were enacted legislatively; other reforms were achieved through collective bargaining.

The first bill (S-2) would limit enrollment in the defined-benefit pension system to full-time employees who work at least 35 hours per week at the state level or 32 hours in local government and public schools. All other new employees earning at least $5,000 annually could enroll in a 401(k)-style defined contribution plan. Current employees with fewer than 10 years of service would be allowed to switch from the defined-benefit plan to the defined-contribution plan, or withdraw from the system altogether.

The bill also would reconfigure the equation used to calculate pension benefits for future employees by dividing the number of years worked by 60, rather than the current 55. Also, the number of "high salary" years used for calculating benefits for workers in the public employee and teacher pension systems would be raised to five years from the current three; enrollees in the police, fire and State Police systems would have their pensions based on their highest three years — up from the current one-year standard.

The bill also would designate a "one job-one pension" rule for multiple job holders, with only the highest-salaried position counting towards a pension.

The second measure (S-3) would require all employees — including current state, school district, and local employees — to pay at least 1.5 percent of their salary towards their health benefits after the expiration of their current contract, and would require all newly-hired employees to pay at least 1.5% of their base pension toward health benefits upon retirement.

State employees would be required to work at least 35 hours per week to qualify for health benefits, with local and school employees having to meet a minimum 25-hour-per-week standard.

A third bill (S-4) to limit sick leave payouts for all new local and school employees to $15,000 - the standard currently in law for state employees. The bill also would allow new local government and school employees to carry over only one year's worth of vacation year-to-year and would eliminate the current sick leave injury program.

The remaining bill, a proposed constitutional amendment (SCR-1) will require a pubic hearing before it can move to the full senate for a vote. It would require the state to annually meet its obligation for each pension plan it operates. If approved by voters in the November general election, the state would have seven years beginning with the 2011-12 fiscal year to catch up to its full obligation — starting with the 2018-19 budget, the full payment would be required every year.