Lawmakers Unveil State Pension Reform Plan

TRENTON – Senators from both parties introduced legislation to reform New Jersey’s troubled pension system on Monday.

One bill would require state, local and school district employees to contribute at least 1.5 percent of their salary to their health benefit costs. Another would limit the amount of unused sick time that can be cashed in at retirement to $15,000.


A third bill would change the way that pensions are calculated to repeal a nine percent pension benefit increase that was implemented in 2001. The final bill would require the state to fully pay its contribution to the pension system each year instead of allowing deferrals.

Enrollment in the state pension system would be limited to full-time workers, and benefits would be paid based on only one position. Pension payouts would be calculated based on the highest five years’ salary, instead of the highest three that are currently used.

No dollar figures were available to indicate how the reforms would affect the state pension system, which is currently underfunded by about $34 billion and is in danger of going broke.

Most of the measures would only affect new hires, but the bill requiring health care contributions would apply to all public workers when their current contracts expire.

These proposals were first made in 2006 after the Legislature held a special session to look for ways to lower New Jersey’s property taxes, which are the highest in the United States. Former Gov. Jon Corzine blocked most of the proposed pension reforms, arguing that they should be part of the collective bargaining process.

The state’s unions are opposed to the new measures.

“The changes proposed in these bills will do nothing to close budget gaps now or in next year’s budget,” Communications Workers of America spokesman Bob Master said in a statement. “All these bills would do is reduce the retirement and health care security of future New Jersey public workers.”

“NJEA is pleased that Trenton is finally paying attention to the condition of New Jersey’s public employee pension funds, but these legislative proposals will ultimately hurt our public schools, our students, and the people who educate them every day,” said New Jersey Education Association President Barbara Keshishian in a statement.

Lawmakers disagreed.

“Something must be done and fast, if we are to save the system from collapsing under the weight of its debt and failing to deliver on its promise to provide long-term security for people who have dedicated their lives to government work,” said Sen. Barbara Buono (D-Middlesex), one of the sponsors of the bill to cap sick day payouts. “Pensions under attack? Quite the contrary.”

Gov. Chris Christie is supportive of efforts to fix the state’s pension system. A spokesman for the governor, Michael Drewniak, said Monday: “The Governor campaigned on pension and benefits reform. We look forward to seeing more details.” Only the summaries of the bills were available Monday.

Each of the Senate bills had at least 23 co-sponsors, so they should have no trouble winning the 21 votes required for passage. It was not clear when the Assembly would introduce its versions of the bills.

“One of my priorities has been to take a hard look at the unfinished property-tax-reform business, and I expect the Assembly Budget Committee will hold a hearing on these bills in the near future,” Assembly Speaker Sheila Oliver (D-Essex) said in a statement. “This is an important issue and it requires a thorough review.”

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