TRENTON – Yesterday, an Assembly committee advanced five bills to reform taxpayer-funded pensions and benefits for public workers.
“The bills approved at [yesterday’s] committee hearing represent the first step towards achieving important and necessary reforms to the state’s pension and health benefits program,” said Assembly Republican Leader Alex DeCroce (R-Morris). “Everyone acknowledges the current structure cannot be supported by taxpayers alone and needs to be revamped. We are past the point of talking about the problem and I am pleased that the long overdue changes the system requires are finally becoming a reality.”
“This is a key step toward fixing our broken pension and benefit system with a comprehensive bipartisan package that’s been studied and analyzed to ensure it will eventually save taxpayer money,” said Assembly Speaker Sheila Y. Oliver (D-Essex). “Our system is unsustainable for both taxpayers and public workers, but with this expanded and sweeping package we will bring real reform and relief to taxpayers and create a reliable system for public workers.”
The key word is “eventually”—Fred Beaver, director of New Jersey’s Division of Pensions and Benefits, told the Assembly Budget Committee this month that the measures wouldn’t begin to create savings for the state until fiscal year 2013.
Still Gov. Chris Christie was pleased by the Assembly votes.
“Today’s vote by the Assembly Appropriations Committee is another positive step toward reforming our broken pension system,” he said. “The only way we will get our state’s finances in order, revive our economy and bring solvency to the system is through working together to make fundamental, needed changes to state and local governments.”
The five bills are scheduled to be voted on Monday by the full Assembly.
• Limit pension system enrollment to new full-time employees who work at least 35 hours per week for the state or 32 hours for local government and schools;
• Require all workers with more than one public job to receive a pension for only one job, with only the highest-salaried position counting toward a pension;
• Allow new employees earning at least $5,000 annually to enroll in a 401(k)-style plan;
• Allow employees with less than 10 years of service to switch from the pension plan to a 401(k)-style plan or to withdraw from the pension system;
• Change the equation used to calculate pensions for new employees by dividing the number of years worked by 60, rather than 55, thus reversing for new workers the 9 percent benefit enhancement enacted in 2001;
• Base pensions for new public workers and teachers on the five highest salary years, rather than the highest three;
• Base pensions for new police and firefighters on the three highest salary years rather than the highest single year;
• Impose a pensionable salary cap for new employees of the Police and Firemen’s Retirement System and the State Police Retirement System. Salary earned under the cap—the base salary equivalent to the maximum wage contribution base for Social Security, or for 2010, $106,800 — would be counted toward PFRS or SPRS membership. Salary over the cap could be included in a 401(k)-type program;
• Repeal 2003 legislation that allowed a police or firefighter to retire at any age with 25 years of service credit on a special retirement allowance of 70 percent of final compensation, if the retirement system reached a funded level of 104 percent; and
• Eliminate the non-forfeitable right to pension benefits after five years in the system for new employees.
• Require all public employees to pay at least 1.5 percent of their salary toward health benefits after the expiration of a current contract;
• Require all newly-hired employees to pay at least 1.5 percent of their base pension toward health benefits upon retirement;
• Require that any changes negotiated by the state—such as higher co-pays—with its employees be applied to every government entity participating in state health benefits programs;
• Prohibit multiple coverage in state health benefits programs;
• Require new state workers to work at least 35 hours per week to qualify for health benefits; and
• Require new local and school employees to work at least 25 hours per week to quality for health benefits.
• Limit sick leave payouts for all new local and school employees to $15,000, just as it already is for state employees;
• Prohibit local government and school employees to carry over only one year of vacation time year-to-year; and
• Eliminate the ineffective sick leave injury program.
• Limit the salaries of executive directors at state and local authorities to the amount of the governor’s salary, which is currently $175,000;
• Limit the salaries of other authority employees to the amount earned by a state Cabinet officer, which is currently $141,000. Any salary in excess of those amounts would need approval from the Local Finance Board for local authorities and the state treasurer for state authorities;
• Limit sick leave payouts to $15,000 for authority employees;
• Standardize the authorities’ holiday schedule with the state schedule; and
• Require the authorities to adopt the same cost-sharing for health benefits as required by the state.
• Eliminate eligibility for any state-administered retirement system for newly hired officers and employees of the New Jersey State League of Municipalities, the New Jersey Association of Counties, the New Jersey School Boards Association, any school board insurance group, any county college joint insurance group, any county or municipal joint insurance fund and any corporation designated to manage a special improvement district established by municipal ordinance;
• Eliminate pension enrollment for employees of those organizations who have less than five years of service credit;
• Eliminate within 24 months the eligibility of all such officers and employees for health care benefits coverage through the State Health Benefits Program or through any health care benefits plan provided by the state or a political subdivision of the state;
• Prohibit any officer or employee of an educational foundation created by or on behalf of a higher education institution in this state for the purpose of receiving donations from becoming a member of the pension system on the basis of that employment; and
• Once the bill takes effect, eliminate service credit for teachers and public employees who while on an approved leave of absence from regular duties as a teacher or a public employee instead serve as an officer or representative of a labor organization that represents, or is affiliated with an organization that represents teachers or public employees.
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