Politics & Government

Pension and Health Care Reform Bill Heads to Assembly; 'No Immediate Impact' on Tinton Falls

Opponents of the reforms, which were approved by the Senate on Monday, have called the legislation an attack on the middle class.

Proposed legislation to increase contributions by public employees to their health care and pension costs is expected to be approved by the state Assembly today, clearing its final hurdle before heading to Gov. Chris Christie to be signed into law.

by a margin of 24-15, with 16 Republican Senators and eight Democrats voting in favor of bill S-2937.

The bill would require teachers, state and local government workers to pay an additional 1 percent of their salaries toward their pensions as of July 1, and an additional 1 percent phased in over the next seven years for a total of 7.5 percent.

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Police and firefighters would pay an additional 1.5 percent of their salaries toward their pensions for a total of 10 percent, as of July 1.  The bill would move the retirement age for new teachers and non-uniformed employees from 60-years-old to 65. To be eligible for early retirement, the employees would now have to work 30 years instead of 25.

The bill would also require the state to make its annual payment into the pension system or unions could sue to force the state to make its payments. Gov. Christie withheld a $3 billion payment from the pension fund last year, which is underfunded by approximately $54 billion.

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The bill would also eliminate the automatic cost-of-living adjustment (COLA) for retired police, firefighters, teachers, state and local government employees in New Jersey's six pension systems.  

According to Tinton Falls Borough Attorney Brian Nelson at a recent council meeting, the legislation would have "no immediate impact on the borough."

Tinton Falls completed contract negotiations in 2010 and will be held to those collective bargaining agreements until they expire in three years, at which point the borough will be subject to the terms of the new legislation.

Nelson did point out at the June 21 meeting that the agreements reached last year go beyond the proposed legislation.  Borough employees agreed in those negotiations to pay 2.5 percent of their base salaries towards health benefits.

U.S. Senator Frank Lautenberg (D-NJ) criticized the legislation for having a detrimental impact on working families.

“The health and pension reform deal that passed in the State Senate is an attack on collective bargaining and a dramatic setback for middle-class New Jersey families," Lautenberg said via press release.  "The State House should be a place where the Governor and Legislature work to improve the lives of working families, not take away benefits from New Jersey's teachers, police, firefighters and other public employees.  Instead of balancing the budget on the backs of middle-class New Jerseyans, the Governor and Legislature should be working to make sure the wealthiest few are paying their fair share to help fix the state’s problems.” 

Gov. Christie said on Monday that the legislation would save New Jersey taxpayers "hundreds of billions of dollars." About 60 percent of the projected $122 billion total pension savings comes from the elimination of COLA, however the measure may not hold up in court.

NJSpotlight reported that both the non-partisan Office of Legislative Services (OLS) and the state Attorney General’s Office previously issued strongly worded opinions during the summer of 2006, which warned the bipartisan Joint Legislative Committee on Public Employee Benefits Reform that the state legislature had established a clear record of legislative intent that previously approved pension benefits should not be reduced.

The bill would have a more significant impact on the cost of health benefits, as it would require all public employees and certain public retirees to contribute toward the cost of health care benefits coverage based upon a percentage of the cost of coverage. Public employees could see current health costs at least doubled, or tripled in some cases.

Under the bill, all active public employees pay a percentage of the cost of health care benefits coverage for themselves and any dependents. Lower compensated employees would pay a smaller percentage, while more highly compensated employees would pay a higher percentage. The rates would gradually increase based on an employee’s compensation, at intervals of $5,000. 

Public employees currently paying 1.5 percent of their healthcare premium cost would pay 3 percent for those earning under $25,000, and up to 35 percent of their healthcare premiums for those making up to $100,000, on a sliding scale that is based on employee compensation. 

The increase to health costs would not affect current retirees, and active employees with at least 20 years of service would pay the increased contributions while still active, but would not be affected upon their retirement.

The bill currently contains two options for public workers, one where public employees could buy health insurance that would cover out-of-state treatment, or a cheaper option that would restrict employees to New Jersey hospitals, unless their case could only be handled by an out-of-state doctor.

The overall impact of the increased pension and health care contributions would range from $1,142 for a public empoyee making $25,000 per year, to $6,058 for an employee earning $65,000, according to the Communications Workers of America (CWA).

"This will cost families thousands of dollars per year and the legislation does nothing to control the cost of health benefits, it simply shifts the costs to families already struggling in this economy," said New Jersey Education Association spokesman Steve Baker.  "This should remain a subject of collective bargaining."

The New Jersey State Policemen's Benevolent Association said the proposals  ask far more of the members of the Police and Firemen’s Retirement System (PFRS) than it does of other pension systems and that it dramatically curtails collective bargaining for health benefits.

"We do not suggest that changes should not be made to strengthen our pension system or that our members are unwilling to offer local property tax relief," said State PBA President Anthony Wieners via press release.  "But we do believe strongly that police and firefighters must not be punished for the failure of government to adequately fund our pension system. We also maintain that negotiations for health benefits at the local level are already yielding significant savings for taxpayers and don’t require the Legislature’s intervention."

Amy Byrnes contributed additional reporting to this article.


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