State Senate Approves Pension, Health Benefits Reform Bill

The New Jersey State Senate approved a bill aimed at increasing public employees' contributions to health benefits and pension payments Monday by a margin of 24-15.  

The State Assembly still needs to pass its own version of the bill before the law will go to Gov. Chris Christie's desk for signing.

The bill makes various changes to the manner in which the Teachers’ Pension and Annuity Fund (TPAF), the Judicial Retirement System (JRS), the Public Employees’ Retirement System (PERS), the Police and Firemen’s Retirement System (PFRS), and the State Police Retirement System (SPRS) operates and to the benefit provisions of those systems, according to a release from the Senate.

Christie released a statement commending the passage of S-2937.

“I am encouraged by the bipartisan Senate vote today and the continued display of support for common-sense pension and health benefits reform," Christie said in the statement issued Monday. "This is a watershed moment for New Jersey, proving that the stakes are too high and the consequences all too real to stand by and do nothing. 

"As a result of Democrats and Republicans coming together to confront the tough issues, we are providing a sustainable future for our pension and health benefit system, saving New Jersey taxpayers hundreds of billions of dollars and securing a fiscally responsible future for our state.”

Unions representing teachers and other public employees have been rallying supporters in Trenton for several days to oppose the measure, which now goes to the state Assembly, where passage seems likely.

The legislation has been a top priority for Christie, the state's top Republican, and Senate President Steve Sweeney (D-West Deptford).

Fraternal Order of Police Lodge 206 President Sean Grannan was among those who protested the reform proposal last Thurdsay.

"The state has created a deficit and now they want us to fix it. What they've been able to do is create this public relations spin here that the public employees are the problem because we've been—I don't know—'freeloading on the system forever,' when that's definitely not the case," he said. "We weren't the ones who created this mess, now we're the ones who are supposed to bail them out."

The bill provides for increases in the employee contribution rates:

• From 5.5 percent to 6.5 percent, plus an additional 1 percent phased-in over seven years beginning in the first year, meaning after 12 months, after the bill’s effective date for TPAF and PERS (including legislators, Law Enforcement Officer (LEO) members, and workers compensation judges);
• From 3 percent to 12 percent for JRS phased-in over seven years; from 8.5 percent to 10 percent for PFRS members and members of PERS Prosecutors Part
• From 7.5 percent to 9 percent for SPRS members

The bill also repeals earlier legislation that provides a member of PERS or PFRS the ability to retire while holding an elective public office covered by PERS or PFRS, while continuing to receive the full salary for that office.

The bill states that the automatic cost-of-living adjustment will no longer be provided to current and future retirees and beneficiaries.

As for health benefits reform, the bill requires 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. 

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

Grannan estimated the pension reform alone will take a "ballpark" average of about $1,000 out of each township police officer's pocket annually.

"While we understand the state is in a budget fix and they feel that their big cost driver is the pension, our whole problem with this has always been that we didn't break it," he said. "We were always paying our 8.5 percent. ... It was the state that decided, or the state and the municipalities that decided, that they didn't want to pay."

Grannan was critical of public officials for painting police and other public employees as "villains" in their push for pension and health benefits reforms.

"I think that leads to the disrespect and violence against police officers all over the country," he said. "If the politicians—the people who are out there and are supposed to be our elected leaders—don't respect the job that we do then how is the regular criminal going to respect the job that we do?"

The New Jersey Education Association called the legislation an attack on the middle class.

"It's unfortunate that the Senate chose to pass this bill, which is an attack on middle class families," said Steve Baker, a spokesperson for the NJEA. "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.

Baker added that benefits should not be legislated.

"This should remain a subject of collective bargaining," he said.

Click here for more information on Senate bill S-2937.

Gloucester Township Patch editor Sean McCullen contributed to this report.