The New Jersey State Senate approved a bill on Monday which, if approved by the Assembly, would increase public employees’ health insurance and pension contributions.
While Gov. Chris Christie released a statement praising the legislation, not everyone is a fan, including the New Jersey Education Association, which represents teachers across the state.
"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 NJEA, of which Princeton Regional Education Association is a local affiliate. "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 said health benefits should not be legislated.
"This should remain a subject of collective bargaining," he said.
Princeton Township Administrator James Pascale said the proposed pension change would benefit both taxpayers and public employees.
“Both parties will benefit because this will lower taxes,” Pascale said. “No one wants to pay more, but if the pension fund is more sustainable by increasing the contribution, surely it’s in their best interest. The bad news is that the state has given themselves additional six years to fully fund their share.”
The increase in health costs, however, will be difficult for township employees who are in their second year without pay raises, he said.
“If this becomes effective July 1…we ‘re talking about going into negative ground in terms of (employee) compensation,” Pascale said. “These are not good times to be a municipal employee, but these are not good times for employees anywhere.
“I know township employees are willing to step up and pay Christie’s ‘shared sacrifice,'” Pascale said. “It’s a bitter pill, but they understand it and they’re happy to have a job.”
On Monday, Christie released a statement commending the Senate’s vote.
“I am encouraged by the bi-partisan Senate vote today and the continued display of support for common-sense pension and health benefits reform," Christie said. "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 and Senate Majority Leader Steve Sweeney (D-Gloucester).
The bill changes how 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 changes the benefit provisions, according to a Senate press release.
The bill provides for increases in the employee contribution rates to their pension funds:
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; and from 7.5 percent to 9 percent for SPRS members, according to the bill.
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 would eliminate automatic cost-of-living adjustments for current and future retirees and beneficiaries.
It would also require all public employees and certain public retirees to contribute toward the cost of health care benefits coverage. Under the bill, all active public employees would pay a percentage of the cost of health care benefits coverage for themselves and any dependents, according to the Senate press 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.