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Assembly Budget Panel to Hold Hearing Next Week

(TRENTON) — Assembly Speaker Sheila Y. Oliver and Assembly Republican Leader Alex DeCroce on Thursday announced bipartisan Assembly legislation to reform public worker pensions and health benefits has been introduced.

They said additional legislation to target pension and benefit reforms at state authorities and agencies and to close a loophole that allows public employees to collect a full public pension while collecting an additional public salary are being finalized and will soon also be introduced.

Oliver (D-Essex) said the Assembly Budget Committee is also expected to convene a special hearing next week — likely on Thursday — on the status of New Jersey’s pension and benefit system.

“This is a first step in what will be a deliberate and thorough review of our broken pension and benefit system and what needs to be done to fix it,” Oliver said. “Our system is unsustainable for both our taxpayers and public workers, but we must ensure that we bring real reform and relief to taxpayers. We will do this right, and I invite all sides to bring their ideas to this debate as we move forward on this priority in the coming weeks.”

“The introduction of pension and health benefit reforms represents an historic day in the General Assembly and is the initial step in addressing one of the most costly components in government,” said DeCroce (R-Morris). “Without action, the system will collapse under its own weight. Taxpayers cannot continue to support the present structure without assistance from its participants. I look forward to working in a bipartisan manner as we move towards enacting reforms which are long overdue.”

Oliver and DeCroce sponsored the bills when they were introduced on Thursday, but additional sponsors will soon be added.

The following legislation was introduced:

A2461, which would:

  • 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.

A2460, which would:

  • 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.

A2459, which would:

  • 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.

ACR115, which would:

  • Ask voters during a November election to amend the state Constitution to eventually require the state to pay the full amount of its required pension fund contribution; and
  • Allow to the state to phase-in the full payments over seven years by paying at least 1/7 of the contribution in the first year and increasing payments by at least an additional 1/7 in each year subsequent year.

Also to be included in the Assembly’s package is a bill still being drafted to include independent state authorities and agencies in the pension and benefits reforms.

Also in the works is a bill that closes a loophole that allows public employees to collect a full public pension while collecting an additional public salary.

And also to be included is a bill (A-2115) already introduced by Assemblyman Paul Moriarty (D-Gloucester/Camden) to bar future employees of government lobbying organizations from enrolling in the taxpayer-paid pension systems and to ban such employees from joining the state health benefits program.

The bill would:

  • 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 18 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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