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State Senate Passes Pension and Health Care Reform Bill

The New Jersey State Senate passed the bill Monday by a margin of 24-15.

The New Jersey State Senate approved a bill aimed at increasing contributions to health benefits and pension payments for public employees today by a margin of 24-15.  The State Assembly still needs to pass its own bill before the law will go to the governor'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.

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

“I am encouraged by the bi-partisan Senate vote today and the continued display of support for common-sense pension and health benefits reform," Gov. Christie said via press release. "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 Gov. Chris Christie and Senate Majority Leader Steve Sweeney (D-Gloucester).

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; and 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. 

on public employees like teachers.

"This legislation would result in a pay cut of several thousands of dollars for every one of us here," said SBEA President Christopher Hines. "Like everybody else, many of our members are struggling to get by as is, this legislation would only make the struggle harder."

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.

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