Pension Reform Bills Introduced in Senate

New Jersey lawmakers on Tuesday introduced pension reform legislation that would affect the pensions and benefits of all public workers, including school district employees.

Four bills were introduced in the state Senate. Each bill has at least 23 sponsors; only 21 votes are needed for passage. According to media reports, the state Assembly was getting ready to introduce companion versions of the legislation later this week.  Three of the bills are S-2, S-3 and S-4 of the 2010-2011 legislative session.

Among the proposals in the legislation: a requirement that workers and retirees at all levels of government and local school districts contribute 1.5 percent of their annual salaries or base pension to their health benefits.

The proposals would also alter how pension payments are calculated. The measures would roll back a 9 percent increase in benefits put into place in 2001; average the highest five years of salary rather than three years to determine pension payments; and ban future part-time workers from participating in the pension system. Payments for unused sick leave would be capped at $15,000 for all public employees, reflecting the limit already in effect for state employees.

The fourth piece of legislation is a constitutional amendment, Senate Concurrent Resolution 1, introduced Tuesday, that would require the state to fully fund its pension obligations in each year’s budget.

NJSBA will thoroughly review the legislation. NJSBA believes that pension reform must be comprehensive, provide long-term stability for the program, and relieve overburdened taxpayers. The bills address many of the structural problems facing the pension and benefits system. Of note is an attempt to address the cost of post-retirement medical benefits, which makes up approximately $1 billion of the state budget.

The pension proposals mirror several recommendations made during a 2006 special session on property tax reform. At that time, a bipartisan committee made 41 recommendations on remaking the pension system; 15 were enacted legislatively and others through collective bargaining.

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