On Monday, Senate President Steve Sweeney unveiled a plan that aims to save the state and local governments, including school districts, millions of dollars by instituting temporary furlough programs for their employees. The proposal would also increase the take-home pay of employees by taking advantage of emergency funds made available through federal legislation adopted in response to the COVID-19 pandemic.
“The Senate president and his colleagues recognize that boards of education and local government will be faced with difficult choices if the current emergency results in substantial declines in revenue,” said Dr. Lawrence S. Feinsod, NJSBA executive director. “We appreciate this bipartisan effort, which is intended to provide financial relief to school districts during a period of extreme uncertainty.
“NJSBA will review the proposal. We look forward to working with Senator Sweeney as this proposal moves forward to ensure we maximize the positive impact it can have on school districts’ budgets.”
Under the proposal, employers would be able to place their employees on temporary and partial furlough. While continuing to receive a portion of their existing salaries while working reduced hours, employees would be able to collect state unemployment benefits. The plan also relies on enhanced unemployment benefits provided to laid-off workers under the $2 trillion stimulus package adopted by Congress last month. That legislation, known as the “CARES (Coronavirus Aid, Relief, and Economic Security) Act,” allows such individuals to receive $600 per week through the end of July in addition to their state unemployment benefits. Between the pro-rated salary, unemployment compensation, and the enhanced federal benefits, many low and middle-income employees would end up taking home more pay than they would have if they continued to work full-time.
The legislation will build upon an existing 2011 state law authorizing job-sharing programs and the collection of unemployment benefits by furloughed workers. In addition, under the federal CARES Act, the federal government will pay 100% of the state unemployment benefit costs through July 31 for any worker furloughed in a state, such as New Jersey, that already has a job-sharing furlough law. The state and federal laws essentially serve as incentives for employers to place workers on furlough rather than lay them off entirely. The 2011 state job-sharing law applies to both public and private employers, as would this new proposal.
According to documents explaining the plan, the proposal could generate $750 million in savings for the state, municipalities, counties and school districts if 25% of their employees are placed on furlough. The savings would be achieved through reduced payroll costs. Additional details of the plan can be found here.
The Senate president plans to introduce legislation, known as the “Employee Job-Sharing Furlough Protection Act,” to be co-sponsored by Senators Nellie Pou and Steve Oroho, to effectuate the proposal. The bill would require passage by both houses of the Legislature and the signature of the governor. The NJSBA continues to review the proposal, but believes it has the potential to be a critical cost-saving tool during this period of economic uncertainty.