Senate President Steve Sweeney has confirmed that he will not post a bill, S-2606, that would place a hard cap on the amount public employees contribute to the cost of their health benefits, essentially shifting such costs from public employees to taxpayers. Many NJSBA members, particularly those entering contract negotiations, have been inquiring about the bill’s prospects for several months.

In a Feb. 4 statement, Sweeney explained his position on the measure.

“Unless we enact the sensible reforms outlined in the bipartisan Economic and Fiscal Policy Workgroup’s ‘Path to Progress’ report, pension and benefit costs will rise $4.1 billion over the next four years, creating a massive budget deficit and crowding out spending on other priorities, including K-12 education, college affordability and social services,” Sweeney said. “I will not post the bill for a vote because the taxpayers of New Jersey deserve the major structural reforms needed to fix the fiscal crisis. They cannot afford it and public employees won’t realize any lasting benefits.”

He continued, “The best way to achieve ‘Chapter 78 relief’ is by lowering employee out-of-pocket healthcare premium costs with sensible reforms,” such as shifting from platinum-plus to gold-level coverage, by enacting a strong third party administrator bill and by expanding patient-centered medical home options.

Last year, Sweeney convened the Economic and Fiscal Policy Workgroup, a panel of legislators and fiscal and economic experts, to devise innovative solutions to improve the state’s financial health.  In August 2018, the group recommended pension and benefits reform; education reform at the administrative level; county and municipal government reforms and shared services; state and local government tax restructuring; and leveraging assets to stabilize the pension system.

For public employee health benefits, the group proposed the following:

  • Shift all state and local government employee and retiree health care coverage from platinum to gold.
  • Require all new state and local government retirees to pay the same percent of premium costs they paid when working.
  • Merge the School Employees Health Benefits Program into the larger State Health Benefits Plan and make the plans identical in coverage.
  • Require an ongoing third-party audit of health care claims.
  • Require families with multiple state or local government employers to select only one health care plan from one employer.

S-2606, the legislation that will not be posted in the Senate, would reverse the health care cost-sharing provisions of a 2011 law, commonly referred to as Chapter 78, which required public employees to take on a greater share of their health benefits costs.  That law was phased in over several years with the fully phased-in contribution amounts serving as the basis for future rounds of contract negotiations between boards of education and their employees.

S-2606 would override the Chapter 78 requirement that “contribution levels shall become part of collective negotiations and shall then be subject to collective negotiations in a manner similar to other negotiable items between the parties.” Instead, the amount that an employee would pay towards their health care costs would be tied to a percentage of their income as follows:

  • No more than 3 percent of base salary for individual coverage;
  • No more than 4 percent of base salary for individual and adult or individual and children coverage; and
  • No more than 5 percent of base salary for family coverage.

The NJSBA opposes the legislation and applauds the Senate President for taking this stance.  If enacted, the legislation would likely result in tax hikes or reductions in critical programs, staff and services.

“We look forward to working with the administration, legislative leadership and lawmakers on ways to control the overall costs of health benefits,” said Dr. Lawrence S. Feinsod, NJSBA executive director. “Reducing these costs will enable boards of education to direct a greater share of their resources to expanding educational programs and services for students, while maintaining a level of benefits necessary to attract and retain a highly qualified workforce.”