At a State House press conference last Thursday, Senate President Steve Sweeney unveiled a package of 27 bills that would implement the recommendations contained in the “Path to Progress” report issued by the New Jersey Economic and Fiscal Policy Workgroup last August.

According to a press release issued by the Senate Majority Office, the bills are “designed to fix New Jersey’s fiscal crisis, restore the stability of the pension system and save tens of billions of dollars for taxpayers.”

NJSBA commends the efforts of the workgroup and legislative leadership to tackle complex issues facing our state’s school districts and taxpayers. The workgroup’s recommendations include strategies to lower public employee health benefit costs, reform special education funding and promote government efficiency through shared services.

Before taking a position on each bill, however, the NJSBA will analyze the specific details of the package in light of Association policy and the impact on local school districts. The analysis will be shared with the membership and will form the basis of feedback to the Legislature.

A detailed summary of the package, prepared by NJSBA, can be found here. The bills address:

  • Creation of a hybrid pension plan for teachers and non-uniformed state, county and municipal employees. The plan protects those with over five years of service who have a non-forfeitable right to their current benefits. It creates a new hybrid plan for new hires and newer employees that provides a defined benefit plan on the first $40,000 of income and a “cash balance” account on income above $40,000 that pays a guaranteed 4% return or 75% of the amount the pension system earns on their account. Any excess earnings would remain within the Teachers’ Pension and Annuity Fund and the Public Employees Retirement System to reduce the unfunded liability. Initial review indicates that the proposal would not shift the employer’s share of teacher retirement costs from the state to local school districts. However, the legislation stipulates that any school district and municipal savings made possible through the changes in the retirement systems must be applied to property tax relief.
  • Merger of the high-cost School Employees Health Benefits Plan into the State Health Benefits Plan to be run by an expanded Plan Design Committee, and the shift of all public employees from Platinum-level healthcare plans to Gold plans with an actuarial value of no more than 80% upon the expiration of current contracts. Public employers would be required to offer Bronze level plans with an actuarial value of 60% to employees with zero premium payments.
  • A requirement that county school superintendents develop regionalization plans to merge all K-4, K-6, K-8, 7-12 and 9-12 districts into K-12 regional school systems, provide funding for regionalization studies, and set up a pilot program permitting the establishment of countywide school districts. The legislation does not call for a public vote on the regionalization plans.
  • A requirement that the state administer and assume the cost of all Extraordinary Special Education placements above $55,000, replace the use of census-based reimbursement for special education costs with reimbursement based on actual pupil costs, and assign and train a cadre of Administrative Law Judges to handle all special education cases.
  • State funding for counties to appoint coordinators to expand shared services, require cost-benefit analyses for long-term tax abatements and mandate that future Payments in Lieu of Taxes (PILOTs) be shared proportionately with school districts and counties, and establish an Economic and Fiscal Policy Review Commission and a County and Municipal Study Commission within the legislative branch to continue to find efficiencies in government services and costs.

The New Jersey Economic and Fiscal Policy Workgroup, a panel of legislators and experts in fiscal and economic policy, was formed in February 2018. The group was charged with examining “the negative fiscal impact of federal policies on New Jersey’s residents, businesses, economy, real estate values, affordability, and competitiveness and to have the committee identify strategies to mitigate the impact.”

The final report was broken into five sections as follows: 1) Pension and Benefit Reform, 2) Education Reform at the Administrative Level, 3) County and Municipal Government Reform and Shared Services, 4) State and Local Government Tax Structure, and 5) Leveraging Assets to stabilize the Pension System. Since the release of the workgroup’s report, Senate President Sweeney and other workgroup members have held public forums throughout the state to provide information about the recommendations and solicit feedback.

Eighteen of the 27 bills have just been introduced:

  1. S-3753: Establishes cash balance plans in PERS and TPAF for new public employees and employees with less than five years of service; makes various changes to PERS and TPAF retirement eligibility.
  2. S-3754: Terminates SEHBP; terminates SHBP Plan Design Committee; transfers coverage from SEHBP to SHBP; requires certain plans with no employee or retiree contribution; imposes limit on health care benefits for public employees.
  3. S-3755: Requires the executive county superintendent of schools to establish consolidation plan to combine all school districts in a county, other than preschool or kindergarten through grade 12 districts, into all-purpose regional school districts.
  4. S-3756: Requires limited purpose regional school districts to coordinate with constituent districts regarding school calendar and curriculum.
  5. S-3757: Establishes a pilot program in NJDOE for organization of county administrative school districts.
  6. S-3758: Provides for direct state payment of cost of special education and related services for certain students.
  7. S-3759: Creates special education unit within the Office of Administrative Law dedicated to special education cases.
  8. S-3760: Requires municipalities, school districts, and local authorities to regularly meet to discuss shared service agreements.
  9. S-3761: Establishes a County and Municipal Study Commission.
  10. S-3762: Makes several changes to current law concerning the assessment of real property in this state by permitting additional counties to adopt the provisions of the “Property Tax Assessment Reform Act,” originally enacted as a pilot program in Gloucester County to explore the efficacy of county-based real property assessment.
  11. S-3763: Renames joint meetings as regional service agencies; grandfathers existing joint meetings.
  12. S-3764: Requires counties to appoint a shared services coordinator; appropriates $2 million to fund these appointments.
  13. S-3765: Establishes an Office of Local Government Efficiency in DCA; appropriates $250,000 for program support.
  14. S-3766: Requires Edward J. Bloustein School of Planning and Public Policy to undertake a study to determine efficiency and scaling in delivery of local government services.
  15. S-3767: Establishes a pilot program to permit use of generally accepted accounting principles in certain county and municipal annual financial statements.
  16. S-3768: Requires shared services agreements to include certain provisions, such as performance evaluation criteria, procedures for determining fee adjustments, alternative dispute resolution procedures and exit procedures to govern the dissolution of the agreements.
  17. S-3769: Permits county police department and force to provide police services to municipalities.
  18. S-3770: Establishes the “New Jersey Economic and Fiscal Policy Review Commission” to provide an ongoing review of state and local tax structure, economic conditions, and related fiscal issues.

The nine bills listed below were pending before the Legislature prior to Thursday’s announcement and reflect various workgroup recommendations. Some of them have seen movement in the Senate, the Assembly or both houses.

  1. S-2455/A-2001: Transfers county college employees and retirees from membership in SEHBP to membership in SHBP.
  2. S-2578/A-1851: Limits payments for unused sick leave earned after effective date by public officers or employees represented by union; for all public employees, limits vacation leave carry-forward and requires suspension and forfeiture of certain supplemental compensation.
  3. S-3042/A-4619: Creates subaccounts for SHBP and SEHBP health care services and prescription drug claims; requires procurement by the state of third-party medical claims reviewer.
  4. S-103: Limits eligibility of certain public employees for health care benefits; prohibits those so limited from receiving payments for waiving benefits.
  5. S-3219: Eliminates use of census-based funding of special education aid in school funding law.
  6. S-1: Encourages sharing of services; makes appropriations.
  7. S-1701/A-345: Requires cost-benefit analyses for long term tax exemption; requires DCA to create database of these exemptions; requires new distribution of annual service charges; requires five-year tax exemption and abatements be filed with certain county officials.
  8. S-3246/A-4807: Establishes elective pass-through business alternative income tax and allows refundable gross income tax credit for taxpayers earning income from pass-through businesses in taxable year.
  9. S-2179/A-307: Allows gross income tax deduction for charitable contributions to certain New Jersey-based charitable organizations.
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