State Pension Reforms Will Save Towns $314M

As previously reported, the Pension Reform Bills up for vote yesterday were unanimously passed before the full Senate.

Trenton-A package of public worker pension and health benefit reform bills was approved unanimously in the state Senate on Monday, over the objections of union leaders.

Quick, unanimous approval of three reform bills by the Democratic-controlled state Senate amounted to an early victory for Republican Gov. Chris Christie, who has mocked salary and benefits abuses and vowed to restore the underfunded pension system to fiscal health.

The measures - largely affecting future hires - cap the value of unused sick days retiring employees can cash out at $15,000, require government workers at the local, county and state levels to contribute at least 1.5 percent of their salaries toward their health insurance costs, and bar part-time workers from enrolling in the state pension system.

Senate Majority Leader Barbara Buono, D-Middlesex, and Minority Leader Tom Kean Jr., R-Union, hailed the legislation’s passage as significant and long overdue, while union workers stood outside the Senate chamber resigned to the result. Each bill had more than 21 co-sponsors — the minimum number needed to get through the Senate — virtually assuring passage.

The final tally was 36-0 for each measure.

“Don’t underestimate what we’re doing here today — this is the New Jersey Legislature, where things are maddeningly incremental,” Buono said. “If we had done it five years ago, it would have been a lot better. We would have reached significant savings by now, but we didn’t.”

State Sen. James Whelan, D-Atlantic, last week told a group of teachers and public workers that a good pension used to be compensation for salaries that were lower than those in the private sector. But times have changed, he said at a legislative committee hearing, and government employees now often make more than others doing private-sector jobs that require equal education and experience.

In the Atlantic City School District, where he teaches, Whelan said some experienced teachers make more than $100,000 a year. So do some police officers and firefighters with years and years on the job.

In the past, pensions grew during lean times, Whelan said, adding that now state pensions needed to make up a $34 billion deficit.

The bill requiring a health care contribution from all public workers would save towns and counties an estimated $314 million next year, according to projections from the Office of Legislative Services. State workers already contribute to their health plans. Estimates of savings to be achieved from the other bills were not available.

The proposal to cap retiree payouts for unused sick time to $15,000 would change common practice in a number of area municipalities. Such payments have often exceeded $100,000.

In Atlantic City this week, the City Council is scheduled to consider paying nearly $1.5 million in unused time to 10 retiring city employees. In Little Egg Harbor Township, Ocean County, retiring police Chief Mark Siino will be paid $188,176 from the township for unused sick time, vacation and comp time.

The Legislature first tried to enact pension reforms in 2006 after a joint legislative committee recommended changes to help keep a lid on property taxes. Most were never enacted, in part because then-Gov. Jon S. Corzine wanted pension and health care concessions negotiated during collective bargaining.

The pension funds for public employees, teachers, firefighters and police are underfunded by about $34 billion and are at risk of becoming insolvent if fixes aren’t made.

For years, the state has skipped or greatly reduced its annual contribution to the fund and used the money for other purposes.

A fourth bill in the Senate package phases in a requirement that the state make its annual pension contribution. A public hearing will be held Monday. If approved by the Legislature, the question could be put to voters in November.

The bills were introduced in the Senate two weeks ago. Senate President Steve Sweeney, D-Cumberland, Gloucester, Salem, fast-tracked them to the Senate floor for a vote days after they were released from the State Government committee.

Similar bills are expected to be introduced in the Assembly on Thursday.

Christie called the measures “a good start,” but urged the Legislature to send tougher — but unspecified — reforms to his desk.

Public worker unions oppose the changes and say the Statehouse climate is hostile to public workers. Municipal officials say the reforms will mean future cost savings.

To read the full story, see the article in the Press of Atlantic City, 2/23/2010, Angela Delli Santi, Associated Press. Staff writer Elaine Rose contributed to this report.