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As reported by nj.com, a Superior Court judge challenging the increased payments judges must make under newly-enacted changes to public worker health and pension benefit plans will not be allowed to have his case directly sent to the New Jersey Supreme Court. In a two-paragraph order issued yesterday, Supreme Court Justice Virginia Long said the state’s highest court will not relax the rules of court to allow Judge Paul DePascale to skip the trial and appellate levels.

DePascale, who sits in Hudson County, filed a complaint last month calling the health and benefit law enacted July 1 unconstitutional for judges, saying it cuts their salaries and threatens their judicial independence. The suit is the first legal challenge to the health and benefit law. Other state public employee unions are also vowing to sue. Assignment Judge Linda Feinberg in Mercer County is scheduled to hear the matter on September 16.

Depending on the course of action, the case could take years to move through the courts, including the Appellate Division. DePascale’s attorney said the Supreme Court has the discretion to hear a matter on an expedited basis. In her order, Justice Long said DePascale can ask the Supreme Court again to take up the case after Feinberg finishes with it.

The new law, to be phased in over seven years, will make judges’ pension contributions go from 3 percent to 12 percent of their annual salaries. DePascale’s pension deductions would jump by $14,849 by 2017, he said in court filings. In court papers, DePascale also said his health benefits contribution would more than double to $5,230.86. The increased financial contributions begin October 4.

Judicial salaries, set by law, range from $165,000 for Superior Court trial judges, including DePascale, to $192,795 for Supreme Court Chief Justice Stuart Rabner.

Governor Chris Christie has said judges traditionally have paid the least amount of money into their pension program yet they receive some of the highest payouts. Case law allows judges in New Jersey to hear cases that affect them when there is no other court that has jurisdiction over the matter. The case has not gone to federal court because DePascale’s allegations involve the state-not federal-constitution.

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As reported by nytimes.com, in the last three years, hundreds of cities, towns and school districts in New Jersey have saved tens of millions of dollars on health insurance by dumping their private carriers and switching to a little-known benefits program run by the state. But now one of the state’s most powerful lawmakers is promoting legislation that could effectively cripple the program. The lawmaker, Senate President Stephen Sweeney, has placed a provision in a health care insurance bill that would prohibit the program from accepting new members.

Sweeney is a close ally and childhood friend of George Norcross 3^rd, perhaps the most influential Democratic boss in New Jersey. Mr. Norcross owns one of the largest brokers of health insurance to government entities in the state, and his company has been losing customers to the program Sweeney wants to rein in. Sweeney acknowledged in an interview that he had spoken with Norcross about the provision, but denies the legislation was introduced at his behest.

Sweeney said the state benefits program was losing hundreds of millions of dollars and required costly state subsidies. A ban on new members would “allow time for stabilization and to judge the plan’s sustainability,” he said. However, state records and interviews call into question Sweeney’s claim that the state program is foundering.

The health coverage bill introduced by Sweeney has gotten attention largely because it would require public sector workers to pay much more for insurance. But, the ban on new admissions to the state program, local officials warn, could administer a poison pill to one of the most effective tools that cities, towns, and school districts in New Jersey can use to pool resources and achieve significant savings in health insurance costs. If the provision is approved, governments not currently in the program would then have to seek insurance through companies like Norcross’ Conner Strong.

The state benefits program covers three groups: one for about 146,000 state workers, another for about 180,000 teachers and other school workers, and a third for about 67,000 local government workers. The program offers relatively generous benefits at low costs, and must accept any municipality or school system in New Jersey that applies, no matter how sick its work force. Privately run insurance pools sometimes accepts only those that have had lower medical expenses. Each municipality or district that joins the state program pays the same rate, so healthier work forces subsidize sicker ones.

To read the article in full, click here.

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As reported by nj.com, Democratic leaders met with union officials and sources say the topic was overhauling health benefits. Senate President Steve Sweeney and Assembly Speaker Sheila Oliver met with the heads of the biggest public employee unions: Communications Workers of America, America Federation of State, County and Municipal Employees, International Federation of Professional and Technical Engineers, and the New Jersey Education Association.

Standing outside the meeting, Barbara Keshishian, president of the NJEA, declined to comment, saying the meeting was private. Leaders of the other unions have not responded to a request for comment, but three union and legislative sources said they discussed proposals by Governor Chris Christie and Sweeney to change health benefits for state employees. The sources requested anonymity because they were not authorized to discuss the meeting.

The Governor is pushing for state workers to pay 30 percent of the cost of the premium. Currently, state employees pay 1.5 percent of their salary for health insurance. Sweeney is pushing his own plan that would base contributions on both the cost of the premium and salary. Different from Christie’s proposal, Sweeney is recommending a sliding scale that would have low-income workers paying less than high-paid employees.

The Communications Workers of America, the state’s largest union, released its own plan, which would have workers pay a portion of the premium and a portion of their salary. The CWA plan would have most employees paying 14 percent of the cost of the premium. The CWA, with the backing of several other unions, has argued that the health benefits should be subject to collective bargaining, presently taking place to hammer out a new contract when the current one expires on June 30.

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As reported by nj.com, Governor Chris Christie estimates his plan to overhaul the state’s public employee health benefits system will save more than $870 million a year by 2014 by shifting significant percentage of the costs to employees and future retirees, according to the Treasury Department.

In the most detailed explanation of the proposal to date, Treasury spokesman Andrew Pratt said the governor wants to gradually increase state employee health benefit contributions over three years, requiring them to pay 10 percent of premiums this July and climbing to 30 percent by July 2014. New workers would immediately pay 30 percent. Currently, state employees pay 1.5 percent of their salary for medical benefits. Most Democratic lawmakers and budget observers believed Christie wanted employees to start paying 30 percent of their premiums immediately and assumed that was how he justified savings of $370 million in his proposed state budget.

In response to requests from The Star-Ledger, the administration says the final tally is more than $870 million and the proposal would involve much more than increased contributions, such as tiered plans, increased co-pays and lengthening the eligibility requirements for post-employment health care. The savings represent about one-third of the $2.5 billion the state expects to pay in employee medical costs this year, Pratt said. They would also dwarf initial estimates of a proposal by Senate President Stephen Sweeney, who wants contributions to be based on salary.

Democratic lawmakers who were already skeptical about the $370 million in savings in the proposed budget expressed more disbelief about the latest figures, with the chairman of the Senate Budget Committee calling them “ridiculous.” The Christie plan would not change payouts for current retirees and workers with at least 25 years on the job when the measure takes effect would not be required to pay more when they retire. But, all others would have to pay 30 percent after they retire and workers would not be eligible for post-retirement health coverage unless they work for 30 years, up from 25 years.

With no Republican bill and a lack of Democratic support for Sweeney’s proposal, Christie’s budgeted $370 million in health benefit savings is on shaky ground. It is one of several uncertainties in the governor’s budget. The State Supreme Court is considering whether Christie needs to restore up to $1.6 billion in education cuts and the administration has yet to explain how it plans to achieve $300 million in Medicaid savings through a federal waiver, which faces layers of approvals. “There could be a lot of problems,” said Assembly Budget Committee Chairman Lou Greenwald. “I hate to see him strike out on all three of these.”

To read the article in full, click here.

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As reported by nj.com, Senate President Stephen Sweeney’s plan to require public workers to kick in more for medical benefits is getting little support from his fellow Democrats. As Sweeney scrambles for votes, Senate Republicans say they favor Governor Chris Christie’s proposal, which a new non-partisan report predicts would save about 16 times more money than Sweeney’s plan next year for state workers alone. Democrats, however, have even less enthusiasm for Christie’s plan.

In a March 16 letter, a senior analyst with the Office of Legislative Services said Sweeney’s bill would save the State about $22 million next year, while Christie’s plan would save about $347 million. Sweeney’s plan would save $206.2 million by the seventh year. The review only covered state workers.

Democrats who oppose the bill argue that how much public workers pay for health benefits should be decided at the bargaining table and not dictated by lawmakers. “This stuff needs to be negotiated,” said State Senator Ron Rice. State Senator John Girgenti said, “Clearly, something needs to be done to curb the rising costs of health benefits, and most public employees believe this as well. But it should happen through collective bargaining, not legislation.”

Some opponents cited a recent offer by the Communications Workers of America, the largest state employee union, to increase contributions after Christie said he will not negotiate medical benefits. The CWA said its plan would save $200 million by 2013.

If the CWA makes a deal with Christie, Sweeney said there “would be no need” for legislation: “I think they knew I’m serious about doing legislation. Now if they can accomplish it through collective bargaining, I think the governor should attempt it.”

Bill supporters say it’s a reasonable alternative to Christie’s plan, which calls for all public workers, regardless of income, to pay 30 percent of their medical premiums. Sweeney wants to phase in the increases over seven years and set a sliding scale of 12 to 30 percent of premiums, based on salary. Currently, public workers pay at least 1.5 percent of their pay for health benefits.

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As reported by nj.com, the state’s largest public employee union unveiled its plan for workers to contribute more for their medical coverage in hopes of convincing lawmakers and the public that real savings can be achieved at the bargaining table. 

The Communications Workers of America, which represents about 40,000 state workers, detailed a plan union leaders say would increase employees’ share of insurance premiums to about 14 percent and save taxpayers more than $200 million by 2013. The plan calls for increased monthly contributions and higher co-pays for doctor’s visits and prescription drugs.

Union leaders say they were forced to take the negotiations public after Governor Chris Christie made it clear a week ago that he was not interested in negotiating medical benefits. Those details should be handled through legislation, he said. “Governor Christie professes to love collective bargaining, but we have yet to see it,” said Bob Master, CWA political director. “What’s going on in New Jersey is no different than what’s going on in Wisconsin and Ohio.”

Momentum is building to require all public workers to contribute significantly more for medical benefits. Christie and Senate President Stephen Sweeney say broad-based legislation is the only way to bring parity between public and private workers and save the state millions. “We’re changing New Jersey, and the CWA has to be part of it,” Christie said at an appearance in Newark. “I know they don’t like the fact that someone will go to the Legislature and fight for the taxpayers rather than fleece the taxpayers, which they’ve been doing over history. Sorry, there’s a new game in town and they’re going to have to get used to it.”

Hetty Rosenstein, state director of CWA, said state workers understand they need to contribute more, but believe the terms should be negotiated, as they have been for decades. While the CWA is the largest state employee union, it represents only a fraction of the 510,000 public workers in the state, and Christie wants the health benefits law to cover all public workers. Christie is hoping to save more than $300 million in the proposed budget with the reform package. Rosenstein said she is trying to reach out to other public employee unions in hopes of having a “mass negotiation” that would help achieve the savings Christie is seeking while preserving the right to collectively bargain medical benefits.  

Under the CWA plan, workers would continue to pay 1.5 percent of their salaries toward medical costs but would also kick in an additional 5 percent of their premiums by 2013. The hybrid model is designed to take into account a worker’s salary. By the end of the contract, average workers would pay about 13.5 percent of their medical premium costs, about $210 a month for family coverage. Rosenstein said with co-pays and other changes, workers would pay about 22 percent of their premiums. Christie wants all public employees to pay 30 percent of their premiums, about $475 a month for family coverage. Sweeney wants workers to pay 12 to 30 percent of premiums, based on salary.

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As reported by nj.com, leaders of New Jersey’s public workers unions said they will launch a full court press against a bill sponsored by Senate President Stephen Sweeney that would force public employees to pay more for their health care benefits. The unions have called the bill an attempt to throw out collective bargaining rights.

Hetty Rosenstein, state director for the Communication Workers of America, said her union would picket, extract pledges from lawmakers to oppose it and hold “lobby days” against the bill over the next several weeks. “It becomes illegal to negotiate anything different than what’s in that bill,” she said. “It preempts all collective bargaining.”

Bill Lavin, president of the state Firefighters Mutual Benevolent Association, said police and firefighters will protest it at a Statehouse rally and press all 120 lawmakers. “It’s totally unacceptable. I think if that were to pass, it will guarantee that the Democrats will lose the majority,” he said. “We’re shocked that Steve Sweeney, who calls himself a Democrat, would act in this manner…He’s rolled over for the governor in every instance.”

The pushback comes as the legislation has gained bipartisan support in the state Senate, with Jennifer Beck (R-Monmouth) signing on as a prime sponsor. Public employees pay 1.5 percent of their salaries towards their health benefits. Under Sweeney’s plan and a proposal by Governor Chris Christie, workers would pay a portion of their premiums instead and would have more plans to choose from.

Under Christie’s plan, public workers would pay 30 percent of their premiums within three years. Under Sweeney’s, they would pay a sliding scale based on income, with the highest earners eventually paying 30 percent. Christie’s plan would require current retirees to pay part of their premiums.

Beck said she still has reservations about parts of the bill. She agreed with Sweeney that employees should pay rates based on their income, but agreed with Christie that current retirees should pay part of their premiums. Christie spokesman Kevin Roberts said the governor’s office was not upset that Beck signed onto the Democratic proposal.

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As reported on trentonian.com, New Jersey Governor Chris Christie held fast to his national reputation for fiscal discipline amid the widespread financial crisis that has hit the United States, unveiling a $29.4 billion state budget that calls for heftier contributions from state workers for pension and health care benefits.

Christie proposes paying $500 million into the state’s severely underfunded pension system, the minimum required under a new state law to get the state to quit skipping its payments. But Christie says he’ll make the payment only if the Democratic Legislature agrees to reforms that require government workers to delay retirement and pay more. Union workers, a powerful Democratic constituency in a legislative election year, oppose the plan.

Christie’s carrot-and-stick budget plan also targets public workers’ health care. His plan calls for additional property tax credits to poor, disabled and senior households, but only if the Legislature significantly increases public workers’ health insurance contribution. Specifically, Christie wants legislation that would push one-third of the cost of health insurance onto state workers by 2014, up significantly from the 1.5 percent of their salary they pay now. Christie would apply the $323 million in savings to property tax relief for low-income, senior and disabled homeowners.

Unions plan to rally at the Statehouse on February 25, 2011 in support of public workers in Wisconsin, where protests have erupted over collective bargaining rights and public employees’ benefits are among the issues raising ire. In a speech at the American Enterprise Institute in Washington, Christie urged elected officials to follow his example in addressing spending and debt, and big-ticket items such as pensions and other benefits. “It’s time to do the big things-the really big things,” he said.

In New Jersey, Democratic leaders in the Legislature complained that Christie, through his budget, pits one group of middle-class residents against another. However, the League of Municipalities, an association of municipal mayors, says it’s pleased Christie’s budget proposal holds the line on spending and aid to towns.

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As reported by nj.com, Senate President Stephen Sweeney will unveil a plan that aims to slash the State’s huge medical costs by requiring public employees to kick in significantly more to health benefits, according to three officials familiar with the proposal.

The Sweeney plan shares much common ground with Governor Chris Christie’s reform agenda and signals significant momentum in Trenton for sweeping changes to public medical benefits. Sweeney is expected to unveil the plan at the Statehouse on February 15, 2011, one week before Christie delivers his proposed budget to the Legislature.

The Democrat’s plan would provide immediate savings and as much as $1 billion annually within seven years, according to the officials, who requested anonymity because they were not authorized to speak publicly on the proposal. Under Sweeney’s proposal, all public employees would pay a percentage of their premium instead of the current system that requires them to pay at least 1.5 percent of their salary. The increases would be phased in over seven years and would be applied on a sliding scale depending on the employees’ salary. 

For example, in the first year, public employees who make less than $30,000 would pay 2 percent of their premium, while those who earn more than $100,000 would pay 12 percent. When fully implemented after the seventh year, the lowest income workers would pay 12 percent of their premiums, while top earners would pay 30 percent. The annual payments would range from $2,280 to $5,700 a year.

Christie has called for all public employees to pay 30 percent of their premiums on a gradual basis, regardless of income. Current retirees, most of whom pay nothing for their medical benefits, would not be subject to the increase under both the proposals advanced by Christie and Sweeney. All increases would go into effect at the start of the next union contract. Like Christie, Sweeney will also call for the creation of a multi-tiered benefit plan where employees can pay less for less coverage and more for increased coverage.  

Unlike the laws governing public pension plan that typically require payments each year to fund the current and future costs, retiree medical benefits rules allow states to “pay as you go,” which means they pay on the current cost each year and ignore the long-term price tag. For New Jersey, that long-term price tag is nearly $67 billion, about $13 billion more than the State’s pension deficit. While the pension funds have $48 billion on hand, the State has not saved a dime for medical benefits.

New Jersey has the highest unfunded liability and annual medical benefit costs in the nation, according to an analysis by the Center for State and Local Government Excellence. As of the latest report, there are 394,521 active and retired employees enrolled in the state-administered health benefit plan. This includes active and retired employees from municipalities and school districts who participate in the state plan. Under Sweeney’s proposal, towns would be temporarily blocked from joining the state system to help the fund stabilize.

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On January 20, 2011, a New Jersey Superior Court Judge rejected an attempt by various public employee unions to overturn pension changes for new government employees enacted early last year. The laws challenged required new employees to pay 1.5 percent of their salaries toward current health benefits and 1.5 percent of their pensions after they retire. The laws also limited pensions to full-time employees and capped payments of unused sick time to $15,000.

The decisions, released by the Honorable Linda R. Feinberg, were largely expected.  The Communication Workers of America, AFL-CIO, and the American Federation of State, County and Municipal Employees all challenged the laws as vague and unconstitutional.  New Jersey’s largest teachers union, the New Jersey Education Association, the Teamsters Union, and the Fraternal Order of Police argued the Legislature overstepped its authority and that these new laws amounted to an unlawful “taking” by the government.

Feinberg rejected these and other arguments and dismissed the lawsuits “with prejudice,” meaning that the unions could not bring another lawsuit again on the claim. Please click on the links below to read the decisions in their entirety.

CWA Decision

NJSPBA Decision

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As reported by nj.com on January 13, 2011, Governor Chris Christie proposed significantly higher health insurance premiums for hundreds of thousands of public workers in New Jersey, saying overly generous benefits are threatening to bankrupt the system.

Christie told a town hall audience in Bergen County that state and local workers, teachers, police, and firefighters must begin paying more for their medical and dental benefits if the system is to remain afloat. The health benefits fund is $67 billion shy of meeting its eventual obligations.

Christie wants benefits changes that make the health insurance system more like the private sector or the federal government, with employees paying about one-third of the costs of whatever benefits plan they choose. The government picks up the other two-thirds. That would amount to a significant increase from the 1.5 percent of salary employees now pay. A teacher earning $60,000 now pays $900 a year toward a plan that costs $22,000, Christie said. Under his new proposal, that teacher would contribute $7,333 a year for an identical plan. The changes also could result in inferior benefits, as some workers would be forced to accept plans with higher deductibles and co-pays or limited choice of doctors, to keep down costs.

Christie said health benefits for current workers and retirees cost New Jersey taxpayers $4.3 billion a year and growing. He said the State cannot afford to have worker benefits eating a larger and larger portion of state, local and school budgets. The Governor also renewed his call for changes to the pension system which include: raising the retirement age to 65, from 62, rolling back a 9 percent pension increase granted a decade ago and requiring all workers to contribute 8.5 percent of their salaries toward retirement, a higher portion than all but police and firefighters pay now. He said adopting major changes to the pension system this year would cut the funds’ $34 billion unfunded liability in half in 30 years.

As one can see, Governor Christie’s looming healthcare proposals will have a significant impact on New Jersey public safety employees going forward. The contributions that members currently pay could become significantly higher, while the level of benefits they currently receive could drastically decrease. Please continue to check this blog periodically to ascertain updates regarding the impending proposals.   

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On May 20, 2010, a New Jersey judge ruled that a new law requiring public employees to pay at least 1.5 percent of their salaries toward health insurance can go into effect on May 21, 2010.

As reported in the Asbury Park Press, unions for police and firefighters asked the Superior Court for a temporary restraining order that would have kept the law from taking effect in certain situations. The request was part of a larger lawsuit that seeks to block the new law, which is part of the State’s efforts to hold down costs by being tougher on public employees and their unions, including those working for local government.

The new law, championed by Governor Chris Christie, requires the contributions of employees once their current collective bargaining agreements expire. Many public employees already contribute at least 1.5 percent of their salaries to health coverage. Other locals have chosen smaller pay raises to keep free health care, or have switched to inferior insurance coverage to keep it free. 

The unions’ main contention was that the amount employees pay for their health insurance should be worked out in contract negotiations, not imposed by the State. According to the judge, “not every term and condition on which a collective bargaining unit would want to negotiate is fair play.” The judge also rejected the unions’ arguments that the law amounts to an unfair tax on the State’s roughly 400,000 public employees or that the law is vague.

The unions will get another chance to make their case in court later. While the unions ultimately hope to stop the law from being enforced entirely, the main concern in this case was narrow. Police and firefighters are prohibited by state law from going on strike. When their contract negotiations reach an impasse, they go to a lengthy arbitration process. In essence, the unions argued the 1.5 percent payment requirement should not apply to the 215 local unions currently in the arbitration process.

Please continue to check this blog periodically for updates regarding this litigation. 

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