New Jersey Public Safety Officers Law Blog : New Jersey Public Safety Employee Lawyer & Attorney : Pellettieri, Rabstein & Altman Law Firm : Workers Compensation, Discipline Representation for Police & Firefighters : New Jersey

The Asbury Park Press published an article in today's Sunday edition addressing the ability of The State of New Jersey to honor its pension obligations to those public employees that have been paying into the retirement system since the start of their public employment .  The article, entitled "Can New Jersey Keep its Pension Promises?" unfortunately reiterated the same information that we have been hearing for the last several years.......The Pension System is Broke.

The article stated that as of June, 2009, the state's pension system faced unpaid liabilities in the amount of $45.8 billion dollars.  However, this is assuming that the state receives an annual 8.25% return on its pension investments.  At this point in time, everyone is aware that the State hasn't seen 8.25% for several years now.  Furthermore, many studies have demonstrated that the unfunded liability of $45.8 billion is a conservative estimate and the true unfunded liability is more along the lines of $173.9 billion, with unfunded health care costs reaching $55 billion dollars.  Eileen Norcross, a George Mason University researcher has been quoted as stating, "It's mathematically impossible to pay this out.  It's too large."

However, despite the fact that the public employment pension system is in dire straits, Governor Christie, has made the decision to "skip" the state's 2010 $3billion dollar pension payment. In reviewing the administration's decision to forgo the payment, one has to question if the Christie administration has already given up on attempting to save the state pension system and the countless amount of money that has been withheld from public employee's paychecks on a weekly basis since the inception of the system.  I bet many of you who are reading this article would like to skip a few pension payments or take a "pension holiday" the way that the state, county and local governments have over the last sever years. 

A year or two ago, myself and other attorneys representing public employee labor unions filed suit against the State of New Jersey for failing to fund the State Employee Pension Systems.  An argument was made that the state had a constitution mandate or obligation to fund the pension system.  Unfortunately all of the suits were dismissed under the notion that the state had very broad discretion in making decisions on how to appropriate funds concerning fiscal obligations.  However, the court did leave the door open and stated that a suit would be entertained if pension recipients did not receive payment due to the state's inability to pay.  With that being said, one has to ask the question:  "Wont it be to late at that point in time?"

We will continue to follow this issue on this blog.  You, the public employees of the State of New Jersey, and retired public employees of the  state of New Jersey need to take affirmative steps to attempt to revive your retirement system.  If you do not take immediate affirmative steps to protect your retirement income, unfortunately, it appears as if it will be lost due to government irresponsibility and mismanagement. 

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On October 30, 2008, The Press of Atlantic City reported that new Ocean City, New Jersey Police Officers will make approximately $5,000 less under the contract that was recently approved by the PBA and city council. The contract with the Policemen's Benevolent Association Local 61 also reflected a move to the state health-insurance system from the city’s own health system. The city has cited double digit increases in premium costs as the reason for moving from its own plan to the State Health Benefits Program. The city further stated that it plans to move all municipal employees to the state benefits program as soon as practicable. 

The contract also reflected a 3.5 percent increase in salary for 2008, a 3.85 percent increase in salary for 2009, a 3.9 percent increase in salary for 2010 and a 3.8 percent increase in salary for 2011.

However where the contract strayed from the traditional path was the establishment of a two-tier pay system reflecting a cut in salary for new hires from $42,200 to $37,500. The contract also changed a longevity payment from a range of 0 to 12 percent to a flat dollar bonus based on years of service.

Presently contract negotiations with the city fire union have reached an impasse and are in binding interest arbitration.

We should take a few teaching points away from the settlement of this particular contract. 

• First, I believe we will see a greater trend developing where municipalities will continue to move away from their own health plan system and opt into the State Health Benefit Program as a cost saving measure. 

• Second, in today’s economy and with the poor self inflicted financial condition of the state of New Jersey, municipal aide is being cut which means less money for pay raises and benefits. The days of seeing 4% increases will be harder to come by in the immediate future. Furthermore, raises for 2008 will probably be less than the years that follow. 

• Finally, it is interesting that the PBA agreed to lower the starting salary of new officers. While there may be a multitude of economic reasons for this decision, we should not speculate why this concession was made without understanding the dynamics of the department’s man power, Table of Organization, and the benefits conferred upon the members for making the concession.

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In Communication Workers of America v. State of New Jersey, the appellants challenged an amendment made by the State Health Benefits Commission to the retiree prescription drug card pilot plan. In support, appellants argued that the rule is invalid and unenforceable because it reduces post-retirement health care benefits. 

The Appellate Division affirmed the amendment to N.J.A.C. 17:9-6.10(h) as well as a concurrent resolution. The Court held that the rule allowing adjustment of the cap on out-of-pocket expenditures is consistent with statutory authority governing the prescription drug benefit plan. The Court also noted that the pilot plan, as adopted, is reasonable and necessary to preserve the financial integrity of the plan.

This entry serves as follow up to the one regarding the State Health Benefits Program. As you can see, proposed changes or changes actually made to the State Health Benefits Program have become an increasingly important topic for all public employees. Recently, the State of New Jersey has become especially active in seeking to amend or alter the benefits packages offered to its employees through contract negotiations. Undoubtedly, as more collective bargaining units negotiate their contracts, this topic, which involves the potential for premium sharing by the employees, will come to the forefront.

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Most recently New Jersey GovernorJon S. Corzine signed the Public Employee Pension and Benefits Reform Act of 2008. While this bill does not affect the members of the Police and Firemen’s retirement System (PFRS), it does affect members of the Public Employees Retirement System (PERS) and the Teachers Pension and Annuity Fund (TPAF). Certain Public Safety Officers in the State of New Jersey hold membership in PERS. The legislation, S-1962/A-2818, is touted to save New Jersey tax payers $150 million dollars by 2022 through new changes to the pension systems to include instituting a higher retirement age and new income eligibility requirements for enrollment in the major pension systems.

The significant changes signed into law today include:

•  Increasing the annual salary required for new workers to qualify for the state pension system to $7,500. Previously, workers required an annual compensation of only $500 to qualify for the Teachers Pension and Annuity Fund, and a minimum salary of $1,500 a year for the Public Employees Retirement System.

• Raising the retirement age from 60 to 62 for new employees to qualify for a pension without a reduction.

• The number of paid holidays for state employees is reduced to 12. It eliminates the Lincoln's Birthday holiday and combines it with Washington's Birthday, to be observed as President's Day.

The new law also makes reforms to the State Health Benefits Program (SHBP), allowing the state to offer an incentive to employees to opt out of the program and accept health coverage from other sources such as a spouse's plan. The state has the power and authority to determine whether to offer the incentive and the amount, which could not exceed half of the amount saved because of the employee's waiver of coverage.

The bill was sponsored in the Senate by Senators Barbara Buono (D-Middlesex), Stephen Sweeney (D-Salem, Cumberland, Gloucester), Nicholas Scutari (D-Middlesex, Cumberland, Union), and Tom Kean (R-Essex, Morris, Somerset, Union), and in the Assembly by Speaker Joseph Roberts (D-Camden).

While the members of PFRS have been spared by this legislation, close watch must be kept on our elected officials as it appears they are prepared to enact any cost savings measures available due to the poor financial position of the state.

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