NJ Senate Committee Approves Bill Preventing Double-Dipping

Posted on June 7, 2011 by Donald Barbati

 

As reported by nj.com, a double-dipping pension practice that stoked outrage earlier this year may become a thing of the past. The Senate Budget and Appropriations Committee unanimously approved two bills to prevent elected officials from collecting their pensions without actually stepping down from their jobs. The bills would only affect elected officials who have not yet taken advantage of the loophole, which has been broadened since its inception in 1985.

Many elected officials and public employees retire, start collecting a pension, then get a different government job. But the law targeted by the committee allows elected officials like lawmakers and sheriffs to start collecting a pension while still holding the same job and collecting a paycheck, as long as they are eligible to retire and once had a different public job. Five lawmakers, some sheriffs and county surrogates have used the loophole.

Although the overall dollar figure involved is small, state Sen. Steve Oroho, the bill’s sponsor, said it’s important to eliminate lucrative exceptions for elected officials. “The perception and appearance is what really matters,” he said. “It’s an issue of the public trust.”

The bills had been stalled for years until news reports in April said Essex County Executive Joseph N. DiVincenzo, Jr. had been using the loophole since August. He had “retired” three months before winning his unprecedented third term in office. State records peg his monthly pension at almost $5,740, while his salary was $153,207 last year.

The bill now goes to the full Senate for a vote. Similar bills in the Assembly have not yet advanced.     

DiVincenzo has defended his pension as legal and in the best interests of his family. In a statement, he said the committee’s decision “represents a noteworthy shift” in the Legislature. “Pension costs contribute to financial challenges being faced by state, county, and municipal governments,” he said. “I hope today’s vote enables us to continue the discussion and find additional ways to provide relief.”

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New Jersey Pension Reform Introduced

Posted on February 9, 2010 by Donald Barbati

As reported in the Trentonian on February 9, 2010, legislation requiring public workers to assume a portion of their health benefits costs and providing relief to the State pension system has been introduced. The package of bills introduced follows vows by Democratic leaders in the State Senate to revisit pension reform recommendations made four years ago.

One bill requires state, local, and school district workers to contribute at least 1.5 percent of their salary toward their health care costs. Another caps at $15,000 the amount of unused sick time that can be cashed in at retirement. A third bill repeals the 9 percent pension benefit increase put in place in 2001 by changing the way pensions are calculated. The last bill in the package requires the State to make its annual payment to the pension system, not skip it or short it, as has been the custom in recent years.

Most of the proposals would affect new hires, not those already in the pension system. However, the measure requiring public workers to contribute toward their health care costs would take effect when their current contract expires. No figures were immediately available on the potential savings. 

The pension system is underfunded by about $34 billion and is in danger of becoming insolvent unless fixes are made. The proposals were first made in 2006 after the Legislature met in special session to come up with ways to lower New Jersey’s property taxes, which average $7,045 a household and are the highest in the country. Pension and health care costs are major drivers of property taxes. 

Former Governor Jon Corzine halted some of the legislative-driven reforms, arguing that they should be part of the collective bargaining process. The State’s Unions, which have long resisted pension reforms, supported Corzine’s position. 

Other highlights of the bills include: (1) limiting enrollment in the pension system to those considered full time; (2) enrollment in a defined contribution plan for part-timers; (3) calculating pension benefits based on the 5 highest years of salary, instead of the 3 highest years, for future public workers, and basing benefits on the 3 highest years, instead of the highest year, for future State Police employees; and (4) allowing pension benefits based on one job, not multiple positions.  

Please check this blog periodically to ascertain updates with regard to this proposed legislation. Were the bills ultimately passed, there is no doubt they would have a drastic effect on New Jersey Public Safety Officers.

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