Coins falling into jam jar labelled pension.

As reported by N.J.com, furious after watching pension investment fees triple over the last three years even as their funds lost value, police and firefighter union leaders are seeking to wrest control of their underfunded pensions from the state.

As Gov. Chris Christie is set to deliver his final budget address, state Senate President Sweeney (D-Gloucester) on Monday introduced a bill (S3040) that would transfer management of the Police and Firefighters Retirement System to a newly expanded board of trustees.

“They’ve been screwing up pensions for decades now,” Ed Donnelly, president of the New Jersey State Firefighters’ Mutual Benevolent Association told NJ Advance Media, referring to the $11 billion that the state has yet to pay into his retirement system.

Since Christie’s reelection, state worker pension fees have soared, but as a newly released actuary report shows, in the last fiscal year the market value of PFRS assets dropped 6 percent. In the last fiscal year, police and fire retirement system’s value went from 70.5 percent fully funded to 64.4 percent.

By comparison, the S&P 500 index has returned 17.5 percent in the last year.

The proposed legislation would give uniformed first responders greater voice and tilt control over those assets away from the state treasurer’s office and towards union members.

Sweeney’s bill would transfer the management of the police and firefighters unions from the state treasury’s pensions and benefits division and award it to an expanded 12 member board of trustees whose balance of power favors union members by a ratio of 7 to 5.

The union side of the board would include:

  • one police officer appointed by the president of the New Jersey State Policemen’s Benevolent Association
  • one police officer appointed by the president of the New Jersey State Fraternal Order of Police
  • one firefighter from the appointed by the president of the New Jersey State Firemans’ Mutual Benevolent Association
  • one firefighter appointed by the president of the Professional Firefighters Association of New Jersey
  • one retiree from the system elected by retirees of the PFRS system

Meanwhile, the governor would appoint five trustees in total; four from local governments and one from state government.

“It’s really about taking the politicians out of the equation,” said Fred Beaver, who was director of pensions at the state treasury from 2002 to 2010.

Now a consultant to the NJ State Firefighters Benevolent Association, Beaver said that while the new board’s structure would seem to favor unions, Christie was likely to support it since his own pensions task force had recommended as much in 2015.

Two years ago, the state pension and health benefit study commission recommended that New Jersey “transfer the assets, liabilities and risks of the existing pension and new retirement plans to employee entities willing and able to assume this obligation.”

It also urged the state to “allow those who receive the benefits to have the power and assume the risk of managing the plans to ensure that the available funds are sufficient to pay for the provided benefits.”

A spokesman for Christie did not respond to an inquiry by NJ Advance Media about whether the governor might back the legislation.

Sweeney, in a statement emailed to NJ Advance Media, said giving the union’s agency over their own destiny would produce better results.

“This practice has been effective with private-sector unions so we know that it works,” wrote Sweeney in an email to NJ Advance Media. “Their returns actually improved when they took control. When the investment strategies are their own, the unions will make sure they make the best decisions for their members.”

Under the proposed legislation, the police and fire unions would also obtain broad discretion over both the size of members retirement benefits and the contributions needed to support them.

An early draft of the legislation reviewed by NJ Advance Media allowed that the board may “enhance…or modify any benefit as an alternative to an increase in the member contribution rate.”

It also allows for the board to “reinstate, when appropriate, such reduced benefit to the statutory level without an additional contribution by the member.”

Beaver said this would be a welcome change for unions who’ve seen state contributions held hostage to the whims of the budget.

“In the past, the support of the board went as far as the treasurer wanted it to go,” said Beaver.

Christie has said he’ll make a record $2.5 billion pension payment in his final year, but that’s only half the most recent actuarial recommendation.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Michael DeRose Michael DeRose

Michael P. DeRose is a shareholder at the firm and primarily focuses his practice in labor/ employment law and other aspects of civil litigation, such as contract disputes. He has litigated and tried hundreds of matters before the Superior Court of New Jersey…

Michael P. DeRose is a shareholder at the firm and primarily focuses his practice in labor/ employment law and other aspects of civil litigation, such as contract disputes. He has litigated and tried hundreds of matters before the Superior Court of New Jersey, the Office of Administrative Law and the New Jersey Public Employment Relations Commission on behalf of various labor unions and their members. Michael has extensive experience defending and fighting for members of law enforcement and other public employees facing adverse disciplinary action, such as termination or suspension from employment. He also frequently argues before New Jersey’s Appellate Division on behalf of his clients.

A large portion of his practice is also devoted to contract negotiations on behalf of union clients, representing such clients in grievance arbitration/ contract disputes, and otherwise advising union leaders on labor and employment matters.  Michael also has significant experience in the realm of interest arbitration on behalf of the firm’s law enforcement and firefighter unions. As a result of the firm’s robust labor and employment practice, Michael regularly appears before various state agencies, such as the New Jersey Civil Service Commission, the New Jersey Division of Pensions and Benefits, the State Health Benefits Commission, and NJ PERC. In addition to representing labor unions and active employees, Michael also represents retirees before the Division of Pensions in disability retirement applications, both ordinary and accidental disability retirement, in pension forfeiture actions, and in other miscellaneous pension disputes. He also counsels private business and their principals in contract and employment law, in addition to representing their interests in civil litigation. Michael has a track record of obtaining favorable outcomes for his clients and treats each everyone of them on an individual and particularized basis in accordance with their needs.

Before joining the firm in August of 2015, Michael was an associate counsel at a civil litigation firm out in Trenton, New Jersey, where he principally focused his practice around employment law and tort claims litigation. Prior to that, he served as a law clerk in the Superior Court of New Jersey for the Honorable F. Patrick McManimon, Mercer County Vicinage, from September of 2012 to August of 2013, where he attained significant experience in the realm of alternative dispute resolution having mediated well-over one-hundred cases, primarily related to commercial and residential landlord/ tenant disputes and contract/ business litigation. He earned his Juris Doctorate in 2012 after graduating from the Western Michigan University-Thomas M. Cooley School of Law. In 2007, he earned his Bachelor of the Arts in Criminal Justice and Public Administration from Kean University where he was a member of the Kean University baseball team and vice president of the Alpha Phi Sigma chapter of the National Criminal Justice Honor Society.

Michael is admitted to the New Jersey State Bar, the United States Federal Court for the District of New Jersey, and is a member of the Mercer County Bar Association.