As reported by northjersey.com, Lawmakers have relaunched an effort to spin off management of the pension fund for police and firefighters from New Jersey’s larger $78 billion pension system, a move that former Gov. Chris Christie blocked last year over concerns that it gave labor unions a “blank check” to enhance their benefits at taxpayers’ expense.

The bipartisan measure, which is supported by the four unions representing police officers and firefighters but opposed by representatives of municipal and county associations, was approved unanimously by the Senate state government committee on Thursday.

It requires several more approvals in both the Senate and Assembly before it can be sent to the governor’s desk for a final endorsement or veto. Unlike last year, when Christie, a Republican, conditionally vetoed the measure, Phil Murphy, a Democrat swept into office with the support of organized labor, now occupies the governor’s office.

A Murphy spokesman declined to comment on the legislation Thursday.

New Jersey currently manages the pension funds for several groups of employees together, pooling the assets and making investment decisions for all the funds through the State Investment Council, whose members are chosen by unions and the administration.

The new bill, S-5, however, would transfer management of the Police and Fire Retirement System, which has more than 88,000 participants and $27 billion in assets, from the state to a new 12-member board of trustees, which would hire its own executive director, actuary, chief investment officer and ombudsman.

The panel would be able to change contribution rates, adjust benefits and approve cost of living adjustments for retirees despite pension reforms Christie signed into law in 2011 restricting such changes. Seven of 12 trustees would be union representatives with the rest appointed by the governor to represent government employers.

Union officials say that they have been formulating the ideas in the legislation for years as they have grown frustrated with the performance of investments managed by the state and fees paid to outside fund managers.

Those officials also blame the state, which for years has failed to fund the pension system at a rate recommended by actuaries, for the slide of the Police and Fire Retirement System from over 100 percent funded in 2000 to about 65 percent as of last year.

“The reason that we are where we are today is not because of us and it’s not because of local government,” Eddie Donnelly, president of the New Jersey State Firefighters Mutual Benevolent Association, said Thursday. “It’s because of the reckless policies and enactments from state government, from the governor and the treasurer’s office.”

But representatives of both the New Jersey State League of Municipalities and the New Jersey Association of Counties testified against the bill Thursday over concerns that it transfers management of the pension fund to police and fire unions while leaving taxpayers on the hook for the associated risks.

John Donnadio, executive director of the association of counties, pointed out that local governments — and by extension taxpayers — will contribute nearly three times more money toward the Police and Fire Retirement System in 2018 than the members themselves. Because of that, he said, taxpayers will largely have to foot the bill should the board choose to enhance benefits or make other decisions that prove to be costly.

Donnadio and Michael Cerra, assistance executive director of the League of Municipalities, asked lawmakers to amend the bill to establish an equal balance between union and employer representation on the board and to add other provisions to make it harder for the board to enhance member benefits.

“If these amendments are not amenable to the committee or to the sponsor … then we would recommend that the plan be then changed to become a defined contribution plan,” similar to a 401(k), Donnadio added. “If the labor wants the management, then we believe that equity demands that they also assume the risk of loss with these plans.”

Christie expressed similar concerns when he conditionally vetoed a similar measure last year.

“I refuse to repeat the mistakes of prior governors and legislatures who enacted pension legislation without ensuring appropriate safeguards for taxpayers nor securing significant concessions from labor,” Christie wrote in a veto statement. “I refuse to hand PFRS a blank check, while handing the taxpayers the deposit slip.”

Patrick Colligan, president of the New Jersey State Policemen’s Benevolent Association, dismissed those concerns after Thursday’s hearing.

“It’s a ludicrous argument because it’s our pension system,” he said. “We’re here because we want to save the system.”

He also said that there is no labor-management pension board in the country that gives as many or more board seats to government representatives as it does to labor representatives.

The bill will next be considered by the Senate Budget and Appropriations Committee on Monday.

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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.

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