July 16 2006

Can N.J. afford the rising cost of teachers and cops?

Sunday, July 16, 2006

By BOB IVRY

STAFF WRITER

We're grateful to our police officers. We count on them. We're proud of them.

Our state is going broke paying for them.

RUNAWAY PAY

   New Jersey governments are awash in red ink. But from State Street to town hall, no one is tackling the biggest reason for our fiscal woes – what we pay public employees.

   Focusing on police officers and teachers, we describe a system that has produced $100,000 base salaries for the rank and file, generous pensions and no-cost benefit packages – all at a time when the private sector is going in the opposite direction.

   We don't blame the workers. They're paid what government employers are willing to pay them.

   We blame the people who established a system that's so one-sided that local governments can't get a break. Those governments sit down to negotiate contracts with police and teachers and it's game over before it even begins. The big losers in the process – taxpayers.

 The series

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Same goes for teachers. We wish we could afford them, but we're having trouble.

We're having trouble paying for New Jersey's nearly 500,000 public employees. Especially at their current salaries and fringe benefits. Especially with New Jersey's property taxes among the steepest in the nation and rising.

Especially now that state officials have closed a $4.5 billion budget gap by raising taxes and cutting services while sidestepping the subject of how we compensate unionized public workers.

This isn't about bad guys -- crooked politicians or school superintendents with secret retirement deals.

No, police and teachers are working people. People we trust every day to prepare our children for the future. People whose job it is to step between us and harm.

But there are so many of them, and their unions keep beating town councils and school boards at the bargaining table.

If a corrupt politician dips into the town till, that's a problem. But pay every cop in town $100,000 and spring for family health benefits for every teacher and that's a path to financial ruin -- or a taxpayer revolt.

Check it out:

• $100K Club -- Police officers in northeast New Jersey routinely make more than $100,000 in total pay. They are among more than 10,000 government employees in New Jersey who earn that much, according to state payroll and pension records.

• Tops in cops -- Police in Bergen County are the best paid in a state that the federal Bureau of Labor Statistics says has the highest police pay in the country.

For example, Fairfax County in Virginia boasts higher household income than Bergen, but police in the Washington suburb make a lot less than police do here. The average cop in Fairfax made $75,000 in 2005, including overtime; their counterparts in Bergen made $20,000 more.

Viewed another way: The base pay for a rank-and-file patrolman in New York City tops out at $60,000 after 5½ years. Patrolmen at the top of the pay scale in Bergen County often get more than $90,000 before overtime. Contracts already in place in many towns will push base pay past $100,000 in 2008.

• Overdosing on overtime -- Overtime lifts police pay well above $100,000 in even middle-income communities. Police in Butler earn base salaries $10,000 less than many of their counterparts in wealthier areas of North Jersey, but they make up for it with time-and-a-half. Their average total pay in 2005 exceeded $100,000.

• Rewriting Genesis -- For police in Alpine and other towns, the week isn't seven days, but six -- four days on and two days off. The result is 17 extra days off a year, beyond holidays and vacation.

• Golden years -- Ridgewood police Sgt. Paul Gilard retired on June 30, 2005. His total compensation for the year was $187,115, including a retirement payout of nearly $130,000. He'll receive an annual pension of $73,000 for the rest of his life. He's 48 years old.

• Who's the boss? -- Police in northeast New Jersey often make more money than the folks who pay their salaries, a Record analysis found.

In 2004, the average income-tax filer in Bergen County earned $80,423. For the years 2003 to 2005, cops in Bergen averaged $85,028 before overtime, according to state pension records. There was greater disparity in Passaic County. Tax filers there reported average 2004 income of $54,980, while cops earned base pay of $75,064. (See "What people make" for an explanation of our analysis.)

"Property value is enhanced by good services," said Richard D. Loccke, a Hackensack attorney who represents many police union locals at the bargaining table. "There's an emotional outcry against police, and it's misplaced. Two-thirds of the tax levy is education. That has the biggest impact. Education is the 800-pound gorilla sitting in the room."

Above average

Teachers' salaries and perks have indeed grown as well, although less so than cops'. Teachers in The Record's circulation area earn an average of roughly $61,500. It usually takes teachers twice as long to reach the top of the pay scale, but once they arrive there, they, too, often make more than the average taxpayer.

• Head of the class -- In Bergen alone, 1,126 teachers, or 10 percent, earned more than $90,000 in 2005-06, according to state records. In the city of Passaic, an urban district supported largely by state income-tax dollars, 158 classroom teachers topped $90,000. In Wayne, 43 teachers earned six figures. And don't forget, most teachers get summers off.

• Safe and secure -- Tenured teachers in New Jersey are essentially guaranteed jobs for life.

Over the past 10 years, not one of Bergen County's 10,000 teachers has been fired via tenure hearings, the only process for involuntarily removing tenured teachers for inadequate performance.

The powerful New Jersey Education Association, the union that represents teachers in all but five New Jersey districts, has also successfully opposed performance-based merit pay.

• Healthy benefits -- The NJEA has stuck to a policy that taxpayers must foot the entire bill for its members' health insurance.

"Protecting health benefits is our No. 1 priority," said George Lambert, an NJEA field representative for Region 23, which encompasses northern Bergen County. "We've been very successful. There's no district in this region where members pay for health benefits. I don't see giving that up. Ever."

Great benefits are remnants of a time when government pay was low. To make up for that, public employers offered perks like free health insurance.

Let's just say salaries have caught up, while benefits remain as generous as ever.

More than 53,000 full-time employees of the state government -- 75 percent of the total -- are enrolled in a state health insurance program that provides free coverage for them and their families, according to Thomas Vincz, spokesman for the Department of the Treasury.

More than 125,000 local employees also get free health benefits under the program, with only a few kicking in toward family coverage, he added.

Private industry nationwide provides only 9 percent of its workers with free family health coverage, a study by the Kaiser Family Foundation found. The typical private-sector worker in New Jersey chipped in $2,400 for single coverage and $6,600 for family in 2004, according to the state Chamber of Commerce.

Unions supreme

Certainly, police officers and teachers are not the only causes of escalating taxes. Runaway spending is also caused by pay-to-play, waste and corruption, as well as shoddy and in some cases overpaid management.

But cops and teachers are the most prominent public workers in our towns. They're often the most numerous. They're usually the best paid rank-and-file workers. Their unions are the most powerful in Trenton. And they take a big slice of our property tax bill.

Their union leaders are skilled and persuasive.

"We are a very successful organization. I don't shy away from that," said NJEA assistant executive director Vincent Giordano. "What differentiates the NJEA from other unions? What makes us so successful? It's our ability to engage our members and our ability to meld their professional interests and their advocacy interests into an organization they believe is functioning on behalf of all their interests."

They are also unapologetic.

"Do you work around the clock? Christmas? Thanksgiving? Is somebody going to shoot at you?" said Michael J. Madonna, president of the New Jersey State Policemen's Benevolent Association. "When you leave to go to work you don't know if you're coming home. I don't want to be corny, but it's a fact. It's just what the job entails. The stress of the job."

Indeed, two officers were shot, one critically wounded, Thursday during a routine traffic stop in Egg Harbor Township.

Towns have found ways to pay for cops and teachers. Sometimes it's other workers who bear the brunt. Wayne, for example, has eliminated 26 positions in the past 12 years.

Usually, however, it's the taxpayer who gets the short end. Rather than cut services, most municipalities raise taxes. In the 93 towns of The Record's circulation area, property taxes surged 58 percent between 1995 and 2005. That's nearly twice the inflation rate for the New York metro area.

The state, too, has hit upon a formula of paying employees more and raising taxes to match. Governor Corzine's "deficit-closing" budget calls for a 9 percent spending hike partially funded by a rise in the sales tax to 7 percent from 6 percent.

To be fair, Corzine's budget increase is due in part to his commitment to replenish the pension fund, which former governors such as Richard Codey, James E. McGreevey and Christie Whitman didn't do in a meaningful way. Their budgets essentially saddled today's taxpayers with the tab for past promises to public employees.

In a poll conducted by The Record for this story, three out of four North Jersey residents said property taxes were too high. Property taxes were also cited as the single most important problem facing the state.

Lawmakers may be hearing that. This summer the Legislature is supposed to meet in special session to tackle property tax reform.

But some possible solutions remain taboo. Woe unto the legislator who so much as suggests that unionized government workers accept givebacks or otherwise help the state deal with its budget problems. When Sen. Stephen M. Sweeney, D-Gloucester County, proposed just that last month, he was accused of demagoguery -- by members of his own party.

Sweeney said, however, he expects that many of the same politicians who bashed him will be forced by circumstances to come around. He's pushing for the Legislature to discuss employee compensation at the special session this summer.

"A lot of my legislative colleagues agree with me but don't want to go through the nonsense I'm going through," Sweeney said. "But guess what? I'm still standing, still pushing, and you'll see a lot more legislators coming over to my way of thinking because taxpayers are demanding it."

Many factors pump up the state budget, but any attempt to rein in costs without addressing compensation is likely to fail.

"Public employee unions are a special breed that don't give up anything willingly, and anyone who asks them to becomes an instant pariah," said Ramsey Mayor Richard Muti.

Spiral of blame

How did we get to this point? Can we blame the workers? They're paid what government employers are willing to pay them. Can we blame the unions? They're doing what unions do -- protecting and promoting the interests of their members.

Trenton lawmakers aren't shy about pointing a finger. Despite flat or declining state aid to municipalities, they blame local officials.

Said Codey, a West Orange Democrat who's the Senate president: "Has the Legislature ever increased property taxes? I never voted to raise property taxes. I'm not a school board member. I'm not a mayor."

Agreed Sen. Robert Singer, R-Lakewood: "Mayors are trying to find any way they can to blame somebody else for rising property taxes."

It's true that mayors and council members have not held the line against growing compensation. Due to inexperience, lack of nerve or a genuine belief that public employee raises are more important than keeping taxes low, they haven't stuck together in the same way their union adversaries have. They've failed to offer a credible counterweight to union strength.

"The easiest thing to do in municipal government is to agree with all the loud groups and you'll be reelected and your taxes will continue to skyrocket," said Emerson Mayor Steve Setteducati.

But in the Record poll, 41 percent of respondents blamed the state for their swelling tax bills, making the governor and state lawmakers the top-ranked villains.

There's wisdom in their choice. State officials have made sure that in the delicate balance of contract negotiations, the police and teachers unions have a thumb on the scale.

State officials are the ones who established the Public Employment Relations Commission -- nicknamed PERC -- and gave police the right to settle contracts by binding arbitration, which routinely awards cops annual base-pay raises of 4 percent.

They're the ones who then enacted the "cap law," which limits the percentage municipal budgets can increase every year -- 2.5 percent, or 3.5 percent if a town council passes a special ordinance -- while the cost of health benefits grew 13.3 percent last year, according to the state Chamber of Commerce.

They're the ones who stripped school boards of the right to impose their last best offer on teachers in the event of a deadlock in contract negotiations, robbing taxpayers of an important negotiating tool without requiring anything from teachers in return.

They're the ones who created the State Health Benefits Program, which pays every cent of the health insurance for more than half the workers in the plan.

They're the ones who established a pension system that paid out $4.2 billion in benefits last year, according to the Division of Pension and Benefits -- up from $2.5 billion in 2000 and $1.8 billion in 1996 -- and then approved budget after budget that failed to fund those pensions.

They're the ones who in the past three years received $951,915 in campaign contributions from the NJEA, $329,425 from state trooper organizations and $218,495 from the state PBA.

So we have unions that look out for teachers and police and we have a Legislature that looks out for teachers and police and we have nobody with any real clout looking out for the taxpayer, who is now shelling out an additional penny in sales tax -- a 17 percent increase -- on top of a hefty bump in property taxes.

Corzine, in his somber budget address in March, called for non-unionized state workers to skip their cost-of-living salary increases this year, a cutback the Legislature approved. He also wanted non-union workers, most of them supervisors, to make a 10 percent contribution toward their benefits. Lawmakers didn't go along with that.

State Treasurer Bradley Abelow said those provisions were a foreshadowing of topics the Corzine administration planned to discuss with union negotiators when bargaining begins, as soon as this fall, for new contracts. Current contracts are due to expire in June 2007.

"The unions know full well the implications as far as how we'd be thinking going into upcoming contract talks," Abelow said. "We'll be talking about salaries, pension reform and a series of issues concerning health care."

By law, pensions can't be cut, Abelow said, and until bargaining begins, "not much can be done about salaries." He said he hopes the Legislature, in its special session this summer, passes laws against pension sweetening and other abuses.

"We hope they take a look at things they didn't want to tackle this spring," he said.

In the meantime, Corzine maintains a close relationship with the unions his treasurer says will be asked to make concessions in a few months. The governor's budget was so well-received by the public unions that three of them -- the NJEA, the Communications Workers of America and the American Federation of State, County and Municipal Employees, or AFSCME -- all chipped in to run a barrage of radio and TV commercials and a direct-mail campaign in support of its passage.

"It's unprecedented for the three unions to work so closely together, and the reason we're doing that is we all share the same concerns," said CWA spokesman Bob Master.

When members of public unions rallied in Trenton on June 19 in favor of the budget and its sales tax hike, Corzine told the gathering, "I will fight for you."

Sweeney, the business representative for an 800-member ironworkers union as well as a state senator, said that instead of firing up the crowd, Corzine should have been meeting with union leaders and asking them for concessions -- now.

"Governor Corzine was wrong for at least not asking them to come back to the table and be part of the solution," Sweeney said. "They say budget time is not the right time to do that, but of course it's the right time to do it. That's when we're dealing with finances."

Sweeney said there is plenty the Legislature can do in its summer session, such as raise the state employee retirement age to 60 from 55, increase medical co-pays for new hires and reduce the number of holidays for state workers.

"I told the unions they're going to lose those benefits," Sweeney said. "The Legislature and the unions created this mess together, so we should fix it together.

"I'm a union guy," Sweeney added. "A friend can tell you the truth."

No numbers

How much do the cops and teachers in your town make? Don't stress if you're clueless. You're in good company.

In the Record poll, the majority of 1,100 registered voters guessed way low. Just one in three came even close to what experienced cops are paid in their town.

Public vs. private

Police officers in northeast New Jersey typically outearn other residents; teachers as a rule make less, but they usually work 10 months.

 Bergen Passaic

Taxpayer wages1: $80,423 $54,980

Base police pay2:  $85,028 $75,064

Teacher salaries3:  $62,707  $60,011

1 Wage earnings from 2002 income reported to the IRS, adjusted to 2004 dollars.

2 Three-year average (2003-2005) from New Jersey pension system.

3 Full-time teachers and other certified education staff, not including principals or other administrators, from the state Department of Education.

For teachers, the results were even more striking. While correctly noting that teachers don't make as much as cops, almost all respondents said a fully experienced classroom teacher earns less than $60,000. In fact, a teacher with a master's degree at the top of the pay scale typically makes in excess of $80,000.

There's good reason for the discrepancy. It's not as if information on what public-sector employees make is readily available -- even though the law specifically says it should be.

The Record requested computerized payroll records from every town and school board in the 93 municipalities that make up the paper's circulation area. We received them from fewer than 20 percent.

Some towns balked at reporters' requests for electronic access, saying they kept the payroll records on paper. But when reporters visited a handful of municipal offices to take a look at them, the records weren't available. Other towns said they didn't have the information, that it was in the hands of contractors who process their payroll.

Even when the information is at hand, it's often confusing, if not misleading. Town councils pass "salary ordinances" that are written with a wide range, even though the person actually in the job makes the maximum. Contracts typically calling for a 4 percent annual raise for police also provide new patrolmen with scheduled salary adjustments, known as "horizontal increases," that can triple a rookie's pay in five years. Longevity -- derided by critics as the "breathing bonus" -- can add 10 percent or more to the pay scale for senior employees, but is often detailed separately from salary scales.

"The public has been deceived," said Washington Township Mayor Rudy Wenzel. "A patrolman who makes an $85,000 salary really makes $97,000 with all the add-ons."

It's no better in Trenton. Want to know what a state worker gets paid? The information is kept in two separate places, requiring two separate document requests. The state personnel department keeps payroll records, but overtime records are stored over at Treasury, which charged this newspaper $977 for the database.

What we found: Over the past three years, the state paid out more than $600 million in overtime.

Lacking this most basic payroll information, many of us haven't been able to make the connection between the checks we write to Town Hall and the extraordinary compensation public employees receive.

Uneven playing field

Local officials say they have little chance at the bargaining table to halt mushrooming costs. Police and teachers unions mine decades of institutional memory and peruse the details of recent and ongoing contract talks statewide. The PBA calls upon attorneys like Richard Loccke, who's compiled an impressive winning streak, while the NJEA has specially trained and battle-hardened field representatives available on a phone call's notice.

By contrast, town council and school board members turn over every three or four years. Many have little or no experience hammering out labor contracts. Some worry the public may think they're being too tough. Once the signs reading "Save Our Cops" or "Support Our Teachers" start sprouting on their neighbors' lawns, their resolve softens.

"If the Legislature can't stand up to the teachers union, what hope can a little local board have against them?" said Mark Bombace, president of the Ridgewood school board.

Unions know the advantage of negotiating with 566 separate towns and 593 different school districts around the state. The results are contracts so generous they would have been inconceivable a generation ago. So the unions champion home rule and squelch any talk of regionalization. Two years ago, when Emerson and Westwood talked about combining police forces, PBA members from around the region packed meetings to denounce the plan. The towns caved.

"The PBA made the argument that residents would see strange faces in the police cars," said Westwood Mayor Thomas Wanner. "Well, there are many residents that don't know the faces of the police force like they used to. They're too busy working, trying to pay property taxes, to get to know their police officers."

Binding arbitration hands the advantage to the police unions. Mayors, council members and labor attorneys hired by municipalities know that arbitrators are likely to award raises well above municipal spending caps and the rate of inflation. It's considered a victory when they can get the police union to settle at the negotiating table and thereby avoid arbitration, which can add $50,000 or more to their legal fees.

Arbitration also skews salaries for other public employees, said Wayne Mayor Scott Rumana.

"If you know the going rate [for police raises] is 4 or 4¼ percent, and you're fighting to get it below 4 percent, you're not going to turn around to the other unions and get them to agree to a 1 percent raise," Rumana said. "With the tools we're stuck with, we do our best."

Arbitration also encourages unions to engage in a practice known as "whipsawing" -- persuading one town to agree to a higher pay rate and then arguing to an arbitrator that a neighboring town has an obligation to pay equivalently.

"The whole negotiating process is slanted toward the upward movement of salaries," said Sen. Gerald Cardinale, R-Demarest.

Clout with lawmakers

It's not difficult to root out the source of union power. The NJEA, for instance, has nearly 200,000 members. According to its own figures, 93 percent of them voted in 2004.

So did their families. And their friends.

The NJEA has parlayed its sway with the Legislature into a virtual monopoly on education policy. In many cases, that's a good thing. In some cases, it involves protecting the union more than it involves protecting quality education. The most obvious cases are its resistance to merit pay and its defense of tenure job-protection rights, instituted in 1909.

"Tenure protects the bad and the mediocre. It protects the good, but they don't need protection," said Joseph R. Morano, an attorney with the Lyndhurst firm Scarinci & Hollenbeck who represents school districts.

Like the police, teachers play one town against the other. They can pressure a school board to relent on important issues like health benefits by playing on trustees' concerns about competitiveness.

"If you're looking for a job, where are you going to go? Not to the district that makes you pay," said Robert Baxer, a former Ramsey school trustee. "No district wants to be the first one that does it because they'll be losing out on hiring the best and brightest teachers coming in. And it would be impossible to get experienced teachers from another district."

If municipal officials feel any resentment over the untouchable status of public employees, most of them don't talk about it. They fear a backlash -- their words may come back to haunt them in an upcoming negotiation or election. Residents, too, hesitate to criticize teachers and police.

"What person is going to get up at a public meeting and say, 'Mr. Mayor, you're wise for doing that' when you have the chief of police saying he doesn't want to do that?" asked Alfred Murphy Jr., former mayor, councilman and school board member in Hillsdale. "Same with teachers. I had teachers come in with black armbands because we let people go. And that intimidates some people. Getting tough will cost you because the police and teachers are very effective at playing to the audience, the public."

Staff Writers Benjamin Lesser, Adrienne Lu, Monsy Alvarado and Maya Kremen contributed to this article. E-mail: ivry@northjersey.com

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July 17, 2006

Timing was everything for NJEA power broker
Monday, July 17, 2006

By BOB IVRY
STAFF WRITER

Vincent Giordano's salary was $5,100 in 1964, the year he started as a social studies teacher in Upper Saddle River. He had no idea what he'd make the next year.

It turned out to be $5,200.

"So I counted on my one hand, the other hand, and all my toes and I said, 'This is not going to cut it at that pace,' " Giordano said.

So he went to work for the union.

Talk about timing.

In 1968, the Legislature gave teachers the right to bargain collectively. A bloodless revolution was at hand. Giordano -- whose father had told him that, except for the priesthood, teaching was the most respectable profession -- was a Bergen County field representative in the vanguard of change.

Today, in his office in the New Jersey Education Association's building across State Street from the capitol in Trenton, Giordano -- round, sharply dressed and 64 years old -- smiles at the results of his four decades of labor on behalf of the rank and file.

Teachers are doing well. Not as well as he'd like -- never as well as he'd like. Starting salary for an Upper Saddle River teacher is $41,000. Teachers at the top of the pay scale there and throughout North Jersey often make more than $90,000.

Teachers' health insurance is paid by school districts throughout the state. Pensions are comfortable. And in Trenton, whenever the NJEA tells the Legislature to jump, it jumps.

Giordano, as much as anyone, made that happen.

Other unions, like the AFL-CIO, are splintering. The United Auto Workers are mulling serious givebacks to help bail out failing employers and the Longshoremen are watching their leaders get hauled off to prison for corruption.

Not Giordano's union. The NJEA, which represents teachers and other school workers in all but five districts in the state, has kept its nose clean. It's gone from four field offices in the late 1960s to 22 today. From 75,000 members in 1971 to nearly 200,000 in 2006. It's well-organized. It's democratic. It's run by the members.

Giordano, as much as anyone, made that happen, too.

Now he's the assistant executive director -- boss of all 57 field reps in the state. Gone are the days when he could use his fingers and toes as an abacus to calculate his annual pay raise. Although he won't say how much he earns, Giordano wears nice suits and lives in a home in Watchung that's assessed at $1.1 million.

The two Vinces

Giordano downplays his accomplishments. That's the union way. A lot of people had a hand in the NJEA's success, he'll tell you. But he's been a major-league force.

"In our corner of the world, we built the NJEA," said Vincent Perna, who partnered with Giordano in the union's Bergen County field office for 24 years.

The two Vinces, they were called. They worked out of Hackensack and then Oradell, fighting traffic up and down Route 4, Kinderkamack Road, Route 17, to deliver pep talks to teachers who brought grievances against their school districts and coach local negotiators in putting together favorable contracts. They made themselves available all day, every day, and a lot of nights, committed to building the NJEA into the powerhouse it's become.

They got a head start on the school boards in the years after collective bargaining came in. They wrote the boilerplate for the contracts, some of which is still used today. They plotted out the yearly raises teachers would get. They figured out how to preserve free medical coverage. They persuaded school districts to give teachers 24 hours' notice before evaluations and allow teachers to challenge bad reviews.

And though Giordano will tell you the school boards have caught up, it's not true. The advantage exploited by Giordano and Perna in the late 1960s and early 1970s is a legacy that persists to this day.

Giordano and Perna. The two Vinces. One played Good Vince, the other Bad, Perna said.

"I was the 'Let's go throw a can in the front door and see how big the explosion is and see if we can fix it,' " Perna said. "He was more 'Let's see if we can massage this into place and see if we can do it without an explosion.' "

Still, Perna noted, Giordano "presided over more strikes in Bergen County than anyone else, even me."

In the most memorable, Englewood teachers walked off the job twice – in 1975 for 12 days and in 1982 for 17 days. A 19-day strike in Teaneck in 1982 ended with the acceptance of a three-year contract calling for a 19 percent raise over the first two years and a cost-of-living increase -- between 7.5 percent and 9.5 percent -- the third.

'The R word'

Those hard-won raises set the tone for the rest of the region, and marked the beginning of the end of the days of the poorly paid public-school teacher.

Giordano, as much as anyone, made that happen.

How did he do it? Relationships, he'll tell you. It's all about relationships.

"That's my word, the R word," Giordano said. "This business, this process of negotiations, is basically about relationships. Developing and nurturing relationships. It's about some technical stuff, too -- you have to kind of know what you're talking about. But ultimately it gets down to your ability to develop a working relationship with someone so they feel comfortable."

Relationships.

"One of the things about bargaining is it's about relating to people," said Lester Aron, an attorney with Sills, Cummis in Newark who tangled with Giordano for years as a negotiator for school districts. "Vince was always very good at talking to my clients. He was businesslike, not threatening. Superintendents and board members respected him because he knew his business and he wasn't crazy. He was not a dirty fighter."

Relationships. Built over plates of osso buco and bottles of merlot in every decent Italian restaurant from Moonachie to Mahwah.

"When Vince was a field rep, he knew all the best Italian restaurants and enjoyed them all," Aron said. "Whenever we ate together, we'd go to a place he knew and I didn't."

Perna remembers that, too -- a revolution fueled by pasta and marinara.

"Vince subscribed, and still does, that there's no problem a good bottle of wine can't fix," he said.

E-mail: ivry@northjersey.com

July 18

Workers' health care causing pain
Tuesday, July 18, 2006

By MONSY ALVARADO
STAFF WRITER

Visit the complete Special Report: Runaway Pay

Third of six parts

Whatever else you can say about pregnancy and labor, it didn't cost Christel Vasquez of Teaneck much.

Premiums for the teacher's health insurance are paid entirely by her employer, the Jersey City public school district. It covered her regular checkups, two ultrasounds and a first-trimester screening. When she delivered her daughter more than a year ago, Vasquez paid nothing to the hospital.

"I paid $5 co-pays, but that's it," said Vasquez, who is expecting her second child in December. "The insurance paid for everything."

Things are a lot different for Nicol'e Gordon of Ridgefield Park. A retail saleswoman, Gordon gave birth to twins in October. Even though more than $100 of her biweekly paycheck went toward her health insurance premiums, she still ended up paying for portions of her ultrasounds, and $30 in specialist visit copayments. She said she paid more than $2,500 in medical expenses by the time she took her babies home, and is still receiving bills.

"You are not expecting to be shelling [out] that much money," she said. "It's kind of annoying when you see people that do not have to pay anything."

As health-care costs swell, private companies are scaling back employee medical benefits, choosing high-deductible plans, increasing copayments and asking employees to contribute more toward premiums.

But in New Jersey's public sector, where nearly 78,000 employees of the state government and state college system enjoy free medical coverage for themselves and their families, things are moving at a much slower pace, if at all. Winning even the smallest concessions during contract negotiations is an uphill battle because of strong unions, tough bargaining rules and rigid state guidelines about employee contributions.

"I've said it in negotiations," said Jeff DeSimone, a Ridgefield Board of Education member. "In the real business world, a businessman couldn't stay in business paying these types of benefits."

Public employees and union officials say they have accepted smaller raises and other compromises to keep top-notch benefits. Asking them to share in the cost of reducing the tax burden is not the solution, they say.

"We think that is the wrong perspective to be taken in terms of the current issues with health care," said Steve Baker, spokesman for the New Jersey Education Association. "It shouldn't be about getting concessions. We should be looking at ways to make sure everyone has adequate and affordable health care."

Rising costs

Employee health-benefit expenses are a major and growing cost for government in New Jersey. In 2005, the state government spent $1.9 billion on employees and retirees enrolled in New Jersey's largest public-sector benefits pool; local governments spent $1.2 billion. That figure is projected to more than double in five years, according to a task force commissioned by state Sen. Richard J. Codey last year, when the West Orange Democrat was acting governor.

Closer to home, health benefit costs are driving budgets upward. In North Jersey public school systems, for instance, a computer analysis by The Record found that medical-insurance costs rose more than twice as much as overall expenses from the 1997-98 to the 2004-05 school year. The analysis covered a majority of the school districts in northeast New Jersey, the 79 for which data were available for the entire time period. Those districts spent 10 percent of their 2004-05 budgets on health benefits.

Among the most glaring examples are Bloomingdale, where health benefits grew by 129 percent; Fort Lee, where they jumped 161 percent, and Teaneck, with a 111 percent hike. In all three districts, overall expenses grew by less than 40 percent.

"It's eating us alive," said Fort Lee school Business Administrator Nick Girone. "There's no question about it."

While annual percentage increases actually have eased since the early 1990s, continued hikes of 10 percent to 20 percent a year represent "big chunks of your budget. It just keeps going up. There is never a slack time," he added.

Local governments find themselves stuck amid high property taxes, rising operating costs, flat state aid and state-imposed spending limits. Officials say they can't continue to absorb the increases.

"There has to be some radical changes in how we provide benefits," said Bogota Mayor Steve Lonegan. "Otherwise it's going to drive taxes through the roof."

Codey's Benefits Review Task Force identified potential savings, but none that sits well with the public-sector unions.

State and local governments could save $350 million annually if they paid 95 percent of employee premiums, rather than the full cost for the popular NJ PLUS plan, the panel said.

"We felt quite strongly, given the looming liability of health benefits, that they be negotiated hand in hand with wage benefits and that employees begin to pay some amount of the health care premium," said Philip Murphy, chairman of the task force.

The group suggested that public employees and retirees contribute through higher co-pays, deductibles or other means. To reduce the high costs of prescription drugs, the eight-member group recommended the state give preference to generic drugs and rely on mail order for prescriptions.

The group also recommended eliminating a provision that allows couples who both are public employees to receive separate -- and sometimes overlapping -- health coverage packages.

Baker, the NJEA spokesman, said that the organization opposes significant increases in health care costs for public employees. He also said that, with co-pays and other costs, public employees do contribute to health coverage expenses.

"No one is receiving completely free health care," he said. "When you look at health benefits, you can't look at them independent of salaries. If a local doesn't make changes to its health benefits, but accepts smaller wages, can you say they didn't do anything to contain costs?"

The New Jersey State League of Municipalities says health care is the No. 1 issue confronting state government and is a major factor for local governments.

"Legislative help is needed and the proposals suggested by the Task Force are a good start," the league said in a statement. "A major task force should be established to deal with this issue inclusive of state and local governments, as well as experts."

State Treasurer Bradley Abelow confirmed that medical care is driving the growth of the state's budget.

"On a state level, on a national level, the private sector, it's hard to control. But it must be a point where we focus on a cost-containment strategy," he said.

Governor Corzine's office said steps have already been taken in the 2007 budget to keep public employee benefit costs down. The budget includes bulk purchasing of prescription drugs for the State Health Benefits Program and Medicaid for a projected savings of $75 million. The state also plans to rely more on generic and mail-order drugs in the state health plan for a savings of $20 million, said Brendan Gilfillan, Corzine's spokesman.

"The governor understands that the skyrocketing costs of public employee benefits pose a serious challenge to our state's finances and this report confirmed that," he said. "We will continue to look for efficiencies and cost-cutting measures going forward. Additionally, the governor intends to address some of the issues raised in the report in the upcoming contract negotiations."

Increasing costs

Health costs are rising fast nationwide, fueled by increased demand for medical services, new and more intensive medical treatments, an older population and unhealthy lifestyles. And insurance costs have kept pace.

A recent survey by the state's Chamber of Commerce revealed that costs for New Jersey companies ran higher than the national average -- increasing an average of 12.7 percent in 2004 and 13.3 percent in 2005. Garden State employers paid an average of $7,307 per employee for health benefits in 2004, up $735 from the previous year, according to a survey by the New Jersey Business and Industry Association.

But in the public sector, employees barely feel the pinch of those increases.

Local school districts and municipalities have several options for providing benefits. They can contract with private insurance carriers, find a self-insurance fund -- where a town pays for each claim submitted -- a joint insurance fund with other towns, or join the State Health Benefits Program, which allows participants to choose among seven medical plans. The biggest health-insurance pool in the state, it provides benefits for 366,093 working and retired public employees enrolled. Additionally, 440,647 spouses and children of employees and retirees are covered through the plan.

Some state employees kick in toward premiums for their own coverage. But employees in the 938 municipalities, school districts and county agencies enrolled with the state program pay nothing for their own coverage.

Nearly 78,000 state employees are enrolled in the NJ PLUS plan, the most popular of the seven options available through the SHBP; they receive free coverage for themselves and their families, according to Thomas Vincz, a spokesman for the Department of the Treasury. More than 125,000 local employees also get free health benefits under the program, with only a few kicking in toward family coverage, he added.

Arlene Schatz, acting president of the Hackensack Taxpayers Association, said its members often complain that rising health benefit costs are putting more pressure on residents' pockets.

"What's upsetting for us as taxpayers is that most of us don't work for a municipality or any form of government," she said. "We all are on fixed incomes. We all work in the private sector where we all contribute to our health packages."

Negotiating change

Health benefits are almost always an item of contention around the negotiating table, but rarely do public employees budge on givebacks.

"Protecting health benefits is our No. 1 priority," said George Lambert, an NJEA field representative for Region 23, which encompasses northern Bergen County. "We've been very successful. There's no district in this region where members pay for health benefits. I don't see giving that up. Ever."

Vasquez, the teacher from Teaneck, acknowledges that health benefits are a nice perk of her job, but says it balances low pay, especially early in a teaching career. She points to teachers who hold several jobs to make ends meet.

She made $43,100 last year, her fourth on the job.

"In the teaching profession you don't make good money until you are in the system for 10 years," she said. "I rely on my check to pay my mortgage."

But local officials and property-tax watchdogs maintain that the days when public employees traded low wages for premium benefits are long gone. Nowadays, they say, many government workers have both -- good pay and good benefits.

They point to police officers in some municipalities, like Hackensack, earning base pay of more than $93,000 after five years of service, and schools superintendents and administrators who rake in six-figure salaries. Besides their wages, public employees also get paid vacation, sick and personal days, longevity payments and a pension when they retire.

Some also get lifetime health benefits.

"Lots of folks in the private sector don't have it as good," said Ramsey Mayor Richard Muti. "When you figure all these benefits, plus decent pay, public-sector employees are doing well. It's time they pay a greater share in health benefits costs."

But talks of givebacks seldom go smoothly. Negotiations can last for months. And when a new pact is reached -- thanks to strong unions, arbitration rules and a rigid state health benefits plan -- taxpayers usually continue to bear the brunt of the costs.

"[Public-employee unions] have a good system of representation," said Deborah Kole, staff attorney for the League of Municipalities. "And there has not been as cohesive an effort by municipalities. Sometimes you have towns agreeing to something and it slowly becomes the norm."

Small steps

Some governments contain costs by shopping around. Earlier this year, Hackensack opted for self-insurance and expects to spend $8 million on health benefits, the same as last year.

Some have had a modicum of success at the bargaining table.

In Ridgefield Park, new hires get full coverage in the traditional plan -- where employees can see almost any doctor -- for themselves, but must pay for family coverage for three years. The district calculated the savings at $408 a month per affected employee.

And in Rutherford, new school hires can only choose the preferred provider plan, a hybrid between an HMO and a traditional plan. When they reach tenure, employees can enroll in the more expensive traditional plan.

"The hope was that once they got into [the PPO] plan they would stay in it," said Superintendent of Schools Leslie O'Keefe Conlon.

Teachers and other employees in the Ringwood schools have been contributing toward family coverage since 2000. Former Board of Education member Joseph Walker, who helped in negotiating the change, said it took months to convince the union.

"At the time the union members understood the board's dilemma," Walker said. "From management, we considered it a foot in the door, as far as breaking the ice in this. At the time, we were the fourth or third district [in the state] that ever got it."

Some new white-collar employees in Ramsey will also have to contribute to family coverage premiums, and police have agreed to a PPO. Muti, the mayor, said before the changes, health insurance premiums had risen an average of 15.8 percent; come September, they will rise 5 percent.

"That is definitely a trend that other municipalities must follow," he said. "They need to get their employees to contribute more toward their health benefits."

The following is a snapshot of the difference in childbirth costs for two women who work in the public and private sector, respectively.

*Vasquez was charged the copay for two doctors' visits.

**Gordon is still receiving medical bills.

Editorial:

Big bucks
Tuesday, July 18, 2006
THE RECORD'S EDITORIAL STAFF
THE evidence presented in The Record's current series, "Runaway pay," could not be clearer: Drastic and painful changes in public employees' salaries and benefits must be made if New Jersey's property tax burden is to be lightened.

As the series explains, we are grateful to our police and teachers for the services they provide to us and our children. But we are collectively going broke paying for them.

The dramatic changes that are needed will not be palatable to anyone -- not the police and teachers themselves, not the lawmakers who must make those changes, and not even most taxpayers. You may love home rule, but it is too costly to sustain any longer.

The current situation is out of control. Routine six-figure salaries for police officers who patrol tiny towns and a union that prides itself on the fact that no teacher in this region pays anything for health insurance are simply unacceptable in a state that is in the midst of a fiscal crisis.

Police and teachers, who are the subjects of the weeklong series that began Sunday, must be far more flexible at the bargaining table from now on. Like all public employees in New Jersey, they must be ready to make concessions that their powerful unions have refused to even consider in recent years, particularly related to health care and pensions.

Free health care for these employees and their families, without even a small premium, is a luxury New Jersey taxpayers can no longer afford to provide. Unions across the country have begun accepting a two-tiered system that protects older workers but provides more realistic benefit packages to new hires -- benefits that are far more in line with the private sector.

Taxpayers must make sacrifices, too. North Jersey residents cannot gripe about high property taxes and continue to insist on home rule. It is central to the problem. We simply have too many towns, too many schools and too many police departments. We don't need them all, and quality of life will not change if some of New Jersey's 566 towns and 593 school districts sit down together and decide to share services or even merge.

There is no better time to begin this transition. We have a governor ready to lead the way toward property tax reform. Governor Corzine will address the Legislature on July 28 and open the special session that must rise to the occasion and take this task seriously.

Everything must be on the table. There must be no favors for special interests, no politics and no shortcuts.

Finger-pointing and blaming others are not going to solve this problem. Everyone who lives and works here -- and the people elected to serve us at the state, county and local levels -- are all in this together.

We all have a stake in the state's future, and we must all be willing to consider the greater good.