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Attached are bill statements from the 3 bills that have already passed in the Senate (36-0)...If S3 and S4 pass the Assembly they will go to the Governor's desk for his signature. These are bills that the Governor has said are a 'good start'. GSCS expects that more reform bills will move along soon.
S2 - The bill makes a number of changes to the State-administered retirement systems concerning eligibility, the retirement allowance formula, the definition of compensation, the positions eligible for service credit, the non-forfeitable right to a pension, the enrollment waiver, the prosecutor’s part of the Public Employees’ Retirement System (PERS), special retirement under the Police and Firemen’s Retirement System (PFRS) and employer contributions to the pension systems.
S3 - The bill makes various changes to the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP) concerning eligibility, cost sharing, choice of a plan, the application of benefit changes, the waiver of coverage and multiple coverage under such plans.
S4 - The bill makes various changes concerning payments to public employees for unused sick leave, carrying forward of vacation leave by public employees, sick leave for injury while in State service, and accidental and ordinary disability retirement for members of the Public Employees’ Retirement System (PERS) and the Teachers’ Pension and Annuity Fund (TPAF).
ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE, No. 2
STATE OF NEW JERSEY
DATED: MARCH 18, 2010
The Assembly Appropriations Committee reports favorably Senate, No. 2
The bill makes a number of changes to the State-administered retirement systems concerning eligibility, the retirement allowance formula, the definition of compensation, the positions eligible for service credit, the non-forfeitable right to a pension, the enrollment waiver, the prosecutor’s part of the Public Employees’ Retirement System (PERS), special retirement under the Police and Firemen’s Retirement System (PFRS) and employer contributions to the pension systems.
Specifically, the bill provides that:
1) new members in the Teachers’ Pension and Annuity Fund (TPAF) and the PERS will be eligible only if their hours of work are 35 or more per week for State employees and 32 or more per week for political subdivision employees. Persons not eligible for TPAF or PERS because the hours of work are fewer than required may be eligible for enrollment in the Defined Contribution Retirement Program (DCRP); the membership compensation threshold for the DCRP is increased to $5,000 from $1,500.
2) the multiplier for retirement calculation purposes, other than for veterans’ and disability benefits, for new PERS and TPAF members will be changed from 1/55 to 1/60, the pre-2001 level.
3) maximum compensation upon which contributions will be made for PFRS and State Police Retirement System (SPRS) purposes for new police officers, firefighters, and State Police officers who become members of those systems will be the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act, with a member becoming a participant of the DCRP with regard to any amount over the maximum
4) the retirement allowance for a new member of the TPAF or PERS will be calculated using the average annual compensation for the highest five years of service as opposed to using the current average for the three highest years of service, and for a new member of the PFRS and SPRS will be calculated using the average annual compensation for the three highest years of service as opposed to using the current compensation in the final year of service.
5) a person will be eligible for membership in the PERS or TPAF based upon only one position of several that may be held concurrently and requires the retirement system to designate the position providing the higher compensation as the basis for membership, contributions, and pensions calculations.
6) new members of the TPAF, the Judicial Retirement System (JRS), the Prison Officers' Pension Fund, the PERS, the Consolidated Police and Firemen's Pension Fund, the PFRS, and the SPRS will not have a non-forfeitable right to receive benefits upon the attainment of five years of service credit.
7) a person who commences service in a position that makes the person eligible to be a member of the TPAF, the JRS, the PERS, the PFRS, or the SPRS, or a person already enrolled but with less than 10 years of service credit, may choose either to be enrolled in the relevant retirement system or enrolled in the DCRP, or to choose to withdraw entirely from enrollment in any State-administered retirement system. 8) the Prosecutors Part of the PERS will be closed to new members.
9) the benefit enhancement in the PFRS that would permit a member of the PFRS to retire, at any age after 25 years of service credit, on a special retirement allowance of 70 percent of final compensation after the retirement system reaches a funded level of 104 percent is to be eliminated.
10) the State, beginning July 1, 2011, is to make in full the annual employer’s contribution, as computed by the actuaries, to the TPAF, the JRS, the Prison Officers' Pension Fund, the PERS, the Consolidated Police and Firemen's Pension Fund, the PFRS, and the SPRS. The State would be in compliance with this requirement provided the State makes a payment, to each State-administered retirement system or fund, of at least 1/7th of the full contribution, as computed by the actuaries, in the State fiscal year commencing July 1, 2011 and makes a payment in each subsequent fiscal year that increases by at least an additional 1/7th until payment of the full contribution is made in the eighth fiscal year and thereafter.
This bill is identical to Assembly Bill No. 2461, as also reported by the committee.
FISCAL IMPACT:
The Department of the Treasury estimates that the provisions of this bill, excluding the provision that permits the State to phase-in the payment of its full annual contribution to the various State-administered retirement systems, will reduce the actuarially required contribution to the State-administered retirement systems by the State and local employers by $13.2 million in FY 2013, $25.3 million in FY 2014, and $40.9 million in FY 2015. The cumulative State and local savings from FY 2013 to FY 2026 are projected to total $1.6 billion and $1.16 billion, respectively, excluding any associated phase-in savings. The actuaries of the retirement systems were not able to estimate the fiscal impact of the provision limiting PERS and TPAF membership to full time employment because the database of the Division of Pensions and Benefits does not maintain hours worked by members. Consequently, the population that would be impacted by this provision could not be ascertained.
In addition, the Department of the Treasury indicates that the provision of this bill requiring the State to make its full annual pension contribution, phased-in over seven years, will result in a payment by the State of at least $540.3 million in FY 2012, $1.156 billion in FY 2013, and $1.884 billion in FY 2014. The State’s full contribution for these fiscal years are estimated to be $3.477 billion for FY 2012, $3.705 billion in FY 2013, and $3.923 billion in FY 2014. This provision in the bill is designated as a State cost because the State has not made its full contribution in FY 2009 and FY 2010.
ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
[First Reprint]
SENATE, No. 3
STATE OF NEW JERSEY
DATED: MARCH 18, 2010
The Assembly Appropriations Committee reports favorably Senate Bill No. S3 (1R).
The bill makes various changes to the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP) concerning eligibility, cost sharing, choice of a plan, the application of benefit changes, the waiver of coverage and multiple coverage under such plans.
Specifically, the bill provides that:
1) after the bill’s effective date and the expiration of any applicable binding collective negotiations agreement, active employees of the State, local governments, and boards of education will contribute 1.5 percent of base salary toward the cost of health care coverage under the SHBP and the SEHBP. Employees of the State, local governments, and board of educations who become members of a State or locally-administered retirement system on or after the bill’s effective date would be required to pay in retirement 1.5 percent of their pension benefit toward the cost of health care coverage under the SHBP and the SEHBP. For State and local government employees and retirees and for board of education employees, this amount will be in addition to any other amount that maybe required through the collective negotiations process for employees with a majority representative for collective negotiations and, for those without such a representative, through the application of the terms of a collective negotiations agreement upon them. The contribution required for new State employees in retirement will not be waived for a retiree who participates in the New Jersey Retirees' Wellness Program.
2) local governments, including local boards of education, will be able to limit, through collective negotiations agreements with their active employees, the choice of plans offered by the SHBP or the SEHBP.
3) changes in the provision of health care benefits through the SHBP and the SEHBP that are included in collective negotiations agreements between the State and its employees will be applied to local government employees including school employees at the same time and in the same manner as to State employees.
4) after the bill’s effective date, enrollment in the SHBP will be limited to a person who: 1) is a full-time appointive or elective officer of the State or local government whose hours of work are fixed at 35 or more per week, a full-time employee of the State, or a full-time employee of an employer other than the State whose hours of work are fixed by the governing body at not less than 25 per week; or 2) an appointive or elective officer, an employee of the State, or an employee of an employer other than the State who has or is eligible for health benefits coverage in SHBP on that effective date and continuously thereafter. The bill similarly limits enrollment in the SEHBP to persons employed full-time whose hours of work are fixed by the governing body at not less than 25 per week.
5) the incentive that a public employer may provide to an employee who waives health care benefits coverage under any plan or program offered by the employer cannot exceed 25% of the amount saved by the employer or $5,000, whichever is greater. The current limit is 50% of the amount saved by the employer.
6) multiple coverage in the SHBP and the SEHBP will not be permitted in accordance with the rules and regulations promulgated by the State Health Benefits Commission and the School Employees’ Health Benefits Commission.
This bill is identical to Assembly Bill No. 2460, as also reported by the committee.
FISCAL IMPACT:
The Division of Pensions and Benefits in the Department of the Treasury estimates that the provision of the bill requiring active employees of local government entities and boards of education to contribute 1.5 percent of compensation for health care benefits could result in savings to those entities and boards of $314 million in State Fiscal Year 2011, $324 million in Fiscal Year 2012, and $333 million in Fiscal Year 2013. This estimate assumes a July 1, 2010 effective date for the bill and that compensation for public employees will increase 3 percent annually. State employees currently contribute 1.5 percent of pay, which for FY 2010 equals approximately $81.3 million. No additional estimates concerning the other provisions of the bill have been provided by the division.
The OLS notes that these savings will begin to be realized upon the expiration of collective negotiations agreements, and the local government entities participating in the SHBP and the SEHBP may realize additional savings through the implementation of the various other provisions of the bill. However, the OLS cannot estimate those savings because information and data is not available. The savings to be realized by any one local government entity or board of education will depend on the particular circumstances of that entity or board.
The OLS notes that the State may realize some additional savings from the provision of the bill concerning the definition in SHBP of full time as 35 or more hours of work per week for appointed or elected officials, and the provision concerning waivers of health care benefits coverage.
With regard to the contribution in retirement required of future employees of the State, local government entities, and boards of education, a fiscal impact cannot be determined because the impact will occur many years after the bill’s effective date.
ASSEMBLY APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE, No. 4
STATE OF NEW JERSEY
DATED: MARCH 18, 2010
The Assembly Appropriations Committee reports favorably Senate, No. 4
The bill makes various changes concerning payments to public employees for unused sick leave, carrying forward of vacation leave by public employees, sick leave for injury while in State service, and accidental and ordinary disability retirement for members of the Public Employees’ Retirement System (PERS) and the Teachers’ Pension and Annuity Fund (TPAF).
Specifically, the bill provides that:
1) supplemental compensation for accumulated unused sick leave payable to any new local government or school district officer or employee cannot exceed $15,000 and can only be paid at the time the officer or employee retires.
2) new local government and school district officers and employees may carry forward vacation leave for only one successive year, except that vacation leave that cannot be used because of an emergency declared by the Governor could accumulate subject to certain limits.
3) the sick leave injury program for State employees will no longer be available for employees who are injured or who become ill directly as a result of State employment after the bill’s effective date, which is 60 days after enactment or after the expiration of current collective negotiations agreements.
4) accidental and ordinary disability retirement for new members of the TPAF and PERS will no longer be available and those new members would be eligible for disability insurance coverage similar to that provided by the State currently to individuals enrolled in the Defined Contribution Retirement Program.
This bill is identical to Assembly Bill No. 2459, as also reported by the committee.
FISCAL IMPACT:
The OLS notes that the limit on payments for accumulated unused sick leave and the limit on vacation leave carry forward applies to new employees of local government entities and boards of education. While savings may be realized by some local governments and boards of education, the savings cannot be calculated because no information or data is available on these benefits. The savings to be realized by any one local government entity or board of education will depend on its particular circumstances.
The termination of the State’s sick leave injury (SLI) program may result in savings of approximately $16.8 million in State Fiscal Year 2012 based on the annual growth in program costs from Fiscal Year 2007 to Fiscal Year 2009. Termination of the SLI program may shift costs of the SLI program to the workers’ compensation program by an unknown amount. Those who would have applied for SLI benefits will have to apply for workers’ compensation benefits, but it may be more difficult to qualify under workers’ compensation.
The OLS cannot calculate the fiscal impact to the State, local government entities, or boards of education from the elimination of disability retirement in the PERS and TPAF. The Department of the Treasury has not provided information regarding the cost of long term disability insurance or an estimate of the impact on the employers’ contributions to the PERS and TPAF.
