Senate Passes Pension & Benefit Reforms Unanimously
Tuesday, February 23, 2010

MEMORANDUM

TO: Members of the New Jersey Senate

FROM: Christina M. Genovese, Director, Government Relations, CCSNJ

RE: S-2 (Scutari/O’Toole); S-3 (Doherty/Whelan); S-4 (O’Toole/Buono); SCR-1

(Sweeney/T. Kean)

DATE: February 22, 2010

The Chamber of Commerce Southern New Jersey strongly supports S-2 (Scutari/O’Toole); S-3 (Doherty/Whelan); S-4 (O’Toole/Buono); SCR-1 (Sweeney/T. Kean), which is the four bill package that will make changes to state employees’ benefits. The Chamber has been a strong and consistent voice in the need for state government to bring spiraling employee related costs under control. We commend Senate President Sweeney and the sponsors of these bills for making this complex and controversial issue a priority.

We support S-2 (Scutari/O’Toole), which makes several changes to the state pension system by: limiting eligibility into PERS/TPAF to full time employees; enrolling part-time employees, new elected officials and new full-time appointed employees in the Defined Contribution Retirement Program; basing membership eligibility into PERS/TPAF on hours worked weekly; rolling back n/55 to n/60 (which will negate the 9% pension boost given in 2001); changing the pension benefit calculation to the highest five years of service from the highest three years; and requiring designation of one position for enrollment in the pension system, amongst other actions.

The comprehensive measures outlined in S-2 (Scutari/O’Toole) mirror many of the recommendations made by the Chamber in our Board Council Report and encompass almost all of the pension reform recommendations made by the Joint Legislative Session on Public Employee Benefits.

We also strongly support Senators Doherty and Whelan’s bill, S-3, which would make several changes to employee health benefits by: requiring state employees, local government employees and employees of school districts to pay 1.5% of their base salary towards health benefits (after the expiration of their current contract); requiring these employees to pay 1.5% of their base pension towards health benefits when they retire; allowing local employers to prospectively provide monetary incentives to waive SHBP coverage and capping the incentive amount at $5,000; and prohibiting multiple coverage in SHBP and SEHBP as an active employee, retiree or dependent, amongst other provisions.

Health care costs represent a growing expense to all employers. S-3 (Doherty/Whelan) will save significant dollars and provide a more balanced burden between the employer and the employee by requiring employees to contribute to their health care costs and making entry into the state health benefits system more restrictive.

Senate Majority Leader Buono and Senator O’Toole should also be commended for introducing S-4, which would implement several other recommendations made by the Chamber, such as: capping the payout amount of unused sick time for local and school district employees at $15,000; and limiting accumulation of unused vacation time. These reforms simply make sense and will undoubtedly save taxpayer dollars.

The last constitutional amendment, SCR-1 (Sweeney/T. Kean) would phase-in a requirement that the State pay the full amount of its pension obligation each year. This measure will no longer allow the State to defer pension payments during difficult budget years.

The Chamber respectfully offers four recommendations that would strengthen these bills, as currently written. They are:

S-2 (Scutari/O’Toole):

· Making the proposal designating one position per employee for PERS/TPAF enrollment a requirement for current employees, as well as future employees.

· Making the proposal to change the pension benefit calculation to the highest 5 years of service a requirement for current employees, as well as future employees.

S-3 (Doherty/Whelan):

· Instead of a 1.5% contribution of total base salary to health care benefits, require a 10% contribution on the total health care premium cost.

· Instead of a 1.5% contribution of total pension benefit to health care benefits for retirees, require a 10% contribution on the total health care premium cost for retirees.

In conclusion, these bills will make important incremental changes to certain employee benefits that will, in the long run, save taxpayer dollars. We urge you to vote “yes” on this four bill package and commend the bill’s sponsors for their commitment to the taxpayers of New Jersey.