NJ Governor Chris Christie (Hoboken Condos/Flickr)
Three bills providing for sweeping reforms of New Jersey's pension system passed the State Senate unanimously yesterday, while a proposed constitutional amendment was scheduled for a Monday public hearing. The Assembly will start considering its own legislation on Thursday.
The three bills, which all passed 36-0, would mandate that all workers contribute 1.5 percent of their salaries toward their own health-insurance premiums, limit sick-time cash-outs to $15,000, require that a worker work 35 hours a week (32 weeks at local levels) to be eligible for the defined-benefits plan, and create a new defined-contribution plan for part-time workers. Both state and local workers are affected, in contrast to previous proposals that affected state workers only.
Hundreds of unionized workers jeered and chanted outside the Statehouse, while their leaders derided the bills as "sound-bite politics." But they clearly have few friends. Two State Senators, both Democrats, said essentially that the State must act now, or else the pension system will collapse. The Star-Ledger (Newark), northern New Jersey's largest paper, hailed the measures as "a modest step toward fiscal sanity."
In fact, The Star-Ledger suggested that when the Assembly takes up the measures, they should re-examine the exemptions for current workers and perhaps say that they can only apply beyond a certain age and term of continuous service. They also recommended forbidding a worker to cash out his unused sick time, which workers in the private sector are not normally permitted to do at retirement or other severance. (A worker may cash out vacation time but not sick time.)
Assembly Speaker Sheila Oliver mentioned two questions that she had about the measures. One is whether a worker who might work three jobs, all part-time but adding up to 32 or 35 hours a week total, would still be considered "part-time" because he or she did not work the minimum number of hours per week at any one of these jobs. Another is why workers at independent authorities should be left out, when their inclusion might save the State significant additional sums.
The last measure, to amend the Constitution, would actually involve placing a public question on the November election ballot. It would lay the State under a Constitutional obligation to make full annual payments to the pension fund. The State has not been making these full payments since 2004, with the result that the pension system is underfunded by more than $34 billion, or half its value.
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Comments
The state has ignored funding the pension plan as required and created this problem. If yearly funding had been made, the interest and investment income would have covered current pension costs and thereby reducing pension deficits as a whole.
Something had to be done. Let's hope this works.
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