Governor Signs Pension Reform Legislation
Calling it an “important first step” in pension reform Governor Jon Corzine signed S-17 into law on Thursday. The bill emerged from the Special Session on Property Tax Reform. Thanks to aggressive advocacy by NJPSA the bill was substantially weakened from its original version which contained radical pension reform recommendations.
While the bill is a vast improvement certain limited provisions affect public employees. The law does the following:
- Sets up a defined-contribution plan for elected officials. Under this provision members of TPAF are specifically excluded.
- Eliminates the 4% rate on pension loans for all members including principals and supervisors. Instead a loan requested after the effective date of the law-the 30th day after the date of enactment (June 8 2007)-would have a “commercially reasonable” rate as required by the Internal Revenue Code to be determined by the State Treasurer. An administrative fee may also be charged. The 4% rate would still apply to current loans.
- Caps sick leave compensation at $15000.00 for certain board of education employees but allows grandfathering of currently accrued time. The application of this provision to principals and supervisors is unclear from the bill language which specifically excludes individuals “employed or appointed in the regular or normal course of employment.” Regulations will be developed to clarify this language and NJPSA will keep you advised of any changes.
- Restricts vacation leave only to a one-year carryover absent certain exceptional circumstances for certain board of education employees. The bill language specifically excludes individuals “employed or appointed in the regular or normal course of employment.” As regulations for the bill are developed NJPSA will keep members advised of new developments.
As more information on the regulations and other items related to this legislation becomes available NJPSA will notify members on www.njpsa.org and through regular e-mail correspondence.