Pension/Benefit Update

Posted · Add Comment

Last week Commissioner of Education Bret Schundler testified before the Senate Budget and Appropriations Committee on Governor Christie’s Budget Proposal ( The Commissioner referenced a “toolkit” of reforms that the Christie Administration will be proposing to help schools keep costs down.

The Commissioner discussed the Governor’s intention to propose certain changes to the collective bargaining laws school pay structures and pension/health benefits for current school employees. The Commissioner discussed the Governor’s proposed reforms as a way to avoid the actual implementation of staff layoffs and referenced the fact that the targeted date of some of the Governor’s proposed reforms would have an August 1st effective date.

The Commissioner has stated that the Governor seeks to propose a change in the retirement calculation for current employees similar to the law that was passed for employees who enter the pension system after May 22 2010. He further stated that their goal is to eliminate free health benefits in retirement by requiring some co-payment obligation for current employees who do not retire by August 1 2010. He has acknowledged that legislation is necessary to enact these changes.

As a result of these comments school employees statewide have been in a panic for more information and advice on what they should do. Right now NJPSA wants you to understand the following points before you react to this latest development:

  1. The Governor’s Proposal is just that a proposal. He does not have the authority to make these changes on his own. Your current pension and benefit rules are set forth in state statute. In order for any changes to be put in place legislation must be filed go through the committee process and be favorably voted upon by BOTH Houses of the Legislature.
  2. As of today there is no bill on file reflecting these proposed changes. Since the Legislature is on a formal “break” in order to deliberate on the State Budget there are no committee hearings or voting sessions. No bills can be introduced until the Legislature is back in session. That date for return is May 10th.
  3. There is some new legislation being developed in the area of pensions. None of these new bills have been formally filed. Thus the legislation cannot be considered let alone acted upon until the Legislature returns in May. One pre-filed bill is A-2620 (O’Scanlon) which proposes to change the pension formula for current employees. This bill would change the retirement calculation relying on a denominator of 60 not the current calculation using 55 as the denominator. As written A-2620 would apply to the future service of current employees after January 1 2011. It does not include a change in the calculation of final average salary from the highest three years to the highest five years as has been mentioned in media coverage this week. Currently there is no Democratic legislator that is co-sponsoring this bill.
  4. Legislation changes during the legislative process often dramatically. The Governor’s Proposals are a first step in the consideration of an issue. The Legislature often changes legislation from an original idea. You will have time to weigh in on this issue in fact NJPSA urges you to begin contacting your legislators now.
  5. There are legal safeguards in place to protect your hard earned pensions and benefits – do not forget that fact. Over the years as the Legislature has attempted pension and benefit reforms it has sought legal advice from the Attorney General’s Office and the Office of Legislative Services the nonpartisan resource arm of the Legislature. These opinions as well as the laws of contract and collective bargaining include strong safeguards against the Governor’s proposed action. Even if the Governor can convince the predominantly Democratic Legislature to pass his reforms a court challenge is likely.

NJPSA does recognize the importance of the issues at stake to you and your families. As a result we have scheduled several workshops to assist you in obtaining the latest information understanding the retirement process and in actually assisting you as you prepare for your retirement. The next workshop on Monday May 17 2010 from 4:00 p.m. to 6:00 p.m. at the FEA Conference Center 12 Centre Drive Monroe Township is full. NJPSA has scheduled an additional session on Thursday June 10 2010 from 4:00 P.M. to 6:00 P.M.

To register contact NJPSA at 609-860-1200. This free workshop on 6/10 is limited to NJPSA members.

In these difficult times NJPSA urges you to get the facts before you act.