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“ We have established this as a fiduciary fund. It’ s not about taking over the pension system,” PBA Director of Government Affairs Rob Nixon accentuated.“ It’ s about fully funding the system. Fiduciaries directing the full-funding obligation gives us a special level of protections and really makes this bill different than anything that has ever come through this committee.”
As a reminder, the PFRS Governance and Investment Act would have its own board made up of employees and employers and be independent of political interference. The board would have police and fire representatives elected by the members, as they are now, but also have professionals – including an executive director, general counsel and chief investment officer – rather than members of state government making all the decisions.
“ Everywhere pension funds are managed by police and fire, they are in better shape.”
Senate President Steve Sweeney
And if there’ s any question about the ability to bring PFRS to fully-funded status, consider that if the PFRS became an independent system, it would be the 28th largest of its kind in the U. S. The new system would be large enough to attract the best investment opportunities and rebates on the market, even the same as the California Public Employee Retirement System, the biggest in the country.
“ It puts day-to-day management of the system in the hands of professionals, whose job is to come to work every day and think about how the PFRS can make money,” Nixon added.
Nixon also pointed out that the independent PFRS system will give the board the authority to adjust benefit levels, including restoring COLA, and whereas the current system requires municipalities to make their annual pension payments on April 1, the new plan will require making quarterly payments.
Since the veto, work has been done to strengthen the failsafe aspects of the plan and effectively make it a better bill. Questions from adjoined parties like the NJ League of Municipalities have contributed to the revisions, including a half-dozen amendments strengthening the PFRS board’ s accountability and training to ensure that the board has the proper oversight.
“ We have spent a lot of years in a lot of meetings and have done a lot of research to come up with a bill that reflects best practices of managing pensions systems,” Nixon emphasized.“ The state realizes this is not what the state does best. It’ s not an investment manager. It’ s not good at crafting policy quickly. This isn’ t looked upon in Trenton as an outside-the-box way to manage PFRS. I’ m really very confident the legislature gets that.”
Good bill hunting
For all the evidence and advocating, the Senate apparently didn’ t need extensive testimony to get the new bill. Assigning it as Senate Bill 5, in fact, was a high-five.
“ When we give it a low number, those numbers are reserved for priority bills,” Senator Sweeney confirmed.“ I think it’ s only fair to police and fire who managed their pension responsibly.”
Any pension-related bill is first presented to the Senate State Government Committee, then to the Budget Committee. Nixon characterized each of the hearings as in and out in a flash, with just a few minutes of testimony.
At the State Government Committee hearing, the unions acquiesced to the NJ League of Municipalities to testify first. Then, Donnelly, Colligan and NJ FOP President Bob Fox presented,
From left, NJ State PBA Director of Government Affairs Rob Nixon, President Pat Colligan and FMBA President Ed Donnelly prepare to reintroduce the PFRS pension bill at the Senate State Government Committee meeting on Feb. 1
confirming the attributes of the bill. A welcome addition turned out to be Professional Firefighters Association of New Jersey President Dominick Marino joining the public safety position, after the PFANJ expressed opposition last year.
What ultimately impressed Colligan was not just that the State Government Committee voted unanimously to approve SB5, but that one of the committee Republicans who had voted against the bill last year changed his mind in this phase.
“ Even though it went through the Senate unanimously last year, this time there were less questions,” Colligan observed.“ We know it’ s a good bill. This was not crafted in a few weeks or a few months. It is years in the works. It is not reinventing the wheel. It’ s the best parts of other wheels.”
The Senate State Government Committee hearing culminated with some high-fives, pats on the back and, short of the cigars, the type of rejoicing that often comes with the birth of a baby. It might have felt that way, and accordingly, the elder statesmen offered the appropriate appraisals.
“ First of all, it showed a lot of long-term thinking correcting a long-standing problem,” Senator Kean commented.“ This is how we come together to find a solution that will stand the test of time. The bill has earned, and deserves, bipartisan support and should be done quickly.”
Sweeney indicated he is very enthused about where PFRS management is headed.
“ Everywhere pension funds are managed by police and fire, they are in better shape. The proof is in the pudding,” the Senate
32 NEW JERSEY COPS ■ FEBRUARY 2018