LEGISLATIVE REPORT
The Pension Commission Report aftermath
Nobody should be surprised by the timing or
content of the governor’s Pension and Health Benefit Study Commission report. Releasing the
report on the day the governor was to give his
annual Budget Message to the NJ State Legislature
gave substance to an otherwise less- than-noteworthy speech. Releasing the report the day after
Judge Jacobson ruled the governor broke the law
ROB NIXON
by not making a full pension payment gave the
governor the political ammo he needed to claim
again that he can’t afford to fund the pension obligation without
bankrupting the state.
What was shocking about the Commission Report, and the
governor’s speech, was the depth to which the New Jersey Education Association (NJEA) had been engaged in negotiations
with the Commission to end pensions as we know them. The
State PBA was aware the NJEA had been meeting with the Commission for several weeks to discuss its pension. There can be little debate that the Teacher’s Pension and Annuity Fund (TPAF)
is in financial trouble. TPAF is grossly underfunded as a result of
the state’s failure to make pension contributions (unlike PFRS,
the teacher pension plan is paid exclusively by the State not by
local government) and the 2001 law that increased teachers’
retirement allowance and cut their pension contributions.
Everyone was shocked, however, when the governor boldly
stated that a “deal” had been struck with the NJEA to implement
the recommendations of the Commission referred to as the
“Roadmap.” The NJEA immediately denied a “deal” was in place
to do anything. But a three- page memo from the Governor (see
http://www.state.nj.us/treasury/pdf/NJEA-CommissionRoadmap-Final_February2015.pdf) and signed by the NJEA and
the Commission leadership suggest that this argument may be
more about semantics than the reality of what is being negotiated behind the scenes. The proposed Commission report and
“Roadmap” would essentially end every public employee’s pension, including PFRS, and the State PBA immediately went on
offense to keep members out of the NJEA’s “deal.”
The State PBA knew the direction the Commission wanted to
head in. When State PBA President Colligan, Executive Vice President Kovar and I met before Christmas with Commission leadership, they were clear that regardless of how healthy PFRS is, it
would be recommending a dramatic break in providing retirement benefits to public employees. The Commission never did
an analysis of PFRS, nor did it make a distinction about how
PFRS funding is entirely unrelated to the state’s pension deficit.
Despite a professional and engaged debate, we made our opposition to any pension changes clear and continued meeting with
legislators to get ahead of the release of the report.
The Commission report proposed what we expected from
that discussion. In fact, five recommendations were made to
establish a “hybrid” pension plan for all public employees. T B