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June 20, 2011

Re:      Pension and Health Benefit Reforms Update
            I.        Senate Passes Pension and Health Benefit Reforms
            II.        Mayors testify before Assembly Budget Committee


League Executive Director Bill Dressel was joined by Mayors McDonough of Hope, Diaz of Perth Amboy, Hawkins of Orange, Gerbounka of Linden and Maley of Collingswood before the Assembly Budget committee in support of A-4133, which establishes imporant pension and health benefits reforms.

 

Dear Mayor:

Today the Pension and Health Benefit Reforms took a step closer to passage.  The actions today by both the full Senate and the Assembly Budget Committee in advancing these reforms are key steps to assure for the sustainability of these systems and a key tool for local governments.  Local governments and our taxpayers need relief.  Approximately 70% of local government costs are tied up in personnel and personnel related expenses.  With arbitration reform having been enacted, these are the prime remaining drivers of these costs are pension and health insurance costs.  S-2937 and A-4133 are much needed reform.

The League commends Speaker Sheila Oliver, Senate President Sweeney and Governor Chris Christie for their leadership in championing the bipartisan Pension and Health Benefit reforms while achieving an important balance for all the major stakeholders.   The League also commends and thanks the others sponsors of S-2937 and A-4133, including Assemblymen Louis Greenwald and Declan O’Scanlon and Senator Joseph Pennacchio.

I.          Senate Passes Pension and Health Benefit Reforms

Today, the full Senate approved S-2937 by a vote of 24-15 as follows:

Voting in favor of the reforms: Addiego (R-8), Allen (R-7), Bateman (R-16), Beach (D-6), Beck (R-12), Bucco (R-25), Cardinale (R-39), Ciesla (R-10), Connors (R-9), Doherty (R-23), S. Kean (R-11), T. Kean Jr. (R-21), Kyrillos (R-13), Madden (D-4), Norcross (D-5), O'Toole (R-40), Oroho (R-24), Pennacchio (R-26), Ruiz (D-29), Singer (R-30), Stack (D-33), Sweeney (D-3), Van Drew (D-1), and Whelan (D-2).

Voting against the reforms: Buono (D-18), Codey (D-27), Cunningham (D-31), Gill (D-24), Girgenti (D-35), Gordon (D-38), Greenstein (D-14), Lesniak (D-20), Sacco (D-32), Sarlo (D-36), Scutari (D-22), Smith (D-17), Turner (D-15), Vitale (D-19), and Weinberg (D-37).

Senator Rice did not vote.

In addition to considering S-2937 the Senate introduced and approved S-2959, which revises the requirement that public employers provide certain health benefit plans to public employees.  According to press reports, S-2959 would repeal the out-of-state network section (Section 76) of S-2937/A-4133.  It would be replaced by language that would direct the new health care boards to create insurance plans that would specifically include only in-state providers, and other plans that would include coverage for out-of-state providers.  No employee would be forced to choose the in-state option.  Subscribers to the in-state plan would be allowed to seek out-of-state care on their physician's certification that no qualified providers exists in-state who can care for the patient's condition.  As with the original language; primary and emergency care would be exempted. Subscribers to the in-state plan who currently see an out-of-state specialist also would have that relationship grandfathered.  We will provide additional information on S-2959 when the text of the bill becomes available.

The bill now awaits a vote by the full Assembly on Thursday.

II.        League Supports Progress on Pension and Health Reform

A panel of Mayors testified before the Assembly Budget Committee in support of A-4133, which provides vital reforms to the State Health and Benefits systems.   League Executive Director Bill Dressel was joined by Orange Mayor Eldridge Hawkins, Perth Amboy Mayor Wilda Diaz, Linden Mayor Richard Gerbounka, Hope Mayor and Past League President Timothy McDonough and Collingswood Mayor James Maley in support of A-4133. 

The League of Municipalities has long advocated for pension and health benefit reforms.  While pension and health benefit costs are one of the main cost drivers for municipal budgets, they are generally outside the municipality’s control.  These costs serve to drive up local costs which in turn force cuts elsewhere in the budget, often to valued and vital public services.

Since the passage of the 2% hard cap last July, nearly every municipality in the State has undergone a budget process without the overwhelming majority of the management reforms tools that were promised.  Many have been forced to severely reduce vital services, including public personnel reductions, and make other difficult and often draconian budget choices.  Pension and Health Care reforms are very difficult issues to tackle in a manner that ensures the financial solvency of the pension systems so they will exist in the future without over burdening municipalities and tax payers. The League applauds the bipartisan efforts of those who can craft such legislation which would accomplish this while protecting our current retirees and grandfathering those eligible for retirement by not breaking our commitment to them.

We anticipate A-4133 being released from the Assembly Budget and Appropriation Committee later today.  The bill is scheduled for a full vote of the Assembly on Thursday, June 23, 2011.

If you have any questions or need additional information on the Pension and Health Benefit reforms please contact Lori Buckelew at lbuckelew@njslom.com or 609-695-3481 x112.

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

 

 

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