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Reform plan would shift around $1.35 billion in costs for retired teachers’ health benefits from state to local governments

TRENTON – Municipalities say local savings from any changes to public workers’ benefits should not be used to help the state afford its long-neglected pension payments.

At a marathon Assembly Budget Committee hearing on Gov. Chris Christie’s $33.8 billion budget plan, Piscataway Mayor Brian Wahler said “it’s frustrating to see” a state study commission recommend that local governments start funding health-care costs for retired teachers, currently a state obligation.

“Don’t steal, hijack our funds,” said Wahler, president of the New Jersey State League of Municipalities.
Wahler said pensions for county and municipal employees are better-funded because regular contributions to the system have been made and that 250 municipalities are self-insured for health coverage because it costs less than the State Health Benefits Plan.

The plan would shift $1.35 billion in costs from the state to local governments in 2016.

“They want to take that money to shore up the state pension system. It’s a rope-a-dope plan,” Wahler said. “Basically, you’re going to once again dip your hands into the taxpayers’ wallets at the local level to shore up the state’s problem.”

Christie’s Pension and Health Benefit Study Commission in its February report answered the anticipated criticism about why local employees should be involved in fixing a state problem.

“The answer is that this is not a state-level only problem,” says the commission’s final report. “It is merely a matter of time before the increased health benefits costs that crowded out state pension funding have the same effect at the local level.”

The state says it will be subsidizing what would otherwise be a $4.6 billion local obligation in 2016, unless changes to benefits are made: $2.5 billion for teacher pensions, though only around 30 percent of that will be paid; $1.4 billion for retired teachers’ health benefits; and $750 million for Social Security contributions.
The Assembly Budget Committee is holding its last of three public hearings on the budget at the Statehouse. The Senate budget panel will hold its second and final hearing Wednesday at Rowan University at Gloucester County in Sewell.

The hearings typically feature a long line of people advocating for increased funding for their specific areas of concern – mental health, literacy, programs for the disabled, hospitals, education, history and so forth.
Tuesday’s hearing was the same, so much so that when Legal Services of New Jersey senior vice president Claudine Langrin said her group isn’t asking for more money this year, Schaer drew a large laugh by quipping, “You’re not asking for more money? What a pleasure to see you.”

Legal Services will seek more money next year, Langrin said.

The hearing, which will probably extend into the early evening, can be heard live through this link:

Michael Symons: (609) 984-4336;






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