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June 25, 2015

Re:      Sunset of certain provisions of c. 78 Pension and Healthcare Reforms

Dear Mayor:

As you may recall P.L. 2011, c. 78 had a sunset provision on the required healthcare contributions.  The law included a sunset provision that the healthcare contributions required by Section 39 expire four years after the effective date of when employees began contributing.  After the full implementation of contributions set forth in section 39 healthcare contributions becomes a negotiated item with those contribution levels becoming the base of negotiations.  For example, if employees began their c. 78 contributions on Jan 1, 2012 then healthcare contributions do not become a negotiated item until after Jan 1, 2016. 

N.J.S.A. 40A:10-21.2 states (emphasis added):

A public employer and employees who are in negotiations for the next collective negotiation agreement to be executed after the employees in that unit have reached full implementation of the premium share set forth in section 39 of P.L.2011, c.78 (C.52:14-17.28c) shall conduct negotiations concerning contributions for health care benefits as if the full premium share was included in the prior contract. The public employers and public employees shall remain bound by the provisions of sections 39, 42, and 44 of P.L.2011, c.78 (C.52:14-17.28c, C.40A:10-21.1, and C.40A:5A-11.1), notwithstanding the expiration of those sections, until the full amount of the contribution required by section 39 has been implemented in accordance with the schedule set forth in section 42.

Employees subject to any collective negotiations agreement in effect on the effective date of P.L.2011, c.78, that has an expiration date on or after the expiration of sections 39 through 44, inclusive, of P.L.2011, c.78, shall be subject, upon expiration of that collective negotiations agreement, to sections 39, 42, and 44 until the health care contribution schedule set forth in section 42 is fully implemented.  After full implementation, those contribution levels shall become part of the parties' collective negotiations and shall then be subject to collective negotiations in a manner similar to other negotiable items between the parties. A public employee whose amount of contribution in retirement was determined in accordance with section 42 or 44 shall be required to contribute in retirement the amount so determined pursuant to section 42 or 44 notwithstanding that section 42 or 44 has expired, with the retirement allowance, and any future cost of living adjustment thereto, used to identify the percentage of the cost of coverage.

It is important to note that P.L. 2010, c. 2 requires that all employees must contribute a minimum of 1.5% of current base salary towards their health benefits cost.  C. 78 did not remove this requirement.  Also, it does not preclude an employer from requiring a health care contribution greater than 1.5% of the employee’s base salary.
We strongly suggest you discuss this with you labor attorney.

If you have any questions or need additional information please contact Lori Buckelew at 609-695-3481 ext. 112 or

Very truly yours,

William G. Dressel, Jr.
Executive Director



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