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February 19, 2009

Re: A-3688 (Cryan)/S-14 (Codey) Reduces Required Local Employer Contributions to PERS and PFRS for State Fiscal Years 2009 through 2011.

Dear Mayor:

We have heard that there are insufficient votes in the Senate to pass S-14, the new Pension Payments Deferral Option bill. This bill includes the provisions that were added to the Assembly bill, A-3688, at our request.

Even if you do not plan on using the deferral, it is now imperative for all to contact their State Senators and urge them to support the bill.

In good faith, the bills’ sponsors have listened to our original concerns and have incorporated the remedy to those concerns into their legislation. Now, in good faith, we ask all to get behind these bills. Without this option, many of your colleagues will be forced to make budget decisions that will jeopardize vital public services.

In their current form, the bills will permit local employers to contribute more than their reduced required contributions to the Public Employees' Retirement System (PERS) and the Police and Firemen's Retirement System (PFRS) during State fiscal years 2009 through 2011 and provide for the calculation of separate resultant unfunded liabilities for each employer.

An employer wishing to pay more than the minimum contributions may elect to pay 75% or 100% of the total required contribution for State fiscal year 2009, 80% or 100% for State fiscal year 2010, and 90% or 100% for State fiscal year 2011. The actuaries for PERS and PFRS will determine for each employer the unfunded liability for any reduced contributions, which liability will be paid by an employer over a period of 15 years.

We believe that the Governor will highlight this matter in his March 10 Budget Address to the Legislature and he could ask for both Houses to move on this at their March 16 sessions.

We, further, expect the proposed Budget to include across-the-board cuts that would, almost certainly, include further reductions in municipal property tax relief funding. That would make the deferral option even more vital to many members of the municipal family, all around the State.

Please contact your State Senator and communicate the absolute need for the option, if all municipalities are to continue to be able to deliver essential public services to their citizens, at a time when we are all seeing daily reports of foreclosures, job losses and business failures for both large and small employers.

For more information, contact Jon Moran at 609-695-3481, ext. 121.

Very truly yours,


Hon. Timothy C. McDonough                                                  William G. Dressel, Jr.
President, NJLM and Mayor, Hope Township                            Executive Director



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