December 1, 2009
The recent report of the State of New Jersey Commission of Investigation, titled The Beat Goes On: Waste and Abuse in Local Government Employee Compensation and Benefits demonstrated what the League of Municipalities has long argued: the State must establish reasonable benefits standards for all government employees.
As the SCI’s report notes, the League has been in the forefront of benefit and pension reform for some time. For example, the League supports a statewide cap on sick leave buyouts for local government employees. Currently, sick leave buyouts at retirement for state government employees are capped at $15,000. Both the SCI and the League agree that applying this cap at all levels, including local government, would save the taxpayers a significant amount of money.
In 2006, in response to Governor Codey’s Benefit Review Task Force, the League of Municipalities issued the Correction of Pension Errors (COPE) report. The purpose of this report was to fill in the gaps of the Governor’s Task Force report and to offer workable solutions to the problem of skyrocketing pension and benefit costs. Taken together, the SCI report and the COPE report offer a comprehensive plan to deal with the current crisis.
The SCI and the COPE report differ in one important aspect: the focus (or, in the SCI report, the lack of focus) on police and firefighter compensation and benefits. The SCI report makes scattered mention of this issue and the difference between the strict benefit limits of certain local public employees versus the police and fire employees. However, as the COPE report notes, legislative mandates have created different benefits for employees covered by Public Employee Retirement System (PERS) versus employees covered by the Police and Fire Retirement System (PFRS). These mandates have made PFRS the most expensive local pension system. For example, the retirement age of employees differ depending on the pension system. Any efforts at change must include reform of the compensation and benefits of all local government employees, including police and firefighters.
It is important to note, however, that the SCI report was not all negative. The report contains examples of several local governments that have taken the initiative and begun “direct action to rein in public employee benefits.” New Jersey is a diverse state, and different areas face very different problems. Certain reforms should have a statewide effect, such as the cap on sick leave buyouts. However, it is vital that any reform effort be flexible enough to allow local units, such as those mentioned above, the ability to implement personnel policies and other reforms that work best for them and their citizens.
The League believes that the SCI report, along with the COPE report, represents an excellent guidepost on the path towards repairing public employee compensation, benefits, and pensions. This long process has already begun with the recent reforms to our pension systems: the creation of a Defined Contribution Retirement Plan, increasing the requirements to enroll in the pension system, capping the benefit level of new members, raising employee contributions and increasing the retirement age. Many towns are contractually obligated to provide the current level of compensation and benefits. The United States Constitution prohibits any state from passing a law that would interfere with contractual obligations. Thus, we must all hone in on providing a better future for our children and grandchildren. We look forward to working with municipal officials, state legislators, and the executive branch in implementing reasonable reforms that treat public employees fairly while saving taxpayer dollars.
For further information contact Bill Dressel at (609) 915-9072 or firstname.lastname@example.org.