NJASA

 

 

 

It is the end of August and the heat of summer will continue until September 21, the official beginning of autumn. However, issues affecting active and retired educators have been on fire, and their heat will continue to be felt long after the summer ends.

 

So for those of you who have been enjoying the summer and not paying much attention to the news, let’s bring you back to the realities of the pension problems affecting your current or future retirement.

 

Since early June, the New Jersey Supreme Court has rendered a decision negatively affecting the funding of the  pension plans covering educators and, by extension, negatively affecting those educators covered by those pension plans; it has not acted on an appeal affecting the COLA payments of all retirees, although it has agreed to review and issue a decision in the case; and the New Jersey Public Employees Relations Commission (PERC) has rendered a decision affecting health benefit payments by active educators. Both Senator Steve Sweeney, Senate President, and Assemblyman Vincent Prieto, Assembly Speaker, have floated plans to deal with the on-going pension funding crises. Sweeney has suggested the federal government provide low-interest loans to those states, like New Jersey, which are faced with large pension deficits, while Prieto has quietly discussed a plan with employee union leaders that would increase funding over the next five years to help defuse the crises.  

 

A second decision relating to Chapter 78 was rendered by the Public Employees Relations Commission (PERC) in mid-August which interpreted a section of the law, called the “sunset” provision. This provision allows for the modification of another section of the act which blocks collective bargaining of the amount employees are required to pay for their health benefits.  Under the law, employees are to pay a percentage of the cost of their health benefits for a period of at least four years. That percentage is to range from 5% to 35% of the cost of their health benefits, but can be no less than 1.5% of salary. The section of the law containing this contribution requirement was to “sunset” four years after the date of the passage of the legislation (June 28, 2015) or four years after any collectively bargained contract that began after the original date of the legislation (June 28, 2011). Thus, a newly effective collectively bargained contract (1) that takes effect after June 28, 2015 and replaced a contract that became effective on July 1, 2011 or (2) that takes effect four years after its effective date if that date was after July 1, 2011 may have different contribution rates than those in Chapter 78. However, without any contract modification, the contribution rates remain the same as those in Chapter 78.