Cranford Reacts to Pension and Health Care Reform Bill

Cranford residents have mixed feelings on a Senate-approved bill that would require public employees to increase contributions to their health care and pension costs. That legislation goes before the state Assembly today, clearing its final hurdle before heading to Gov. Chris Christie to be signed into law.

Some residents welcome the bill, while others believe it unfairly digs at state employees. The bill particularly angers members of the Cranford Fire and Police Departments.

Steve DiPaolo, a firefighter and bargaining representative for the Cranford Fire Department, said he's frustrated the current legislation was put forth by the state without an attempt to negotiate terms. DiPaolo stated that without the give and take between the state and the unions, the bill’s provisions feel “forced.”

“Half the provisions that I have right now as an employee I get because they were bargain privileges,” he said. “We gave something in order to take something and visa versa. Right now, there’s no give and take. It’s just being ordered down from the state level as to what’s going to happen. It’s kind of taking away not only our right to negotiate, but previous [provisions] that we have given back to get to where we are today are all null and void, it’s a moot point now."

by a margin of 24-15, with 16 Republican Senators and eight Democrats voting in favor of bill S-2937.

The bill would require teachers, state and local government workers to pay an additional 1 percent of their salaries toward their pensions as of July 1, and an additional 1 percent phased in over the next seven years for a total of 7.5 percent.

Police and firefighters would pay an additional 1.5 percent of their salaries toward their pensions for a total of 10 percent, as of July 1.  The bill would move the retirement age for new teachers and non-uniformed employees from 60-years-old to 65. To be eligible for early retirement, the employees would now have to work 30 years instead of 25.

The bill would also require the state to make its annual payment into the pension system or unions could sue to force the state to make its payments. Gov. Christie withheld a $3 billion payment from the pension fund last year, which is underfunded by about $54 billion.

The bill would also eliminate the automatic cost-of-living adjustment (COLA) for retired police, firefighters, teachers, state and local government employees in New Jersey's six pension systems. 

U.S. Senator Frank Lautenberg (D-NJ) criticized the legislation for having a detrimental impact on working families.

“The health and pension reform deal that passed in the State Senate is an attack on collective bargaining and a dramatic setback for middle-class New Jersey families," Lautenberg said via press release.  "The State House should be a place where the Governor and Legislature work to improve the lives of working families, not take away benefits from New Jersey's teachers, police, firefighters and other public employees.  Instead of balancing the budget on the backs of middle-class New Jerseyans, the Governor and Legislature should be working to make sure the wealthiest few are paying their fair share to help fix the state’s problems.” 

Gov. Christie said on Monday that the legislation would save New Jersey taxpayers "hundreds of billions of dollars." About 60 percent of the projected $122 billion total pension savings comes from the elimination of COLA, however the measure may not hold up in court.

NJSpotlight reported that both the non-partisan Office of Legislative Services (OLS) and the state Attorney General’s Office previously issued strongly worded opinions during the summer of 2006, which warned the bipartisan Joint Legislative Committee on Public Employee Benefits Reform that the state legislature had established a clear record of legislative intent that previously approved pension benefits should not be reduced.

The bill would have a more significant impact on the cost of health benefits, as it would require all public employees and certain public retirees to contribute toward the cost of health care benefits coverage based upon a percentage of the cost of coverage. Public employees could see current health costs at least doubled, or tripled in some cases.

Under the bill, all active public employees pay a percentage of the cost of health care benefits coverage for themselves and any dependents. Lower compensated employees would pay a smaller percentage, while more highly compensated employees would pay a higher percentage. The rates would gradually increase based on an employee’s compensation, at intervals of $5,000. 

Public employees currently paying 1.5 percent of their healthcare premium cost would pay 3 percent for those earning under $25,000, and up to 35 percent of their healthcare premiums for those making up to $100,000, on a sliding scale that is based on employee compensation. 

The increase to health costs would not affect current retirees, and active employees with at least 20 years of service would pay the increased contributions while still active, but would not be affected upon their retirement.

The bill currently contains two options for public workers, one where public employees could buy health insurance that would cover out-of-state treatment, or a cheaper option that would restrict employees to New Jersey hospitals, unless their case could only be handled by an out-of-state doctor.

The overall impact of the increased pension and health care contributions would range from $1,142 for a public empoyee making $25,000 per year, to $6,058 for an employee earning $65,000, according to the Communications Workers of America (CWA).

"This will cost families thousands of dollars per year and the legislation does nothing to control the cost of health benefits, it simply shifts the costs to families already struggling in this economy," said New Jersey Education Association spokesman Steve Baker.  "This should remain a subject of collective bargaining."

The New Jersey State Policemen's Benevolent Association said the proposals  ask far more of the members of the Police and Firemen’s Retirement System (PFRS) than it does of other pension systems and that it dramatically curtails collective bargaining for health benefits.

"We do not suggest that changes should not be made to strengthen our pension system or that our members are unwilling to offer local property tax relief," said State PBA President Anthony Wieners via press release.  "But we do believe strongly that police and firefighters must not be punished for the failure of government to adequately fund our pension system. We also maintain that negotiations for health benefits at the local level are already yielding significant savings for taxpayers and don’t require the Legislature’s intervention."

Officer Matthew R. Nazzaro, the President of Cranford PBA Local 52, stated that while the PBA has long supported state-wide pension reform, he believed the current legislation validated the common misconception that increasing contributions would lower taxes.

“I trust that the taxpayers are going to be excited about their taxes going down but, simply stated, the taxes will not go down,” he said. “All that’s going on is robbing Peter to pay Paul, and in doing so, violating the core fundamental rights of the collective bargaining units throughout the state, which is a real shame.”

Nazzaro stated that the bill is “one of the biggest shames” in light of the sacrifices the department made in the past year, including a pay freeze and contributing 100 percent more to co-pays and offices. He believes state politicians have done a disservice to due process, and in turn let down the people of the state.

“The money that’s “saved” is going to be shelved into something else, and no one is going to get a check in their mail saying ‘this is from police and fire benefit reform,’ that’s not going to happen.”

Patch readers and commenters gave their thoughts on the issue, with many saying they believe the problem to be a lack of accountability on the state’s behalf. Tonyski55 said in an email that while he took no issue with pension and healthcare payments, he questioned the state government’s fiscal responsibility.

“Granted many municipalities have fallen into fiscal turmoil, but the spending habits of state, and local cities not to mention the School Districts must be brought under control and remain prudent due to the free-wheeling habits of the past 30 years,” he said.

Commenter Mark W called Christie a “bully” for making public workers pay “5,000 to 10,000” more per year.

Commenter Tom stressed that, “Personal responsibility and self-reliance are what's required to repair the economic mess we're in, not more central government seizing more and more private property through taxation. That's the way to destroy a society.”  He also believed that pensions and retirement benefits should be ended in order to lessen the burden of the taxpayer.

Commenter Waveznstarz, however, was in support of the bill.

“Why shouldn't they pay more for health and pension benefits? What makes them special, nothing. Good for you Gov. Christie, keep up the good work.”

 Should the bill pass in the assembly, DiPaolo stressed that employee anger at the decision cannot deter the service the department provides to the community.

“The toughest thing is going to keep morale high and keeping our guys happy, because it’s something that’s being forced upon us, but it’s being forced upon us at a state level and not a township level,” he said. “We’ve still got to provide the same service, do the right job and do the right thing. We’re smart enough to realize it’s all on a state level.”

Nazzaro believed that any financial gains the township sees from the bill should be re-invested in the police department in order to better ensure the township’s well being by restoring boots on the ground.

“We’re down 12 percent over 3 years, we’re down 6 police officer positions,” he said. “If we are to realize savings, then I hope we are going to bring back our manpower. We need to get back to what’s important and focus on what government is there to do, and it’s to protect the people…That’s where money should be going, not to bogus programs at the state level.”