Questions swirl on Christie plan for pensions; ‘road map’ could divide unions

A day after Governor Christie announced what he is calling a “road map for reform” on public employee pensions and health care, legislators and union leaders aren’t sure what exactly the next step is, but they say any progress is most likely to hinge on negotiating changes to employee health benefits.

And if Christie can get the teachers union — the state’s largest and most politically powerful — to agree to health care concessions, that could help him pressure other unions representing state workers to follow suit when their contracts are up in June.

Related: Christie tells town hall crowd he’s focused on N.J.

“The key to this legislation is an understanding that there’s a change in the health care plan. Without that, I don’t think there’s going to be an agreement,” said Assembly Minority Leader Jon Bramnick, R-Union. “If you can’t get past Square One, you’re done.”

Union and legislative leaders on Wednesday were still reading through and processing the dense, 50-page pension commission report, plus the governor’s 2016 budget. They were largely unable to reach a consensus on how, or if, the administration’s recommendations will proceed.

And looming over the governor’s proposal is a Superior Court judge’s order from Monday that Christie must work with the Legislature to find nearly $1.6 billion to restore the pension contribution the governor cut from the 2015 budget. Although the administration has said it will appeal the decision by Judge Mary C. Jacobson, many state and union leaders believe the focus should be on fulfilling the state’s prior pension commitment, which Christie has touted across the country as a fix to New Jersey’s long-neglected retirements benefit system.

Faced with lagging economic growth, off-the-mark revenues and ever-increasing pension payments, Christie, a Republican considering a possible presidential run, is looking to drastically reform the pension reforms he signed into law in 2011.

Christie laid out in his budget address Tuesday what he called an “unprecedented accord” with an old foe, the New Jersey Education Association, to freeze current pensions and replace them with a new plan that is similar to a 401(k) in the private sector. The existing plan and the new one would be transferred to a trust overseen by the NJEA, which signed a memo endorsing the framework for more reforms.

The proposal would also require amending the state constitution, which in itself is a difficult task requiring a three-fifths majority in both houses of the Legislature and approval by voters in a referendum in November.

But between then and now, questions abound.

Legislators said cutting the cost of employee health care benefits and finding a funding source for pensions are top priorities in moving ahead, though some in leadership showed little or no appetite for Christie’s proposal.

“I’m always willing to listen,” said Assembly Speaker Vincent Prieto, D-Secaucus. “If we change this to capture cost savings, what is that impact going to be on those employees?” he added. “What does it mean to the average worker? How much more out of pocket will they pay? These are numbers that I’d have to look at before I make any decisions.”

Senate President Stephen Sweeney, a Democrat who partnered with the Republican governor to usher in pension reforms in 2011, seemed less inclined to work again with the governor since Christie skipped or slashed pension payments after drawing significant concessions from unions. The governor must make a “good-faith” effort to fund the pension system, Sweeney said.

“I’m offended that we’re renegotiating something that was already negotiated,” Sweeney said Tuesday.

Although the NJEA signed a memo endorsing the so-called road map, it has made clear that it is not fully onboard with the plan and that many details must be worked out. On Wednesday, NJEA President Wendell Steinhauer said he planned to meet with leaders from the state’s major unions to discuss the road map.

Several of those unions were unwilling to even entertain the governor’s proposals, arguing that they have held up their end of the bargain by paying higher costs for health care and retirement, yet the state has skipped its pension payments or, as in the last two years, cut its scheduled contributions to the pension system.

Jacobson, the Superior Court judge, issued her pension payment ruling a day before Christie outlined his $33.8 billion spending plan for 2016. In it he includes a $1.3 billion pension payment, still more than the current year but well below the nearly $3 billion called for in the legislative reforms of 2011.

Hetty Rosenstein, state director of the Communications Workers of America, the largest state employee union, said the union expects the governor to focus on complying with the judge’s order.

“Right now we’re looking at that decision, not a memo that was signed by another union and two handpicked millionaires selected by the governor who put out a term paper,” she said. “Let’s not get distracted here. There is a law, and the judge said you have to make these payments.”

The State Troopers Fraternal Association of New Jersey expressed resentment that the pension commission report was “kept secret” until after the governor’s budget address. In a statement, association President Christopher Burgos “vehemently” objected to any kind of pension freeze or “inferior cafeteria-style health care.”

The New Jersey State Policemen’s Benevolent Association said it has been willing to discuss some health care changes but that Christie hasn’t allowed the State Health Benefits Plan Design Committee to work with the union.

“We’re already at the table, but he has so far refused to engage in our efforts,” PBA President Patrick Colligan said. “Sadly, they won’t even cooperate to allow us to review critical costs and the state contracts that drive health care for our members.”

Colligan said his union is unwilling to budge on the pension issue.

The teachers pension fund, which is paid for by the state, has a much larger unfunded liability than the Police and Fire Retirement System, which has been paid into at the municipal level.

“Their system is state-funded and struggling due to the lack of state payments,” Colligan said. “Our pension is locally funded and in good shape. We shouldn’t be involved therefore in any legislative debate over what the state may want to do with the teacher pension fund.”

Christie’s proposals are likely to pit the unions with better-funded systems against those, like the teachers, who are worried about running out of money.

Christie’s proposals are likely to pit the unions with better-funded systems against those, like the teachers, who are worried about running out of money.

Steinhauer cited the unfunded liability — which is between $40 billion and $83 billion, depending on the accounting system — as one of the reasons his union was willing to negotiate.

“At some point, the checks will stop,” he said. “It’s about making sure our members have a pension.”

http://www.northjersey.com/news/questions-swirl-on-christie-plan-for-pensions-road-map-could-divide-unions-1.1277850