Trenton Hustles to Allow Politicians to Rejoin State Pension System

John Reitmeyer | December 15, 2017 | Politics
With minimal discussion, legislative leaders fast-track effort to allow unknown number of their compadres back into public-employee pension program

Senate President Stephen Sweeney (D-Gloucester)
Just a week after Gov. Chris Christie said the health of New Jersey’s public-employee pension system is so shaky that the state should begin moving workers into a 401(k)-style retirement plan, legislative leaders are fast-tracking a bill that would create the reverse path for some politicians.

Introduced earlier this week amid the current lame-duck session, the legislation seeks to give a small group of elected officials an opportunity to get back into the state pension system instead of only having the option of investing in a state-run defined-contribution retirement plan.

The measure won approval with only minimal discussion yesterday in the Senate Budget and Appropriations Committee, after a key leader waived a requirement that it undergo another layer of scrutiny. The bill is now on schedule to go before an Assembly committee on Monday.

Whether Christie ultimately will sign the legislation before the lame-duck session ends next month remains an open question. Christie’s office declined to comment on the pension bill yesterday.

System underfunded by as much as $90B

The fast-tracked pension legislation has emerged just a week after Christie stood alongside the leaders of his own bipartisan public-employee benefits review panel to renew a call to help save the state pension system, which is underfunded by as much as $90 billion, in part by beginning to move public employees into a 401(k)-style defined-contribution benefit plan. The panel has also urged lawmakers, so far unsuccessfully, to cut public-employee health benefits and use the savings to help pay down the pension system’s deep unfunded liability.

Christie’s reform efforts, which have also included changing the state’s pension-contribution schedule and directing state Lottery revenues into the retirement funds, followed up on work done a decade earlier when former Gov. Jon Corzine was in office.

Among other changes, Corzine signed into law a measure that no longer allowed elected officials to enroll in the state’s defined-benefit Public Employees Retirement System (PERS), instead offering them an opportunity to get in a defined-contribution retirement plan. At the time, elected officials that were then in PERS could stay in “while that person continues to hold that elective public office without a break in service.”

The same law created one exception, which allowed lawmakers who moved between offices in the state Assembly and Senate to stay in PERS.

But under the carefully crafted bill that’s now advancing in Trenton, a small group of elected officials who had previously been in PERS but were forced out of the system after running successfully for another elected office would now be given an opportunity to get back into the troubled pension system.

They’re not saying who would benefit

It’s unclear exactly how many officials would benefit from the bill, and lawmakers are so far declining to provide any names. Senate Budget and Appropriations Committee Chairman Paul Sarlo (D-Bergen) said yesterday his understanding is that the bill would benefit “less than five” individuals.

A similar piece of legislation was introduced in 2014, with Camden Mayor Dana Redd, who is a former state senator, identified at the time as someone who would benefit from the opportunity to get back into PERS. The South Jersey Democrat is a longtime ally of Senate President Steve Sweeney (D-Gloucester), and has worked with both Sweeney and Christie on initiatives aimed at helping Camden rebound from long-simmering economic troubles. The 2014 bill was eventually withdrawn from consideration.

Redd could not be reached for comment yesterday.

Asked for the names of the officials who would benefit from the bill, Sweeney told reporters yesterday that “our guys have some (names) we can give you.” But later in the day, partisan legislative staff declined to provide any names, saying they were still trying to verify the names of the current or former lawmakers who would benefit.

Sweeney also told reporters the measure would fix “the intent” of the 2007 legislation by letting people who’ve remained in public service in New Jersey have a chance to get back into PERS.

Sweeney: ‘They were thrown out’

“It’s really the point that there were people that were in the pension system that never left, they never left public office,” he said. “They went from one office to a different office. They were thrown out and that was not the intent of the legislation.”

Sweeney, who allowed the measure to move forward in the Senate yesterday by waiving a requirement that the state Pension and Health Benefits Review Commission scrutinize it, denied the claim that adding new people into the already troubled defined-benefit retirement system would worsen the state’s underfunding problem.

“If you tell me you’re adding four or five or maybe 25 people to a pension system that has 800,000 people involved in it and that’s going to hurt the pension system, it’s not true,” Sweeney said.

Sarlo also played down the impact the change could have on the overall pension system, citing the small number of people that the bill would affect.

“Every individual impacts the liability, but it’s a handful of members,” Sarlo said.