Governor Vetoes Sweeney Plan on Health Benefits for County Colleges, Employees

This is the latest skirmish over employee benefits between the first-term Democratic governor and legislative leaders from his own party

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College professor
Gov. Phil Murphy yesterday vetoed a bill that lawmakers claimed was going to save the state’s county colleges millions of dollars by switching their employees into a different state health-benefits group.

The measure had advanced with bipartisan support through both houses of the Legislature earlier this year, but had drawn strong opposition from the New Jersey Education Association, the state’s largest teachers union and a powerful Murphy ally.

In fact, the governor’s veto message echoed the union’s claim that the bill would have trampled on the collective-bargaining rights of the colleges’ union-represented employees. He also suggested more recent changes to the design of employee and retiree health-benefits plans were already delivering “much of the savings” sought through the bill.

Murphy’s veto represents the latest skirmish over employee benefits between the first-term Democrat and legislative leaders from his own party, and it drew an immediate response from Senate President Steve Sweeney, a prime sponsor of the legislation. He had claimed savings from the bill would have ultimately filtered down to college students.

“To stand with the NJEA against students is outrageous,” said Sweeney (D-Gloucester). “That’s who the benefactors are.”

Big savings were promised

The process for coming up with healthcare options for state and local government workers and school-district employees in New Jersey was last overhauled in 2011 under a bipartisan bill that was enacted by former Gov. Chris Christie and the Democratic-controlled Legislature. That process requires two panels with equal representation from labor and management to reach consensus on any changes in health benefits that affect cost or the quality of care.

One of the panels, the State Health Benefits Program (SHBP), is set up for general government workers and retirees; the other, the School Employees’ Health Benefits Program (SEHBP), caters to education workers and retirees. While county college employees are currently enrolled in the SEHBP, lawmakers sought to move them into the SHBP after that program’s plan-design committee adopted a series of change last year that resulted in no increases in health insurance premiums for 2018. By contrast, members of the corresponding SEHBP committee were deadlocked at the time on similar proposed changes, and the premiums for most education employees rose by roughly 13 percent.

Lawmakers had originally estimated that moving the county college employees out of SEHBP would save a combined $22 million annually. That projection included $4.5 million in savings for the county college employees themselves on health benefits costs, and another $17.5 million for the colleges. Lawmakers also assumed the college savings would be passed along to students in the form of relief on their ever-rising tuition bills.

But Murphy’s administration announced over the summer that the SEHBP plan-design committee had agreed to make a number of new changes to the benefits plans offered to the education employees and retirees that are covered by the group; it’s the savings from those changes that Murphy referenced yesterday in the statement he issued along with his veto of Sweeney’s bill.

Murphy and NJEA on same page

Murphy suggested that “it was widely known” as the bill was moving through the Legislature that the SEHBP was going to be able to make changes like those realized by the SHBP for 2018 under talks involving union officials and his own administration.

“As a result, much of the savings sought by this bill is already captured by the actions we have taken together,” Murphy wrote.

He also raised the issue of collective bargaining, one of the key issues that the NJEA cited in its criticism of the bill as it was moving through the Legislature earlier this year.

“While the savings sought by the bill are laudable, I have always believed that fairness demands that all parties involved have a voice in cost-saving decisions, which occurs during the normal collective-bargaining process,” Murphy wrote. “This bill does not seek to find savings within the contours of collective bargaining.”

Sweeney — who has clashed openly with the NJEA and last year beat an NJEA-backed candidate to retain his seat in the Senate — reacted strongly to Murphy’s collective-bargaining claim yesterday, calling it “not even a little bit true.” He suggested there’s no opportunity right now for any county college employees to negotiate joining plans that only the SHBP offers.

Assemblywoman Carol Murphy (D-Burlington), another primary sponsor of the bill, said even if the recent SEHBP changes have resulted in projected savings, the goal for the governor and lawmakers should be “to strive to maximize every dollar saved that we can for rank and file workers.”

Sweeney: County colleges were ‘pleading’ for the measure

“It is quite disappointing that Governor Murphy opted to veto legislation that would save money for our county colleges, while also reducing the premiums for college employees,” the Assemblywoman said.

Sweeney also noted that the governor and lawmakers just launched a new program together earlier this year through the latest state budget that is using state dollars to help provide free county college for income-qualified students. The initiative was a top legislative priority for the governor.

“We put $25 million into (the budget) for free county college,” Sweeney said. “Here’s $22 million we could have found for county colleges. The county colleges were the ones who were pleading with us to pass this bill.”

The employee-benefits issue is not an unfamiliar subject of disagreement for the State House’s two highest-profile Democratic leaders. Sweeney has been backing a new round of employee-benefits changes that were proposed in a report issued earlier this year by a nonpartisan panel of fiscal-policy experts. Murphy has not endorsed that group’s proposals, which include a call to merge the state’s two health-benefit groups into one. The governor has instead favored his own administration’s push to work cooperatively with the NJEA and other worker unions to find areas to cut costs for both the government and employees.

Asked if a potential veto override could be looming, Sweeney said yesterday that he’s “not talking about that yet.” But he added: “It was a pretty strong vote in both houses.”

In the Senate, the bill passed by a 22-12 margin; it was approved in the Assembly 55-16, with three abstentions.