Acting Governor Appoints Members to Identify Options to Maintain
Fair Employee Benefits at Manageable Cost
(TRENTON) – Acting Governor Richard J. Codey today signed an executive order creating a Benefits Review Task Force and named six leading experts and two cabinet members to develop recommendations to address the state’s escalating cost of benefit programs.
“Each year the state’s fixed costs grow larger and larger and consume more and more of the budget,” said Codey. “This is a problem we can no longer ignore. We need people with real working experience to provide options for the state to consider.”
The task force is charged with examining the current laws, regulations and procedures regarding the provision of employee benefits to state and local government workers. It will make recommendations designed to control the costs of benefits, while ensuring a fair and equitable benefit system for the state’s public employees, and issue a report to the Governor within six months of the order’s effective date.
In his FY 2006 budget address, Codey identified increased mandatory costs as a major driving force behind the increase in state spending each year. He called for the creation of a working group to develop ideas to help reform the state’s structural budget problem.
Over the past four years, the total cost of health care benefits for current state workers has risen 50 percent. The total cost of health care benefits provided free of charge to retired teachers and other school personnel has doubled, and the total cost of health care benefits for retired state and college employees has tripled.
Employee benefit costs are projected to be 14 percent of the overall FY 2006 budget, as compared to 8.8 percent just four years ago. By the year 2010, it is projected that benefit costs will constitute 20 percent of the state budget.
This year’s budget shortfall was marked by a $1.4 billion increase in mandatory funding needs. These additional costs include increased spending for worker health care, retirement and salaries.
Codey named four business leaders and two professors, all with distinguished careers and experience in the areas of employee benefits, pensions, management, finance and economics, to help identify potential solutions. The members of the task force are:
Phillip Murphy, Chairman: retired partner of The Goldman Sachs Group, Inc. Murphy has been an international business leader for 20 years. He has worked in Frankfurt, Hong Kong and New York, and led a number of major company initiatives. He oversaw his firm’s global private wealth management business and helped form the unit responsible for firm-wide business in the emerging markets of Europe, the Middle East and Africa.
Richard D. Quinn: Managing Director-Human Resources, Public Service Enterprise Group (PSEG), where he is responsible for compensation and benefit strategies for the company’s 18,000 employees and retirees. Quinn has more than 43 years of experience in employee benefit plan design, administration, strategic planning, consulting and in compensation planning and over 25 years experience in labor negotiations. In 1992, he served on the NJ Governor’s BEST Commission where he prepared an evaluation of the compensation and employee benefit practices of the state. He is affiliated with numerous professional organizations including the U.S. Chamber of Commerce Employee Benefits Committee and the Health Care, Employee Benefits and Executive Compensation Councils of the Conference Board.
David Alai: Vice President-Corporate Human Resources for Sharp Electronics Corporation (SEC), where he played a critical role in introducing a pension plan as a part of a collective bargaining agreement. As a member of SEC’s Retirement Plans Committee, Alai was also responsible for overseeing investment decisions and administrative functions of the plans, as well as ensuring compliance with appropriate government regulations and agencies.
Thomas A. Meyers, CPA, CFA, CPCU: Senior Vice President & Chief Financial Officer, NJM Insurance Group. With more than 25 years of service at NJM, Myers has extensive experience in the areas of accounting, insurance, finance and management. He served as an Administrative Committee member on NJM’s Employee Saving Fund Plan and Retirement Plan. He previously worked for Ernst & Whinney and was the President of the American Association of Microcomputer Investors, Inc.
Paula B. Voos: Chairwoman, Labor Studies and Employment Relations Department, School of Management and Labor Relations, Rutgers University. Voos has a Ph.D. in Economics from Harvard University. Prior to joining the faculty at Rutgers, she served as a teaching assistant at Harvard University; an economics instructor at the University of Massachusetts-Boston; and the director of the Industrial Relations Research Institute and professor of economic and industrial relations at the University of Wisconsin-Madison. Voos has spoken and written extensively on the topic of labor and employment relations.
William M. Rodgers III: Professor of Public Policy, Edward J. Bloustein School of Planning and Public Policy and Chief Economist, John J. Heldrich Center for Workforce Development. Rodgers has an M.A. and a Ph.D. in economics from Harvard University. He previously served as a professor of economics and director of the Center for the Study of Equality at the College of William and Mary, and was the chief economist in the Office of the Secretary, U.S. Department of Labor. He has written and edited numerous journal articles, books and reports on economic and labor issues.
State Treasurer John E. McCormac and Labor and Workforce Development Commissioner Thomas D. Carver will also serve on the Task Force.
The text of the Executive Order signed today is as follows:
EXECUTIVE ORDER NO. 39
WHEREAS, a contributing factor to the recent budget shortfall has been a $1.4 billion increase in mandatory funding needs, including nearly a $1 billion increase in employee benefits; and
WHEREAS, continuing increases in employee benefits costs contribute to the structural deficit that New Jersey faces every year; and
WHEREAS, over the last four years growth in benefits has helped drive budget spending increases; and
WHEREAS, the total cost of health care benefits for current State employees has risen by 50 percent over the last four years; the total cost of health care benefits for retired State and college employees has more than doubled; and the total cost of health benefits provided free of charge to retired teachers and other school personnel has doubled; and
WHEREAS, employee benefit costs are projected to be 14 percent of the State’s overall FY 2006 Budget as compared to 8.8 percent four years ago, and by the year 2010, it is projected that benefit costs will constitute 20 percent of the State budget; and
WHEREAS, controlling growth in employee benefit programs cannot occur overnight, but it is critical that the process to review and recommend ways in which the costs of health benefits and pensions for public employees can be managed begin now, while still maintaining fair benefits for those employees;
NOW, THEREFORE, I, RICHARD J. CODEY, Acting Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby ORDER and DIRECT:
1. There is hereby established a Benefits Review Task Force (hereinafter “Task Force”). The Task Force shall consist of eight members, including the State Treasurer, the Commissioner of Labor, and six public members appointed by the Governor. The public members shall be selected from among individuals with knowledge or experience in the areas of employee benefits, pensions, management, finance or economics in the academic, corporate or government setting. The Governor shall appoint the Chair of the Task Force.
2. The Task Force shall (1) examine the current laws, regulations, procedures and agreements governing the provision of employee benefits to State and local government workers, (2) analyze the current and future costs of the benefits, (3) compare the level of benefits provided to government employees in this State to the benefits provided to other workers, and (4) recommend changes to the laws, regulations, procedures and agreements designed to control the costs of such benefits to the State’s taxpayers, while ensuring the State’s public employees a fair and equitable benefit system.
3. The Task Force shall issue its report to the Governor within six months of the effective date of this Executive Order.
4. The Task Force is authorized to call upon any department, office, division or agency of this State to supply it with records and other information, personnel or assistance that it deems necessary to discharge its duties under this Order. Each department, officer, division or agency of this State is hereby required, to the extent not inconsistent with law, to cooperate with the Task Force and to furnish it with such records, information, personnel and assistance as is necessary to accomplish the purposes of this Order.
5. This Order shall take effect immediately.
GIVEN, under my hand and
seal this
25th day of May
in the Year of Our Lord, Two Thousand and Five, and of the Independence of the United States, the Two Hundred and Twenty-Ninth.
Richard J. Codey
Acting Governor
Attest:
Mark J. Fleming
Deputy Chief Counsel to the Governor
