||This law provides for the following: changes PERS, TPAF and DCRP contribution rates and new employees’ compensation base and retirement age; implements changes to the SHBP and the transfer of education employees to School Employees’ Health Benefits Program; and modifies the State Investment Council.
|Chapter 92, P.L. 2007
||This law implements certain recommendations contained in the December 1, 2006 report of the Joint Legislative Committee on Public Employee Benefits Reform.
|Chapter 62, P.L. 2007
||Establishes homestead credits to reduce property taxes; imposes 4% cap on local tax levies; permits Local Finance Board to define capital and non-bondable current expenses; makes an appropriation.
|Chapter 49, P.L. 2007
||This law imposes mandatory imprisonment and mandatory forfeiture of pension and retirement benefits for public officers or employees convicted of certain crimes involving or touching their office or employment.
Links to the New Jersey Legislature and other legislature information.
Chapter 103, P.L. 2007
Date Approved: June 28, 2007.
Effective Date: This act shall take effect immediately (June 28, 2007), except that sections 12 through 16, inclusive, shall take effect July 1, 2007, and sections 27 through 29, inclusive, shall take effect July 1, 2008, and sections 31 through 41, inclusive, shall take effect immediately and shall be implemented as soon as practicable as determined by the School Employees’ Health Benefits Commission so that the School Employees’ Health Benefits Program shall be operational as of July 1, 2008, and sections 50 and 51 shall take effect on the 30th day after enactment but such anticipatory action may be taken in advance thereof as shall be necessary for the implementation of the sections1.
This law provides for the following:
- Changes PERS, TPAF and DCRP contribution rates and new employees’ compensation base and retirement age;
- Implements changes to the SHBP and the transfer of education employees to School Employees’ Health Benefits Program; and
- Modifies the State Investment Council.
The sections of this law and the various changes they impose are as follows:
I. Pension Benefit Provisions
Sections 1 to 6: Increases the member contribution rate for the Teachers’ Pension and Annuity Fund (TPAF), the Public Employees’ Retirement System (PERS), and for the Defined Contribution Retirement Program (DCRP) from 5% of annual compensation to 5.5% of annual compensation. For State employees, teachers and other school district employees enrolled on or after July 1, 2007, the increase will be effective July 1, 2007. For employees currently enrolled in these systems, the increase will be effective with the next payroll period that begins immediately after July 1, 2007. For employees of the Judicial Branch of State government, the University of Medicine and Dentistry, and counties and municipalities enrolled on or after July 1, 2008, the increase will be effective July 1, 2008. For employees of the Judicial Branch of State government, the University of Medicine and Dentistry, and counties and municipalities enrolled in these systems prior to July 1, 2008, the increase will be effective with the next payroll period that begins immediately after July 1, 2008.
Sections 7 and 8: Change the “early retirement” provisions of the TPAF and PERS for teachers and public employees who become members of the systems on or after July 1, 2007. While such a new member who accrues 25 or more years of service will be able to retire before the service retirement age of 60, the member’s retirement allowance will be reduced by 1% per year for each year (1/12 of 1% per month) the member lacks of being age 60 but over age 55 and by 3% per year for each year (1/4 of 1% per month) the member lacks of being age 55.
Sections 9 to 18: Imposes a maximum compensation upon which contributions will be made for TPAF and PERS for teachers and public employees who become members of those systems on or after July 1, 2007. The maximum amount will be the amount of base or the contractual salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act. For 2007, that amount is $97,500. A new member for whom this annual maximum will be reached in any year will become a participant of the Defined Contribution Retirement Program, unless the member waives participation when first eligible, but permits the person to elect to participate at a later time, with such election effective on the January 1 following a participation request. For the amount of compensation over the maximum compensation, 5.5% will be deducted as a contribution for the purposes of the program. When a TPAF or PERS member also becomes a participant in the Defined Contribution Program, the life insurance and disability benefit provisions of that program will be available for that participant.
Section 11 of the law provides immediate rule making authority to the State Treasurer with regard to the Defined Contribution Retirement Program.
The provisions of this law concerning “early retirement” and maximum compensation will apply to teachers and public employees who become members of the TPAF or PERS on or after July 1, 2007. They will not apply to a person who at the time of enrollment in one of these systems on or after July 1, 2007 transfers service credit from another State-administered retirement system, but will apply to a former member of one of these systems who has been granted a retirement allowance and is reenrolled in the retirement system on or after July 1, 2007 after becoming employed again in a position that makes the person eligible to be a member of the retirement system.
II. Health Care Benefits Provisions
This law amends the State Health Benefits Program (SHBP) statutes to reflect changes to the program to be implemented as the result of binding collective negotiations agreements between the Executive branch and collective bargaining units representing State employees. There are two basic changes: (1) the creation and grant of authority to the State Health Benefits Commission to contract for the administration of preferred provider organizations (PPOs), and (2) the establishment of an employee contribution of 1.5% of the employee’s base salary toward the cost of whatever type of SHBP coverage the employee has chosen. Reflecting discussions with the New Jersey Education Association, the law also establishes a School Employees’ Health Benefits Program (SEHBP) through the School Employees’ Health Benefits Act. The SEHBP will provide health care benefits for active and retired education employees through PPOs and HMOs overseen by a new School Employees’ Health Benefits Commission.
Section 19: Adds a new definition of a “successor plan” to identify a PPO plan that replaces the traditional plan. The definitions of “employee” and “dependents” are updated to reflect coverage of intermittent employees and partners of a civil union.
Section 20: Provides that, upon the creation of the SEHBP, the member of the State Health Benefits Commission representing the New Jersey Education Association will be replaced by a local employees’ representative.
Section 21: Requires any contract entered into after June 30, 2007 by the State Health Benefits Commission to include the successor plan to the Traditional Plan, one or more HMO’s and a State managed care plan substantially equivalent to the NJ PLUS. Describes the availability of the successor plan and the State managed care plan into retirement. The section also recognizes that the State Health Benefits Commission may have issued a request for proposals for the administration of new plans not including the traditional plan.
Section 22: Implements the 1.5% of base salary active employee contribution to the cost of SHBP benefits for State employees per ratified agreements and for all non-aligned State employees, as well as the contribution arrangements for retirees. For State retirees who attain 25 or more years of service, and who retire on or after July 1, 2007, the contribution will not be effective until the New Jersey Retirees’ Wellness Program is open for enrollment. Thereafter, the contribution will be waived for a retiree who participates in the wellness program. The Division of Pensions and Benefits will issue a report on this pilot program. The report will include, but need not be limited to, the claims experience with regard to retirees in the program, and the costs and savings realized. The report will be issued at the end of the third year after the program’s implementation or by December 30, 2010, whichever is earlier. The report will be submitted to the Governor, the Legislature, and the State Treasurer. The section also provides that an employee or retiree may terminate the withholding of the contribution for SHBP benefits if the participant withdraws from SHBP coverage and certifies current coverage by other health benefits.
Section 23: Codifies in law the services and benefits to be included in contracts for the new PPOs and provides for coordination between the State Health Benefits Commission and the new School Employees’ Health Benefits Commission in effectuating provisions of the School Employees’ Health Benefits Program Act, contained within this law, which creates the new SEHBP to cover active and retired educators.
Sections 24 to 26: Replaces references to the traditional plan or NJ PLUS with the more general references in statutes related to notification of termination of a physician contract, SHBP coverage if both husband and wife are eligible for SHBP benefits, and SHBP benefits for certain members of the National Guard.
Sections 27 to 30: Amends SHBP statutes to delete references to school board participation and coverage of education employees once their health care benefits are under the SEHBP.
Section 31: Provides that Sections 31 through 41 will be known and cited as the School Employees’ Health Benefits Program Act.
Section 32: Defines terms used for the School Employees’ Health Benefits Program (SEHBP), which is anticipated to be operational July 1, 2008, including employers able to participate in SEHBP.
Sections 33 to 35: Creates and describes the responsibilities and powers of the School Employees’ Health Benefits Commission, administered in the Department of the Treasury. The commission will have nine members: the State Treasurer, the Commissioner of the Department of Banking and Insurance, an appointee of the Governor, a person appointed by the Governor from New Jersey School Board Association nominations, three persons appointed by the Governor from New Jersey Education Association nominations, a person appointed by the Governor from New Jersey State AFL-CIO nominations, and a chairperson appointed by the Governor from nominations jointly submitted by at least six of the other eight members of the commission. The Director of the Division of Pensions and Benefits will serve as secretary.
Sections 36 to 39: Describe the benefits, services and payment obligations of the SEHBP. Prescription drug benefits will be provided through the School Employee Prescription Drug Plan or a free-standing employer prescription drug plan or the prescription drug part of a SEHBP plan. Prescription drug benefits for retirees will be provided through the School Retiree Prescription Drug Plan.
Section 40: Requires of the School Employees’ Health Benefits Commission certain annual reports, periodic audits and review of program costs.
Section 41: Provides that the provisions of the SHBP statutes will continue to be applicable to SEHBP, except as expressly stated to the contrary in the School Employees’ Health Benefits Program Act.
Sections 42 to 49: Amends and supplements existing law to reflect implementation of the School Employees’ Health Benefits Program.
Sections 43 and 44: amend the law to eliminate the funding of post-retirement medical benefits through the TPAF and PERS.
Sections 48 and 49: create separate funds outside of the pension plans for the funding and payment of post-retirement medical benefits for retired State employees and retired educational employees.
III. State Investment Council Provisions
Section 50: Changes the membership of the State Investment Council from 11 to 13 members, with the addition of one member to appointed by the Governor from among three persons nominated by the Public Employee Committee of the New Jersey State AFL-CIO to serve for a term of three years, and one member to be appointed by the Governor from among three persons nominated by the New Jersey Education Association (NJEA) to serve for a term of three years. If the persons nominated are not acceptable to the Governor for appointment, the Governor may request submission of new nominees.
The number of appointments made by the Governor with the advice and consent of the Senate is increased from five to six. The number members designated from the Board of Trustees of the Public Employees' Retirement System, the Board of Trustees of the State Police Retirement System, the Board of Trustees of the Teachers' Pension and Annuity Fund, and the Board of Trustees of the Police and Firemen's Retirement System of New Jersey is changed to four members elected by the boards from the active members of their respective retirement systems or from the retirees of those systems who are receiving a retirement allowance. The term of the four members is increased from one to three years. The member from the Consolidated Police and Firemen's Pension Fund Commission is eliminated.
The two members appointed from the persons nominated by the AFL-CIO and the NJEA will be qualified by training, experience or long-term interest in the direct management, analysis, supervision, or investment of assets. This training, experience or long-term interest is to have been supplemented by academic training in the fields of economics, business, law, finance or actuarial science or by actual employment in those fields. At least five of the seven members appointed by the Governor with the advice and consent of the Senate and from persons nominated by the General Assembly Speaker or Senate President will be qualified by training and experience in the direct management, analysis, supervision or investment of assets, provided that this training and experience has been acquired through academic training or actual employment in those fields.
Requires the members of the State Investment Council to file the same annual financial disclosure statements as those required to be filed by members of other State boards and commissions who are not compensated for their services, as required by law or executive order of the Governor. The financial disclosure statements of council members will be made available to the public in the same manner as the statements of members of other State boards and commissions are made available to the public.
The terms of the members of the council serving on the 30th day after the law takes effect, other than the five members appointed by the Governor with the advice and consent of the Senate to serve for terms of five years and the one member appointed by the Governor from persons nominated jointly by the President of the Senate and the Speaker of the General Assembly to serve for a term of five years, are terminated.
Section 51: Requires the council to issue a report by March 1 of each year, in addition to the reports already required by law, on the investment activities for the prior calendar year, to include a summary of the current investment policies and strategies of the council and those in effect during the prior calendar year, a detailed summary of the amount invested, whether the investments were made by employees of the Division of Investment or by external managers, performance benchmarks, and actual performance during the calendar year. The report is to be submitted to the Governor, the Legislature, and the State Treasurer, and made available to the public through the official Internet site of the State.
The council is required to hold an open public meeting each year, and accept comments from the public at such a meeting. The matters that will be open to discussion and public comment during this annual meeting will include the investment policies and strategies of the council, the investment activities of the council, the financial disclosures statements filed by council members, and the certification of contributions filed by external managers, as well as other appropriate matters concerning the operations, activities and reports of the council.
Finally, the amendment requires an external manager to file a certification before being retained and annually thereafter that discloses the political contributions made during the 12 months preceding the certification by the manager or the manager’s firm, or a political committee in which the manager or firm was active. The certification must specify the political contributions made to candidates for the elective public office in this State and any political committee established for the support of such candidate, and contributions made for the transition and inaugural expenses of any candidate who is elected to public office. As used here, “contribution” and “political committee” will have the meaning set forth in “The New Jersey Campaign Contributions and Expenditures Reporting Act,” Chapter 83, P.L. 1973 (C.19:44A-1 et seq.).
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Chapter 92, P.L. 2007
Date Approved: May 9, 2007
Effective Date: This act takes effect on the 30th day after the date of enactment (June 8, 2007), except that sections 1 through 19 will take effect on the July 1, 2007 and section 20 will take effect January 1, 2008, but the State may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.
This law implements certain recommendations contained in the December 1, 2006 report of the Joint Legislative Committee on Public Employee Benefits Reform. The sections of this law and the various changes they impose are as follows:
Sections 1 to 19: Establishes a Defined Contribution Retirement Program for elected and certain appointed officials and for retired elected officials who choose to participate in the program. The program becomes operational on July 1, 2007. State and local government employers will contribute to the program three percent of the employee’s base salary, Group life insurance and the option for disability benefits coverage will be provided to participants. A Defined Contribution Retirement Program Board is established. Participants will contribute five percent of their salary and will be allowed to allocate their contributions and the contributions of their employer into investment alternatives as determined by the new program board.
Section 20: Effective January 1, 2008, a person performing professional services for a political subdivision of this State or of a board of education, or of any agency, authority or instrumentality thereof, under a professional services contract is prohibited from becoming a member of the PERS. In addition, the law provides that a person who performs professional services will not be eligible, on the basis of performance of those professional services, for membership in the PERS, if the person meets the definition of independent contractor as set forth in regulation or policy of the federal Internal Revenue Service for the purposes of the Internal Revenue Code. While a person performing professional services will continue to accrue service credit during the term of any current contract, the person will not accrue service credit for the performance of those services after the contract expires.
Section 21: Requires the Division of Pensions and Benefits to investigate unreasonable increases in compensation reported for credit in the various State-administered retirement systems.
Section 22: Closes the Workers Compensation Judges Part of the PERS to new members.
Sections 23 to 27: Removes language from existing law that permits the State Treasurer to reduce the amount of normal contributions needed to fund the various State-administered retirement systems when excess assets are available.
Section 28: Requires each of the defined benefit plans to use consistent and generally-accepted actuarial standards. Any modification of the assumption or actuarial methodology at the direction of the State that changes asset values, obligations or annual contributions will require public disclosure and a financial impact analysis prior to adoption.
Sections 29 and 30: Amends the SHBP laws to exclude service credit earned in the defined contribution retirement program from service required for employer-paid health care benefits in retirement.
Section 31: Requires the State Health Benefits Commission to ensure that every contract purchased by the commission to provide benefits under the State managed care plans includes disease and chronic care management for specified conditions meeting nationally recognized accreditation standards.
Sections 32 to 40: Eliminates the four percent fixed rate of interest for loans from the State-administered retirement systems and provides that the rate of interest will be set by the State Treasurer at a commercially reasonable rate as required by the Internal Revenue Code. The sections also permit the charging of an administrative fee for such loans.
Section 41: Provides retirement system members with certain rights to their benefits, as required by the Internal Revenue Code for qualified governmental plans.
Sections 42 to 47: Limits, at the local government and school district level, the payment of supplemental compensation to $15,000 at the time of retirement for unused sick leave for elected and certain appointed officials. Those who have accrued supplemental compensation based upon unused sick leave at the time this law is enacted, at the expiration of a contract in effect at that time, or upon becoming such an elected or appointed official, will be eligible to receive the amount so accumulated or not more than $15,000, whichever is greater. The carry-forward of unused vacation leave is also limited for these same local government and school district officials, to one successive year.
Section 48: Extends to all local public employers the current authorization to provide financial incentives to employees who waive coverage under the SHBP if the employee is eligible for other health care coverage. Under previous law, this option was available to municipalities since 1995, to municipal authorities since 2001, and to county colleges since 2003. The incentive amount is currently limited to no more than 50 percent of the amount saved by the employer through the employee’s waiver of coverage.
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Chapter 62, P.L. 2007
Date Approved: April 3, 2007
Effective Date: This act shall take effect immediately (April 3, 2007); provided, however, sections 2 through 12 shall be applicable only to budget years beginning on or after July 1, 2007, and shall not be applicable to budget years beginning after June 30, 2012; section 13 shall be retroactive to July 1, 2006, and shall not be applicable to budget years beginning after June 30, 2012; and sections 19 through 40 shall first apply to claims for rebates and credits for property taxes paid for the tax year 2006.
This law provides a homestead property tax credit for residents of New Jersey and provides a means to ensure that the property tax relief is sustainable through a property tax levy cap of four percent that is applicable to school districts, counties, municipalities, fire districts, and solid waste collection districts.
While most of the provisions of this law deal with establishing the property tax credit and the four percent local employer budget cap, the following sections deal specifically with pensions and/or the State Health Benefits Program (SHBP):
Section 3d: This subsection of the law provides school districts with a limited exception for employee health care costs to exceed the four percent budget cap that is otherwise established by this law. The allowable increase in health care costs is equal to that portion of the actual increase in total health care costs for the budget year, less any withdrawals from the current expense emergency reserve account for increases in total health care costs, that exceeds four percent of the total health care costs in the pre-budget year, but that is not in excess of the product of the total health care costs in the pre-budget year multiplied by the average percentage increase of the SHBP, as determined annually by the Division of Pensions and Benefits. This provision is effective for budget years beginning on or after July 1, 2007, and shall not be applicable to budget years beginning after June 30, 2012.
Section 10b.(3): This subsection of the law allows a local unit (defined as a municipality, county, fire district, or solid waste collection district ) to exceed the four percent budget cap that is otherwise established by this law for pension contributions as set forth in section 5 of Chapter 108, P.L. 2003, (C.40A:4-45.43) for the years indicated in that section. This provision is effective for budget years beginning on or after July 1, 2007, and shall not be applicable to budget years beginning after June 30, 2012.
Section 10b.(5): Similar to the provision applicable to school districts, this subsection of the law allows a local unit to exceed the four percent budget cap that is otherwise established by this law for employee health benefit costs. The increase is limited the actual increase in total health care costs for the budget year that is in excess of four percent of the total health care costs in the prior year, but is not in excess of the product of the total health care costs in the prior year and the average percentage increase of the SHBP, as determined annually by the Division of Pensions and Benefits. This provision is effective for budget years beginning on or after July 1, 2007, and shall not be applicable to budget years beginning after June 30, 2012.
Sections 42 through 45: Allows local employers that participate in the SHBP to pay the premium charges for active employee health benefits coverage based on a binding collectively negotiated agreement. Also allows local employers to establish a Section 125 cafeteria plan. This provision is effective immediately.
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Date Enacted: March 15, 2007
Effective Date: Thirty Days After Approval
Description: This law imposes mandatory imprisonment and mandatory forfeiture of pension and retirement benefits for public officers or employees convicted of certain crimes involving or touching their office or employment.It’s impact on public pensions is as follows:
- It clarifies that the board of trustees of a State or local pension fund can order forfeiture of “earned service credit” and can implement any pension forfeiture ordered by a court, and requires mandatory pension forfeiture for crimes or offenses involving or touching the office, position or employment for a number of crimes enumerated in this law.
- The pension forfeiture will be ordered by the court immediately upon a finding of guilt or a plea of guilty unless the court, for good cause, orders a stay of the pension forfeiture pending a hearing on the merits at the time of sentencing. The law does not preclude the authority of the board of trustees from ordering the forfeiture of all or part of the earned service credit or pension or retirement benefit of any member of the pension system for misconduct occurring at the time of the member’s public service, including cases where the court does not enter an order of forfeiture.
- It provides that the board of trustees of any State or locally-administered pension fund or retirement system may subpoena witnesses and compel their attendance, and also may require the production of documentation in a matter concerning the rendering of honorable service by a public officer or employee seeking to receive a public pension or retirement benefit. If any person refuses to obey any subpoena so issued, or refuses to testify or produce the requested documentation, the board may apply to the Superior Court to compel the person to comply with the subpoena.
- It provides that a State, county or local employer participating in a pension system will be responsible for reimbursement to the plan of all pension costs incurred by the system following any settlement agreement between the employer and an employee that provides for the employer not to pursue any civil or criminal charges or an action for misconduct against the employee in exchange for the employee’s resignation in good standing when the employer fails to fully disclose the settlement to the board of trustees of the pension system.
The pension forfeiture and mandatory terms of imprisonment provisions of this law are prospective in application, and shall apply to crimes or offenses committed after the law takes effect.
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