Council On Local Mandates | FTBOE COLM 0001-21
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PROCEDURAL HISTORY

Complaint filed. On February 18, 2021, via email, a Complaint was filed by Willaim C. Morlok, Esq., on behalf of the Franklin Township Board of Education, in which it submits that P.L. 2020, Chapter 44 (New Jersey Employee Health Benefits Program), legislation that required school districts in New Jersey to offer a new health care plan.  The Complaint alleges that the legislation could cause the Franklin Township Public School District and their employees to incur over $1,100,000.00 in overall increased health care costs.  As discussed below, even just new employees enrollin in the new plan will result in financial harm.  P.L. 2020, Chapter 44, dictates all financial aspects of the plan, to include contribution percentages, contribution caps, and co-pays, resulting in nothing left for the parties to negotiate to mitigate the financial impact.  The mandate is unfunded.

A summary of the Franklin Township Board of Education Complaint may be viewed under Pleading Summaries.

To view the full version of the Franklin Township Board of Education Complaint, please click here.

Council Publication.  Because of the identity of the issue raised, on February 26, 2021 via email and hand delivered letter, the Council ordered that the complaint should be served on the Attorney General, the Department of Education & Higher Education, the Acting Commissioner at the Department of Education, and the officials listed in Council Rule 9a.  The Council also determined that the Attorney General would be directed to file an Answer to the Complaint, and that any other official served with the Complaint that chose to do so might file an Answer, as Respondent.

Council grants Respondents' request for 30 day stay. On March 5, 2021, the Respondent in this matter requested an 30 day stay in this matter.  The Council granted the request of the respondent, by issuing an 30 day stay in the matter.

Claimant submits letter brief to supplement their Complaint, with a copy of draft legislation S3487. On March 5, 2021, William C. Morlok, Esq., Counsel for Claimant (Franklin Township Board of Education) submitted a letter brief to supplement their complaint, and more specifically their request for an injunction to the Council with a copy of draft Senate Legislation S3487.

To view the full version of the Franklin Township Board of Education letter brief to supplement their complaint, please click here.

Council issues Case Management Order.  On March 22, 2021, via email, the Council issued a case management order in this matter to all interested parties.

To view the full version of the Council on Local Mandates Case Management Order to all parties, please click here.

Respondent State of New Jersey, Executive Branch, submits Letter Brief In Lieu of a Formal Brief In Opposition to Complainant's Request for Preliminary Injunctive Relief. On April 23, 2021, Jaclyn Frey, DAG, on behalf of Respondent, the Executive Branch of the State of New Jersey, submits this letter brief in opposition to the request by Complainants, the Franklin Township Board of Education (“Franklin Township”), the Gloucester City Board of Education (“Gloucester City”), and the Lower Township Elementary Board of Education (“Lower Township”), for an order enjoining the enforcement of L. 2020, c. 44 (“Chapter 44”) pending the outcome of this consolidated matter.

A summary of the Respondent State of New Jersey, Executive Branch, submits Letter Brief In Lieu of a Formal Brief In Opposition to Complainant's Request for Preliminary Injunctive Relief may be viewed under Pleading Summaries.

To view the full version of the Respondent State of New Jersey, Executive Branch, submits Letter Brief In Lieu of a Formal Brief In Opposition to Complainant's Request for Preliminary Injunctive Relief, please click here.

Gloucester City Board of Education files complaint in regards to P.L. 2020, Chapter 44 (S2273/A20).  On March 26, 2021, via email, a Complaint was filed by William C. Morlok, Esq., on behalf of the Gloucester City Board of Education, in which it submits that P.L. 2020, Chapter 44 (New Jersey Employee Health Benefits Program), legislation that required school districts in New Jersey to offer a new health care plan.  Unfortunately, the legislation is already causing the Gloucester City Board of Education to incur $21,634.32 monthly, or approximately $260,000.00 yearly,  in overall increased health care costs.  P.L. 2020, Chapter 44, dictates all financial aspects of the plan, to include contribution percentages, contribution caps, and co-pays, resulting in nothing left for the parties to negotiate to mitigate the financial impact.  As a result, the mandate is unfunded.

A summary of the Gloucester City Board of Education Complaint may be viewed under Pleading Summaries.

To view the full version of the Gloucester City Board of Education letter brief to supplement their complaint, please click here.

Lower Township Elementary Board of Education files complaint in regards to P.L. 2020, Chapter 44 (S2273/A20).  On March 26, 2021, via email, a Complaint was filed by William C. Morlok, Esq., on behalf of the Lower Township Elementary Board of Education, in which it submits that P.L. 2020, Chapter 44 (New Jersey Employee Health Benefits Program), legislation that required school districts in New Jersey to offer a new health care plan.  Unfortunately, the legislation is already costing Lower Township Elementary Board of Education to incur costs of approximately $44,000 for 20-21,  in overall increased health care costs.  As discussed below, that number will only go up on July 1, 2021.  P.L. 2020, Chapter 44, dictates all financial aspects of the plan, to include contribution percentages, contribution caps, and co-pays, resulting in nothing left for the parties to negotiate to mitigate the financial impact.  As a result, the mandate is unfunded.

A summary of the Lower Township Elementary Board of Education Complaint may be viewed under Pleading Summaries.

To view the full version of the Lower Township Elementary Board of Education letter brief to supplement their complaint, please click here.

Notice of Appearance filed on behalf of Senate President Sweeney and Assembly Speaker Coughlin.  On March 29, 2021, via email, Leon Sokol, Esq., on behalf of Senate President Sweeney and Assembly Speaker Coughlin filed an Notice of Appearance in the matter regarding P.L. 2020, Chapter 44.  Please be advised that the Senate President and the Assembly Speaker appear in this proceeding pursuant to Council Rule 6(a) and 9(a) and by operation of the Council’s Publication Notice regarding this proceeding. The Council’s Publication Notice states, in relevant part: “The Council also determined that the Attorney General would be directed to file an Answer to the Complaint, and that any other official served with the Complaint that chose to do so might file an Answer, as Respondent.” (emphasis added). Pursuant to Council Rule 9(a), the Senate President and Assembly Speaker were served with the Complaint. As such, they intend to file a responsive pleading pursuant to the Publication Notice and pursuant to Your Honor’s Case Management Order dated March 9, 2021.

To view the full version of the Notice of Appearance by the Presiding Officers' Senate President Sweeney and Assembly Speaker Coughlin, please click here.

Counsel for the Presiding Officers' (Senate President Sweeney and Assembly Speaker Coughlin) submit letter brief request for 14 day extension. On April 1, 2021, via email, Leon Sokol, Esq., Counsel for the Presiding Officers' (Senate President Sweeney and Assembly Speaker Coughlin) filed an letter brief request for an extension of 14 days to file responsive pleadings.  The Council granted the request of the respondent, by issuing an 14 day extension to file responsive pleadings in the matter.

Counsel for the Presiding Officers' (Senate President Sweeney & Assembly Speaker Coughlin) submit Letter Brief in Opposition to Claimants Application for Preliminary Injunctive Relief with Certification of Service. On April 23, 2021, via email, Leon Sokol, Esq., Counsel for the Presiding Officers' (Senate President Sweeney and Assembly Speaker Coughlin) submitted an letter brief in Opposition to Claimants Application for Preliminary Injunctive Relief.  Also enclosed is the Respondents Senate President Stephen M. Sweeney and Assembly Speaker Craig J. Coughlin's Answer to the Complaints.

A summary of the Presiding Officers' Letter Brief in Opposition to Claimants Application for Preliminary Injunctive Relief, may be viewed under Pleading Summaries.

To view the full version of the Presiding Officers' (Senate President Sweeney and Assembly Speaker Coughlin) Letter Brief in Opposition to Claimants Application for Preliminary Injunctive Relief, please click here.

To view the full version of the Presiding Officers' (Senate President Sweeney and Assembly Speaker Coughlin) Answer to the Complaints, please click here.

Council issues Notice of Hearing. On May 13, 2021, the Council submitted their Notice of Hearing to the Secretary of State and all interested parties in I/M/O Complaint filed by the Franklin Township Board of Education (COLM-0001-21):

Date/Time of Hearing: May 21, 2021, at 9:00 a.m.
Place of Hearing:  Virtual - MS TEAMS
  140 East Front Street, 8th fl.
  Trenton, NJ 08608
Purpose of Hearing: To hear oral argument(s) on Injunctive Relief

 

PLEADING SUMMARIES.

This portion of the site reproduces summaries, written by parties and amici, of their pleadings, as they are filed with the Council, beginning with the filed Complaints.  The summaries do not represent the views of the Council; they are provided to facilitate understanding of the positions reflected in the pleadings.

Complete copies of all filed pleadings may be obtained by contacting the Council office as described under Address & Telephone.

Claimant Franklin Township Board of Education Summary of Complaint:

  "The Franklin Township Board of Education ("FTBOE") submits that this Complaint addresses P.L. 2020, Chapter 44, legislation that required school districts in New Jersey to offer a new health care plan. Unfortunately, the legislation could cause the Franklin Township Public School District and their employees to incur over $1,100,000.00 in overall increased health care costs. As discussed below, even just new employees enrolling in the new plan will result in financial harm. P.L. 2020, Chapter 44, dictates all financial aspects of the plan, to include contribution percentages, contribution caps, and co-pays, resulting in nothing left for the parties to negotiate to mitigate the financial impact. The mandate is unfunded.

  1. Prior to the passage of P.L. 2020, Chapter 44, school district employee contribution rates toward health care benefits were based on a percentage of premium model.

  2. With the passage of P.L. 2020, Chapter 44, school district employee contribution rates toward health care benefits are now based on a percentage of salary model (with caps), known as the New Jersey Educators Health Plan (NJEHP). The NJEHP has raised the overall costs of health care for the Franklin Township Public School District and their employees.

  3. Notably, this change in the basis for contribution rates reduces the percentage of the employee contribution from a range of 3% to 35% to a range of 1.7% to 7.2%. Accordingly,
school district employers are now forced to absorb this differential in the percentage of employee contribution rates, often increasing the net cost of health care benefits to the school district employer (and school district as a whole), under the NJEHP.

  4. Despite this increase in the net cost of health care benefits to the school district employer under the NJEHP, P.L. 2020, Chapter 44, does not allow for any practical means to offset the additional expenditures required for the school district employer to implement the NJEHP, and is therefore an unfunded mandate.

  5. P.L. 2020, Chapter 44 states that "the employer and the majority representative shall engage in collective negotiations over the financial impact of the [cost] difference" when the net cost to the employer under the NJEHP is higher than the net cost of health care benefits coverage available to employees through an existing collective negotiation agreement. However, the school district employer still remains bound by the contribution percentages, contribution caps, and the coverage or co-payment amounts set forth in P.L. 2020, Chapter 44. Accordingly, such collective negotiations "over the financial impact of the difference" in implementing the NJEHP are not truly possible, as there are no health care related financial aspects remaining to
negotiate.

  6. Pursuant to P.L. 2020, Chapter 44, all school district employees hired on or after July 1, 2020 were to be automatically enrolled in the NJEHP, unless they elected to waive coverage. The Franklin Township Board of Education did not complete that automatic enrollment due to the negative financial impact and unfunded mandate, as discussed throughout this Complaint.

  7. Pursuant to P.L. 2020, Chapter 44, all school district employees hired prior to July 1, 2020, were to be provided the option to enroll in the NJEHP, unless they affirmatively elected to waive coverage, or affirmatively elected to remain enrolled in their prior coverage. The Franklin Township Board of Education did not complete that open enrollment due to the negative financial impact and unfunded mandate, as discussed throughout this complaint.

  8. As detailed below, the NJEHP was created to provide cost savings, though if every employee of the Franklin Township Board of Education switched to the plan, it would result in employees and the Franklin Township Board of Education paying a combined $1,131,967.68 more. The Franklin Township Board of Education and their employees have worked tirelessly and collaboratively to secure what is believed to be some of the lowest costs for health care in the State of New Jersey. P.L. 2020, Chapter 44, has thwarted those efforts and not provided funding or any other means to make up for the negative financial impact."

The above summary is a quotation from the Complaint filed by William C. Morlok, Esq., on behalf of the Franklin Township Board of Education, on February 18, 2021.

Respondent, State of New Jersey, Executive Branch Summary of Answer:

  "Respondent, the Executive Branch of the State of New Jersey, submits this letter brief in opposition to the request by Complainants, the Franklin Township Board of Education (“Franklin Township”), the Gloucester City Board of Education (“Gloucester City”), and the Lower Township Elementary Board of Education (“Lower Township”), for an order enjoining the enforcement of L. 2020, c. 44 (“Chapter 44”) pending the outcome of this consolidated matter.    This matter arises from the Legislature’s update to a long-existing health insurance plan for New Jersey’s educators.  All three Complainants have filed nearly identical complaints seeking to strike Chapter 44, and also requesting a stay of the legislation.  Complainants’ request for a stay must be deniedbecause: (1) they have failed to establish they will suffer substantial or significant financial hardship as a result of the legislation; (2) they have not demonstrated a likelihood of success on the merits of the case; and (3) the public interest weighs heavily against granting a stay in this instance.

  Chapter 44 addresses the administration and management of health care benefit plans for State school employees whose employers participate in the School Employees’ Health Benefits Program (“SEHBP”), and for certain eligible employees whose employers do not participate in the SEHBP.  Under Chapter 44, beginning on January 1, 2021, the SEHBP shall offer three plans that provide medical and prescription drug benefits, thus terminating all other plans offered prior.  The three plans to be offered under Chapter 44 include the New Jersey Educators Health Plan (“NJEHP”), the SEHBP NJ Direct 10 plan, and the SEHBP NJ Direct 15 plan.

  From the outset, Respondent denies that Chapter 44 constitutes an unfunded mandate.  Local school districts have been sharing the cost of health insurance with their employees for decades, in accordance with changing legislation and collective negotiations agreements between employers and employees.  To the extent there are costs associated with a district’s offering of health insurance in accordance with Chapter 44, this is not a new phenomenon. Healthcare costs are constantly in flux, and dependon a number of unpredictable factors from one plan year to the next.  This has been the norm for decades — Chapter 44 is nothing more than  an update to a model that has existed since 1961.  Moreover, Chapter 44 includes an important safety valve for employers and employees — it requires employers to engage in collective negotiations to offset the net cost of the new plans.  Complainants have not engaged in that mandatory process.

  Complainants have also failed to show that they will suffer imminent, substantial, and significant financial harm if a stay is not granted.  Instead, they rely on purely speculative figures to allege a net cost if they implement the requirements of Chapter 44.  And not only do these alleged costs amount to conjecture, but even if they were actual or imminent they would not be significant or substantial enough to warrant a stay under the law.  Furthermore, Complainants’ purported harm is self-created: as noted above, they have refused to engage in the collective negotiations process to offset those costs; and they also waited until at least seven months after Chapter 44 was enacted to file this action.  Thus, on balance, and when considering the many public policy interests militating against a stay, injunctive relief should not be granted. 

  Therefore, for the reasons set forth more fully below, Complainants’ request for preliminary injunctive relief must be denied."

The above summary is a quotation from the Answer filed by Jaclyn Frey, DAG, on behalf of Respondent the State of New Jersey, Executive Branch, on April 23, 2021.

Claimant Gloucester City Board of Education Summary of Complaint:

  The Gloucester City Board of Education ("GCBOE") submits that this Complaint addresses that P.L. 2020, Chapter 44 (New Jersey Employee Health Benefits Program), legislation that required school districts in New Jersey to offer a new health care plan.  Unfortunately, the legislation is already causing the Gloucester City Board of Education to incur $21,634.32 monthly, or approximately $260,000.00 yearly,  in overall increased health care costs.  P.L. 2020, Chapter 44, dictates all financial aspects of the plan, to include contribution percentages, contribution caps, and co-pays, resulting in nothing left for the parties to negotiate to mitigate the financial impact.  As a result, the mandate is unfunded.

  1. Prior to the passage of P.L. 2020, Chapter 44, school district employee contribution rates toward health care benefits were based on a percentage of premium model.

  2. With the passage of P.L. 2020, Chapter 44, school district employee contribution rates toward health care benefits are now based on a percentage of salary model (with caps), known as the New Jersey Educators Health Plan (NJEHP). The NJEHP has raised the overall costs of health care for the Gloucester City Public School District and their employees.

  3. Notably, this change in the basis for contribution rates reduces the percentage of the employee contribution from a range of 3% to 35% to a range of 1.7% to 7.2%. Accordingly,
school district employers are now forced to absorb this differential in the percentage of employee contribution rates, often increasing the net cost of health care benefits to the school district employer (and school district as a whole), under the NJEHP.

  4. Despite this increase in the net cost of health care benefits to the school district employer under the NJEHP, P.L. 2020, Chapter 44, does not allow for any practical means to offset the additional expenditures required for the school district employer to implement the NJEHP, and is therefore an unfunded mandate.

  5. P.L. 2020, Chapter 44 states that "the employer and the majority representative shall engage in collective negotiations over the financial impact of the [cost] difference" when the net cost to the employer under the NJEHP is higher than the net cost of health care benefits coverage available to employees through an existing collective negotiation agreement. However, the school district employer still remains bound by the contribution percentages, contribution caps, and the coverage or co-payment amounts set forth in P.L. 2020, Chapter 44. Accordingly, such collective negotiations "over the financial impact of the difference" in implementing the NJEHP are not truly possible, as there are no health care related financial aspects remaining to
negotiate.

  6. Pursuant to P.L. 2020, Chapter 44, all school district employees hired on or after July 1, 2020 were to be automatically enrolled in the NJEHP, unless they elected to waive coverage. The Gloucester City Board of Education commenced with that automatic enrollment as of January 1, 2021.

  7. Pursuant to P.L. 2020, Chapter 44, all school district employees hired prior to July 1, 2020, were to be provided the option to enroll in the NJEHP, unless they affirmatively elected to waive coverage, or affirmatively elected to remain enrolled in their prior coverage. The Gloucester City Board of Education commenced with that open enrollment as of January 1, 2021.

  8. As detailed below, the NJEHP was created to provide cost savings, though the Gloucester City Board of Education has seen a monthly loss of $21,634.32 which is annualized to $259,611.84.  The Gloucester City Board of Education had recently entered into the School Health Insurance Fund ("SHIF") program and saw a significant cost savings, so much so that P.L. 2020, Chapter 44 has caused the overall cost of healthcare in the District to go up by approximately $32,000.00, yearly.   P.L. 2020, Chapter 44 has thwarted those efforts and not provided funding or any other means to make up for the negative financial impact.

The above summary is a quotation from the Complaint filed by William C. Morlok, Esq., on behalf of the Gloucester City Board of Education, on March 26, 2021.

Claimant Lower Township Elementary Board of Education Summary of Complaint:

  The Lower Township Elementary Board of Education ("LTEBOE") submits that this Complaint addresses that P.L. 2020, Chapter 44 (New Jersey Employee Health Benefits Program), legislation that required school districts in New Jersey to offer a new health care plan.  Unfortunately, the legislation is already costing the Lower Township Elementary Board of Education to incur $21,634.32 monthly, or approximately $260,000.00 yearly,  in overall increased health care costs.  P.L. 2020, Chapter 44, dictates all financial aspects of the plan, to include contribution percentages, contribution caps, and co-pays, resulting in nothing left for the parties to negotiate to mitigate the financial impact.  As a result, the mandate is unfunded.

  1. Prior to the passage of P.L. 2020, Chapter 44, school district employee contribution rates toward health care benefits were based on a percentage of premium model.

  2. With the passage of P.L. 2020, Chapter 44, school district employee contribution rates toward health care benefits are now based on a percentage of salary model (with caps), known as the New Jersey Educators Health Plan (NJEHP). The NJEHP has raised the overall costs of health care for the Lower Township Elementary Public School District and their employees.

  3. Notably, this change in the basis for contribution rates reduces the percentage of the employee contribution from a range of 3% to 35% to a range of 1.7% to 7.2%. Accordingly, school district employers are now forced to absorb this differential in the percentage of employee contribution rates, often increasing the net cost of health care benefits to the school district employer (and school district as a whole), under the NJEHP.

  4. Despite this increase in the net cost of health care benefits to the school district employer under the NJEHP, P.L. 2020, Chapter 44, does not allow for any practical means to offset the additional expenditures required for the school district employer to implement the NJEHP, and is therefore an unfunded mandate.

  5. P.L. 2020, Chapter 44 states that "the employer and the majority representative shall engage in collective negotiations over the financial impact of the [cost] difference" when the net cost to the employer under the NJEHP is higher than the net cost of health care benefits coverage available to employees through an existing collective negotiation agreement. However, the school district employer still remains bound by the contribution percentages, contribution caps, and the coverage or co-payment amounts set forth in P.L. 2020, Chapter 44. Accordingly, such collective negotiations "over the financial impact of the difference" in implementing the NJEHP are not truly possible, as there are no health care related financial aspects remaining to negotiate.

  6. Pursuant to P.L. 2020, Chapter 44, all school district employees hired on or after July 1, 2020 were to be automatically enrolled in the NJEHP, unless they elected to waive coverage. The Lower Township Elementary Board of Education commenced with that automatic enrollment as of January 1, 2021.

  7. Pursuant to P.L. 2020, Chapter 44, all school district employees hired prior to July 1, 2020, were to be provided the option to enroll in the NJEHP, unless they affirmatively elected to waive coverage, or affirmatively elected to remain enrolled in their prior coverage. The Lower Township Elementary Board of Education commenced with that open enrollment as of January 1, 2021.

  8. As detailed below, the NJEHP was created to provide cost savings, though the Lower Township Elementary Board of Education has seen an annualized loss of $43,628.00.  The Lower Township Elementary Board of Education was previously self-insured and has recently entered into the Coastal HIF ("HIF") program due to the uncertainty surrounding healthcare and the COVID-19 Pandemic.  The switch to HIF caused rates to raise slightly, and the Lower Township Elementary Board of Education determined that they would not pass any of that cost on to their employees until July 1, 2021.  Even without that, the District is forced to pay more money than they would have had P.L. 2020, Chapter 44 not existed.  Further, because of the aforementioned, it is anticipated that more employees will switch to the NJEHP plan during the next open enrollment period.

  9. P.L. 2020, Chapter 44 has caused the overall cost of healthcare in the District to go down by approximately $27,000.00, yearly.  P.L. 2020, Chapter 44, has not allowed the Lower Township Elementary Board of Education to realize any of those savings, instead requiring them to pay $43,628.00 more, for the balance of the 20-21 school year.

The above summary is a quotation from the Complaint filed by William C. Morlok, Esq., on behalf of the Lower Township Elementary Board of Education, on March 26, 2021.

The Presiding Officers' Letter Brief in Opposition to Claimants Application for Preliminary Injunctive Relief.

  This matter comes before the Council by way of Complaints filed by the Franklin Township Board of Education, the Lower Township Elementary Board of Education, and the Gloucester City Board of Education (hereafter collectively “the Claimants”). Claimants challenge L. 2020, c. 44 (hereafter “Chapter 44” or “the Act”). The purpose of Chapter 44 is to help school districts control their spiraling employee health care costs through a careful re-design of public employee health insurance plans. Notwithstanding this purpose, Claimants contend that Chapter 44 is an impermissible unfunded mandate within the meaning Article VIII, section 2, paragraph 5 of the New Jersey Constitution.

  Chapter 44 is not an unfunded mandate. Quite the contrary. According to a leading actuary retained by the Legislature, Chapter 44 – based on the most recent data -- is projected to save school districts and their employees over $800 million per year.

  Chapter 44 is a complex piece of legislation that applies to 584 public school districts across the State. The Legislature anticipated that at least some of these hundreds of school districts might encounter short-term transitional costs, rather than transitional savings. In recognition of this potential circumstance, the Legislature directed school districts that might encounter short-term transitional costs to enter into collective bargaining negotiations with their employee organizations in order to address these costs. This is a requirement of the statute.

  Remarkably, none of the three school districts that have brought this action has complied with the statutory mandate to initiate collective bargaining negotiations with their employee organizations. Instead, Claimants seek preliminary injunctive relief from this tribunal without so much as making an effort to engage in collective bargaining.

  Claimants have failed to comply with the express terms of the statute. As such, they have no ground to seek relief before this tribunal.

  Moreover, the public interest would be ill-served by the Claimants’ application More particularly, if the preliminary injunctive relief here sought were granted, the result would place a cloud of uncertainty and potential disruption for hundreds of school districts that are in the process of implementing health care benefit plans mandated by Chapter 44. Claimants’ application should be denied for this reason alone.

  For this and other reasons that are set forth herein (and that are set forth in the brief of the Attorney General), Claimants’ application for preliminary injunctive relief should be denied.

The above summary is a quotation from Leon J. Sokol, Esq., on behalf of the Presiding Officers' Senate President Stephen M. Sweeney and Assembly Speaker Craig J. Coughlin, on April 23, 2021.