NJ.com - TRENTON - For seven weeks, Gov. Chris Christie has brought his far-reaching plan to overhaul New Jersey's public worker retirement system to town halls across the state.
|Governor Chris Christie appears in front of Parsippany Town Hall where he announced he is creating a commission to study further pension reform. Parsippany, NJ 8/1/14 (Robert Sciarrino/The Star-Ledger)
He's sent out email blasts and tweets on the growing burden on pension and health care costs, trying to build support for a polarizing plan he and his high-powered commission say will defuse the Garden State's massively underfunded retirement system.
But the commission, which worked in secret for months on the proposal to reinvent those benefits, now has a new job: putting together all the nitty-gritty details of how Christie's pension reform would play out for hundreds of thousands of public employees.
Rather than handing the report off to another task force as originally envisioned, the commission's mission was recast. Tom Healey, the chairman of the pension commission and a former Goldman Sachs executive, said the governor turned down his resignation.
"He's asked the commission to continue on," Healey said, adding that commission members and Christie discussed executing the plan at length during a recent private meeting.
Christie appointed the bipartisan commission last summer to examine and turn around a retirement system whose costs are estimated to grow by $600 million a year. The combined health care and pension unfunded liability is $90 billion (and much higher under new accounting rules).
"This is a bipartisan group of the most knowledgeable, dynamic thinkers that's been assembled on this topic anywhere," said Assemblyman Declan O'Scanlon (R-Monmouth). "And their best effort is the best effort we can hope for."
The commission developed a series of sweeping proposals, including freezing the existing pension system and moving active public employees onto a "cash balance" pension plan, a hybrid between the more generous defined-benefit plan and a 401(k)-like defined contribution plan. It is also shooting to save the state and local public employers billions of dollars by offering less expensive health care plans and asking employees to pick up a larger share of the cost.
Those savings would be recycled into closing the gap in pension funding. Next year, Christie is proposing a $1.3 billion pension payment, while state law requires $3.01 billion and actuaries recommend even more.
In exchange, the state would give pension payments constitutional protection from the whims of governors and lawmakers and the perils of budget shortfalls.
The commission's report left it to a new task force to figure out exactly what those benefits would look like. But now Christie's commission has split into subgroups tasked with designing those pension and health insurance plans and wading through the legal issues around a drafting a constitutional amendment and transferring pension fund assets to unions, Healey said.
For instance, the commission will choose new levels of health care coverage and set rates for employer and employee contributions and guaranteed minimum investment returns into the cash balance pension plan. In states that have adopted cash balance plans, those figures vary considerably.
The panel will have to work swiftly if the reforms are to debut in 2016.
The Legislature would have to approve a proposed constitutional amendment this summer to get it on the Nov. 3 ballot.
"If you ask me what's the biggest problem, it's clearly the short time frame, because we have to get it done by July 1," a date that mirrors the deadline for the state budget, Healey said.
State Senate President Steve Sweeney (D-Gloucester), who shepherded a round of pension reforms through the Legislature in 2011, and Healey have been in touch on the plan, but "those discussions must start and finish with a commitment by the administration to make the legally required payments to the pension system," Sweeney spokesman Richard McGrath said.
O'Scanlon said the timeframe is reasonable — "We're not coming up with a way to send men to Saturn," he joked, but that will be driven by the commission, the administration and "God willing the unions."
In the months leading up to that deadline, Healey said the commission will be seeking input from leaders from labor and the Legislature and school and municipal officials.
"If you're going to propose something affecting the pensions of hundreds of thousands of people, you'd be wise to bring a lot of experts and stakeholders to the table," said Steve Wollmer, communications director of the New Jersey Education Association.
Pat Colligan, president of the New Jersey State Policemen's Benevolent Association, said he thinks Christie's rollout of the proposal — which was marred by the much-disputed claims that it had the NJEA's blessing — soured the unions' goodwill, and that tension hurts the reforms' chances this year.
This article appeared on NJ.com authored by Samantha Marcus.