Gov. Phil Murphy has proposed a $6.4 billion contribution to the pension system, which would be the state’s first full payment in a quarter-century. | Mark Lennihan/AP Photo
New Jersey Gov. Phil Murphy boasts about how he‘s proposed restoring a full payment into the state pension system for the first time in more than two decades.
But as the state ramps up its contribution to a system that’s underfunded by tens of billions of dollars, it’s also considering restoring eligibility to some public employees — state and county prosecutors, administrative law judges and workers compensation judges — after new hires were taken out of the system more than 10 years ago to lighten the financial burden.
It’s unclear how many new people would be eligible for pensions and what the total cost would be. All of the changes must be approved by the Legislature. One of the bills making its way through the Legislature, on workers comp judges, projects a nominal savings for the state’s general fund because of how the pensions are funded.
A Republican lawmaker who is an expert on public pensions thinks the changes are the start of a disturbing trend.
“They obviously included these professionals to be excluded and now we seem to be chipping away piece by piece,” said Assemblymember Ned Thomson (R-Monmouth), who was a trustee in the Public Employees Retirement System from 1995 to 2017. “To come back every 15 minutes and say, ‘Oh this 26 [people] here, this 110 here, or this 2,000 here, it’s a technical correction.’ No, it’s not.“
Workers who were removed from the pension system now pay into New Jersey’s Defined Contribution Retirement Program, which is similar to a 401(K).
As part of his budget for the fiscal year that begins July 1, Murphy has proposed a $6.4 billion contribution to the pension system, which would be the state’s first full payment in a quarter-century.
But stronger than expected revenue, including billions of dollars in federal American Rescue Plan funds, could lead to an even larger contribution. An administration source previously told POLITICO they would like to see an extra $500 million added.
The pension system covers some 800,000 current and retired government workers.
Bills to allow some public employees back into the system are being pushed by judges and prosecutors who say removing new hires from the system has made it harder to retain people and more difficult to recruit top tier candidates.
“We are struggling to attract and retain the best and the brightest that New Jersey can offer, and that’s what we need for the work that we do. We affect peoples’ lives in a very real way,” Administrative Law Judge Ellen Bass told the Assembly Judiciary Committee when it approved a bill, NJ A4313 (20R), in March to allow judges back into the pension system.
“We are absolutely finding that many qualified people aren’t interested in joining us when they learn they won’t be rewarded with a pension,” Bass said.
The bill passed the Assembly, 51-23, on June 3 but hasn’t advanced in the Senate. The non-partisan Office of Legislative Services estimates it would lead to $2 million in additional costs to the state in its first year and then “grow as a function of increases in judges’ salaries and other economic factors.”
David V. Calviello, president of the Assistant Prosecutors‘ Association of New Jersey, made a similar argument to Bass‘ during an Assembly State and Local Government Committee hearing on another bill, NJ A5785 (20R). That measure would restore county prosecutors to the pension system and bump up staff prosecutors to the more generous part of the Public Employees Retirement System that was created just for prosecutors in 2002, but closed to new hires in 2010.
“Prosecutors hired after May 21, 2010, lost a significant incentive to make their job a career,” Calviello told the Assembly committee. “Since then, we’ve seen a growing rise in prosecutors who’ve had to leave their positions after just a few years because the cost to stay was just too high.”
John Donnadio, executive director of the New Jersey Association of Counties, called the bill dealing with prosecutors “frustrating.”
“It will certainly impose an expense,” he said during the same hearing. “But it also changes the terms and conditions of employment. Again, the assistant prosecutors are hired under a certain set of circumstances and they’re changing the conditions moving forward.”
The bill to readmit workers compensation judges to the pension system, NJ S758 (20R), which passed the Senate, 29-5, in February and awaits action in the full Assembly, is somewhat less controversial. According to OLS, the roughly $4.5 million annual cost would fall on the Second Injury Fund, which would be funded by increased assessments on workers’ comp insurance.
The bill would mean about $100,000 a year less in costs to the state’s general fund, OLS estimated.
Thomson, the Republican assemblymember, wasn’t sympathetic to the arguments for employee retention, especially considering many earn six-figures salaries.
“You’re a higher-end employee. Yes, you work hard, but you knew that going in. So don’t turn around and tell me you deserve it now because you’re now at a different stage of your career,” he said.
This is not the first time lawmakers have rolled back pension reforms to make them more generous to certain groups.
In 2018, former Republican Gov. Chris Christie, who spearheaded many pension cutbacks for public workers, signed into law a bill designed to make former Camden Mayor Dana Redd eligible to re-enter the pension system Christie signed the bill three days after an obscure university governing board hired Redd for a $275,000 pensionable job without considering other applicants. The law also allowed several other former elected officials to return to the pension system, but none benefited as much as Redd, who saw her future pension increased enormously.
”That was just a flat out, fragrant violation of what was intended for the system, Thomson said. “That was abhorrent. So let’s let everybody back in, shall we.“
Several bills pending in the Legislature would tweak the pension system or make technical changes. One, NJ S1212 (20R), would allow municipal business administrators to accrue pensions. That bill hasn’t advanced.
Last week, Murphy signed into law a bill, NJ S3197 (20R), that would allow former judges working as county prosecutors to defer their judicial retirement until they’ve left their position as prosecutor.
The bill appears to have been written with Middlesex County Prosecutor Yolanda Ciccone in mind, as she otherwise would have to leave the prosecutor’s position when she reaches the mandatory judicial retirement age of 70 in 2024 in order to collect her judicial pension.
It also could potentially apply to Judge William Daniel, whom Murphy nominated last week as the next Union County prosecutor.
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