Senate Panel Quickly Passes Pension-Padding Bill for Politicians

Steve Sweeney. Kevin B. Sanders for Observer

A state Senate panel quickly advanced a bill that would give some elected officials bigger pensions, plowing through a vote on Thursday in roughly one minute and without any debate or public testimony.

The bill (S3620) would allow certain elected officials, such as outgoing Camden Mayor Dana Redd, to re-enroll in the Public Employees’ Retirement System (PERS) even if they were removed due to switching from one elected office to another.

Effectively, the bill creates a special exemption that allows Redd to cash in on a bigger public pension at a time when public workers who are not politically connected have seen cutbacks to their benefits and a freeze in yearly cost-of-living adjustments for retirees since 2011.

The legislation — first reported by Observer — is moving quickly in part because Senate President Steve Sweeney (D-Gloucester), a Redd ally, has given it special status, allowing it to move forward without a customary review by a public body that scrutinizes the cost of pension and health benefits legislation and makes recommendations to lawmakers.

The bill could be approved by the Assembly and Senate and signed by Gov. Chris Christie — another Redd ally — during the waning days of the lame-duck Legislature. A full vote in the Assembly and Senate could be held on the bill before the legislative session ends on Jan. 9.

The legislation was introduced this week and cleared the Senate Budget and Appropriations Committee on Thursday by a 9-2 vote with one abstention. The Assembly Appropriations Committee will hear the bill on Monday, according to a spokesman for Assembly Speaker Vincent Prieto (D-Hudson).

That the bill was referred to the Appropriations Committee is of note, since that panel is chaired by a South Jersey Democrat and Sweeney ally, Assemblyman John Burzichelli (D-Gloucester). Prieto could have referred the bill instead to the Budget Committee, which is led by a North Jersey Democrat, Assemblyman Gary Schaer (D-Passaic).

A similar version of the bill that was introduced and then yanked in 2014 would have benefited Redd and Assemblyman Ralph Caputo (D-Essex), a Prieto ally.

Typically, any bill that establishes or modifies pension benefits for public employees is first reviewed by the Pension and Health Benefits Review Commission, a panel established in 1991 that is made up of administration officials and union representatives.

Sen. Sam Thompson (R-Middlesex) told lawmakers after the Senate budget committee approved the bill that several measures up for a vote Thursday that would modify benefits did not get vetted by the Pension and Health Benefits Review Commission.

Sen. Paul Sarlo (D-Bergen), the chairman of the budget committee, then called for a brief recess, and a few minutes later, emerged from a back room and said Sweeney had signed letters waiving the commission’s right to review several bills, including S3620.

Sarlo said after the meeting that he did not have a copy of Sweeney’s letter for S3620. Thompson was given and showed reporters copies of similar letters Sweeney wrote for other bills.

On Thursday evening, after the committee vote, a spokesman for Sweeney provided a copy of the letter for S3620. It notified the Pension and Health Benefits Review Commission that senators would vote on the Dana Redd pension bill “as soon as practicable” because it was an “urgent matter.”

The Senate sponsor of the bill is Sen. Sandra Cunningham (D-Hudson), who sits on the Senate budget committee but was not present for the vote on her bill. She left a yes vote.

At issue is a 2007 law that put new elected officials in a retirement plan, similar to a 401(k), called the “Defined Contribution Retirement Program.” That plan offers less generous benefits than PERS, one of the state’s largest and least financially sound pension funds.

Elected officials already enrolled in PERS before July 1, 2007, however, were allowed to keep building up their heftier PERS pensions as long as they remained in the same elected office, with an exception for lawmakers who jumped between the Assembly and Senate.

Redd, a Democrat allied with Christie and South Jersey power broker George Norcross, became Camden’s mayor in 2010. She had to resign the simultaneous offices she held in the city council and state Senate when she became mayor, and the PERS pension she had been accruing was frozen.

The new Senate bill would allow Redd and others who served in elected office on July 1, 2007 — but later jumped to another elected office — to re-enroll in the PERS fund, so long as they have served at least 15 years with no break in time between holding different offices. Those elected officials also would be able to make their pension enrollment retroactive to the date of taking any previous elected office.

Sweeney said lawmakers in 2007 never intended to block officials such as Redd from being able to collect their pensions. Sweeney was not a sponsor of the 2007 law.

“When we changed the rules for people not getting in the pension system, it was for newly elected officials,” Sweeney said Thursday. “The people that we’re talking about were in the system and they just moved to a different office. That’s not what the intent ever was for the bill.”

The 2007 law, however, specifically says the exception for officeholders who wished to remain enrolled in PERS after July 1, 2007, only applied as long as “that person continues to hold that elective public office without a break in service.”

Sweeney and Sarlo could not say who would benefit from the bill. “Our guys have some [names] we can give you,” Sweeney told reporters after the bill passed the committee. A spokesman for the Senate Democrats did not provide those names upon request Thursday.

But an amendment to the bill would ensure that Redd benefited from the legislation. The amendment, read aloud during the committee hearing, says qualifying elected officials would be eligible to re-enroll in PERS “on the effective date of the bill if the person’s term of office expires within 30 days before the effective date.” Redd’s term expires in January, and the full Assembly is not scheduled to meet again until Jan. 4. The Senate’s next scheduled voting session is on Monday.

Sarlo said the bill would benefit fewer than five people. A Democratic legislative source who spoke on the condition of anonymity told Observer on Wednesday that “several people were taken out of the PERS system” as a result of the 2007 pension overhaul, but the source only named Redd specifically.

Sen. Kristin Corrado (R-Passaic), who voted against the bill in the budget committee, said, “I believe it was aimed at a select few getting that benefit, and we shouldn’t be doing that.”

Sen. Jennifer Beck (R-Monmouth) was the other no vote.

New Jersey’s pension system is one of the worst-funded in the nation, with nearly $90 billion in unfunded liabilities, according to a report released this month by a Christie-appointed commission.

“This doesn’t hurt the pension system,” Sweeney said. “It’s a small number of people. It’s a $90 billion deficit. We’re adding money. We’re going to fully fund the pension like [Governor-elect] Phil Murphy said. So it’s not hurting the pension.”

But Hetty Rosenstein, the state director of the Communications Workers of America union, said the legislation was ill-advised. The CWA opposed the bill in Thursday’s committee hearing but did not submit testimony.

“Adding unfunded liabilities to the pension at this time is grossly irresponsible and should not be done,” Rosenstein said.

Christie is one of Redd’s closest allies. The governor and the mayor have been in a close partnership for years on charter schools, police issues and economic development in Camden.

Christie spent years blasting “greedy” public workers who complained of cuts to their pension benefits. Lately, he has been warning of the dire shape of the pension system, urging Murphy to adopt new reforms.

Christie could veto the pension bill. “As we always say, we don’t discuss pending or proposed legislation until a final bill is delivered and we have had ample time to fully review it,” Brian Murray, a spokesman for the governor, wrote in an email. (Christie and his office sometimes comment on pending legislation.)

Redd’s office did not respond to requests for comment Thursday.

In 2014, a similar bill that would have boosted Redd’s pension was introduced by Assemblyman Craig Coughlin (D-Middlesex). But Coughlin, who is now set to become speaker in January, pulled the bill and took his name off of it when it sparked controversy.

Senate Panel Quickly Passes Pension-Padding Bill for Politicians