Senate Passes Fast-Tracked Bill to Boost Pensions for Politicians

The Assembly chamber in the New Jersey statehouse. Jeff Zelevansky/Getty Images

A bill that would give outgoing Camden Mayor Dana Redd and a few other politicians bigger pensions continued to zoom through the state Legislature on Monday with no debate or details on the bill’s fiscal impact.

The state Senate passed the legislation by a 24-8 vote without any debate, and the Assembly Appropriations Committee advanced the bill earlier in the day by a 8-2 vote with one abstention in roughly one minute. The bill could be approved by the Assembly and signed by Gov. Chris Christie — a Redd ally — during the waning days of the lame-duck Legislature. The legislative session ends Jan. 9.

The lack of any debate, public testimony or firm financial details regarding the pension-padding bill is jarring because elected officials from the governor on down routinely lament the sorry state of New Jersey’s pension system, which is more than $90 billion underwater and has been the source of numerous credit-rating downgrades since Christie took office.

In a bit of schizophrenic policymaking, the state Senate not only passed the pension-padding bill for politicians, it also gave final approval to a separate bill designed to improve the health of the pension system through regular “stress tests” and by tracking fees paid to outside investment managers.

The pension-padding bill (S3620) would allow certain elected officials 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, it 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.

Several lawmakers said Monday that Redd would not be the only elected official to benefit from the pension-padding bill. But Democrats have not provided a list of names to reporters, saying the status of some individuals still has to be verified.

The bill could benefit Assemblyman Ralph Caputo (D-Essex) and Sen. James Beach (D-Camden), Senate President Steve Sweeney (D-Gloucester) said Monday. Beach was not present for the Senate vote. Sweeney said there is a “handful of legislators and a handful of other people” who would be affected by the bill. “I don’t have all the names,” he added. He told reporters a full list of names would be provided before the bill becomes law.

Assembly Appropriations Chairman John Burzichelli (D-Gloucester) acknowledged that the bill would boost Redd’s pension, but also said he didn’t know the complete list of elected officials who would benefit. “Nothing’s being hidden here,” he said later.

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.

The bill would allow Redd to return to PERS and draw a pension commensurate with her more than $100,000-a-year salary as mayor, and she also would be able to accrue more time toward her pension because of the retroactivity provision, accounting for her years of service in the city council.

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.

Sweeney argued that adding a few elected officials to the pension system was inconsequential since there are hundreds of thousands of public workers already enrolled. “It has no impact on the pension. We got a fiscal note on that,” he said.

Senate Democrats on Thursday distributed a Microsoft Word document attributed to analysts at the nonpartisan Office of Legislative Services. That document said, “the number of persons and public employers to which the bill applies is so small a percentage of the total active and retired members and employers in the system that the bill will not impact the unfunded accrued liability or the funded ratio” of the pension system.

That line, however, doesn’t appear in the “fiscal impact” statement the OLS posted online after a Senate committee advanced the bill last week. The OLS analysts in that statement said they were “unable to estimate the cost to the state or local governments of permitting elected public officials to reenroll in PERS if the conditions set forth in the bill are met.”

The pension-padding bill must still pass the Assembly and be signed by Christie in order to become law. The Assembly’s next voting session is Jan. 4. Christie’s office has declined to comment on the bill.

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. But Sweeney signed a letter waiving the commission’s right to review the bill. Assembly Speaker Vincent Prieto (D-Hudson) signed a similar letter, according to his spokesman, Tom Hester.

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 Governor-elect Phil Murphy to adopt new reforms.

Christie could veto the pension bill. His office has said it won’t comment on the legislation “until a final bill is delivered and we have had ample time to fully review it.”

Senate Passes Fast-Tracked Bill to Boost Pensions for Politicians