TRENTON – Barbara Keshishian, president of the N.J. Education Association, said the pension and benefits reform bill, sponsored by state Sen. Steve Sweeney (D-3), of West Deptford, asks employees to solve the fiscal problems of the state.
“We are still analyzing it,” she said today, “but we have concluded that it is a terrible proposal, for several reasons.”
“It does nothing to rein in broker fees that are costing the taxpayers untold millions every year,” she said. “It does nothing to bring transparency to the process of buying health care. And it does nothing meaningful to require the state to pay its share of pension costs now, even though that is the primary reason why our pension funds are in such trouble.
“Instead, this proposal would place the entire burden for reducing costs on the backs of working people,” Keshishian said.
The NJEA released an analysis that claims the reform plan, which Sweeney said is also backed by Gov. Chris Christie, would cost a typical New Jersey teacher $4,500 per year, while reducing the quality of benefits. The data is based on an average teacher salary of $66,000 and membership in the state’s family health plan.
The union touted the savings found by using the State Health Benefits Plan (SHBP), and highlighted a part of Sweeney’s bill that has been removed – which would have put a moratorium on entrants into the SHBP. Keshishian today retold the story of how non-SHBP government employers are paying expensive fees to health care brokers, like George Norcross, president of Connor Strong, an insurance brokerage firm that has many public-sector clients. The SHBP does not use brokers and avoids those fees. “There is no transparency for taxpayers for these brokerage fees,” she said, calling the brokers “expensive and unnecessary middlemen.”
On a data sheet highlighting some local units across the state that saved money by entering into the SHBP, Keshishian pointed to Gloucester Township in Camden County, where Conner Strong brokered the town’s health care provisions. According to the estimated NJEA analysis, Gloucester pays over $10 million for health care, whereas they previously paid over $15 million for a private health care provider, including over $600,000 in brokerage fees to Conner Strong.
Sweeney combats NJEA example
In response to the NJEA claims, Senate Democrats’ spokesman Derek Roseman issued a release countering the union claims.
“First, let’s compare apples to apples – a teacher making $66,000 annually (the example used in the NJEA op-ed) and enrolled in the NJ Direct 15 family insurance plan (which costs $19,000 a year), and a private-sector employee making the same amount and who we’ll enroll in a similarly priced family plan.
“Under current law, teachers contribute 5.5 percent of their salaries into the pension system, and 1.5 percent of their salaries to cover the cost of health care. So, our sample teacher pays a total of $4,620 for these items.
“According to the Kaiser Family Foundation’s 2010 Annual Survey on Employer Health Benefits, the average employee pays 30 percent of the premium for a family plan. And we’ll have that employee also contribute 5.5 percent of their income into a 401(k) retirement plan. Under those assumptions, the sample private sector worker pays $5,700 for health care, plus adds another $3,630 into their 401(k) – a total of $9,330, 14.1 percent of salary and more than double what the teacher pays.
“Now, let’s turn back to the teacher for just a moment. Under the Senate President’s plan, the teacher would immediately pay an extra one percent of income into the pension system, for a 6.5 percent contribution. In addition, based on her $66,000 salary, she would only be paying 4.8 percent of her health insurance premium. That comes to a total of $5,202 – $4,128 less than the private sector worker.
“And even if the teacher was required to immediately make the full additional two-percent pension contribution (for a total of 7.5 percent) and 19 percent health care contribution, she would pay $8,560 – still $770 less than the private sector worker.”