Trenton rethinking perk: Retiring at 55 Tuesday, November 14, 2006 • BY JOE DONOHUE • Star-Ledger Staff A bipartisan legislative panel is expected tomorrow to recommend raising the retirement age from 55 to 62 for new state workers and requiring all state employees to contribute more to their health insurance plans. The panel's final report also will recommend a switch to 401(k)-style retirement plans, instead of traditional pensions, for future elected, appointed and part-time officials. And it may call for retired state employees with relatively high incomes to contribute to their post-retirement medical insurance. The chairman of the Joint Legislative Committee on Public Employee Benefits Reform said the panel's recommended changes would have a real impact on fringe-benefit costs. Last year a study commission warned those costs threatened to eventually bankrupt the state. The joint committee is one of four created in July to consider ways to lower property taxes and due to report their recommendations tomorrow. While many of the details are still being worked out, some of the lawmakers' goals are already known: A reduction of up to 20 percent in most property tax bills next year. A plan to increase school aid by up to $1 billion. An increase in the powers of county school superintendents. Members of the committee on government consolidation said yesterday they are moving away from a more drastic proposal to merge all school districts into countywide systems. Possibly the creation of a state board to identify towns and school districts that should merge, with voters getting the final say. After the committee on benefits reform met for two hours yesterday, Sen. Nicholas Scutari (D-Union), who chairs the panel along with Assemblywoman Nellie Pou (D-Passaic), discussed some of its broader recommendations while emphasizing that many details still were under negotiation. Scutari said the panel is expected to recommend the age for retirement at full benefits be increased to 62. He said the committee had to balance the need for reform against the fact the state cannot legally alter pension benefits for employees with more than five years of service. "There's nothing draconian that's being done to current employees," Scutari said. "Most of the changes are moving forward and are going to be prospective." Leaders of government worker and teacher unions have demanded that any changes in their benefits be negotiated as part of their contracts. The Corzine administration is currently in private talks with state worker unions to obtain a new salary and fringe-benefit contract before the current one ends June 30. "We're at the table discussing pension and health benefits right now, and that's where the discussions should be exclusively," Carla Katz, president of Local 1034 of the Communications Workers of America, said yesterday. Pou, who described yesterday's committee meeting as "extremely productive," said the panel recognizes that many changes, such as higher health insurance contributions, will have to be addressed at the bargaining table. "We don't want to change too many of the rules of what current employees expected when they started their employment," Scutari said. "Moving forward -- that's a completely different story." During an unrelated news conference, Gov. Jon Corzine said his relationship with legislators so far has been "very cooperative" on benefit issues. "It's very difficult for the Legislature to sit at a negotiating table on a lot of the issues, so we'll work together to try to have a common view on those things that would provide support for the overall program," Corzine said. One change that could be quickly addressed by legislation, Scutari said, would allow only 401(k)-style pensions instead of traditional pensions for newly elected officials, appointees and part-time workers. Under another change, officials with more than one public pension would have to choose one of them as their primary pension, instead of combining them to boost their retirement benefits, he said. Also, the committee wants to cap public pensions at the same maximum used by Social Security to collect taxes. Next year, that threshold will be $97,000, Scutari said. He added that there was discussion, though not yet a consensus, on whether to recommend 10 paid holidays for state workers instead of the 13 they now receive. Two Republicans on the panel, Sen. William Gormley of Atlantic County and Assemblyman Kevin O'Toole of Essex County, said they submitted 37 suggestions and were satisfied enough with yesterday's discussions that they may support the committee's report instead of writing their own minority report. "I'm happy they've taken our recommendations very seriously," said O'Toole. Gregg Edwards, president of the Center for Policy Research of New Jersey, a conservative think tank, said lawmakers should not be timid about seeking legislative reforms, because they have sweetened benefits in the past without any contract talks. "Full benefits at 55 is a legislative creation. It wasn't done at the bargaining table. It's their obligation to undo that misstep," Edwards said. "They got us into this mess. It's my argument it's their obligation to get us out." There are 322,000 current members and 121,000 retirees in the pension system for state and municipal government workers. The teacher pension system has 154,000 members and 65,400 retired members. The committee proposals would not apply to members of the police and fire pension systems. Dunstan McNichol and Jeff Whelan contributed to this report. Joe Donohue covers state government and politics. He may be reached at jdonohue@starledger.com or (609) 989-0208. © 2006 The Star-Ledger. Used by NJ.com with permission.