Many New Jerseyans want the state to make full payments into the public employees pension system, but the Garden State simply does not have the money, according to a legislator who is working on new pension reforms.

The Assembly Chambers at the Statehouse (Governor's Office/Tim Larsen)

The ideas include changes for the state's teachers and that was not well-received by the New Jersey Education Association.

"It's becoming more and more difficult to navigate our fiscal obstacle course and a lot of that has to do with us meeting these (pension payment) obligations," said Assemblyman Jack Ciattarelli (R-Somerville). "In a state that already has one of the highest income tax rates, the highest property taxes, an estate tax, one of the highest sales taxes, we have all this tax revenue and we augment it with casino revenue taxes and lotteries, how is it that we can't make these payments? The reason is because they're becoming more and more expensive."

Facets of Ciattarelli's work in progress include:

  • For all current and future teacher retirees, no post-retirement Medicare Part B reimbursement if their pension plus Social Security equals or exceeds $30,000 per year;
  • For all teachers with less than 10 years in system, pension account is switched over to cash balance defined contribution pension plan (e.g., 401k);
  • All newly hired teachers go immediately into cash balance defined contribution pension plan (e.g., 401k) and their pension and Social Security are paid for by the local school district, not the state.

"Of all the proposals in my plan the one that would have the greatest impact in the near term and we need near term impact, is the recalibration of the current school funding formula. If every community was responsible for at least 25 percent of their school budgets through the local school tax levy (property taxes) it would free up billions to meet all of our unfunded liabilities for pensions," Ciattarelli said.

The assemblyman has not put his ideas into bill form yet because he said he would like to first speak with as many of his legislative colleagues as possible. He also wants to consult with other stakeholders including school boards, teachers and the NJEA.

"Assemblyman Ciattarelli's proposal is deeply flawed for a number of reasons," said NJEA President Wendell Steinhauer in an emailed response. "First, it specifically targets teachers. Given the scope of the state's pension failures, that is utterly inappropriate. Second, none of his proposals do anything to reduce the unfunded liability that the state has created as a result of its many years of funding failures. The pension problem cannot be solved with more benefit cuts. It can only be solved with responsible funding. Finally, his plan would further degrade pensions of teachers, who are already paying far more for both their pensions and health benefits while the state fails to do its part."

In the same email, Steinhauer also said the assemblyman's plan was another attempt to divert attention from the real issue, which is the need for responsible state funding.