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GSCS Board of Trustees - Statement on Pension-Health Benefits Proposal

Garden State Coalition of Schools Comments:

Pension Study Commission ‘Roadmap’

The Garden State Coalition of Schools has closely examined the report issues by the Pension Study Commission convened by Governor Christie. The following represents the GSCS’ comments on the report, the Roadmap to Resolution.


  • Garden State Coalition of Schools is concerned about any outcome that shifts the burden of the pension system to the local tax payers as we believe it would have a negative impact on local school districts providing a quality public education.


  • In a 2% capped (plus allowances) environment, local school districts and tax payers would not be able to keep up with the rate of growth of both health care and pension payments. As such, there are already both short and long-term consequences for local districts in maintaining programs and services for our students. Shifting the pension payments to local school districts will have a deleterious impact on school districts ability to maintain instructional programs for students and risk increases in property tax


  • The Roadmap is predicated on the idea that reducing healthcare costs will off-set increases in employer’s pension contributions.  The GSCS is asking for clarification concerning how the state proposes to reduce healthcare benefits.  Is the state considering reducing employee and retiree healthcare benefits through statute, or is the state anticipating that boards of education will successfully negotiate these concessions as part of the collective bargaining process?


  • The GSCS is opposed to any public law, constitutional amendment or administrative decree that shifts the pension liability from the state government to the local educational agencies.


  • The GSCS would like further clarification if districts will be able to take adjustments for pension contributions during their budget development process, much like healthcare adjustments.  If so, property taxes will rise when local districts are faced with unanticipated healthcare or pension increases.  If not, programs and personnel will be reduced when faced with such unanticipated increases.


  • GSCS is concerned with any formula that over estimates or under estimates costs on a macro level as these decisions are specific to individual districts.  State-wide calculations and assumptions do not accurately express the unique differences from one district to another.  For example, one district may have a higher percentage of its staff receiving family healthcare and a lower percentage of single coverage than a neighboring district.  If the net increase of the School Employee Health Benefit Plan (SEHBP) aggregate increase is 10%, but single coverage increase by 8% and family increase 11%, the aggregate increase is different from one district to its neighbor.  This is only one of many examples of how summarizing districts’ cost will be an oversimplification.


  • Further, the GSCS is mindful that state governments cannot declare bankruptcy but the same is not true for municipal governments. As such, by shifting the burden of the pensions to the LEA’s it is conceivable that concerns with the future vitality of the proposed solution may bring even further concerns in the future should municipalities and LEA’s be unable to meet their future (proposed) pension liabilities.


  • The historical volatility of the SEHBP makes for an unlikely and improbable source of healthcare reform. As such, the competition for local property tax dollars would surely see a reduction in opportunities and services for students. It must also be noted that the projections for savings assumes that all districts are participating members of the SEHBP.


  • This is most assuredly not a fair assumption as many districts have made strategic benefits decisions to control their costs by using lower premium plans other than the SEHBP.  Furthermore, many contracts with labor require that the membership agree with the change to a new health care provider.


  • The GSCS is supportive of P.L. 2011, Ch. 78 and recommends the legislature and governor work to make the contributions of the health benefits plans permanent at the conclusion of the 4th year of implementation.


GSCS Annual Meeting - May 27, 2015