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Murphy benefits report calls for savings, but no cuts

December 21, 2018

TRENTON, N.J. (AP) — New Jersey’s public worker benefits programs should leverage their size to drive down costs, Gov. Phil Murphy’s administration said in a report Friday, stopping short of calling for cuts to worker benefits sought by lawmakers and the governor’s predecessor, Chris Christie.

The Democratic administration’s task force unveiled the 12-page interim report Friday, promising to continue to examine its “larger charge” of pursuing long-term reforms.

Murphy praised the report as an “excellent” start to address what has become a perennial issue in New Jersey, stemming from the failure of previous Democratic and Republican governors to fully fund the public pension and worker benefits. Estimates put the pension and benefits’ liability at a roughly $152 billion, while this year’s state budget is just $37.4 billion.

“This is a Goliath of a task, but the blue print laid out today provides sound, actionable items that are achievable in the immediate future while we work toward long-term solutions,” the governor said in a statement.

The report, which Murphy commissioned in July, suggests a handful of ways to cut costs. Among them are getting lower costs and better health outcomes by leveraging the system’s size, estimated at nearly $7 billion. Another recommendation calls for shorter contract lengths with the network provider, arguing that there is no room for re-negotiation based on “changing dynamics.”

The state’s pension and benefits cover 800,000 state workers, teachers and others, plus retirees. Christie, a Republican, struck a deal with labor unions and Democrats who control the Legislature in 2011 to overhaul the pension, resulting in higher payments from the state in exchange for cost-of-living increases from retirees. Christie paid more into the pension than his predecessors, but because of budget constraints it was less than initially agreed to, while workers didn’t see their payments return.

Before he left office, he also sought to cut health benefits to lower the strain they put on taxpayers but got nowhere, in part because labor unions no longer wanted to deal with him.

Murphy got elected in 2017 on a promise to fully fund the pension and with considerable help from public worker unions who vehemently opposed Christie’s efforts to cut the pension.

Republicans reacted coolly to the report. Republican state Sen. Steve Oroho called the report’s recommendations “abstract.”

“It seems like another attempt to kick the can down the road, while ignoring real proposals in our Path to Progress report,” he said.

Oroho was referring to Democratic Senate President Steve Sweeney’s bipartisan document from August on similar issues.

That report called the pension and benefits burden a “crisis” and sought cuts.

Among his panel’s recommendations were shifting state and local workers from a defined-benefit pension to a 401k-style plan for new workers and those with fewer than five years of service. The panel is also calling for cutting health benefits for retirees from platinum plans to gold.

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This article has been corrected to show the report was commissioned in July, not May.

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