State contract: fair deal for whom?
The Corzine administration reached a contract agreement with the state's largest employee union this morning. An outline of the terms provided by the Governor's Office is below, followed by the CWA release on the agreement. If you were hoping the contract would result in lower tax bills, you will be sorely disappointed.
It bears no resemblance to the reforms proposed by the special session legislative committee on pensions and benefits - recommendations Corzine ignored, saying he wanted to negotiate them at the bargaining table instead. Read the releases and weep:
Corzine Administration release:
PENSION REFORMS (Apply to Public Employee and Teacher Retirement Systems)*
Creates defined contribution plan to cover earnings in excess of the social security cap (currently $97,200) for new hires. Projected savings: $158.5 million per year by 2022.
Raises the retirement age from 55 to 60 for new hires. Projected savings: $77.3 million per year by 2022.
Calls for an increase in employees' contribution to pension system from 5% to 5.5% of an employee's annual salary, which begins to address the substantial unfunded liabilities in the system. Projected savings: $103.9 million in FY08 and 239.7 million per year by 2022.
HEALTHCARE REFORMS (Apply to State Civilian Workforce)
Calls for employees to contribute 1.5% of their salary to the cost of healthcare. Projected savings: $60 million per year beginning FY08. Contributions toward the cost of healthcare for local employees and educators are negotiated at the local level.
Health plan changes, including changes in co-pays for doctor visits and prescription drugs and replacing Traditional Plan with PPO. Projected savings: $30 million per year beginning FY08.
HEALTHCARE REFORMS (Apply to Educators)*
Affirms state commitment to fully fund cost of healthcare for retired educators.
Creates new governance structure for educator healthcare program management to jointly achieve improvements, efficiencies and cost savings targeted at $25-40 million.
Requires comprehensive review of system every five years to jointly determine structure of program.
WAGES (Apply to State Civilian Workforce)
Calls for salary increases of 3% in years one and two and 3.5% in years three and four, for a total of 13%.
Because the agreement also calls for an increase in pension contributions from 5% to 5.5% of salary and a contribution of 1.5% of salary toward healthcare costs, the net wage increase is actually 11% over four years.
Salaries for local employees and educators are negotiated at the local level.
* Will require legislation to implement.
CWA release:
CWA Announces 4-year State Worker Deal with 13% Raise
State Workers Reach Agreement on Four-Year Contract with 13% Across the Board Raise; 12% Compounded Raise after increased deductions; First Contract with No Wage Freeze in 15 Years
Agreement to Contribute 1.5% in Pre-Tax Wages to Address Rising Cost of Health Care; Workers Will Gain Access to National PPO Plan with Increased Network and No Gatekeepers; Also Agree to .5% Increase in Pension Deduction to Shore up Retirement System
TRENTON—The Communications Workers of America, which represents 40,000 New Jersey State Workers, reached a new four-year contract with the State of New Jersey early this morning that provides for 13% in across the board raises, and for the first time in 15 years, contains no wage freezes.
Recognizing the need to address rising health care costs and massive shortfalls in pension funding, CWA also agreed to a 1.5% pre-tax payroll contribution to the cost of health care, and to a .5% increase in workers' pre-tax pension contribution. Even after these deductions, the average worker will see a 12% increase in real wages over the life of the agreement.
"This agreement clearly demonstrates the value of the collective bargaining process," said Chris Shelton, Vice President, CWA District One. "Rather than having the Legislature unilaterally impose pension and health care givebacks on us, we have negotiated a contract that provides real economic security for our members while providing responsible leadership on the very real problems of pension and benefit costs."
Highlights of the contract include:
Raises of 3% on July 1, 2007 and July 1, 2008, and raises of 3.5% on July 1, 2009 and July 1, 2010. State workers have not negotiated a contract without wage freezes since 1992. The contract will provide significantly more in-pocket money than the 2003 contract.
Annual cash bonus payments to all workers with salaries less than $37,000, in order to bring their raises up to the value of the percentage raise for a worker earning $37,000. An additional provision will boost salary scales for thousands of lower-paid clerical workers.
Pensions for current employees will remain completely unchanged. Legislative and bargaining proposals to cut the pension benefit for future workers by 9% or to calculate pensions based on the average of the last five years of salary, instead of the current three, were rejected. So were proposals to require all future employees to enroll in a 401(k) type plan instead of the current defined benefit system.
The contract also commits the State to work with the union to seek legislation that will increase employee representation on the State Investment Council from 4 to 6, and provides for a chairperson elected annually by the members of the Council, instead of appointed by the Governor for five years. The parties will also seek greater disclosure of the financial interests of the Council members.
The Governor will continue his commitment to meet the state's annual obligation to fully fund the pension.
The 1.5% contribution to the cost of health care and the .5% increase in the pension contribution will be in pre-tax dollars, reducing their combined value to about 1.5% of take-home wages.
The State will introduce a new national PPO health care plan which will replace the current NJ Plus plan. This plan will have an expanded national network of doctors and will not require workers to seek referrals from primary care physicians if specialists’ services are required, in contrast to the current plan.
CWA bargained to link the health care contribution to wages, instead of the cost of premiums, in order to minimize the impact on low-wage workers and those with families. In addition, health care premiums are rising more quickly than any other consumer item and the Union did not want increases linked to those premiums.
The parties strengthened contract language guaranteeing that there will be no changes in health benefits during the life of the agreement.
"After 18 months of finger-pointing and scapegoating, this contract represents a real victory for state workers," said Shelton. "We bargained in the most difficult environment we've faced since Whitman was Governor, at a time when private sector pensions and health care are virtually collapsing. We secured a solid wage increase that raises the standard of living of our members, while enhancing protections for our health care and pensions for years to come."
"We have agreed for the first time to make a modest contribution towards the cost of health care and to a modest increase in pension contributions," said Shelton. "We believe these are reasonable and responsible steps that are justified by the considerable funding problems facing the benefit systems. Those who oppose this contract because of these modest changes are living in a fantasy world of irresponsible leadership which fails to take account of the threats to pension and health care benefits in both the public and private sectors."
It bears no resemblance to the reforms proposed by the special session legislative committee on pensions and benefits - recommendations Corzine ignored, saying he wanted to negotiate them at the bargaining table instead. Read the releases and weep:
Corzine Administration release:
PENSION REFORMS (Apply to Public Employee and Teacher Retirement Systems)*
Creates defined contribution plan to cover earnings in excess of the social security cap (currently $97,200) for new hires. Projected savings: $158.5 million per year by 2022.
Raises the retirement age from 55 to 60 for new hires. Projected savings: $77.3 million per year by 2022.
Calls for an increase in employees' contribution to pension system from 5% to 5.5% of an employee's annual salary, which begins to address the substantial unfunded liabilities in the system. Projected savings: $103.9 million in FY08 and 239.7 million per year by 2022.
HEALTHCARE REFORMS (Apply to State Civilian Workforce)
Calls for employees to contribute 1.5% of their salary to the cost of healthcare. Projected savings: $60 million per year beginning FY08. Contributions toward the cost of healthcare for local employees and educators are negotiated at the local level.
Health plan changes, including changes in co-pays for doctor visits and prescription drugs and replacing Traditional Plan with PPO. Projected savings: $30 million per year beginning FY08.
HEALTHCARE REFORMS (Apply to Educators)*
Affirms state commitment to fully fund cost of healthcare for retired educators.
Creates new governance structure for educator healthcare program management to jointly achieve improvements, efficiencies and cost savings targeted at $25-40 million.
Requires comprehensive review of system every five years to jointly determine structure of program.
WAGES (Apply to State Civilian Workforce)
Calls for salary increases of 3% in years one and two and 3.5% in years three and four, for a total of 13%.
Because the agreement also calls for an increase in pension contributions from 5% to 5.5% of salary and a contribution of 1.5% of salary toward healthcare costs, the net wage increase is actually 11% over four years.
Salaries for local employees and educators are negotiated at the local level.
* Will require legislation to implement.
CWA release:
CWA Announces 4-year State Worker Deal with 13% Raise
State Workers Reach Agreement on Four-Year Contract with 13% Across the Board Raise; 12% Compounded Raise after increased deductions; First Contract with No Wage Freeze in 15 Years
Agreement to Contribute 1.5% in Pre-Tax Wages to Address Rising Cost of Health Care; Workers Will Gain Access to National PPO Plan with Increased Network and No Gatekeepers; Also Agree to .5% Increase in Pension Deduction to Shore up Retirement System
TRENTON—The Communications Workers of America, which represents 40,000 New Jersey State Workers, reached a new four-year contract with the State of New Jersey early this morning that provides for 13% in across the board raises, and for the first time in 15 years, contains no wage freezes.
Recognizing the need to address rising health care costs and massive shortfalls in pension funding, CWA also agreed to a 1.5% pre-tax payroll contribution to the cost of health care, and to a .5% increase in workers' pre-tax pension contribution. Even after these deductions, the average worker will see a 12% increase in real wages over the life of the agreement.
"This agreement clearly demonstrates the value of the collective bargaining process," said Chris Shelton, Vice President, CWA District One. "Rather than having the Legislature unilaterally impose pension and health care givebacks on us, we have negotiated a contract that provides real economic security for our members while providing responsible leadership on the very real problems of pension and benefit costs."
Highlights of the contract include:
Raises of 3% on July 1, 2007 and July 1, 2008, and raises of 3.5% on July 1, 2009 and July 1, 2010. State workers have not negotiated a contract without wage freezes since 1992. The contract will provide significantly more in-pocket money than the 2003 contract.
Annual cash bonus payments to all workers with salaries less than $37,000, in order to bring their raises up to the value of the percentage raise for a worker earning $37,000. An additional provision will boost salary scales for thousands of lower-paid clerical workers.
Pensions for current employees will remain completely unchanged. Legislative and bargaining proposals to cut the pension benefit for future workers by 9% or to calculate pensions based on the average of the last five years of salary, instead of the current three, were rejected. So were proposals to require all future employees to enroll in a 401(k) type plan instead of the current defined benefit system.
The contract also commits the State to work with the union to seek legislation that will increase employee representation on the State Investment Council from 4 to 6, and provides for a chairperson elected annually by the members of the Council, instead of appointed by the Governor for five years. The parties will also seek greater disclosure of the financial interests of the Council members.
The Governor will continue his commitment to meet the state's annual obligation to fully fund the pension.
The 1.5% contribution to the cost of health care and the .5% increase in the pension contribution will be in pre-tax dollars, reducing their combined value to about 1.5% of take-home wages.
The State will introduce a new national PPO health care plan which will replace the current NJ Plus plan. This plan will have an expanded national network of doctors and will not require workers to seek referrals from primary care physicians if specialists’ services are required, in contrast to the current plan.
CWA bargained to link the health care contribution to wages, instead of the cost of premiums, in order to minimize the impact on low-wage workers and those with families. In addition, health care premiums are rising more quickly than any other consumer item and the Union did not want increases linked to those premiums.
The parties strengthened contract language guaranteeing that there will be no changes in health benefits during the life of the agreement.
"After 18 months of finger-pointing and scapegoating, this contract represents a real victory for state workers," said Shelton. "We bargained in the most difficult environment we've faced since Whitman was Governor, at a time when private sector pensions and health care are virtually collapsing. We secured a solid wage increase that raises the standard of living of our members, while enhancing protections for our health care and pensions for years to come."
"We have agreed for the first time to make a modest contribution towards the cost of health care and to a modest increase in pension contributions," said Shelton. "We believe these are reasonable and responsible steps that are justified by the considerable funding problems facing the benefit systems. Those who oppose this contract because of these modest changes are living in a fantasy world of irresponsible leadership which fails to take account of the threats to pension and health care benefits in both the public and private sectors."
posted by Randy Bergmann at 11:27 AM
6 Comments:
Nice to see that when the state government takes the money out of the teacher's pension fund and then does not pay it back, it forces the workers to contribute more. Hopefully one day the citizens of NJ will realize that it is not the public employees who are the problem but the actual state government that created the mess.
Looks like Corzine just bought a lot of votes for the next election, (273,000, not counting teachers, fire and police). Under McGreevy, the "Project Labor Agreement" came about, it requires that in any construction contract with state funds involved over $200,000 contractors must sign labor agreements with the various unions. That bought McGreevy the vote of labor. I wonder what Jon boy has up his sleeve to pander to that group.
this should be the shove that anybody needs to cut and run from this state ....right now ,things are about get real bad real soon
I dont think any state worker will vote for Corzine. He just gave them a 1% raise for the next two years, once you figure in the givebacks. ONce you factor in inflation, they have a pay cut. Corzine lost the union vote.
The Governor bemoaned higher pension and health care costs, but his recent contract with state workers does virtually nothing to improve this situation. The tiny employee contribution of 1.5 percent for health care premiums and an increase in the retirement age for teachers from 55 to 60 for new hires only - may actually worsen the situation because these actions maintain unsustainable benefits that will make genuine reforms, such as transitioning to defined-contribution plans, more difficult.
Fascinating! The state, under Governor Christie Whitman, borrowed (Read stole, since it has not been paid back) 2.8 Billion dollars from the state pension system. Yet modestly paid state workers, including teachers, police and firefighters, are still being blamed for the pension mess, and by extension ever increasing property taxes. Get Real.
Post a Comment
<< Home