Governor Jon S. Corzine

STATEMENT OF THE GOVERNOR REGARDING
STATE EMPLOYEE CONTRACT NEGOTIATIONS

TRENTON – Governor Jon S. Corzine this morning released the following statement regarding the early completion of state employee contract negotiations with the Communications Workers of America (CWA):

“Since September my Administration has been engaged in good faith negotiations with public employee unions. Today I am pleased to announce a tentative agreement that provides savings for New Jersey taxpayers and protects the healthcare and retirement security of our public employee workforce. This agreement is the result of our mutual commitment to the collective bargaining process, which by its nature requires compromise.

“The leadership of the New Jersey Education Association and the Communications Workers of America should be commended for their diligence and willingness to help restructure our state’s financial future. This agreement makes today a good day for New Jersey taxpayers and public employees.�

During this process, the Administration held a series of discussions with the New Jersey Education Association (NJEA) and NJEA President Joyce Powell, which resulted in relief for taxpayers while affirming New Jersey’s ability to attract high-quality educational employees. Complete details are included in the below fact sheet.

The Administration was represented by lawyers Angelo Genova and James McGovern, partners of Genova, Burns & Vernoia, and David Beckett, director of the Governor’s Office of Employee Relations. Genova, McGovern and Beckett will be available to the media at 2 p.m. in the Governor’s Outer Office.

SUMMARY OF KEY ECONOMIC ITEMS IN AGREEMENT

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.
o Projected savings:
 $158.5 million per year by 2022

• Raises the retirement age from 55 to 60 for new hires.
o 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.
o 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.
o 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.
o 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.