OPINION
As Senate President I had a duty to protect the long-term sustainability of every public employee’s pension system, SAVING IT FROM BANKRUPTCY, and in 2011, that’s exactly what we did. Since then, I have remained committed to improving the state’s pension and healthcare benefits—and I have a track record to prove it. Under my leadership, we:
- Saved billions of dollars for public employees by introducing a reverse auction system for the Prescription Benefit Manager’s contract.
- Developed a new health benefits plan for teachers, balancing salary-based contributions with reasonable coverage for specialized care, leading to significant savings.
- Provided additional incentives for teachers to use in-state hospitals and doctors, offering half the premium of the unrestricted plan.
- Ensured the state made its full pension contributions, setting the stage to reinstate Cost-of-Living Adjustments (COLAs).
It’s never easy making these tough decisions, but a leader is required to make the difficult choices. Decades of pension mismanagement, gimmickry and underfunding had occurred before I took over as Senate President. And having served on pension boards for private sector unions nearly my whole career, I knew I was obligated to act.
I’ve always known that bringing back COLAs will come at a cost. That’s why, as Senate President, I introduced the RICH (Retirement Infrastructure Collateralization Holdings) bill, a product of recommendations from the economists, academics and legislators who served on the bipartisan Economic and Fiscal Policy Workgroup.
This isn’t a gimmick, and the concept isn’t new. Both parties in the Legislature supported the transfer of the New Jersey State Lottery to pension system for teachers and state and local government employees, diversifying pension fund revenues and cutting the unfunded liability. Route 50, a state and local government periodical, offers an overview of how a similar model worked on a larger scale in Queensland, Australia. The nearly $50 billion value of this transaction nearly wiped out that pension system’s unfunded liabilities. You can read more about it here: Route 50 article on pension funding gaps.
I appreciate Assemblyman Sauickie referencing my press release, but I wish he had a better grasp of the policy-making process. While the press release didn’t cover every detail, anyone genuinely interested can read the Path to Progress report, the RICH bill I sponsored, and the Route 50 article, which includes a Stanford study that analyzed how a tollway was leveraged to fund a pension system. Politicians like Sauicke often make sweeping statements like “just bring back the COLA,” but if he’s serious, he owes the public a plan to pay for it. That presumably includes potential tax increases, budget cuts, or other measures necessary to restore COLAs responsibly.
Lastly, I appreciate the Assemblyman acknowledging my efforts to fully fund the School Funding Formula. But let’s be clear, Senate Bill 2, which he referenced, resulted in large state aid increases to 75% of public school students and taxpayers, who were not getting their fair share and had been underfunded for over a decade because the state’s funding formula failed to keep up with enrollment growth. Meanwhile, the state kept sending the same amount of aid to school districts with shrinking enrollments and soaring ratables for students who were no longer there.
Instead of making financially prudent decisions in preparation for having to share with the underfunded districts under a seven-year phase-in to fair funding that they knew was coming, these districts fought and are still fighting against the other 75% of students who were not getting their fair share. Over those seven years, we redistributed subsidies that — for nearly two decades –favored 25% of the students over the rest. No student saw their aid reduced beyond what was justified by a drop in enrollment, and per-pupil spending remained consistent. Today, students everywhere in New Jersey – in cities, suburbs and rural areas – are receiving their full fair share of state aid as required by the School Funding Formula. Not a penny more. Not a penny less.
That’s only fair.
Steve Sweeney is the former Senate President and is running for the Democratic nomination for Governor.
Editor’s note: Senator Sweeney’s opinion follows one previously published by Assemblyman Alex Sauickie.