Attached are two advisories – one on active programs and rates and the other on retired programs and rates .
Yesterday, the School Employees’ Health Benefits Program Design Committee met and came to an agreement on plan designs for the School Employees’ Health Benefits Program for the calendar year 2012. Attached is an advisory with this information.
August 29, 2011 AdvisoryP.L. 2011 Chapter 78
Chapter 78, P.L. 2011 was signed into law effective June 28, 2011. The law changes several aspects of the Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement System (PERS) operation and some benefit provisions of those systems. The Division of Pensions and Benefits is in the process of implementing the provisions of Chapter 78, and we will provide additional information as it becomes available.
This advisory will be updated regularly as NJEA receives more clarifications.
The law mandates the following:
Increase in Employee Pension Contribution Rates
Chapter 78 changes the employee contribution percentage for pension benefits from 5.5% to 6.5% for ALL active members of TPAF and PERS, effective immediately. However, that increase will begin as soon as the necessary administrative procedures for collection are established and will not be applied retroactively to the effective date.
An additional 1% increase will be phased in over 7 years starting after 12 months from the law’s effective date for ALL active members of TPAF and PERS.
The contribution increases will be implementedin two phases:
The first phaseapplies to all employees who are members of PERS and TPAF employed in all covered service positions. The increase will become effective with the first payroll on or after October 1, 2011. For Local Government employees, Local Board of Education employees, and State employees who are not compensated through the State Centralized Payroll Unit or not reported on a biweekly payroll schedule,the increase is effective with the first payroll amount to be paid on or after October 1, 2011, which is reported to the Division of Pensions and Benefits as compensation for the fourth calendar quarter of year 2011.
The second phase of the employee contribution increase from 6.5% to 7.5% applies to ALL active members of PERS and TPAF and will be phased in equally over a seven year period beginning July 2012. The contribution rate will increase by 0.14% every year starting July 2012 until the 7.5% contribution level is reached in July 2018. The minimum pension loan repayment amounts and payments for the purchase of service credit after the effective date of the law will need to be adjusted accordingly.
Pension Plan Provisions Changes
The law creates Tier 5 for members of TPAF and PERS:
New members to the pension system on or after June 28, 2011 will be eligible for a service retirement benefit at age 65.
New members to the pension system on or after June 28, 2011 will need 30 years of creditable service for receipt of the early retirement benefit with a reduction of 1/4 of 1% for each month (3% per year) that the member is under age 65.
Members are new to the system at their original date of hire and/or after they incur two or more years break in service (including medical leave of absence).
Automatic Cost-of-Living Adjustment (COLA) Suspension
The law suspends the payment of COLA to ALL current and future retirees and beneficiaries until the state pension fund reaches certain level of funding (target funded ratio).
Creation of New Pension Committees
Chapter 78establishes new pension committees:
One eight-member committee in the TPAF; and
Two eight-member committees in the PERS, one for the State part and one for the local part of the PERS.
Four members of each committee will be appointed by the Governor to represent public employers. The other four will be appointed by the unions representing members of those retirement system. The committees will be formed when the pension fund reaches certain level of funding (the “target funded ratio” for the system or part of the system is achieved). Every committee will have the discretionary authority to change the plan provisions including:
employee contribution rate;
benefit formula multiplier;
final compensation period;
minimum age at which a member becomes eligible to retire either for service or early retirement;
disability retirement provisions; and
The committee will not have authority to change the vesting period requirements.
The committee will give priority consideration to the reactivation of the COLA before any other benefit changes. It will be able to reactivate the COLA and change the basis for its calculation, as well as set the duration and extent of the activation.
The committee will not implement any pension benefit change if the direct or indirect result of that change will cause the system’s funded ratio to fall below the target funded ratio at any time during the 30 years following the implementation of such decision.
Definition of Target Funded Ratio
The new law defines “target funded ratio” to be the ratio of the actuarial value of assets to the actuarial accrued liability. The target ratio will be expressed as a percentage that will equal to 75% in fiscal year 2012, and increased annually in the next seven fiscal years, until the ratio reaches 80%. It will remain at 80% level for all subsequent fiscal years.
Changes in Pension Funding
The law changes the methodology for calculating the unfunded accrued liability payment portion of the employer’s annual pension contribution to the TPAF and PERS. The unfunded actuarial accrued liability (UAAL) will be amortized for each plan over an open-ended thirty year period and paid in level dollars. Beginning with the July 1, 2019 actuarial valuation, the UAAL will be amortized over a closed thirty year period until the remaining period reaches twenty. After that the amortization period will revert to an open-ended twenty year period.
Contractual Rights to Employer Pension Contributions
The new law provides that each member of the TPAF and PERS will have a contractual right to the annual required contribution made by the employer (State) or by any other public entity. That means that the employer (State) or other public entity must make a required contribution on a timely basis to securely fund the retirement system and to provide the retirement benefits to which the members are entitled by statute.
The failure of the State or any other public employer to make the annually required contribution will be deemed to be a violation of the contractual right of each employee. The Superior Court, Law Division will have jurisdiction over any action brought by a member of any system or fund or any board of trustees to enforce the contractual right set forth in this law. The law also provides that the rights reserved to the State in current law to alter, modify, or amend such retirement systems and funds cannot diminish the contractual right of employees established by this law.
Changes in Investment Council
Chapter 78, P.L. 2011 increases the membership of the State Investment Council from 13 to 16 members. Two additional members are appointed by the Governor with the advice and consent of the Senate, and one member is added from persons nominated by Public Employee Committee of the New Jersey State AFL-CIO. The law also provides that an elected member of the boards of trustees for TPAF and PERS will be eligible for designation to serve on the State Investment Council.
The law establishes a process using a super conciliator to resolve an impasse on a decision or matter regarding pension benefits before any new committees in the TPAF and PERS.
Additional Pension Plan Compliance Provisions
Chapter 78, P.L. 2011 codifies in law various provisions necessary to maintain the qualified plan status of the State retirement systems under the federal Internal Revenue Code. It intends to bring the defined contribution plans into compliance with U.S. Department of Treasury regulations affecting administration of plans administered under section 403(b) of the Internal Revenue Code.
13 Tips for Twitter & Facebook
- Make sure you read and follow your district’s social media policy (if your district has one).
- Don’t use your full name as your user name; giving away personal information – even your full name – online can be dangerous. Make sure to keep your cell phone number and home email private – you can check this under “Privacy Settings” under “Contact Information.”
- Do not affiliate your social media accounts with your work email address. People can search for you by your email address.
- Consider carefully how what you post could be interpreted. Humor, especially sarcasm, is extremely difficult to convey.
- Never post information about your job online, especially about students. People have lost their jobs for things they have posted. Never post anything you mean to be funny about your boss or students.
- Never post during work hours or using work materials, such as a computer. Even if you use your own personal laptop or smartphone at work, you could have a problem, particularly if you are posting when you are supposed to be performing your duties. Remember, Twitter, Facebook, and other social networking sites have time and date stamps on comments so people can see when you posted something.
- Even if you are not “friends” or “following” a manager or co-workers, people can find your information online and so-called friends may share it with your boss by printing it out, taking a screenshot, or showing them the information on a smart phone.
- Be careful with abbreviations. Twitter mandates 140 characters; many times you have to shorten or abbreviate your message. Make sure you re-read your post carefully before you submit it.
- Do not share where you are with applications such as Foursquare. You never know who is accessing your information, or why. Be safe and only post your location after the fact.
- Always exercise good judgment when posting anywhere online. Don’t let emotion overwhelm common sense. Be careful when using capital letters as this is considered to be shouting.
- Be judicious in posting photos online, especially if they are not something you would want to be shown at a school board meeting. User policies can vary – you may be allowing the company the right to use them any way they would like. Never post photos of yourself holding alcoholic beverages or wearing provocative clothing.
- Monitor photos in which you are “tagged.” When someone uploads a picture of you and tags it with your name it can be viewed unless you have properly set your privacy settings, which is at least a seven-step process. In addition, be careful of photos in which others are behaving in a risqué manner as you will be seen as guilty by association.
- Do not “friend” or “follow” students or their parents. If you are using social media for education-related activities, make sure to have it approved in writing by your supervisor and create a different account; do not use your personal account.
As educators, we are held to higher standards than the rest of the working world. It’s a responsibility that we take very seriously. Be safe online and never post anything you wouldn’t want read out loud at a school board meeting.
2011 Phi Delta Kappa/Gallup Poll of the Public’s Attitudes Toward the Public Schools
Released on August 17, 2011; based on a sample of 1,000 adults in U.S. households. This poll is considered a trusted source of information and is widely disseminated for use by policymakers and the media. There is an iPad app available with the complete findings; the full report is here: http://www.pdkintl.org/poll/index.htm
Press release headline — 43rd Annual PDK/Gallup Poll Shows Higher Confidence in Teachers Despite Negative Perception of Nation’s School.
Title of the report – Betting on Teachers
Key findings on recruiting, retaining great teachers:
- Seven out of ten polled say they have “trust and confidence in the men and women who are teaching children in the public schools.” This is unchanged from last year’s poll. More than half think their local public school has a hard time attracting good teachers. More than two thirds think giving teachers more flexibility is preferable to following a prescribed curriculum.
- Three of four polled would support recruiting high-achieving students to be teachers and would “encourage the brightest person they know” to become a teacher.
- By a large majority, the ability to teach students is perceived to be a result of natural talent versus college training.
- Two-thirds would like to their child to become a public school teacher again this year.
Key findings on teachers and collective bargaining:
- Nearly half (47%) believe that unionization has helped the quality of public school education.
- A majority (52%) would side with teacher unions versus the governor in states where there are budget and collective bargaining disputes.
- In determining teacher pay, more than one third (38%) think academic degrees, experience and principal evaluations are very important; 29% say student test scores are very important.
- In a RIF, one third would rely on experience as the most important factor for determining who should be laid off first; 37% on principal evaluations; 27% on academic degree; 30% on student test scores.
- By large majorities, at every school level, respondents chose having a more effective teacher with larger class size over smaller class size and a less effective teacher.
- Opinion is split on releasing information about individual teacher’s student test scores.
Key findings on quality and the problems facing education;
- Once again, lack of financial support tops the lists of problems faced by public schools.
- Community schools receive a letter grade of A or B by a majority (51%); in 2010 49% received those grades. Only 17% graded the nation’s schools A or B. Key factors driving the difference are that there is greater knowledge and pride in community schools.
- Teachers get a letter grade of A or B from 69% of those polled; 54% for principals; 37% for the school board; 36% for parents.
- Barack Obama gets an A or B for his support of public schools by 41%, up from 34% last year.
- More than two thirds (70%) now favor the idea of charters schools; in 2010 68% approved.
- Public school choice is favored by 74%; 34% approve of allowing parents to choose private schools at public expense.
Other sections of the poll considered opinions digital learning, preparing students for the future, and students of military families.
August 4, 2011
The “New Jersey First Act” and public school employment
What is the Act?
The Act establishes residency requirements in public sector employment in New Jersey.
What public school employees are affected by the Act?
Every person holding an office, employment or position with a school district or an authority, board, agency, commission or instrumentality of the school district falls under this residency requirement. This includes employees of local school districts, regional school districts, jointure commissions, county vocational schools, county special services school districts, educational services commissions, educational research and demonstration centers, environmental education centers, and educational information and resources centers.
What is the effective date of this legislation?
Although signed into law by the Governor on May 17, 2011, the law actually takes effect on September 1, 2011.
Are current school employees who live out of state “grandfathered?”
Yes, as long as the employees are in their position prior to the effective date of September 1, 2011, they will not be required to have their principal residence in New Jersey as long as they do not have a break in public service greater than seven (7) days.
How does the law define principal residence?
The law states that a person may have, at most, one principal residence and the state of a person’s principal residence means that state:
- where the person spends the majority of his or her nonworking time, and
- which is most clearly the center of his or her domestic life, and
- which is designated as his or her legal address and legal residence for voting.
If I am a “grandfathered,” out-of-state resident, can I change school districts and retain my exemption?
Yes, as long as the break in service between jobs is no greater than seven (7) days.
If I am hired after September 1, 2011, how long do I have before I have to fulfill the residency requirement?
One year (365 days) from your date of hire.
If I am on an approved leave of absence for more than seven (7) days, is that considered a break in service?
No, during a leave of absence the employment relationship between the public employer and the public employee continues to exist.
Does a reduction in force (RIF) constitute a break in service?
Yes, if the public employee is out of work for more than seven (7) days before being re-employed. The affected employee would therefore have three options:
- move his or her principal residence to New Jersey within one year of his or her re-employment, or
- seek a hardship waiver, or
- sever his or her employment relationship.
What is a hardship waiver?
The law sets up a five-member committee to deal with exemptions from the residency requirements based upon critical need or hardship. Three of the members are appointed by the Governor, one by the Senate President and one by the Speaker of the Assembly. If the committee fails to act upon an application for exemption within thirty (30) days of receipt, no exemption will be granted.
Are districts still allowed to hire employees from outside of New Jersey?
Yes, there is no ban to hiring individuals from outside of New Jersey, however, they will be subject to the law and will be required to establish their principal residence in New Jersey within one year.
Are charter school employees affected by this law?
Yes, employees of charter schools are public sector employees since charter schools are taxpayer funded.
Are employees of state colleges and universities subject to these residency requirements?
Yes, except some exemptions are provided for certain employees of state colleges, universities, other higher education institutions, county or community colleges employed on a temporary or per-semester basis as a visiting professor, teacher, lecturer or researcher. Also exempted are full- or part-time positions as a member of the faculty, the research staff, or the administrative staff requiring special expertise or extraordinary qualifications in an academic, scientific, technical, professional, or medical field or in administration, that, if not exempt from the residency requirement, would seriously impede the ability of the college, university, or institution to compete successfully with similar colleges, universities, or institutions in other states. A report on these positions must be filed on January 1 of each year with the Governor and the Legislature.
As with any new legislation that is enacted, there are many questions that will arise. Some of them, especially as it relates to tenure, will be answered through litigation.
- What if I am a tenured employee who currently resides in New Jersey and I decide to move my principal residence to Pennsylvania. After a year, do I lose my job and tenure protection?
- What if I am a nonresident 10-month employee (paraprofessional) with no guarantee of work for the upcoming year and I collect unemployment during the summer. Is this considered a break in service?