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We Need Your Contact Info
In order to serve you better SUILC is asking that you update your contact information with your personal e-mail address. Members can go to their respective organization's website or email (see below).
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SUILC Officers & Staff
Officers:
Alfred C.
Laubsch, Jr. - President (IBEW LU30)
Eleanor Heck - Vice President (IBEW LU33)
Jerry Calamia - Treasurer (PSMA)
Paula Howard - Recording Secretary (IBEW LU30)
Staff:
Barry Chalofsky - Webmaster/Newsletter
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PSMA & Retirees' Network Website
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Welcome IBEW Managers and Deputy Attorneys General, PSMA Members and Retirees
The Stronger United Independent Labor Council (SUILC) is composed of members of IBEW Local 30, IBEW Local 33, the Public Sector Managers' Association (PSMA), and the PSMA Retirees' Network.
The SUILC is an independent body that represents the interests of its underlying members through advocacy, communications, outreach, union activities, and organizing support. SUILC is the first New Jersey labor council representing four important groups: managers covered by IBEW Local 30, managers covered by PSMA, Deputy Attorneys General covered by IBEW Local 33, and retired state employees covered by the PSMA Retirees' Network.
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N.J. Supreme Court Enters Fray Over Pay Hikes for Public Workers
By Samantha Marcus/NJ.com/March 14, 2017
TRENTON -- Public employee unions and government officials clashed Monday in a case before the state Supreme Court that could determine whether workers across New Jersey will get pay raises.
The state's highest court heard oral arguments over the whether "step" increases -- raises in pay when workers reach annual milestones in years of service -- should be granted after a contract has expired.
Atlantic County, Bridgewater Township and the Public Employment Relations Commission asked the court to reverse an appellate court ruling, which found PERC overstepped its authority when it upended a four-decades-old doctrine that says step increases outlive the term of a contract.
The Fraternal Order of Police Lodge 34 and Policemen's Benevolent Association Local 77 charged Atlantic County with unfair labor practices, alleging the county violated that "dynamic status quo" doctrine during contract negotiations and arbitration.
Police officers who were not yet at the top of the pay scale were due 5 percent or 6 percent step increases.
The pension system, comprised of several pension funds, has enough assets to cover 56.5 percent of its liabilities.
PERC dismissed the unions' charges, rejecting a policy it said no longer reflected the economic landscape or the challenges local governments face in complying with state-imposed 2 percent caps on tax levy hikes.
The appellate court said, "Concerns regarding budgets are not a primary consideration when the agency safeguards the rights of public employees," and that "PERC's abandonment of the dynamic status quo doctrine was action outside the scope of its legislative mandate."
That panel also slapped PERC in a dispute out of Bridgewater in which it deemed automatic salary increases during a lapse in contracts could no longer be negotiated or arbitrated.
The dynamic status quo doctrine has been applied to step increases since 1975. PERC said it created a level playing field for negotiations.
Now, said David Rapuano, who argued against the automatic step increases, the doctrine has an effect opposite to the one intended: contract negotiations are more difficult and unions have a disincentive to quickly settle labor disputes.
A passage in the contracts that reads "All provisions of this agreement will continue in effect until a successor agreement is negotiated," proved a sticking point for the justices.
Rapuano said PERC didn't recognize that any language in the contracts that would require increment payments after they expired.
Justices Barry Albin and Jaynee LaVecchia questioned PERC's decision to apply the policy reversal to contracts that were already negotiated and implemented.
PERC's decision altered the playing ground of negotiations "suddenly and unexpectedly after 40 years," LaVecchia said. "Doesn't that deserve prospective notice to parties?"
Rapuano argued PERC's reversal did not upset any existing contracts, rather it changed the period after a contract runs out.
In effect, LaVecchia asked, hasn't "PERC has become a player, a thumb on the scale" in contract negotiations?
Rapuano disagreed.
"Actually no. I think it finally took its hand off the negotiations. I think the dynamic status quo was the thumb."
State employees lodged a similar complaint against Gov. Chris Christie's administration, which similarly froze salaries for tens of thousands of workers whose contracts expired.
A union win in this case would affect every state and local public employee in New Jersey, said Ira Mintz, who represented the police unions before the court.
Patrick Colligan, president of the state Policemen's Benevolent Association, said "If (the justices) follow all the case law and all the labor law and all the PERC decisions from the past 40 years, they will make a decision that is favorable to us," he said.
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Unfunded Liability of Public-Employee Pension System Closes in on $50 Billion
John Reitmeyer/NJ Spotlight/March 6, 2017
New actuarial calculations for New Jersey's beleaguered public-employee pension system show an unfunded liability of near $50 billion, a staggering number for a retirement plan that's been set up to cover roughly 780,000 current and retired government workers.
But many financial experts believe the pension system's funding problem is potentially much worse, because the state has for decades been using optimistic assumptions when it comes to projecting annual investment returns.
The $72 billion pension system's assumed rate of return, or discount rate, for the past few years has been 7.9 percent, which is higher than the average returns of just over 7 percent that the pension system has realized over the past 20 years. Gov. Chris Christie, a Republican who has stressed pension reform during his two terms in office, announced last week that the rate will be lowered to a more realistic 7.65 percent.
While the difference seems subtle, pension experts say the downward adjustment is good for the retirement system's overall long-term health because it will generate a more realistic assessment of the unfunded liability, and that in turn will require the state to make more robust annual contributions in the ongoing effort to maintain the fund's solvency.
Christie's efforts - the reduction is just the latest to occur during his tenure - also line up with calls for more realistic accounting that have come from Senate President Stephen Sweeney (D-Gloucester), the Legislature's leading Democrat on issues related to pension funding and employee benefits.
New Jersey is not alone in seeking more modest financial projections as leaders in several other states have been lowering pension-system assumptions in recent years to better align investment projections with expected market conditions. Under Democratic Gov. Jerry Brown, the California Public Employees Retirement System is reducing its assumed rate of return from 7.5 percent to 7 percent in phases over the next few years. Other states, including Michigan and Connecticut, are making similar changes.
Tom Healey, a financial analyst and former U.S. Treasury official under President Ronald Reagan who led a benefits-review commission impaneled by Christie in 2014, said in an interview that New Jersey has been working under a higher discount than most other states.
"At 7.9 percent, New Jersey was towards the top end of all states," Healey said.
A report published last year by the American Legislative Exchange Council determined the average assumed rate of return among some 280 state-level public-employee pension funds is 7.37 percent. For New Jersey, using a lower discount rate in actuarial calculations will increase the size of the unfunded liability, causing a slight elevation of the annual contribution the state is required to make to keep the pension system solvent.
"The way the math works, it increases the amount of the actuarial required contribution," Healey said.
New Jersey at one point nearly three decades ago used a much more conservative 7 percent discount rate, but it was elevated to 8.75 percent in 1992, a move that allowed politicians at the time to significantly lower how much the state needed to put into the pension system that year to keep it solvent. The rate was eventually moved down to 8.25 percent in 2004. Under Christie, the rate was lowered twice to land at 7.9 percent.
Last year, the pension system, which is professionally managed by the state Division of Investment, enjoyed returns of just over 7 percent. That marked an improvement over the 2015 returns, which didn't crack 1 percent. Over the past 20 years, returns have averaged 7.03 percent, according to Department of Treasury records.
Willem Rijksen, a spokesman for state Treasurer Ford Scudder, said the recommendation to lower the assumed rate of return to 7.65 percent was formally approved by state pension officials late last month. "Moving it downward is consistent with what other states have done and is based upon our analysis of the marketplace and past returns," Rijksen said.
Christie, speaking during his annual budget address last week, said the discount-rate reductions that have occurred during his tenure mean the state is "stopping the gimmickry" of using inflated assumptions to make the unfunded liability look less severe. "When we have too high an assumed rate of return, we are not telling the public the truth," Christie said.
"While this concerted effort has contributed to increases in the annual required contribution into the pension system, those payments are crucial in ensuring the long-term viability of the pension system," said Christie, who also enacted legislation in 2011 that forced employees to contribute more toward their pensions.
"This has not been easy for us to do, but the right thing rarely is easy," he said. "We have obviously not done this to get credit - good thing because we haven't gotten any - we've done it for our state's pensioners and our state's fiscal health."
Sweeney, the Democratic legislative leader, said Christie's efforts to reduce the assumed rate of return put the governor in line with his own advocacy on pension issues. But Sweeney, who is also a private-sector labor official, said making the full state pension contribution, and making that payment in quarterly installments under a new law that will go into effect on July 1, must also be priorities for the state.
"I have long advocated for a more realistic assumed rate of return for the pension system, and my plan to make quarterly payments and insistence on making the full actuarially required pension payment, as scheduled, are crucial to sustaining the long-term financial health of the system so it is there for hard-working public employees," Sweeney said.
But throughout Christie's tenure, his administration has never fully funded the state's obligation even though the governor worked with lawmakers to enact a 2010 law that called for full funding of the state contribution by the 2018 fiscal year, which begins July 1. Instead, Christie's $35.5 billion budget proposal for the 2018 fiscal year includes a $2.5 billion contribution, which is about half the total that actuaries say is needed. Christie's spending plan will be reviewed by state lawmakers over the next several months as part of the formal budget process leading up to a June 30 deadline.
Phil Murphy, a Goldman Sachs veteran and Democratic candidate in this year's gubernatorial election, led a blue-ribbon task force set up by then-Gov. Richard J. Codey in 2005 to review state employee-benefits funding issues. The panel's loudest warning was a call for "no more pension holidays" for state and local governments, but the authors also called for an end to "valuation gimmicks."
Asked to comment on the change from a 7.9 percent assumed rate of return to 7.65 percent, Murphy's campaign sent a statement that instead focused on the size of the state's annual pension contributions, and fee-driven hedge-fund investments that have been pursued during Christie's tenure.
"First principle, the state must make its payment, and if the state is having trouble meeting its targets, then it should jettison the high-cost, money-losing hedge funds that only pad the profits of Wall Street while dragging down the pension funds' performance," Murphy's statement said.
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Police, Firefighters Edge Closer to Control of Own Retirement Fund
By John Reitmeyer/NJ Spotlight/MARCH 24, 2017
New Jersey police officers and firefighters moved a major step closer to getting more say in how their pensions are administered after the full Assembly voted yesterday in favor of a bill that would spin their retirement fund out of the broader state pension system.
The proposal to create a new board of trustees to administer the New Jersey Police and Firemen's Retirement System now heads to Gov. Chris Christie; the Senate already voted in favor of the legislation earlier this month.
But Christie - a Republican who has tried to focus on improving the fiscal health of the grossly underfunded public-employee retirement systems during his two terms in office - has yet to give any indication whether he is in favor of the proposal. Opponents say the change will ultimately shift more risk onto taxpayers, something Christie has tried to prevent from happening in earlier reform efforts. Yet even if the governor chooses to veto this measure it may not matter; the bill has now passed both houses of the Legislature with enough votes to overcome a veto.
Officials from unions representing police officers and firefighters praised the bill's advancement yesterday, saying the proposed new PFRS board is modeled on successful pension boards operating in other states. But representatives of municipal and county governments voiced concerns that the bill gives too much power to the unions at the expense of their government employers because the new panel would give more places on the board of trustees to the unions than the employers.
Years of underpayments
In all, the $72 billion state pension system is made up of seven different accounts, representing employee groups like teachers, judges and police officers and firefighters. While the overall system is grossly underfunded thanks largely to years of underpayments by the state - nearly $50 billion as of the latest official accounting - some of the individual retirement funds are in better shape than others.
For example, the retirement account for judges is in the worst shape, funded at only 36 percent. By contrast, the PFRS is in the best shape, funded at 70 percent. Part of the reason for the difference in funding levels is that the state is responsible for covering the employer contributions that are made into the retirement systems for the judges, while the PFRS employer contributions are generally made by local governments. And unlike the state, county and municipal governments are generally required by state law to pay their full employer pension contribution.
During the debate in the Assembly yesterday, Assembly Speaker Vince Prieto (D-Hudson) said giving the unions a chance to manage their own pension system means they would have more "skin in the game" than the current management structure allows. Right now, the state Division of Investment manages the overall pension system under policies set by the New Jersey State Investment Council.
Union officials have been growing increasingly frustrated with the pension system's lackluster returns in recent years, and they've also raised concerns about investments in hedge funds and other so-called alternative investments that require fees to be paid to outside fund managers.
"This is one innovative way to make sure that we're mindful of how we invest in the pension (system) and make sure the managing of it is (by) the people who care the most about it, the recipients," Prieto said.
All of the risk put on taxpayers?
But the proposal also drew criticism from both sides of the aisle yesterday, with Assemblyman John Wisniewski (D-Middlesex) raising questions about the makeup of the new board of trustees. There would be seven slots for employee representatives versus five for government representatives. And since the bill gives the panel the authority to set contribution rates in addition to making investment decisions, he said the proposal puts all of the risk on the taxpayers if the new board's investments turn out to be faulty.
"This is a bill that is not in the public interest," said Wisniewski, who also raised concerns about whether the new board would be subject to the state Open Public Meetings Act.
Assemblyman Declan O'Scanlon (R-Monmouth) also came out firmly against the bill during the debate, saying the makeup of the new board would give the unions the ability to "crush property taxpayers." Though Christie worked with lawmakers in 2010 to establish a 2 percent limit on local property tax increases, they allowed several exceptions to the cap, including costs associated with covering employee-pension benefits.
"We are absolutely not just flirting with danger, but inviting serious danger," O'Scanlon said.
Christie has yet to say anything publicly about the bill, and his office did not respond to a request for comment yesterday. But Christie's former state treasurer, Andrew Sidamon-Eristoff, wrote in NJ Spotlight earlier this week that he has numerous concerns, including the loss of economies of scale that the pension-system members are now benefitting from and the challenge posed by removing shares of complicated joint investments for only the police officers and firefighters.
Bill may be veto-proof
O'Scanlon said he hopes Christie takes action to address the bill's flaws, suggesting a conditional veto or even outright veto could be looming.
"I believe the governor's office will have the good sense to fix it, or veto it," O'Scanlon said.
In the end, it may not matter how the governor feels about the issue. Though there have been many instances during Christie's tenure where lawmakers have passed bills with a veto-proof majority only to see GOP members change their minds when confronted with an override of the governor, the PFRS bill cleared the Assembly yesterday by a comfortable 61-4-10 vote, and the vote in the Senate was even wider, passing by 37-0 margin. To secure an override, it takes 27 votes in the Senate and 54 in the Assembly.
The concept of giving employees more say over their retirement systems' investment decisions was included in a series of recommendations made by a nonpartisan commission of benefits experts that Christie impaneled in 2014. It's also been supported by Senate President Stephen Sweeney (D-Gloucester), who is sponsoring the bill in the Senate.
But the management change proposed by Christie's benefits panel was only supposed to occur after a freezing of the existing defined-benefit pension system and the creation of a defined-contribution cash-balance fund, recommendations that have not been enacted.
Still, union officials say they've been researching a takeover of their retirement account for the last two years, going across the country to find out what's worked in other states, as well as what hasn't.
"The fact is that almost 20 years of pension gimmicks have reduced the funded value of the PFRS from over 100 percent in 2000 to just over 70 percent funded today, and the steps we are taking to gain control of our financial future are critically important to all of our members and their families," said Patrick Colligan, president of the New Jersey State Policemen's Benevolent Association.
"This legislation installs a system we have seen work in other parts of the country to ensure people receive the pensions they earned at no harm to taxpayers and we look forward to having the same opportunity here in New Jersey," Colligan said yesterday.
"This is a commonsense bill," said Ed Donnelly, president of the New Jersey State Firefighters Mutual Benevolent Association. "It protects taxpayers, municipalities and gives our members peace of mind that the pension will be preserved."
But Michael Cerra, assistant executive director of the New Jersey State League of Municipalities, cited the concerns about the makeup of the proposed new board of trustees while calling the Assembly vote a "defeat for the taxpayers."
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Healthy Gains Reported for Pension Returns
By John Reitmeyer/NJ Spotlight/March 30, 2017
Union officials in recent weeks have questioned the state's management of public-employee pension investments as lawmakers have advanced a bipartisan measure that would give the police and firefighters more control over their retirement system.
But with that bill now sitting on Gov. Chris Christie's desk, new investment-return figures suggest the state pension system has been doing much better over the past few months amid a period of general economic growth and healthy stock-market gains.
In all, state pension-system investments are up 8.6 percent during the 2017 fiscal year, according to data released yesterday during a public meeting of the New Jersey State Investment Council. The returns are even more impressive over the past 12 months, topping 15 percent.
Challenges remain
To be sure, the pension system still has its significant challenges, including an unfunded liability that's close to $50 billion according to the state's official calculations, and possibly much more by other estimates. The state has also for years not been contributing the full amount that's needed based on the latest actuarial assessments to put the pension system back on a path to solvency. The current state budget provides only about 40 percent of that total.
But the new figures indicate investment performance, at least in recent months, does not seem to be a major issue for the $71 billion pension system, which covers the retirements of roughly 785,000 current and retired workers. Investments are up 7.87 percent over the past five years, and up 15.26 percent over the 12-month period through the end of February. The pension system's assumed annual rate of return is 7.65 percent.
"It is nice to be able to report on a period that offers good news," said investment council chair Tom Byrne at the beginning of the meeting yesterday.
The improved investment performance - fiscal year 2016 investment returns came in nearly 1 percent in the red - arrives just as Christie is deciding what to do with legislation that lawmakers sent him last week that would spin the retirement plan for police officers and firefighters out of the broader state pension system. Union officials have sought the change amid the years of state pension underfunding, criticizing the state's handling of investments, pointing to fiscal year 2016 returns, and questioning the acquisition of stakes in hedge funds that require fees to be paid to outside managers.
Managing money for police and firefighters
The bill now on Christie's desk would create a new board of trustees to manage the assets of the Police and Firemen's Retirement System, which has an estimated $24 billion market value. Right now, the state Division of Investment manages the investments on a daily basis for the overall pension system, under policies set by the investment council.
The legislation, which received final approval from lawmakers last week, would also give employees seven of the 12 positions on the proposed board of trustees, meaning they would have a clear majority. But representatives of municipal and county governments have voiced concerns about that composition, saying unions would have too much power at the expense of government employers, ultimately putting taxpayers at risk if the board's investment strategies prove faulty.
Concerns have also been raised about how shares of complicated investments that right now are a part of the broader pension system could be removed for only the police and firefighters. That issue came up during yesterday's investment-council meeting, with Christopher McDonough, the director of the Division of Investment, indicating it is still being reviewed.
"We're still working through what the effect would be on the portfolio if the bill were to be passed in its current state," McDonough said. "There would be, very clearly, challenges in segregating the assets of any one individual plan from the portfolio given the structure of the current system."
He also said an initiative launched last year that involves winding down some of the hedge-fund investments is progressing, with allocations dropping from 11.2 percent in September 2016 to 9 percent at the end of last month. The goal of getting hedge-fund allocations down to 6 percent would likely be met in early 2018, McDonough said.
Tipping his hand
For his part, Christie has yet to tip his hand as lawmakers await his decision on the PFRS bill. Though the concept of giving employees more say over their retirement-system investments was included in a series of recommendations made by a nonpartisan commission of benefits experts that Christie empaneled in 2014, that proposed change was only supposed to occur after the existing defined-benefit pension system was frozen in favor of a new defined-contribution cash-balance fund. Those recommendations and others put forward by the commission, which included Byrne as a member, have not been embraced by Democrats who control the Legislature.
Christie, a second-term Republican, acknowledged during a recent appearance on NJ 101.5 FM radio that the bill doesn't do exactly what the benefits experts recommended, but he also offered little indication of which way he's leaning.
"I have 45 days" to review the legislation, Christie said. "We'll take a good look at it and we'll see what we want do with it."
Byrne, who has raised questions about the bill, said he's yet to speak with Christie about the proposal. But he said he has discussed the measure with lawmakers, including some who voted for the bill but may also be having some misgivings.
The notion that some lawmakers could change their minds is important because, while the bill passed both houses of the Legislature with veto-proof majorities, if Christie were to issue a veto or a conditional veto the issue would then go back to lawmakers for consideration. Christie has never had one of his legislative vetoes overridden since taking office in early 2010, but the politics surrounding the PFRS legislation could pose a firm test to that record. All 120 legislative seats are on the November ballot, and the unions have made it clear the bill's adoption is a top priority.
"I have talked to - and I won't say who - I have talked to certain state legislators who voted for it and are troubled by it," Byrne said. "There are the realities of political pressure, too."
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SUILC Board Meeting Notes
The Board of Delegates met on March 27, 2017. Items discussed included: financial status, recent legislative efforts, status of increment court case, committee meetings, legislative issues and priorities The next meeting of the Board is on June 13, 2017.
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PSMA Retirees' Network Breakfast
The Retirees' Network held its Quarterly Breakfast Meeting on March 29, 2017. The meeting was well attended. Members received updates on recent pension initiatives, dues collection efforts, and membership. Some ideas were discussed to increase membership.
Please note: All PSMA and IBEW members who retire are eligible for a FREE Membership in the Retirees' Network for one year!
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IBEW Seeks to Organize Y, V and W Managers
Managers in Y, V, and W titles interested in learning how to organize with IBEW, please contact Joe Mastrogiovanni, Jr., IBEW Lead Organizer, at Joey_Mastrogiovanni@IBEW.org or
Click Here.
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