NJ Gov Signs Bill Reining in Employee Benefits

By ANGELA DELLI SANTI | June 28, 2011 | 3:14 PM EDT

In this photo released by NBC News, New Jersey Gov. Chris Christie appears Saturday, June 25, 2011, during a pre-taped interview in Washington for Sunday's

TRENTON, N.J. (AP) — New Jersey Gov. Chris Christie on Tuesday signed landmark employee benefits legislation that increases pension and health contributions paid by a half-million teachers, police and other public workers and removes the issue from collective bargaining for four years.

Christie said the benefits have been more generous than the state can afford and need to be scaled back. The latest actuary figures show the pension and health care systems $110 billion short of their eventual liabilities.

The Republican governor said the legislation achieves two main goals: helping New Jersey taxpayers and ensuring that health and retirement benefits are still secure for public workers in future years.

"New Jersey has become a model for America," he said.

The law evokes sweeping changes affecting current and future workers and retirees. Current workers will be assessed a portion of their health care premiums based on how much they earn and will see their pension contributions rise by at least 1 percent immediately. Future hires will have to work until they are 65, not 62, to retire and will have to pay for health care in retirement, unlike retirees now. Workers already collecting a pension will see a suspension in their cost-of-living adjustments.

Employees who earn $60,000 and now pays $900 (1.5 percent of salary) toward health insurance will see their yearly costs more than double to $2,056 (3.4 percent of salary) for single coverage or more than triple $3,230 (5.4 percent of salary) for a family plan, after a four-year phase-in.

That comes closer to the amount private-sector workers pay but is still significantly less.

A Kaiser Family Foundation survey last year found that workers with employer-sponsored health plans paid 19 percent of the premium on average for single coverage and 30 percent for family coverage. State and local government workers paid the lowest percentage of their premiums — an average of 9 percent for single coverage and 25 percent for a family plan, according to the survey.

Public worker unions fought the changes and lost. A majority of Democrats in both houses of the Legislature bucked party leaders and opposed the plan. But it was muscled through with support from minority Republicans and a few Democrats after Christie struck a deal with legislative leaders of both parties.

Other states have been seeking to force public employees to pay more for benefits and limit collective bargaining rights. A GOP-led effort in Wisconsin calls for public workers to pay more for health and pension benefits beginning in late August unless a lawsuit by a coalition of unions is successful.

In Ohio, Gov. John Kasich in March signed a law limiting bargaining rights, which has yet to go into effect. In Michigan, the Republican state Senate has passed measures to require most public employees to cover at least 20 percent of the cost of buying their health insurance coverage, with some flexibility for local bargaining units.

The Massachusetts House passed a bill in late April stripping public-sector unions of the right to bargain over health care.