Sweeney, Prieto gear up for another push to create new board for PFRS — the Police and Firemen’s Retirement System

Frustrated by state government’s handling of the New Jersey public-employee pension system, police officers and firefighters launched a major push earlier this year to gain more control over how their own retirement funds are managed. The effort won broad support in the Legislature from both Republicans and Democrats, but ultimately hit a road block when Gov. Chris Christie rejected their favored legislation.

But now Democratic legislative leaders say they’re preparing to breathe new life into the legislation, seeking to create a new board of trustees to manage the New Jersey Police and Firemen’s Retirement System (PFRS), eyeing early next year for the bill’s reintroduction.

Senate President Stephen Sweeney, the PFRS bill’s primary sponsor, announced the plan to reintroduce the legislation during a recent firefighters’ convention in Atlantic City, and Assembly Speaker Vince Prieto, the sponsor of the PFRS legislation in the lower house, said soon after that he’s also ready to try again in early 2018.

The legislative leaders’ new timeline conveniently coincides with Christie’s pending exit from the State House in January. It also means Sweeney and Prieto have decided not to try to override the Republican governor, something they’ve never been able to do successfully since Christie took office in early 2010, thanks largely to GOP lawmakers who’ve stayed loyal to the governor — even on bills that have received veto-proof majorities, like the PFRS legislation.

No slam dunk

Yet just because the new plan for the bill guarantees Christie will no longer be the main obstacle to passing it, that doesn’t mean its enactment in 2018 is going to be a slam dunk. That’s because the two leading candidates in this year’s gubernatorial election — even as they’ve been feuding over what to do about a key property tax reform that impacts police officer and firefighter salaries — have both yet to endorse the PFRS bill that failed to win Christie’s signature back in May.

Introduced by Sweeney (https://www.njspotlight.com/stories/17/03/14/cops-firefighters-could-pull-pensions-from-nj-public-employee-system/) last February, the PFRS bill was strongly supported by New Jersey’s police officer and firefighter unions as a logical response to their members’ growing frustration with the threat that the state’s chronic underfunding of the public-employee pension system has posed to their retirement accounts. The measure also emerged as the public-safety unions and other labor groups were groaning about the performance of investments managed by the state Division of Investment following the Great Recession, under policies set by the New Jersey State Investment Council.

Building a board

Sweeney’s legislation called for the creation of a new, 12-member board to oversee the PFRS, with seven members representing the interests of police officers and firefighters, and five representing the interests of state, county, and municipal-government employers. The proposed PFRS board would also take over management of the retirement fund from the state, getting the power to hire its own executive director, actuary, chief investment officer, and ombudsman. Decisions related to pension contributions would also fall to the new board under the version of the bill that breezed through the Legislature earlier this year.

In fact, the measure won widespread support from both Republicans and Democrats in both houses of the Legislature when it was sent by lawmakers to Christie’s desk near the end of March.

But the bill was not universally supported, and representatives of the New Jersey League of Municipalities and the New Jersey Association of Counties argued that it would have given too much power to the unions at the expense of taxpayers, who already foot a larger percentage of the overall pension obligation. They also raised concerns that if the new board’s investment decisions soured, it would be up to taxpayers to bail out the PFRS.

Christie, a two-term Republican, ultimately issued a conditional veto in May that didn’t dismiss the idea outright, but offered up a series of conditions that would have to be met in order to win his approval.

Christie’s conditions

For example, he suggested the proposed PFRS board be expanded to a 14-member panel, with equal representation among the unions and government employers. He also insisted that in exchange for gaining more control over their retirement fund the police officers and firefighters should be forced to accept a cap of $7,500 on unused vacation and sick time.

In the wake of Christie’s conditional veto, both Sweeney and Prieto expressed disappointment — and even though the PFRS measure passed both houses with more than enough votes from both Democrats and Republicans to sustain a gubernatorial veto — the two Democratic leaders ultimately decided not to attempt an override.

Sweeney’s strategy

Sweeney (D-Gloucester) divulged his plan to reintroduce the bill late last month during the firefighters’ convention, telling attendees he still considers the bill to be a “model for public pension systems that have been systematically underfunded by entities controlled by governors and state treasurers.” In response, Eddie Donnelly, president of the New Jersey Firefighters Mutual Benevolent Association, said he’s on board with Sweeney’s new strategy.

“For far too long the voices of the stakeholders, the men and women that trust their dollars to the PFRS, and rely on them for retirement security, have been silenced when it comes to how their savings should be managed and invested,” Donnelly said. “Senate President Sweeney has been a welcome partner in our efforts to change this, and we are glad that this thoroughly researched and vetted bill will remain a top priority in the new Legislature.”

Sweeney, who is up for reelection this year, has also received endorsements from both the state Policemen’s Benevolent Association and the state Fraternal Order of Police since making the announcement.

Prieto committed to plan

Meanwhile, Prieto, the Assembly leader who also enjoys strong backing from the state’s public-sector unions, told NJ Spotlight last week that he’s also committed to getting the PFRS bill passed in early 2018.

“I will absolutely be posting this legislation again and give it another chance,” said Prieto (D-Hudson).

But what will happen next is still not clear, even with the upcoming changeover in the governor’s office.

A spokesman for Democrat Phil Murphy, the gubernatorial contest’s current frontrunner, said Murphy recognizes the concerns of the police officers and firefighters, and added “the state has simply not lived up to its end of the bargain.” But Murphy spokesman Derek Roseman did not respond when asked if the candidate is fully committed to signing the current PFRS bill.

“Phil supports efforts to protect our pension system while providing safeguards for taxpayers,” Roseman said.

And while Guadagno’s campaign website indicates she supports the idea of transferring management of police officer and firefighter pension funds over to a new entity, her campaign spokesman, Ricky Diaz, also declined to give a full endorsement of the current version of the PFRS bill.

“She believes the bill had merit, and she’s confident a version can pass with tweaks that provides accountability and also protects taxpayers,” Diaz said.