Monthly Archives: September 2015

New school year, smaller paychecks for many NJ teachers

The 2015-2016 academic year is underway, and New Jersey’s teachers returned to their classrooms to continue a long-standing tradition of excellence: the state’s public school system has once again been ranked, based on a variety of measures, among the top in the nation.

But unfortunately, many of New Jersey’s public school teachers were also greeted with very bad news when they opened their first paychecks since June: their take-home pay had gone down. Significantly.

Even worse: if the State of New Jersey continues its current financial path, which includes pension/benefit reforms that affect public workers but fail to set limits on the rising cost of health care, it’s very possible that many teachers in the Garden State might never again see raises. Ever. In their careers.

A little background:

In a 2010 briefing paper for the Economic Policy Institute, Rutgers University School of Management and Labor Relations professor Jeffrey Keefe addressed the “myth of the overcompensated public employee” and concluded that public employees were actually “slightly undercompensated” compared to their private-sector counterparts.

In general, according to Keefe, public workers receive a “higher portion of their compensation in the form of employer-provided benefits,” and as such, public school employees have traditionally accepted salaries lower than those they could secure in the private sector because those employees paid less for health care and pensions than their private-sector counterparts. 

Further, Keefe says that “education level is the single most important earnings predictor”–and yet in 2010, U.S. public employees with Master’s degrees earned an average of $33,655 less in salary than private-sector workers with the same level of education–and $36,621 less in total compensation when benefits were factored in. (The discrepancy was similar for workers with bachelor’s degrees, which are required of all certificated teachers in the sate. Nearly half of New Jersey’s teachers have master’s degrees.)

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Most relevant to this discussion: the discrepancy Keefe observed in public- vs. private-sector compensation existed before Chris Christie took office in New Jersey in 2010.

And it got worse pretty quickly.

Once on the job, Governor Christie instituted a series of reforms–supported by members of both parties in the Assembly and Senate–which are causing hundreds of thousands of public workers immediate and forthcoming financial hardship:

  1. In 2010, Christie imposed a 2% limit on property-tax increases by municipalities. The cap greatly limited potential future salary increases for public workers, and also coincided with state budget cuts to school funding.
  2. The following year, Christie–again with bipartisan support–signed Chapter 78, P.L. 2011, a law that forced public employees to make increased contributions to their pensions and health benefits and suspended cost-of-living adjustments for retirees. (Public workers all over the state were in various years of previously-negotiated agreements when Chapter 78 was signed into law, but many are entering the fourth and final “tier” of increased contributions–and are paying up to 35% of their health care premiums this year.)
  3. Chapter 78 also stipulated that the state would be required to make increased contributions–over the course of seven years–to the its ailing pension system (the one that, according to a 2014 report, “ranks 95th in generosity among country’s 100 largest plans). However, Chris Christie categorically refused to fund the pension system in accordance with his own law, and then celebrated when the NJ Supreme Court ruled that the part of the law that required increased state contributions was unconstitutional (and, therefore, unenforceable).

So what does all this mean?

In terms of health benefits and in accordance with Chapter 78, public workers have been making increasing contributions to their premiums according to a sliding scale that is based on salary (so workers who earn more money pay more for the same coverage that costs lower-earners less–a formula that NJ Spotlight described as a “progressive income tax”), and while Chapter 78 caps employee contributions at 35%, Christie and his fellow Republicans refuse to set limits on healthcare prices. As healthcare costs increase, so too will employee contributions. (The suspension on collective bargaining of healthcare ended July 1 of this year, so benefits can once again be subject to negotiations once current agreements expire.)

Further, a nearly year-old analysis by NJ Spotlight showed the following:

  • The cost of New Jersey public employee health insurance coverage is the 3rd highest in the nation,
  • Most NJ public workers are paying more than the national average for state government workers,
  • NJ public workers who choose individual coverage pay more than government workers in any other state in the country, and
  • NJ public workers who choose family coverage pay the 10th-highest premium in the country.

With regard to pensions, despite increased worker contributions, New Jersey’s pension system remains underfunded by nearly $50 billion–and, according to a study by the National Association of State Retirement Administrators, the state’s record of funding its pension system is the worst in the country. (Moody’s Investors Services attributed the state’s record ninth credit downgrade to the unfunded pension liability, yet Chris Christie bragged about his pension reforms on Meet the Press last weekend.)

Essentially, the discrepancy between public- and private-sector wages that Jeffrey Keefe reported in 2010–before the 2% cap on property taxes and Chapter 78–has widened in recent years, and many public employees are seeing steady decreases in their take-home pay even as the cost of living continues to rise. To add insult to injury, those same workers–who have had no choice but to contribute hundreds of dollars from each check to the pension system that a string of NJ governors have categorically failed to fund–face the prospect of financial collapse in retirement.

Meanwhile, Chris Christie–whose systematic attack on public workers and egregious pension failures have turned hundreds of thousands of middle-class families upside-down–continues to blame workers and their unions for New Jersey’s financial woes. (Let’s not forget that he referred to public school teachers as “gluttons.“)

In this climate–and also considering that Christie refuses to fully fund schools, promotes evaluating teachers based on their students’ scores on flawed standardized tests, and endorses private management of schools that receive public funds–it is difficult to imagine that the best and brightest college graduates will choose to pursue careers in teaching. And if they don’t, how long can New Jersey expect to have public schools that consistently rank among the top in the nation?

It’s time for the citizens of New Jersey to vote, en masse, to protect public workers, the middle class, and essential services in the state–and to disrupt the current trend that favors corporations and Wall Street executives at the expense of everyday citizens.


 

Public school teachers: please leave a comment below with specific information about how Chapter 78 has affected your take-home pay. You don’t need to use your name.

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