HEALTH BENEFITS INCREASES
Late yesterday, AON released its “Plan Year 2024 Rate Setting Recommendation Analysis” for local governments participating in the State Health Benefits Program (SHBP), which includes a total premium rate change increase of 7.4% as follows:
- “The recommended rate change for Local Government Actives is a 7% increase for medical and a 19.9% increase for the prescription drug premium rates, for a total increase of 7.3%.
- The recommended rate change for Local Government Early Retirees is a 2% increase for medical and a 20.8% increase for the prescription drug premium rates, for a total increase of 7.3%.
- The Medicare Retiree medical decrease for Plan Year 2024 is 7%, which includes both self-insured medical premiums and fully insured Medicare Advantage premiums. The recommended prescription drug rate change in Plan Year 2024 is a 15.5% increase.
- The projected combined Active and Retiree Medical and Prescription Drug Claim Stabilization Reserve Balance is projected to be below the targeted 0 months of plan cost in Plan Year 2024. As a result, 3.0% margin has been added to the Active, Early Retiree, and Medicare Retiree Medical and Prescription Drugs premiums.”
You may review the AON report in its entirety at www.nj.gov/treasury/pensions/rate-renewal.shtml with the State Health Benefits Commission (SHBC) set to approve the rates later this month. Although this is certainly better news than what we learned this time last year and shared in a much more transparent and timely manner, it’s unclear why the Administration decided to forgo providing local governments participating in the State Health Benefits Program (SHBP) with $200.0 million in federal pandemic relief funds highlighted in the Governor’s “Budget in Brief” and intended to mitigate the 24% increase in health benefit costs for county and municipal governments and local employees in 2023. Through press statements, however, Administration officials contend that the Fiscal Year 2024 State budget separately provides $200.0 million in relief to local governments in the form of $150.0 million in a Municipal Relief Fund (MRF) and $50.0 million in an Urban Investment Fund (UIF). As a result of the advocacy of the New Jersey State League of Municipalities (NJLM), the New Jersey Conference of Mayors (NJCM), and the New Jersey Urban Mayors Association (NJUMA), the State Legislature established the MRF in Fiscal Year 2023 as a temporary mechanism to account for the fact that the State of New Jersey has been diverting $330.0 million in Energy Tax Receipts (ETR) from municipalities across the State for more than a decade.
In addition to health benefits and ETRs being separate and distinct matters for municipalities as pointed out by NJLM, NJCM, and NJUMA, counties have never been the beneficiaries of ETR funding, so the $150.0 million is of no help to county governments. Moreover, the intent of the UIF is to make the State’s urban areas more livable and attractive to residents and businesses. Although UIF funding may assist some cities under certain circumstances, it does not address municipal health benefit expenses, and is again, of no assistance to county governments. Consequently, several county governments providing health benefits to employees through the SHBP have been forced to impose hiring freezes, eliminate budget vacancies, and increase tax rates. Moving forward, these counties are exploring the possibility of establishing a regional county health insurance fund as permitted under current law or reconfiguring existing health insurance funds to take advantage of economies of scale.
PFRS BENEFIT ENHANCEMENTS
On July 3rd, Governor Murphy signed into law S-3090 (Gopal D-11/Lagana D- 38)(DeAngelo D-14) as P.L. 2023, c.92 after both houses of the Legislature concurred with his conditional veto, which stated in part: “The stakeholders advocating on behalf of the bill contend that the 20 and out benefit will eventually result in financial savings to the State and local governments because PFRS members that retire early do not receive retiree health benefits and forgo salary and pension enhancements available upon attaining 25 years of service. However, the bulk of the savings projected to be attained through the 20 and out benefit are expected to materialize following the first five years of a member’s retirement. Simply put, two years is not enough time to fully understand the impact that the 20 and out benefit will have on the PFRS. I am further concerned that aligning this trial period with the unprecedented Coronavirus disease 2019 (COVID-19) emergency lessened the utility of any information collected during this period, as the pandemic created significant anomalies in retirement rates. In light of these concerns, I am returning Senate Bill No. 3090 and recommending that the trial period be extended for an additional three years to permit further evaluation of this benefit’s impact on the State’s finances, the PFRS, and its members over a five year period. At the conclusion of the 20 and out benefit trial period, if the Board of Trustees of the PFRS finds that the benefit does not result in increased employer contributions or impact the long-term viability of the PFRS, the Board can then permanently institute a 20 and out benefit without the need for additional legislation.”
NJAC remains opposed to this new law as it will enhance member benefits, accelerate pension payments to members, and increase the unfunded liability of PFRS. Under the new law, a member of PFRS who is enrolled before or after the effective date of this bill may retire, regardless of age, upon attaining 20 or more years of service credit and receive a retirement allowance equal to 50 percent of the member’s final compensation. As such, a police officer hired at the age of 25 could retire at the age of 45. Conservatively assuming the officer retires at a salary of $120,000.00 per year and lives until the age of 80, taxpayers would be responsible for paying this police officer in retirement $2,100,000.00 ($120,000.00/50% = $60,000.00 * 35 years) with $300,000.00 in accelerated payments by taking retirement 5 years earlier.
Moreover, local governments are now responsible for hiring a new officer with additional salary, pension, health, and other fringe benefit expenses at an initial cost of over $105,000.00 per year with a $60,000,00 per year starting salary, $21,900.00 in employer pension obligations ($60,000,00 * 36.5% Employer Pension Obligation Rate), $19,500.00 in health benefit expenses ($30,000 cost of healthcare plan * 65% typical employer obligation), and $5,000.00 in miscellaneous fringe benefits. Importantly note that this starting salary will increase dramatically in year 2 and every year thereafter as the officer progresses through the steps, guides, longevity pay, and annual salary increases. At a time in which local government employers are once again facing double digit pension employer contribution rate increases for both PFRS and the Public Employees Retirement System (PERS), despite meeting their pension obligations as employers for more than a decade, State leaders should instead be focusing on how to relieve this ever-growing fiscal burden that ultimately falls on beleaguered property taxpayers.
UPGRADES AND CONSOLIDATION FOR 9-1-1 COUNTY CENTERS
As was the case last year, the Fiscal Year 2024 State budget appropriates $10.0 million for upgrades and consolidation of local 9-1-1 centers with the following budget language: “Directs appropriation for Public Safety Answering Point Upgrades and Consolidation: The amount hereinabove appropriated for Public Safety Answering Point Upgrades and Consolidation shall be used to provide grants to units of local governments for equipment upgrades and consolidation of Public Safety Answering Points, pursuant to a competitive process, by the Chief Technology Officer, and in accordance with grant criteria to be jointly developed by the Office of Emergency Telecommunication Services within the Office of Information Technology and the Department of the Treasury, subject to the Director of the Division of Budget and Accounting.”
Although the Association had recommended a $21.0 million appropriation with a $1.0 million grant made available for each county to upgrade, maintain, and regionalize its 9- 1-1 system, the $10.0 million appropriation marks only the second time since 2009 that the State has appropriated any funding for county 9-1-1 centers. NJAC certainly appreciates the funding opportunity; however, the clear intent of the 2004 law that imposed a monthly telecommunication surcharge of .90 cents on every telephone line in the State was to build a cutting edge and fully funded 911 system with revenues collected from the surcharge. Unfortunately, administrations on both sides of the aisle have instead diverted 75% – 90% of this funding to pay for general operating expenses in the Department of Law and Public Safety to the tune of $2.5 billion.
RECLAIMED ASPHALT PAVEMENT
On June 30th, both houses passed and sent to the Governor A-4797(Karabinchak D- 18/Benson D-14)(Diegnan D18/Oroho R-24), which would regulate the amounts of Reclaimed Asphalt Pavement (RAP) that may be used for certain road projects.
In summary, the bill would require the Department of Transportation (DOT) and a local contracting unit, when entering into a contract for a public highway project or local road project, to authorize the contracted party to use up to 35% of recycled materials in base and intermediate pavement courses, and up to 25% recycled materials in surface pavement courses. The bill would also establish certain requirements for the use of recycled materials in the project, including that the asphalt mixture be sent to DOT for approval. In addition, the bill would require a local contracting unit, when entering into a contract for a local road project that does not receive State funding, to authorize the use of 50% RAP in base and intermediate pavement courses and 35% RAP in surface pavement courses. The bill would also require the contracted party to provide certification that the mixtures comply with DOT specifications.
NJAC and the New Jersey State Association of County Engineers (NJSACE) opposed the legislation as introduced and met with the New Jersey Asphalt and Pavement Association (NJAPA) on several occasions to work on a compromise that included the DOT certification as is now required under the bill as amended. Special thanks to the leadership at NJSACE for their hard work, resourcefulness, and patience in advocating for important changes now incorporated into the bill that Governor Murphy is likely to sign into law.
DANIEL’S LAW EXPANSION
On June 20th, both houses passed and sent to the Governor S-3125 (Cyran D-20/Gopal D-11)(Quijano D-20/Atkins D-20), which would prohibit the disclosure of personal information of child protective investigators in the Division of Child Protection and Permanency (DCPP) in the Department of Children and Families.
In general, this bill would expand the scope of Daniel’s Law beyond protecting judicial and law enforcement officers to also include DCPP child protective investigators and employees of the Department of Children and Families that engage in investigative activities in response to allegations of child abuse or neglect. Daniel’s Law currently prohibits the disclosure, by both governmental entities and private parties, of the home addresses of any active, formerly active, or retired federal, State, county, or municipal judicial officer, prosecutor, or law enforcement officer. The measure would also expand the definition of “telephone number” to clarify that the term may include either a landline or a cellular telephone number that is primarily used for personal communication, and would revise the current definition of “disclose” to provide that it includes making available or viewable within a searchable list or database, regardless of whether the list or database is actually searched.
The legislation would also remove the requirement that a covered person first receives approval from the Office of Information Privacy prior to providing written notice to a person, business, or association to cease disclosing their information. If the person, business, or association does not cease, the covered person may bring a civil suit against them. As amended, the bill would allow a covered person to assign, in writing, a covered person’s right to bring a civil action for the continued disclosure of their information, and they may do so immediately upon enactment. The measure would also require courts to impose certain penalties for a violation of Daniel’s Law. Governor Murphy is expected to sign the measure into law.
SHBP COMPETITION & TRANSPARENCY
Also on June 30th, both houses passed along partisan lines S-3756 (Scutari D-22/Sarlo D- 36)(Schaer D-36/Wimberly D-35), which would require the State Health Benefits Program (SHBP) and School Employees Health Benefits Program (SEHBP) to select more than one claims administrator for each plan and to provide claims data to public employers that participate in the programs.
In general, this legislation would require the State Health Benefits Commission and the School Employees’ Health Benefits Commission to choose at least two third-party administrators from among submitted responsive proposals within a competitive range. The commissions would be required to award the contracts based on which responsive proposal within the competitive range is the most advantageous to the State based on relevant factors including price, network breadth, member experience, the ability to engage in innovative approaches designed to slow the growth of health care costs, and any other factors that the commission may deem relevant. The commissions would be authorized to award a contract to the vendor with the bid that is most advantageous to the State based upon the evaluation factors, and to thereafter award another contract to one or more vendors with bids within the competitive range that can provide a comparable bid price and factors of the first awarded contract.
The bill would also require the Department of Treasury to provide, upon request, but not more frequently than twice in a plan year, to a participating employer, a standard report which contains the requesting employer’s de-identified aggregate data relating to the use of benefits by their employees, early retirees, and Medicare retirees, and their dependents, covered under the plans in the program. The report would include premiums paid by month for each month covered in the report and paid claims by month for the following categories of services: inpatient hospital; outpatient hospital; in network medical; out of network medical; prescription drugs; medical drugs; emergency room services; and behavioral health, each reported separately. The report shall cover both health and prescription benefits.
Additionally, the measure would require not later than December 1st of each year, the Treasury to collect and analyze claims data within the SHBP and SEHBP to develop, and make publicly available, a claims trend report for each program in the following categories: inpatient hospital; outpatient hospital; in network medical; out of network medical; prescription drugs; medical drugs; emergency room services; and behavioral health. The claims trend report would also provide the information in segments including active, early retiree, and Medicare retiree for each plan in SHBP and SEHBP. The Department would also make the report available on or before December 31st of each year to all majority representatives of public employees for collective negotiations purposes with which the State negotiates. The report would be posted on the Department of the Treasury’s website in a prominent and accessible location not later than January 1st of the following calendar year.
NJAC supports this important and timely legislation as it would increase competition and transparency in the wake of SHBP approving unprecedented health benefit insurance rate hikes late last year. Of note, the Office of Legislative Services (OLS) “estimates that requiring the State Health Benefits Commission and the School Employees’ Health Benefits Commission to contract with multiple claims administrators for each plan offered by the State Health Benefits Program and the School Employees’ Health Benefits Program and requiring the programs to annually provide certain claims data to participating plan sponsors will potentially reduce combined State and local expenditures by five to 20 percent, or $319 million to $1.3 billion, given certain assumptions.” It’s unclear if Governor Murphy will sign this bill into law.
MENTAL HEALTH DIVERSION PROGRAM
Also on June 30th, both houses passed S-524 (Ruiz D-29/Cunningham D-31)(Quijano D- 20/Mukherji D-33), which would create a Mental Health Diversion Program (MHDP) to divert eligible persons away from criminal justice system and into appropriate case management and mental health services.
In general, this legislation would establish an MHDP for individuals with mental illness involved in the criminal justice system in three judicial vicinages located in the northern, central, and southern regions of the State. The intent of the program would be to divert eligible persons with serious mental illness who have committed certain offense away from the criminal justice system and into appropriate case management and mental health services. The goals of the program would be to: reduce incarceration rates for the appropriate target population through effective diversion away from the criminal justice system; increase the quality of life for the target population through efficient linkage to available social entitlements and community based mental health treatment providers, in conjunction with supportive monitoring to ensure compliance; increase community awareness and understanding through cross training of law enforcement and mental health communities; and, reduce recidivism and re-hospitalization rates for the target population leading to an increase in public safety. It’s unclear if Governor Murphy will sign this legislation into law.
DID YOU KNOW that the F in Ferris wheel is capitalized as the attraction first built in 1893 is named after its inventor George Ferris?
THE TOP 5 MOST UNDERRATED SUMMERY TUNES TO HELP PASS THE TIME WHILE ON YOUR WAY TO CAPE MAY, ON THE BOARDWALK IN ATLANTIC CITY, HAVING ONE OF THOSE WILDWOOD DAYS, OR STRANDED AT THE DRIVE–IN.
- ITSY BITSY TEENIE WEENIE YELLOW POLKA DOT BIKINI by Brian Hyland
- The Girl from Ipanema by Astrud Gilberto and Stan Getz
- Let’s Twist Again (Like we did Last Summer) by Chubby Checker
- Under the Sea by the Little Mermaid
- Rock-A-Hula Baby by Elvis
“Deep summer is when laziness finds respectability.” Sam Keen