Jersey City City Council votes to change retirees health benefits

Wednesday, August 31, 2011, 8:20 PM
By Kate Kowsh/The Jersey Journal

Jersey City retirees will now be required to switch health and medical benefits unless they pay extra, thanks to an ordinance that was adopted by the City Council today despite vehement opposition from labor union officials.

Adopted by a 5-4 vote, which brought Councilman David Donnelly near tears as he voted in favor, the ordinance stands to save the city roughly $3 million and affect 1,700 retirees, according to a city official.

Councilwomen Nidia Lopez, Kalimah Ahmad, Viola Richardson and Councilman Steven Fulop voted in opposition.

The ordinance will transition retirees from their traditional plan to a direct access plan, that, among other things, places a cap on what the plan will pay medical providers for their services.

Retirees will receive notice of the adopted ordinance, and be given the option to retain the traditional plan and pay the difference in premium cost, according to a city official, or, if they do not respond, they will be automatically placed in the new, direct access plan on October 1, 2011.

Councilman Michael Sottolano said he's confident retirees will not see a decline in care as a result of the changes.
"As a retiree with 36 years of service, I would not vote for something that I thought would create harm for me or my wife," Sottolano said before voting to adopt the ordinance this afternoon.

Joseph W. Krajnik, president of the Uniformed Firefighter Association of Jersey City, delivered an impassioned call for council members to table the ordinance, to allow for more collective bargaining to take place.

"I'm frustrated by the ineptitude of the negotiation process here in Jersey City," he said at the speakers podium prior to the council's vote. "This is a major issue to every retiree."
Krajnik called for the city to look for other ways to find additional funding to supplement the budget, instead of forcing retirees to switch health plans to save the city money.

"We want the traditional plan in place for our retirees," he declared. "Why are we panicking the retirees who now are on heart attack medicine?"

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I guess if you've decided to see it that way, why let reason or logic get in your way, right?

the public be damned!

Funny you would choose today, the release of the proposed budget, to respond to me - 47 days later. What is in that proposed budget? A $22.3 million increase in taxes and $34.6 million cut in spending. Turns out the $80 million hole is really $57 million. Sure, there are some one-time fixes in there but my point is - when someone points a gun at you ($80 million budget hole! $80 million budget hole!) and demands you react, knowing whether or not the gun is loaded is useful information.

It's not public be damned, it's insisting that the so-called leader of the city state his priorities concisely and adhere to them, not just fire from the hip and go after powerless people because there is no political price to pay for doing so. My point was (and remains): there is a right way to go about cutting spending. You identify your priorities and communicate them so that proposed cuts are made in the context of an overall plan. What are the mayor's fiscal priorities? I wouldn't know, since he hasn't held a state of the city in two years (yes, there's one next week) and rarely speaks except through press releases.

The mayor is a bully who abuses his power and is not extremely facile with the truth. He also has proven time and again he cares about one thing: the well-being of Jerremiah T and friends. I don't know how anyone who cares about this city can view him as anything but an adversary with whom you must negotiate.

Look, I'd love to believe in your peach-cobbler-mountains-and- marshmallow-rivers vision of the world. I guess I am too much of a realist to see things that way - seeing how things have been run here for far too long tends to do that to you.

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and the public be damned?

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Path Is Sought for States to Escape Debt Burdens

New York Times
By MARY WILLIAMS WALSH
Published: January 20, 2011

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government?s aid.

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state?s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

?All of a sudden, there?s a whole new risk factor,? said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission?s Office of Municipal Securities during the Clinton administration.

For now, the fear of destabilizing the municipal bond market with the words ?state bankruptcy? has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month.

House Republicans, and Senators from both parties, have taken an interest in the issue, with nudging from bankruptcy lawyers and a former House speaker, Newt Gingrich, who could be a Republican presidential candidate. It would be difficult to get a bill through Congress, not only because of the constitutional questions and the complexities of bankruptcy law, but also because of fears that even talk of such a law could make the states? problems worse.

Lawmakers might decide to stop short of a full-blown bankruptcy proposal and establish instead some sort of oversight panel for distressed states, akin to the Municipal Assistance Corporation, which helped New York City during its fiscal crisis of 1975.

Still, discussions about something as far-reaching as bankruptcy could give governors and others more leverage in bargaining with unionized public workers.

?They are readying a massive assault on us,? said Charles M. Loveless, legislative director of the American Federation of State, County and Municipal Employees. ?We?re taking this very seriously.?

Mr. Loveless said he was meeting with potential allies on Capitol Hill, making the point that certain states might indeed have financial problems, but public employees and their benefits were not the cause. The Center on Budget and Policy Priorities released a report on Thursday warning against a tendency to confuse the states? immediate budget gaps with their long-term structural deficits.

?States have adequate tools and means to meet their obligations,? the report stated.

No state is known to want to declare bankruptcy, and some question the wisdom of offering them the ability to do so now, given the jitters in the normally staid municipal bond market.

Slightly more than $25 billion has flowed out of mutual funds that invest in muni bonds in the last two months, according to the Investment Company Institute. Many analysts say they consider a bond default by any state extremely unlikely, but they also say that when politicians take an interest in the bond market, surprises are apt to follow.

Mr. Maco said the mere introduction of a state bankruptcy bill could lead to ?some kind of market penalty,? even if it never passed. That ?penalty? might be higher borrowing costs for a state and downward pressure on the value of its bonds. Individual bondholders would not realize any losses unless they sold.

But institutional investors in municipal bonds, like insurance companies, are required to keep certain levels of capital. And they might retreat from additional investments. A deeply troubled state could eventually be priced out of the capital markets.

?The precipitating event at G.M. was they were out of cash and had no ability to raise the capital they needed,? said Harry J. Wilson, the lone Republican on President Obama?s special auto task force, which led G.M. and Chrysler through an unusual restructuring in bankruptcy, financed by the federal government.

Mr. Wilson, who ran an unsuccessful campaign for New York State comptroller last year, has said he believes that New York and some other states need some type of a financial restructuring.

He noted that G.M. was salvaged only through an administration-led effort that Congress initially resisted, with legislators voting against financial assistance to G.M. in late 2008.

?Now Congress is much more conservative,? he said. ?A state shows up and wants cash, Congress says no, and it will probably be at the last minute and it?s a real problem. That?s what I?m concerned about.?

Discussion of a new bankruptcy option for the states appears to have taken off in November, after Mr. Gingrich gave a speech about the country?s big challenges, including government debt and an uncompetitive labor market.

http://www.nytimes.com/2011/01/21/bus ... .html?partner=rss&emc=rss

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We really would have to look at the contracts. They probably only say something like "health benefits of the same and type then offered to current employees" or something similarly flexible. They probably do NOT recite the specific terms, such as amount of deductible, amount of co-pay, etc. And the contracts probably say the employer reserves the right to change insurers and terms.

And if that's the case, a change from a "traditional" "Cadillac" plan -- where the patient can go to any doctor, with no limits and no co-pays -- to the use of an in-network provider system with reasonable deductibles and reasonable co-pays would be totally appropriate without breaching any contract.

We need more details.

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Of course there isn't enough patronage that could be cut to fill an $80 million hole. And certainly other things need to be addressed - but taking contractual benefits away from retirees should be at or near the top of the list??? You can't be naive enough to think that if the mayor gets the cuts he can live with he will magically cave on the others he has fought against tooth and nail, can you?

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The last time I checked, the USPS, NEH, NEA, and believe it ir not AMTRAK are subject to FOIA. The USPS answers to the USPS OIG. The members of the OIG are presidentially appointed and confirmed by the Senate. The NEH chair is also appointed by the President and confirmed by the Senate. I'm not so sure of the NEA. I know the chair is appointed by the president, but not so sure about the confirmation.

I think the JCIA is more akin to the following government chartered and owned corporations (thank you Wikipedia and notice that Amtrak and CPB are among these):
Florida Virtual School (Florida)
National Railroad Passenger Corporation (Amtrak)
Tennessee Valley Authority
Corporation for Public Broadcasting
Federal Deposit Insurance Corporation
Federal Crop Insurance Corporation
Millennium Challenge Corporation
St. Lawrence Seaway Development Corporation
Pension Benefit Guaranty Corporation
Corporation for National and Community Service (Americorps)
Overseas Private Investment Corporation
Legal Services Corporation
Conrail (former)
Resolution Trust Corporation (former)
Panama Canal Commission (former)

I do agree though that the JC autonomous agencies need to be dissolved and reincorporated into accountable city agencies.

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FG - as much as i'd like to agree with you, contract law won't. and it's one of the pillars of US business. Generally you cannot change contracts retroactively.

I don't think those pensions and benefits were ideal in retrospect. But you have got to consider it from the recipients perspective. They planned their retirement based on their city contracts. They were given pension and health benefits based on their service to the city. They planned their retirement based on that City commitment. If that commitment was different, and they were given different options at the time, they could have made different choices. But they weren't. You (and we) cannot pull the rug from under them, and change the rules, just because the city is facing financial issues. The pensioners are the last people we should be hitting in the pocket. Also in contract law, if we did, JC would rightly face a huge class action suit.

Healy was wrong, Fulop was right.

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I guess that quasi-government would be a better reference.

All of these agencies (and when I say CPB, I am referring to the Corporation for Public Broadcasting, which has been a hotbed of government corruption in the past), receive a majority of their funding from the federal government, the USPS being an exception, yet don't have to answer to the government in the same way as a cabinet department (i.e., Agriculture, Defense) or independent agency (SEC, FCC) would. The people that lead these agencies are appointed by the President, but do not have to be confirmed by the Senate like a cabinet or independent agency head would be.

Furthermore, these quasi-government agencies are not subject to the Freedom of Information Act, are not required to use the competitive bidding process for services they purchase, and are subject to far less oversight than your typical federal department or independent agency.

They are the worst of both worlds - little bureaucracy and oversight to prevent corruption and not required to turn a profit either that would prevent corruption in the private sector. Much like the JCIA, JCMUA and JCEDC. As a previous poster said, they should be folded back into the city agency that they were once a part of, as they present an easier way for Healy to award patronage-type jobs.

Sorry, have to disagree with Mr. Fulop and dissenters on this one.

Corporate America changes insurance plans all the time. Effecting retirees all the time.

(which is why as Gen X, I don't believe anything or anyone is going to look out for me. There will be no social security, no medicare, etc.)

So these BS Cadillac plans need to be gotten rid of. The regular plan that everyone else gets should be good enough.

Sorry... Just a little bitter and jaded. Once the Baby Boomers are thru... there WILL BE NOTHING LEFT.

So lets cut NOW. I don't want to keep paying for something I'm NEVER GONNA GET. MEGA PONZI SCHEME.

FG

Steve Fulop, Nidia Lopez, David Donnelly and Viola Richardson are 100% right.

Irrespective of motive, the City cannot back out of this kind of retirement commitment. You cannot make City regulations and laws retroactive. Contract law doesn't work that way, and Healy the lawyer knows that.

While a lot of people may think it unfair. And personally I think that the original City deal was wrong. But, you cannot take away from honest people, who made their retirement plans in good faith.

To paraphrase Steve "don't rob your pensioners to pay the City's tab".

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Can you explain to me how the USPS, CPB (I assume you mean CBP), NEA, and NEH are semi-autonomous?

The mayors math does not seem to add up.The average savings per retired person is 200.00.If there are 1900 retired
people that comes out to 380,000 a year.Sometimes these pols.
just throw out any number they want.

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I agree, something needs to be done or Jersey City will have crushing property taxes that will ruin the place.

I'm thinking Fulop is jumping the Shark here.
Cuts are always tough on someone/some group, that will always be a fact.
He should have banked this small gain for the overall good of the budget, and all taxpayers.
Thousands wished they had 1/2 these benefits.

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No doubt, the semi-autonomous agencies are perfect breeding grounds for corruption, much like those
semi-autonomous agencies in the federal government, such as Amtrak, the USPS, NEA & NEH, CPB and many others.

Unlike the typical government agencies that are part of a city department, they have no red tape or bureaucracy to protect against corruption. Unlike the private sector, there is no incentive to make a profit either. It is the worst of both worlds. These semi-autonomous agencies should be folded back into the departments from whence they came.

As a side note, I think it is funny that the city council now has to wait another six months to take up the proposal. Didn't the rest of the council actually push for that six month policy to prevent council member Fulop from introducing the same bills week after week? Look how that has backfired on them.

they are both right. the semi-autonomous agencies need to be folded back into the city and this benefit change (as done by the state) is also needed.

there is not enough patronage (believe it or not) to balance the budget. our fiscal situation is dire. an $80m hole (or more?).

Jersey City councilman blasts mayor's response to council's vote on retiree benefits

Monday, January 17, 2011, 2:31 PM
By Terrence T. McDonald - The Jersey Journal

Jersey City Councilman Steven Fulop today defended his vote against an ordinance that would have changed healthcare benefits for Jersey City retirees.

The proposed change, backed by Mayor Jarramiah Healy's administration, would have steered retirees to a less expensive healthcare plan, and charged retirees monthly to stay with their current plan.

"There are so many places to cut spending with the mayor's patronage before breaking a legal contract and taking thousands of dollars from people on fixed incomes who have served Jersey City for decades," Fulop said in a statement.

Fulop and three other council members - Nidia Lopez, David Donnelly and Viola Richardson - voted against the proposal at the City Council's Jan. 12 meeting. With Councilwoman Willie Flood absent, the vote ended in a tie.

The council will have to wait for six months to take up the proposal again.

Healy last week criticized the council's decision to defeat the ordinance, saying the change would have resulted in $3.2 million in savings for the city this year and every year going forward.

Fulop called the mayor's position "hypocrisy."

"The mayor's plan is to keep giving out patronage to his friends and employees while balancing the budget on the backs of the retirees," Fulop said.