20-and-out action

Legislative Report 

After a monthlong recess, the Senate and General Assembly returned in early May for committee work and votes that will take them into a much longer break at the end of June. The return to business also triggered the timeline for the governor to take action on a number of bills that had been on his desk since the end of March. Most pressing for the NJSPBA was our priority bill extending 20-and-out.

As you are no doubt aware, the governor conditionally vetoed the legislation. This process has been poorly explained in the news media with one major news service claiming the governor “rejected” the bill.

A conditional veto is different than an absolute veto. An absolute veto is what most people understand as a veto when the president or, in this case the governor, opposes a piece of legislation thus killing it absent a legislative override.

New Jersey, however, offers the governor a wholly different option of a conditional veto. A “CV” is more akin to a recommendation by the governor for amendments to a bill as a condition (hence the term) for him to sign it. It is not a rejection so much as a request to make specific changes.

In the case of 20-and-out, the governor commented in his veto message that the original two-year operational period for the benefit was not long enough to study its impact on the long-term health of pension system. Therefore, the Governor proposed a three-year extension to show a longer period to measure the use of this retirement option.

But part of his veto message is critical because it relates to the powers of the PFRS Board of Trustees. When we wrote the law transferring governing the PFRS to the new Board of Trustees, we established in it that the board has complete control over pension benefits and enhancements. This has not been tested to date.

However, the governor’s veto clearly lays out that it is the exclusive authority of the pension board to decide what to do with 20-and-out after that initial three-year period is over so that we do not have to go back to the State Legislature to pass yet another bill to make it permanent. This message is a powerful tool for the PFRS Board that the pension law means what it says about the power of the board over pension benefits.

While we would have preferred the governor to simply sign the bill, this acknowledgement of the independence of the PFRS Board of Trustees is critical to its long term operation and control of the pension system.

So the next steps are fairly simple. The Senate and Assembly have only to vote to approve the governor’s requested changes and the bill becomes law. Approval of conditional vetoes are relatively straightforward when the sponsors and supporters are on the same page, and we are working now to schedule bill passage. It is expected that, based on the current voting schedule, the bill will be law by the end of June and the benefit made available to members by July 1.