New Jersey School Boards Association President Larry Feinsod explains the association’s problem with Gov. Christie’s Pension and Health Benefits Study Commission’s idea to transfer the liability of state payments of teachers’ pension costs to local school districts

NJSBA is keenly aware of the weight that the current pension system’s unfunded liability places on our state’s finances, the need to ensure the security of the pension system for future retirees, and the impact that health benefit costs have on government budgets and taxpayers… 

Post-retirement medical benefits were granted to members of the Teachers’ Pension and Annuity Fund in the late 1980s by the state, not by local school districts. State payment of the employer’s share of teachers’ pension costs goes back 50 years or more. Perhaps, determining why the state agreed to fund teachers’ pensions would add to the current debate. However, the most critical issue is not why it did so back then, but what would happen to education programs, and local taxpayers, if school boards are required to take on these new costs today. 

According to the Roadmap report, the shift would be cost-neutral for local governments, including school districts, when health benefit reforms for active and retired employees are implemented. However, the actual financial impact—specifically on local boards of education—will depend on the construction of these health benefit reforms, a work that is still in progress.