ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 5422

STATE OF NEW JERSEY

DATED:  MAY 18, 2023

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 5422.

      This bill extends P.L.2021, c. 408, permitting a teacher or a professional staff member providing special services, including but not limited to a speech language specialist or a therapist, who retired from the Teachers’ Pension and Annuity Fund (TPAF) to return to work full time with a board of education in a position of critical need, as determined by the State Commissioner of Education, without being reenrolled in the TPAF if reemployment commences during the 2023-2024 school year.

      If the retired teacher or the retired professional staff member returns to work with the former employer, it must occur more than 180 days after the retirement.  This bill will permit the teacher or professional staff member to receive the TPAF retirement allowance as well as a salary.  The bill permits the return to work under a contract for one year, which may be renewed only for one additional year.  The total period of reemployment with any individual board of education must not exceed a two-year period, unless so approved by the Commissioner of Education as being in the best interests of the school district.  Under the bill, the former member’s retirement must have been a bona fide retirement and any employment or reemployment under the bill must not be prearranged before retirement.

FISCAL IMPACT:

      The Office of Legislative Services (OLS) estimates $3.2 million in annual savings, $2.3 million to the State and $0.9 million to local school districts, in each of the two fiscal years following the bill’s enactment, subject to certain assumptions. Any savings in subsequent years are indeterminate.

      For every teacher or professional staff member who provides special services and returns to employment shortly after retirement without reenrolling in the Teachers’ Pension and Annuity Fund, the local school district may save approximately $9,000 in annual health care costs provided that the employee is receiving State-paid health care coverage in retirement under the School Employees’ Health Benefits Program due to their former employment.

      Because each qualified retiree is not reenrolled in the Teachers’ Pension and Annuity Fund and, thus, does not receive an increase in retirement benefits for the additional service, the fund does not incur additional costs. Consequently, the OLS estimates that for every teacher or professional staff member who returns to employment shortly after retirement without reenrolling in the fund and earns an average salary of $80,000, the State may save approximately $23,000 in annual contributions to the fund, which it would otherwise have to make for an employee in a Teachers’ Pension and Annuity Fund -covered position.

      The OLS cannot predict the actual number of Teachers’ Pension and Annuity Fund retirees who would accept reemployment under the bill’s provisions. Furthermore, the OLS cannot predict the actual salary arrangements that would result under the corresponding reemployment contracts.