New Jersey Gov. Phil Murphy on Wednesday signed sweeping bipartisan legislation overhauling public teachers' health benefits that lawmakers say could save $1 billion a year over seven years.
Murphy, a Democrat, signed the bill, which passed the Democrat-led Legislature this year with no opposition, alongside legislators and the head of the state's biggest teachers union, the New Jersey Education Association.
“This law is a win-win-win for NJEA members, our students and New Jersey residents,” said Marie Blistan, president of the teachers’ union.
The law sets up a new health care plan called the New Jersey Educators Health Plan, under which educators could pay for benefits as a percentage of their salary, rather than a percentage of the premium.
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Under previous law, teachers paid for health benefits as a percentage of the premium, up to 35%. The law Murphy signed instead calls for teachers to pay as a percentage of their salaries up to 7.2%, according to lawmakers.
The new law also provides for two additional plans for educators, but those would be paid for as a percentage of the premium.
The change is expected to save local governments, which levy property taxes to finance schools, $670 million annually. More than $403 million in savings would get passed along to educators, the bills' sponsors say.
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Still, legislative cost estimates say savings are indeterminate and depend on how many teachers switch to the new lower-cost plans.
New Jersey residents paid about $16 billion in school taxes in 2019, according to the state. The proposed savings would be about 4% of the 2019 school portion of the property tax levy.
The legislation overhauls a 2011 law that resulted from a deal between then-GOP Gov. Chris Christie and lawmakers that froze educators'cost-of-living increases in exchange for regular pension payments by the state. That law also changed how health benefit contributions were structured, calculating them as a percentage of premiums.
Teachers say climbing health care costs have, in many cases, erased any salary gains they might have gained under labor contracts.
