Westfield's Mayor Addresses State Pension Report
The Town of Westfield was named among 58 municipalities in a report from the state comptroller that shows that 202 independent contractors should have been removed from the state's pension fund.
The following letter was sent to Patch from the office of Westfield Mayor Andy Skibitsky:
The Office of the State Comptroller (OSC) surveyed 58 of 1,162 municipalities and school districts regarding the pension reform law passed by the State in 2007 and put into effect in 2008. On July 17, 2012 the OSC issued a report entitled “Improper Participation by Professional Service Providers in the State Pension System” (“Report”). In simplest terms, the specific issue at hand is who is an employee and who is an independent contractor, using IRS rulings as the guideline. According to the IRS, “In each case, it is very important to consider all the facts – no single fact provides the answer.” It should be noted that while Westfield did respond to the OSC’s survey, Westfield was not specifically mentioned in the Report.
Let me assure the public that the Town was well aware of the 2007 pension reform law. (Had the Leader checked its own archives, it perhaps would have discovered that I had written about the change in the law in a previous letter to the editor.) Upon the law’s passage, the Council’s Finance and Personnel Policy Committee examined the 46 page law. Rest assured, since the new law went into effect, the new enrollment criteria has been applied and all new hires and appointees are properly enrolled in the pension plan prescribed by the State.
I have said this many times before. In any discussion about public pensions, keep in mind that it is the State of New Jersey, not the Town of Westfield, that mandates who must enroll in the State pension system and in what plan. Prior to the enactment of the 2007 law, the State required all non-seasonal, non-police and fire employees earning over $1,500 per year and not collecting another government pension to enroll in the State’s Public Employees Retirement System (“PERS”) as a condition of employment. (In fact, any governmental entity that did not comply was assessed “delinquent enrollment charges”.) The 2007 reforms established new enrollment thresholds for PERS and also created a new pension plan, the Defined Contribution Retirement Program (“DCRP”), for local appointees and new employees who do not meet the new PERS thresholds. The Town of Westfield followed in good faith the instructions included in a notice issued by the State, “An individual who was a member of PERS prior to July 1, 2007 may continue their PERS membership when appointed to a DCRP position, if the person has ‘continuously’ been a member since that time.”
The Report concludes with recommendations, not indictments. Those recommendations include referring the names of the service providers referenced in the Report to the Division of Pension and Benefits for further review, and the implementation of a comprehensive checklist modeled after the certification form the State of New York uses to determine who is an employee and who is an independent contractor. (To illustrate just how complex making the determination can be, the NYS form lists 21 factors to consider.) Perhaps such clarification from the State is long overdue, given the complexity of the issues at hand and that 57 of 58 entities interpreted the law similarly.
Finally, regarding the quest for names of individuals, when contacted directly, the OSC would not reveal to the Town of Westfield the names of the service providers referred to the Division of Pension and Benefits for further review, even when specifically asked by the Town if any present or past Westfield Town employees are so named.