FISCAL NOTE TO

ASSEMBLY, No. 2103

STATE OF NEW JERSEY

DATED: AUGUST 21, 1996

      Assembly Bill No. 2103 of 1996 changes the definition of veteran, for the purpose of being eligible to receive all benefits, entitlements, exemptions and grants currently provided to other veterans, to include any resident of New Jersey serving on active duty, for at least two years, in any branch of the Armed Forces of the United States, including the National Guard and the Reserve component of the Armed Forces of the United States, on or after February 1, 1955 and on or prior to December 30, 1960.

      The bill also permits a retiree of a State-administered retirement system who meets the definition of a veteran as a result of this bill, or the surviving spouse of a retiree who met the definition, to be eligible to receive the special veterans' retirement allowance in lieu of the retirement allowance the retiree or the surviving spouse is receiving on the day the bill becomes law. The bill directs the State to pay the additional costs arising from any increase in the cost of living adjustment received by a retiree who meets the definition of a veteran as a result of the bill or by a surviving spouse. It prohibits, however, the granting of any retroactive payments to a retiree or a surviving spouse.

      The Division of Pensions and Benefits estimates the cost of providing the special veterans' retirement allowance to these individuals at $938,000 in fiscal year 1998. Of this amount, approximately $573,000 would be payable by the State on behalf of State employees enrolled in the retirement system and $365,000 would be payable by local government employers. The division notes that this cost will increase slightly each year as additional members retire and as cost-of-living adjustments increase. The division further notes that this bill does not require the State to pay the cost of the special veterans' benefit.

      The Office of Legislative Services (OLS) cannot verify the division's estimate. The OLS notes that the special veterans' retirement allowance in the Public Employees' Retirement System (PERS) is 50 percent of final compensation for veterans age 62 with 20 or more years of service. The service retirement formula for non-veterans is years of service divided by 60 multiplied by the highest three years' average salary. Depending on the individual member's circumstances, a veteran's benefit can provide an enhancement of 50 percent over the non-veteran service retirement benefit. However, the

OLS believes that on average the veteran benefit is about 20 percent greater.

      In addition, these individuals would be eligible for other benefits, such as the veterans' property tax exemption, tuition aide, medical and nursing care at the veterans' nursing homes, and burial in the Brigadier General Doyle Veterans' Memorial Cemetery. The additional cost of these benefits is not included in the division's estimate.

      The OLS has no information on the number of individuals who

might qualify for each of these benefits. Currently, the value of a bed in one of the State veterans' nursing homes is between $41,500 and $52,000. The veteran's property tax exemption is $50.00 annually.

This fiscal note has been prepared pursuant to P.L.1980, c.67.