SENATE STATE MANAGEMENT, INVESTMENT AND FINANCIAL INSTITUTIONS COMMITTEE

STATEMENT TO

SENATE, No. 84

with committee amendments

STATE OF NEW JERSEY

DATED: MARCH 14, 1996

      The Senate State Management, Investment and Financial Institutions Committee reports favorably and with committee amendments Senate, No. 84.

      This bill makes membership in the Public Employees' Retirement System (PERS) optional for a special service employee employed by the State under the federal Older American Community Service Employment Act. Any such employee who is in the retirement system on the effective date of this act may terminate membership in the retirement system by making an application in writing to the board of trustees of the retirement system. Upon receiving the application, the board shall terminate enrollment in the system and the member shall receive a refund of accumulated deductions. This refund shall serve as a waiver of all benefits payable under the retirement system.

      The employees to whom this bill applies are at least 55 years of age and receive minimum wages for part-time employment under the Senior Community Service Employment Program which is administered by the Division of Aging in the Department of Community Affairs. The program employs approximately 580 persons who are at or near the poverty level. The program's budget is comprised of 90% federal funds and 10% state matching funds. Program participants receive the minimum wage for an average of 20 hours work per week. According to the Division of Aging, enrollment of these persons in PERS imposes an economic hardship due to the age of the employees and the limited income they derive from this employment.

      In order to retain federal funds, the Department of Community Affairs must maintain a minimum of 510 employees in this program and place 30% of them in non-subsidized employment each year.

      This bill was prefiled for introduction in the 1996 session pending technical review. As reported, the bill includes the changes required by technical review which has been performed.

      Last session, a bill mandating termination of the membership of such employees (S-195) was approved by the Pension and Health Benefits Review Commission.

COMMITTEE AMENDMENT

      The committee amended the bill to make membership in the retirement system optional for these employees instead of removing them from membership in the retirement system.