Health benefits for retired state workers bigger N.J. worry than pensions, think tank warns

A conservative think tank has advised New Jersey to focus more on the rising cost of health care for government retirees than pension system reforms.

New Jersey has one of the highest per-capita obligations to retiree health care, according to the Manhattan Institute for Policy Research.

Unlike the separate investment accounts for pensions, funds for retiree health benefits come out of the state budget, said New Jersey Assembly Budget Committee chairman Gary Schaer.

“Should funds be put away for it? The answer is yes. Right now in New Jersey we’re dealing with other problems, but we would look forward to the governor’s office making some proposals on this area,” said Schaer, D-Passaic.

The Manhattan Institute, which said maintaining generous retiree health benefits is not in the public interest, recommended that state and city governments follow the lead of the private sector and phase out health care benefits to retired public employees.

Schaer had reservations.

“Government is not the private sector. The reasons why people join government work are different from why they join corporate work. Salaries are different. Things are different,” he said. “I think a comparison amongst the two is difficult at best.”

New Jersey will eventually have to deal with the rising costs of the retiree benefits, Schaer said. But he pointed to more immediate priorities — including the need to replenish the Transportation Trust Fund that will run out of money at the end of June.