LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 3798
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: MAY 22, 2023
SUMMARY
Synopsis: Permits teacher, and professional staff member who provides special
services, who retired from TPAF to return to employment for up to
two years without reenrollment in TPAF if employment commences
during the 2023-2024 school year.
Type of Impact: Potential State and local expenditure decreases.
Agencies Affected: Division of Pensions and Benefits in the Department of the Treasury;
School districts.
Office of Legislative Services Estimate
Fiscal Impact Year 1 Year 2 Year 3
State Cost Decrease $2,300,000 $2,300,000 Indeterminate
Local Cost Decrease $900,000 $900,000 Indeterminate
Total Cost Decrease $3,200,000 $3,200,000 Indeterminate
Assumes that 100 teachers or professional staff members are reemployed under the bill’s provisions at an average
salary of $80,000.
 The Office of Legislative Services (OLS) estimates $3.2 million in annual savings, $2.3 million
to the State and $0.9 million to local school districts, in each of the two fiscal years following
the bill’s enactment, subject to certain assumptions. Any savings in subsequent years are
indeterminate.
 For every teacher or professional staff member who provides special services and returns to
employment shortly after retirement without reenrolling in the Teachers’ Pension and Annuity
Fund, the local school district may save approximately $9,000 in annual health care costs
provided that the employee is receiving State-paid health care coverage in retirement under the
School Employees’ Health Benefits Program due to their former employment.
 Because each qualified retiree is not reenrolled in the Teachers’ Pension and Annuity Fund
and, thus, does not receive an increase in retirement benefits for the additional service, the fund
does not incur additional costs. Consequently, the OLS estimates that for every teacher or
professional staff member who returns to employment shortly after retirement without
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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reenrolling in the fund and earns an average salary of $80,000, the State may save
approximately $23,000 in annual contributions to the fund, which it would otherwise have to
make for an employee in a Teachers’ Pension and Annuity Fund -covered position.
 The OLS cannot predict the actual number of Teachers’ Pension and Annuity Fund retirees
who would accept reemployment under the bill’s provisions. Furthermore, the OLS cannot
predict the actual salary arrangements that would result under the corresponding reemployment
contracts.
BILL DESCRIPTION
This bill would extend the provisions of P.L.2021, c.408, to permit a teacher or professional
staff member who retired from the Teachers’ Pension and Annuity Fund to become employed
again with a board of education in a position of critical need commencing in the 2023 – 2024
school year without triggering a re-enrollment in the Teachers’ Pension and Annuity Fund. As
with P.L. 2021, c. 408, reemployment will occur through a one-year contract, whose extension is
limited to a single year with any individual board of education, except upon approval from the
Commissioner of Education. During reemployment the teacher or professional staff member will
collect both a pension and a salary. Under the bill, only a teacher or professional staff member
who experienced a bona fide retirement from the Teachers’ Pension and Annuity Fund and whose
return to work was not prearranged is eligible for reemployment.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that if 100 teachers or professional staff members who provide special
services and return to employment shortly after retirement, without reenrolling in the Teachers’
Pension and Annuity Fund, the State would save $2.3 million annually and local school districts
would save $0.9 million annually in each of the two fiscal years following the bill’s enactment.
Any savings in subsequent years are indeterminate.
The local estimate is based on actual enrollment and cost data for Plan Year 2021 within the
School Employees’ Health Benefits Plan Year 2022 Mid-Year Experience Analysis, which
suggests that education employers pay approximately $9,000 in annual health care expenditures
per member. Additionally, the State estimate assumes an average annual salary of $80,000 per
reemployed teacher or professional staff member and relies on data from the Teachers’ Pension
and Annuity Fund 2022 Actuarial Valuation Report, which suggests that State normal pension
costs represent five percent of appropriation payroll, State costs for the unfunded actuarial liability
represent 29.57 percent of appropriation payroll, and the lottery contribution offset represents 6.25
percent of appropriation payroll.
The OLS cannot predict the actual number of Teachers’ Pension and Annuity Fund retirees
who would accept reemployment under the bill’s provisions or the actual salary arrangements that
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would result under the corresponding reemployment contracts, the OLS estimates that if the
assumptions above hold and 100 teachers or professional staff members gained reemployment
under the bill’s provisions, combined annual savings for the State and local education employers
would approximate $3.2 million, keeping other factors constant.
Health Care Savings for Local Education Employers
Plan Year 2021
Active Employees Cost per Member
(Actuals)
Average Medical Members 144,807
Total Cost $ 1,311,680,000 $ 9,058
Source: SEHBP Plan Year 2022 Mid-Year Experience Analysis
Pension Savings for the State
Savings per Returned
TPAF Contribution Amounts
Employee
State Normal Cost (5%) $ 4,000
UAL Cost (29.57%) $ 23,656
Lottery Contribution Offset (6.25%) $ (5,000)
Total State Pension Cost $ 22,656
Source: Teachers’ Pension and Annuity Fund 2022 Actuarial Valuation Report
Assumes average salary of $80,000 per returned employee.
Section: State Government
Analyst: Anna Harris
Assistant Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).