LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY, No. 1675
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JULY 2, 2024
SUMMARY
Synopsis: Extends membership in TPAF to 10 years after discontinuance of
service and to 15 years for those who were laid off or had 10 or more
years of continuous service upon voluntary termination.
Type of Impact: Annual increased State employer contributions from the General Fund
for TPAF and increased expenditures from the Pension Fund to pay
higher TPAF retirement allowances.
Agencies Affected: Division of Pensions and Benefits in the Department of the Treasury.
Office of Legislative Services Estimate
Fiscal Impact Annual
Increased State Employer
Contributions to TPAF Indeterminate
Increased Teachers’ Pension and
Annuity Fund Retirement Allowance
Payments Indeterminate
 The Office of Legislative Services (OLS) finds the provisions of the bill that extend the length
of time a teacher remains a member of the retirement system and the provisions that allow a
teacher to be re-enrolled in their previous membership tier create an unfunded liability for the
Teachers’ Pension and Annuity Fund. This is because the teacher would receive enhanced
benefits upon their return, which increases the fund’s liabilities but for which no equal amount
of assets to cover those liabilities have been deposited. This unfunded liability reduces the
funded ratio of the system accordingly.
 The bill prohibits these costs to be assessed on the member or the member’s employer.
Therefore it is assumed that the State would pay the member’s share of the unfunded liability
in addition to its actuarially determined annual employer contribution to the Teachers’
Pension and Annuity Fund.
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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 Increases in benefit factors increase retirement allowances, therefore retirement allowances
paid out of the pension fund to the teachers who return to service under the bill would be
higher.
BILL DESCRIPTION
This bill would allow a teacher whose contributions towards their pension as a member of the
Teachers’ Pensions and Annuity Fund State-administered Retirement System to remain a member
of the system for a period of up to 10 years after leaving their position before the State is required
to send the contributions to the member and terminate their membership in the system. In addition,
the bill would allow the continuation of the membership of a teacher who is dismissed under certain
circumstances or a teacher who leaves service after 10 years of continuous service, is vested, defers
retirement, and has not withdrawn their contributions from the retirement system, but returns to
service within 15 years of leaving. The bill would allow a teacher who returns to service within
the appropriate timeframes to be re-enrolled in the Teachers’ Pension and Annuity Fund retirement
system in the same membership tier as they were in before leaving. The bill would also apply
retroactively and allow a teacher who returned to service prior to the effective date of this bill and
within the timeframes and requirements established in the bill to be re-enrolled in the same
membership tier as they were in before leaving. For example, a teacher who leaves service to raise
a family and does not withdraw their employee contributions, could return to work within a seven
year timeframe and maintain their membership tier status upon re-enrollment. Likewise, a vested
teacher who defers retirement could leave service and could return to work within a 15 year
timeframe and maintain their membership tier status upon re-enrollment.
Under current law, teachers have two years to return to service before their employee
contributions are returned and their membership in the system is terminated. Vested teachers who
have deferred retirement, and have not withdrawn their contributions have 10 years to return to
service before their membership in the system is terminated.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds the provisions of the bill that extend the length of time a teacher remains a
member of the retirement system and the provisions that allow a teacher to be re-enrolled in their
previous membership tier create an unfunded liability for the Teachers’ Pension and Annuity Fund.
This is because the teacher would receive enhanced benefits upon their return, which increases the
fund’s liabilities but for which no equal amount of assets to cover those liabilities have been
deposited. Instead those liabilities would be funded over time through increased State employer
contributions. The increased liability reduces the funded ratio of the system accordingly. The size
of the unfunded liability is dependent on the tier into which the member would be re-enrolled. If
a member returns to tier one instead of tier five the unfunded liability would be greater. If a
member returns to tier four instead of tier five the unfunded liability would be smaller.
Because the bill prohibits additional contributions to be imposed on the member and the
member’s employer, it is assumed that the State will pay the increase in the employee contribution
from being placed in a tier with a higher benefit factor, in addition to its actuarially determined
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annual employer contribution to the Teachers’ Pension and Annuity Fund. Increases in benefit
factors increase retirement allowances, therefore retirement allowances paid out of the pension
fund to the teachers who return to service under the bill would be higher.
Section: Legislative Budget and Finance Office
Analyst: Kimberly M. Clemmensen
Assistant Legislative Budget and Finance Officer
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.).


Statutes affected:
Introduced: 18A:66-173