TRENTON – It only felt flat, but there was a fight coming.

On a dead mid-summer day, workers crawled on scaffolding in the vicinity of a plastered-over Governor’s Office, and inside on the second floor of the Statehouse, a suspenders-clad Senate President Steve Sweeney and company gingerly handled the twin trowels of NJ taxes and NJ taxpayer agony.

In the early days of the Murphy Administration, Sweeney and his allies formed a blue ribbon panel to try to dig the state out of a fiscal crisis, which includes combined pension and retiree health benefit liabilities of $151.5 billion, or four times the size of the state’s annual budget.

What they came up with – including greater consolidation of schools (see below) takes aim at public pensions and benefits enjoyed by some of Governor Murphy’s most obvious and avid allies: public sector workers, recommending a phase down from platinum to gold coverage.

Sweeney explained.

“We’re in trouble,” the Senate President advised sternly at a podium at the head of the Senate Caucus chamber, hours after Governor Phil Murphy convened a press conference in Newark to address the NJ Transit crisis.

The Senate President’s group singled out public employee debt, which represents $16,772 for every one of the state’s nine million residents, which will rise by $14.1 billion over the next four years and absorb 26% of the New Jersey budget.

“Time is of the essence,” said Sweeney, who explained the absence of Speaker Craig Coughlin – and other members of the Assembly at the press conference unveiling the workshop’s fixes – with a reassuring, “I know he’s been willing to look at them also.”

The 25-member Economic and Fiscal Policy Workgroup, comprised of economists and tax experts under the bipartisan leadership of Senate Budget Chair Paul Sarlo, Senator Steve Oroho and Assembly Majority Leader Louis Greenwald in the main recommended the following:

• Shift all state and local government employees and retiree’s health care coverage from platinum to gold;
• require all new state and local government retirees to pay the same percent of premium costs they paid when working;
• merge the School Employees Health Benefits Program into the larger State Health Benefits Plan and make the plans identical in coverage;
• cap accrued terminal leave payouts for state and local retirees at $7,500 or the amount currently earned; and make those payments based on average career salary;
• require state and local governments to pay the first $15,000 or remaining earned sick leave immediately or allocate it on a pre-tax basis to retiree healthcare premiums for qualifying employees;
• require an ongoing third-party audit of health care claims;
• require families with multiple state of local government employers to select only one health care plan from one employer.

Sarlo acknowledged that some of the items among the recommendations would be easier to implement than others.

On the schools reform front, the panel wants to:

• merge all K-4, K-5, K-6, K-8, and K-9 school districts into K-12 regional districts to improve the quality of education and promote efficiency;
• permit the establishment of two countywide school district pilot programs;
• move toward full state funding and administration of extraordinary special education;
• establish a state funding and administration of extraordinary special education;
• establish a state-level group to address students for whom an individual evaluation placement team is considering a residential program;
• establish a special education study commission to review the current capitation formula that provides all districts with the same special education and regardless of how many special education students they serve;
• reform the hearing process for special education placements and disputes by appointing Office of Administrative Law judges with experience in special education who would hear only special education cases within the 60-day timeline.

“These are recommendations, and we’re going to hire an actuary to run numbers,” Sweeney said.

The report also contains the recommendation to authorize the commission to undertake a study of shared services to identify the proper size, scale and level of government at which various services – from 911 calls to code enforcement to health services – can be delivered most efficiently and cost-effectively and make recommendations for legislation based on those analyses. It would require the merge of municipal courts with small caseloads, and require municipalities, their boards of education and any local authorities to meet at least twice a year to discuss shared services.