Judge puts controversial benefits switch for Newark teachers on hold - for now

By Dan Ivers | NJ Advance Media for NJ.com
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on February 01, 2016

Newark Superintendent of Schools Christopher Cerf, shown here in a file photo. An Essex County Judge has ordered the state-controlled district to postpone changing the prescription benefits carrier for the Newark Teachers Union.

 

NEWARK — The Newark Public Schools' controversial plan to unilaterally switch its employee prescription benefits plan hit a snag in court Friday.

Essex County Superior Court Judge Donald Kessler issued an injunction that will require the state-controlled district to justify its plans to transfer service for Newark Teachers Union members to Lawrenceville-based Benecard Services. The union, which claims the no-bid contract for Benecard violates its contract, had requested the order.

With approximately 4,000 employees, the NTU is by far the largest union in the district. The switch will proceed as planned for all other workers, who will be covered by Benecard effective Monday.

In a statement, Superintendent of Schools Christopher Cerf said the ruling affirmed his contention that the district has a "managerial prerogative" that allows it to unilaterally change benefit plans, and was confident the district could prove the change represents a crucial step toward closing a significant budget deficit.

"Based on our own review and the assurance of independent experts, we are confident that the proposed plan is not only equivalent, but in many respects is actually superior," he said. "Just as importantly, changing providers will save the district an estimated $1.5 million per year, a cost savings that will directly benefit our students."

The NTU has staged a vocal protest of the proposed change in providers, claiming the district's decision to award Benecard a contract without inviting other public bids smells of political patronage. Benecard was founded by former U.S. Senate and gubernatorial candidate Doug Forrester (he has since sold the company) and was recommended by Conner Strong & Buckelew, an insurance brokerage firm run by South Jersey political power broker George Norcross that also does business with Benecard.

If ultimately successful, transferring NTU members to Benecard would also effectively eliminate the Supplemental Fringe Benefits Fund - an unusual joint trust that has provided dental, vision and prescription benefits to the city's teachers since the early 1970s.

On Friday, NTU President John Abeigon said those changes have now been staved off, at least until Cerf and other NPS administrators can prove any change would be to the benefit the district.

"It was the Newark Public School's responsibility to find a cheaper prescription plan, not an equal one," he said. "Digging themselves out of (a budget deficit) shouldn't be off the back of taxpayers or our members."

While the district opted to bypass an open bid process, it contends that Benecard was only selected after an analysis of three carriers conducted by Conner Strong.

In addition to the NTU, the move has also drawn criticism from the city's School Advisory Board. Several members of the board voiced support for a resolution planned to formalize its opposition, but any vote was delayed when its regular meeting was cancelled following a record-setting blizzard last week.

Board President Ariagna Perello said she was upset by the district's actions in light of a resolution passed in September that requested all contracts over $40,000 be put out to bid.

"We want complete transparency from the district. I want to make sure that under my leadership, when I see something is being done incorrectly, we're going to stand up and say something," she said.

"The NTU is and will not be alone in this fight."

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