In the Matter of Ridgefield Park Board of Education

Annotate this Case

The Ridgefield Park Board of Education (Board) and the Ridgefield Park Education Association (Association) negotiated a collective negotiations agreement (CNA) covering 2011-2014 that went into effect three days after the New Jersey Legislature enacted Chapter 78. The 2011-2014 CNA expired before the employees achieved full implementation of the premium share set forth in N.J.S.A. 52:14-17.28c (Tier 4). After the 2011-2014 CNA expired, the Board and the Association negotiated a CNA covering 2014-2018, which, like its predecessor, stated that employees would contribute 1.5% of their salary towards health insurance or the minimum set forth by statute, regulation, or code. During the 2014-2015 school year, the employees contributed to the cost of their health care at the full premium share required by Tier 4. The Board and the Association disputed Chapter 78’s impact on employee contributions for the CNA’s remaining three years. The Board contended that Chapter 78 preempted any negotiated term for those contributions and that the Association’s members were required to contribute to their health benefits at the Tier 4 level for the duration of the CNA. The Association contended that Chapter 78 did not preempt the 1.5% contribution rate set forth in the 2014-2018 CNA. PERC held that the health insurance premium contribution rate set forth in the 2014-2018 CNA was preempted by Chapter 78 and granted the Board’s request for a restraint of binding arbitration as to that issue. The Appellate Division reversed, determining that adherence to Chapter 78’s plain language would bring about an “absurd result” contravening legislative intent, and required the employees to contribute only 1.5% of their salaries for the three contested years. The New Jersey Supreme Court reversed, finding the health insurance premium contribution rates paid by the Association’s members were preempted by statute and therefore non-negotiable. PERC’s construction of Chapter 78 comported with the statute’s language and the Legislature’s stated objective to achieve a long-term solution to a fiscal crisis.

This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.

In the Matter of Ridgefield Park Board of Education (A-2-19) (083091)

Argued March 3, 2020 -- Decided August 17, 2020

Patterson, J., writing for the Court.

In this appeal, the Court reviews the Public Employment Relations
Commission’s (PERC) decision that the employees’ health insurance premium
contribution rates for the duration of the 2014-2018 collective negotiations
agreement (CNA) between the Ridgefield Park Board of Education (Board) and the
Ridgefield Park Education Association (Association) were non-negotiable because
those rates were preempted by L. 2011, c. 78 (Chapter 78).

Chapter 78 prescribed annual increases in health care contributions over four
years for those employed by a local board of education and required those
employees to achieve full implementation of the increased contributions (Tier 4) in
the fourth year after the statute’s effective date or, for employees already subject to
a CNA, in the fourth year after the expiration of that agreement. Chapter 78 also
provided that when an employer and its employees negotiated the next CNA after
the employees in a bargaining unit reached full implementation of the share of the
cost of health care premiums mandated by N.J.S.A. 52:14-17.28c, they would
negotiate employee health care contributions as if that premium share were part of
their previous CNA. N.J.S.A. 18A:16-17.2.

The Board and the Association negotiated a CNA covering 2011-2014 that
went into effect three days after the Legislature enacted Chapter 78. The 2011-2014
CNA expired before the employees achieved full implementation of the premium
share set forth in N.J.S.A. 52:14-17.28c (Tier 4). After the 2011-2014 CNA expired,
the Board and the Association negotiated a CNA covering 2014-2018, which, like its
predecessor, stated that employees shall contribute 1.5% of their salary towards
health insurance or the minimum set forth by statute, regulation, or code.

During the 2014-2015 school year, the employees contributed to the cost of
their health care at the full premium share required by N.J.S.A. 52:14-17.28c (Tier
4). The Board and the Association disputed Chapter 78’s impact on employee
contributions for the CNA’s remaining three years. The Board contended that
Chapter 78 preempted any negotiated term for those contributions and that the
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Association’s members were required to contribute to their health benefits at the
Tier 4 level for the duration of the CNA. The Association contended that Chapter 78
did not preempt the 1.5% contribution rate set forth in the 2014-2018 CNA.

The Board and the Association petitioned PERC for a scope-of-negotiations
determination. PERC held that the health insurance premium contribution rate set
forth in the 2014-2018 CNA was preempted by Chapter 78 and granted the Board’s
request for a restraint of binding arbitration as to that issue. The Appellate Division
reversed, determining that adherence to Chapter 78’s plain language would bring
about an “absurd result” contravening legislative intent, and required the employees
to contribute only 1.5% of their salaries for the three contested years. 459 N.J.
Super. 57, 61, 70-72 (App. Div. 2019).

The Court granted the Board’s petition for certification. 239 N.J. 393 (2019).

HELD: The health insurance premium contribution rates paid by the Association’s
members were preempted by statute and therefore non-negotiable. PERC’s
construction of Chapter 78 comports with the statute’s language and the
Legislature’s stated objective to achieve a long-term solution to a fiscal crisis.

1. The determination of whether a subject is properly negotiable in negotiations
between public employers and their employees is governed by the three-part test set
forth in In re Local 195, 88 N.J. 393, 403-04 (1982). This case implicates the
preemption prong of that test. Thus, to review PERC’s decision that the rates in
question were non-negotiable, the Court considers whether the plain language of
N.J.S.A. 18A:16-17.2 evinces the Legislature’s intent to preempt any negotiated
provision in the parties’ 2014-2018 CNA regarding employee contributions to their
health care benefits. (pp. 20-23)

2. N.J.S.A. 18A:16-17.2’s first sentence addresses “public employer[s] and
employees who are in negotiations for the next collective negotiations agreement to
be executed after the employees in that unit have reached full implementation of the
premium share . . . .” (emphases added). And in its final sentence, N.J.S.A.
18A:16-17.2 provides that after “full implementation,” the employees’ contribution
levels “shall become part of the parties’ collective negotiations and shall then be
subject to collective negotiations in a manner similar to other negotiable items
between the parties.” Accordingly, during the negotiations for the next CNA after
full implementation is reached -- here, the negotiations for the agreement that would
succeed the 2014-2018 CNA -- the Tier 4 contribution levels would constitute the
status quo. The Legislature did not expressly discuss the scenario in this case, in
which the employees reached “full implementation” of the premium share with three
years remaining in the term of their current CNA. It implicitly addressed the setting

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of this case, however, by making the Tier 4 contribution rate the status quo from
which a successor CNA would be negotiated. Moreover, nothing in the statute
authorizes an immediate reduction of employee health care contribution rates to their
pre-Chapter 78 levels. (pp. 23-26)

3. To the extent that N.J.S.A. 18A:16-17.2 leaves any ambiguity as to legislative
intent, the legislative history of Chapter 78 resolves that ambiguity. The Legislature
viewed public employee health care costs to present a fiscal crisis and acted to
provide a long-term solution to that crisis. The Legislature did not enact Chapter 78
to achieve only a transient increase in employees’ health insurance premium
contributions, followed by an immediate reversion to pre-statute contribution rates
as soon as employees had contributed at the Tier 4 level for a year. Instead, it
envisioned that Chapter 78 would increase employee health insurance premium
contributions over the long term. In short, the construction of N.J.S.A. 18A:16-17.2
urged by the Board and adopted by PERC is consonant with the Legislature’s intent,
as reflected by Chapter 78’s stated goals and legislative history. (pp. 26-30)

4. N.J.S.A. 18A:16-17.2’s impact on employee health benefit contributions based on
the timing of a given CNA is not an “absurd result” warranting a departure from the
statute’s terms. The Legislature clearly understood that school districts negotiate
contracts on different schedules, and that the statute’s impact would vary from
district to district. Nonetheless, the Legislature envisioned that the transition
between Tier 4 health insurance premium contribution rates set by Chapter 78 and
contribution rates negotiated by school boards and employees would take place in
the negotiations for the next CNA, not at some earlier stage. (pp. 30-32)

The judgment of the Appellate Division is REVERSED, and the matter is
REMANDED to PERC.

JUSTICE ALBIN, dissenting, expresses the view that the result reached by
the majority is mandated by neither the language nor the legislative history of
Chapter 78 and deprives the Association the benefit of its CNA with the Board. Had
the Association the prescience to foresee how the majority would interpret Chapter
78, Justice Albin writes, it undoubtedly would have entered a one-year contract with
the Board, during which Tier 4 would have been implemented, and begun
negotiations anew. Justice Albin concludes that the decision here, which strikes
down terms in a negotiated agreement, is unfair and unreasonable, and not consistent
with the Legislature’s probable intent in Chapter 78.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, FERNANDEZ-VINA,
SOLOMON, and TIMPONE join in JUSTICE PATTERSON’s opinion. JUSTICE
ALBIN filed a dissent.

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SUPREME COURT OF NEW JERSEY
A-
2 September Term 2019
083091

In the Matter of
Ridgefield Park Board of Education,

Respondent-Appellant,

and

Ridgefield Park Education Association,

Petitioner-Respondent.

On certification to the Superior Court,
Appellate Division, whose opinion is reported at
459 N.J. Super. 57 (App. Div. 2019).

Argued Decided
March 3, 2020 August 17, 2020

Kerri A. Wright argued the cause for appellant (Porzio,
Bromberg & Newman, attorneys; Kerri A. Wright, of
counsel and on the briefs, David L. Disler and Thomas J.
Reilly, on the briefs).

Steven R. Cohen argued the cause for respondent
(Selikoff & Cohen, attorneys; Steven R. Cohen, of
counsel and on the briefs, Keith Waldman and Hop T.
Wechsler, on the brief).

Kathleen Asher argued the cause for amicus curiae New
Jersey School Boards Association (New Jersey School
Boards Association, attorneys; Kathleen Asher and on the
brief).

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Ira W. Mintz argued the cause on behalf of amicus curiae
Communications Workers of America, AFL-CIO
(Weissman & Mintz, attorneys; Ira W. Mintz, on the
brief).

JUSTICE PATTERSON delivered the opinion of the Court.

This appeal arises from a dispute between the Ridgefield Park Board of

Education (Board) and the Ridgefield Park Education Association

(Association) concerning Board employees’ obligations to contribute to the

cost of their health care benefits under L. 2011, c. 78 (Chapter 78).

Chapter 78 prescribed annual increases in health care contributions over

four years for those employed by a local board of education at the time of the

statute’s enactment. N.J.S.A. 18A:16-17.1(a); N.J.S.A. 52:14-17.28c. It

required those employees to achieve full implementation of the increased

contributions (Tier 4) in the fourth year after the statute’s effective date or, for

employees already subject to a collective negotiations agreement (CNA), in the

fourth year after the expiration of that agreement. N.J.S.A. 18A:16-17.1(c);

N.J.S.A. 52:14-17.28d(c). Chapter 78 also provided that when an employer

and its employees negotiated the next CNA after the employees in a bargaining

unit reached full implementation of the share of the cost of health care

premiums mandated by N.J.S.A. 52:14-17.28c, they would negotiate employee

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health care contributions as if that premium share were part of their previous

CNA. N.J.S.A. 18A:16-17.2.

Here, the Board employees achieved the Tier 4 contribution levels, and

thus full implementation of the mandated premium share, at the end of the first

year of their 2014-2018 CNA. The Board and the Association agreed that

Chapter 78 preempted the parties’ CNA as it applies to employees’ premium

share for the 2014-2018 CNA’s first year but disputed the statute’s impact on

employee contributions for the CNA’s remaining three years. The Board

contended that Chapter 78 preempted any negotiated term for those

contributions; the Association countered that the parties agreed to a lower level

of contributions and that their CNA, not Chapter 78, determined the

employees’ obligations.

The Board and the Association petitioned the New Jersey Public

Employment Relations Commission (PERC) for a scope-of-negotiations

determination. PERC ruled in the Board’s favor. In re Ridgefield Park Bd. of

Educ., P.E.R.C. No. 2018-14, 44 N.J.P.E.R. ¶ 49 at ___ (slip op. 12), 2 017 N.J.

PERC LEXIS 82 at *13-14 (2017).

The Appellate Division reversed PERC’s determination. In re

Ridgefield Park Bd. of Educ., 459 N.J. Super. 57, 72 (App. Div. 2019). It

recognized that Chapter 78’s plain language required the Association’s

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members to contribute to their health care costs at the Tier 4 level for an

additional three years because they had achieved that level in the first year of a

four-year CNA. Id. at 70-71. It determined, however, that application of the

statute consistent with its plain language would bring about an “absurd result,”

contravening legislative intent. Id. at 61, 70-71. The Appellate Division

required the employees to contribute only 1.5% of their salaries for their health

care benefits for the three contested years. Id. at 72.

We recognize a legitimate argument that N.J.S.A. 18A:16-17.2 makes

clear that when employees reach the Tier 4 contribution level in the first year

of a CNA, they must continue to contribute at that level until they negotiate a

successor CNA providing for a lower rate of contribution, and that successor

CNA goes into effect. When the statutory language is considered in

conjunction with Chapter 78’s purpose and legislative history, that legislative

intent is plain. We view PERC’s construction of Chapter 78 to comport with

the statute’s language and the Legislature’s stated objective to achieve a long-

term solution to a fiscal crisis. We do not share the Appellate Division’s view

that PERC’s interpretation of the statute gives rise to an absurd result.

Accordingly, we reverse the Appellate Division’s judgment and remand

the matter to PERC for further proceedings.

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I.

When the Legislature enacted Chapter 78 on June 28, 2011, it amended

several statutes relating to public employee health benefits. See L. 2011, c. 78.

Among other provisions, Chapter 78 required that a public employee

contribute a specified percentage of the premiums charged for his or her health

care benefits based on his or her annual income. N.J.S.A. 52:14-17.28c.

As part of Chapter 78, the Legislature enacted two Title 18A provisions

that are relevant to this appeal. First, N.J.S.A. 18A:16-17.1(a) prescribes

contribution levels for current school board employees that increase annually

over four years:

Notwithstanding the provisions of any other law to the
contrary, public employees, as specified herein, of a
local board of education shall contribute, through the
withholding of the contribution from the pay, salary, or
other compensation, toward the cost of health care
benefits coverage for the employee and any dependent
provided pursuant to L. 1979, c. 391 ([N.J.S.A.]
18A:16-12 et seq.), unless the provisions of subsection
b. of this section apply, in an amount that shall be
determined in accordance with section 39 of L. 2011, c.
78 ([ N.J.S.A.] 52:14-17.28c), except that, employees
employed on the date on which the contribution
commences, as specified in subsection c. of this
section, shall pay:

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during the first year in which the contribution is
effective, one-fourth of the amount of contribution;

during the second year in which the contribution is
effective, one-half of the amount of contribution; and

during the third year in which the contribution is
effective, three-fourths of the amount of contribution,

as that amount is calculated in accordance with section
39 of L. 2011, c. 78 ([ N.J.S.A.] 52:14-17.28c).

Pursuant to Chapter 78’s “sunset” provision, several sections of that

statute, including N.J.S.A. 18A:16-17.1, “shall expire four years after the

effective date.” L. 2011, c. 78, § 83.

Second, in N.J.S.A. 18A:16-17.2, the Legislature addressed the impact

of Chapter 78’s tiered health care contributions on CNAs that govern board of

education employees:

A public employer and employees who are in
negotiations for the next collective negotiations
agreement to be executed after the employees in that
unit have reached full implementation of the premium
share set forth in section 39 of L. 2011, c. 78 ([N.J.S.A.]
52:14-17.28c) shall conduct negotiations concerning
contributions for health care benefits as if the full
premium share was included in the prior contract. The
public employers and public employees shall remain
bound by the provisions of sections 39 and 41 of L.
2011, c. 78 ([ N.J.S.A.] 52:14-17.28c and [N.J.S.A.]
18A:16-17.1), notwithstanding the expiration of those
sections, until the full amount of the contribution

6
required by section 39 has been implemented in
accordance with the schedule set forth in section 41.

Employees subject to any collective negotiations
agreement in effect on the effective date of L. 2011, c.
78, that has an expiration date on or after the expiration
of sections 39 through 44, inclusive, of L. 2011, c. 78
([ N.J.S.A.] 52:14-17.28c et al.), shall be subject, upon
expiration of that collective negotiations agreement, to
sections 39 and 41 until the health care contribution
schedule set forth in section 41 is fully implemented.

After full implementation, those contribution levels
shall become part of the parties’ collective negotiations
and shall then be subject to collective negotiations in a
manner similar to other negotiable items between the
parties.

The import of N.J.S.A. 18A:16-17.2 is the central issue in this appeal.

On June 28, 2011, when Chapter 78 became law, the Board and the

Association were governed by a CNA effective from July 1, 2008 to June 30,

2011 (2008-2011 CNA), which required the Board to “provide the health care

protection hereinafter set forth” in the CNA and to “pay the full premium for

each employee and, in cases where appropriate, for family insurance

coverage.” While the 2008-2011 CNA was in effect, the Legislature enacted a

statute requiring employees of local boards of education to pay 1.5% of base

salary for their health care benefits coverage. N.J.S.A. 18A:16-17(b).

7
After the 2008-2011 agreement expired, the Board and the Association

negotiated a successor CNA for the period between July 1, 2011 and June 30,

2014 (2011-2014 CNA). That CNA went into effect three days after the

Legislature enacted Chapter 78.

The 2011-2014 CNA, like its predecessor, stated that the Board “shall

pay the full premium for each employee and, in cases where appropriate, for

family insurance coverage,” but it also provided that “[e]mployees covered

under this Article shall contribute the following percentage of their salary

towards health insurance: 1.5% or the minimum set forth by statute,

regulation, or code. Contributions shall be made through payroll deduction.”

In accordance with N.J.S.A. 18A:16-17.1, the Board’s employees paid

one-fourth of the contribution required by N.J.S.A. 52:14-17.28c (Tier 1)

during the first year in which the mandated contribution was effective, the

2011-2012 school year. They paid half of the contribution required by

N.J.S.A. 52:14-17.28c (Tier 2) during the second year in which the mandated

contribution was effective, the 2012-2013 school year. The employees paid

three-fourths of the contribution required by N.J.S.A. 52:14-17.28c (Tier 3)

during the third year in which the mandated contribution was effective, the

2013-2014 school year. The 2011-2014 CNA expired before the employees

8
achieved full implementation of the premium share set forth in N.J.S.A. 52:14-

17.28c (Tier 4).

After the 2011-2014 CNA expired, the Board and the Association

negotiated a successor agreement to be effective from July 1, 2014 to June 30,

2018 (2014-2018 CNA). On June 11, 2014, they entered into a Memorandum

of Agreement (MOA) that stated that “[a]ll portions of the expired agreement

not modified by the terms of this Memorandum shall continue to be of full

force and effect and be incorporated into the successor agreement.” The MOA

identified agreed-upon changes to be incorporated into a successor agreement.

None related to employees’ contributions to the cost of their health care

benefits.

The 2014-2018 CNA, like its predecessor, stated that “[e]mployees

covered under this Article shall contribute the following percentage of their

salary towards health insurance: 1.5% or the minimum set forth by statute,

regulation or code. Contributions shall be made through payroll deduction.”

During the 2014-2015 school year, the first year in which the 2014-2018

CNA was in effect, the employees contributed to the cost of their health care at

the full premium share required by N.J.S.A. 52:14-17.28c (Tier 4). The Board

and the Association agreed that Chapter 78 required the Association’s

members to contribute at the Tier 4 level during that initial year of the 2014 -

9
2018 CNA. During the second year of the 2014-2018 CNA, however, the

Association’s members contributed only 1.5% of their salaries to the cost of

their health care.

On August 13, 2015, PERC decided Clementon Board of Education v.

Clementon Education Ass’n, P.E.R.C. No. 2016-10, 42 N.J.P.E.R. ¶ 34, 2 015 N.J. PERC LEXIS 76 (2015). In Clementon, the Board of Education

petitioned for a scope-of-negotiations determination that the health benefits

provision of its CNA was preempted by N.J.S.A. 18A:16-17.2. Id. at 118.

PERC agreed with the Clementon Board of Education, and ruled that the

statute “expressly, specifically and comprehensively sets forth that health

benefit contribution levels become negotiable in the 'next collective

negotiations agreement after . . . full implementation’ of the four-tiered level

of employee contributions is achieved.” Id. at 118-19 (ellipsis in original)

(emphasis added) (quoting N.J.S.A. 18A:16-17.2).

On December 21, 2015, the Board informed the Association that it

viewed the health insurance provision in the 2014-2018 CNA to violate

Chapter 78, as interpreted by PERC in Clementon. The Board asked the

Association to voluntarily “revise and reform” the CNA so that the

Association’s members would contribute to their health benefits at the Tier 4

10
level for the duration of the CNA, “to comply with the law.” The Association

disagreed and declined to amend the CNA.

The Board then reinstated payroll deductions reflecting employee

contributions to health care costs at the Tier 4 level. The Board took the

position that employee contributions would remain at the Tier 4 level for the

duration of the 2014-2018 CNA and announced that it would freeze employee

salaries until the employees had contributed amounts sufficient to satisfy their

obligations under Chapter 78.

The Association filed a grievance with respect to its members’ health

care contributions. The Board and Association agreed to hold the grievance in

abeyance pending the Appellate Division’s review of PERC’s decision in

Clementon.

The Appellate Division, however, did not decide the question raised in

the Clementon appeal. In the wake of PERC’s decision in that matter, the

parties in Clementon negotiated two new agreements to replace their four-year

CNA: a CNA to be in effect for only one year, during which the employees

would contribute to their health care costs at Tier 4 levels, and a three-year

CNA, under which the employees would contribute at a negotiated rate. Given

11
the parties’ resolution of the dispute in Clementon, the Appellate Division

dismissed the appeal in that case as moot.

After the Appellate Division dismissed the appeal in Clementon, the

Association reinstated its grievance in this matter. The Superintendent of

Schools denied the grievance, citing PERC’s decision in Clementon. The

Association advanced its grievance to the Board, which also denied it. At the

Association’s request, PERC referred the matter to arbitration and appointed

an arbitrator.

The Association filed with PERC a petition for a scope-of-negotiations

determination, requesting binding arbitration. The Association contended that

Chapter 78 did not preempt the 1.5% contribution rate set forth in the 2014 -

2018 CNA. The Board petitioned for a scope-of-negotiations determination in

which it sought to enjoin the binding arbitration requested by the Board.

PERC consolidated the two scope-of-negotiations petitions. Relying on

its decision in Clementon, PERC ruled in favor of the Board. In re Ridgefield

Park Bd. of Educ., 44 N.J.P.E.R. ¶ 49 at ___ (slip op.at 12).

PERC noted that “ N.J.S.A. 18A:16-17.2 expressly, specifically and

comprehensively sets forth that health benefit contribution levels become

negotiable in the 'next collective negotiations agreement after . . . full

implementation’ of the four-tiered level of employee contributions is

12
achieved.” Id. ¶ 49 at ___ (slip op. at 4-5) (quoting Clementon Bd. of Educ.,

42 N.J.P.E.R. ¶ 34 at 118-19). PERC reiterated its holding in Clementon that

“depending on the length of the successor agreement that the Board and

Association agree to,” the disputed health care costs provision of the parties’

CNA “may be preempted by N.J.S.A. 18A:16-17.2.” Id. ¶ 49 at ___ (slip op.

at 5) (quoting Clementon Bd. of Educ., 42 N.J.P.E.R. ¶ 34 at 118-19). It

restated the example it gave in the Clementon decision:

if the parties agree to a contract with a one-year term,
[the parties’ negotiated health care contribution
provision] would be preempted by N.J.S.A. 18A:16-
17.2 from July 1, 2014 to June 30, 2015, the final year
of employee contributions at Tier 4 levels. However, it
would not be preempted in the “next” agreement when
employee contribution levels would become
negotiable. Alternatively, if the parties agree to a
multi-year successor agreement, the express language
of N.J.S.A. 18A:16-17.2 would preempt [the parties’
negotiated health care contribution provision] for the
first year of the successor agreement as well as any
additional years in the agreement until the “next”
agreement when employee contribution levels would
become negotiable.

[Id. ¶ 49 at ___ (slip op. at 5) (quoting Clementon Bd.
of Educ., 42 N.J.P.E.R. ¶ 34 at 118-19).]

Addressing this matter, PERC reasoned that because “the tier four

contribution level was reached in the first year of the parties’ 2014-2018 CNA,

the 'next collective negotiations’ agreement within the meaning of [N.J.S.A.

13
18A:16-17.2] will be the agreement that succeeds the 2014-2018 CNA.” Id. ¶

49 at ___ (slip op. at 10). PERC found “[n]othing in Chapter 78 pertaining to

employee health care contributions” to suggest a different construction of

N.J.S.A. 18A:16-17.2 and concluded that “any other interpretation fails to give

meaning to the specific terms” of the statute. Id. ¶ 49 at ___ (slip op. at 11).

Accordingly, PERC held that the health insurance premium contribution

rate set forth in the 2014-2018 CNA was preempted by Chapter 78 and granted

the Board’s request for a restraint of binding arbitration as to that issue. 1 Id. ¶

49 at ___ (slip op. at 11).

The Association appealed. The Appellate Division granted amicus

curiae status to the New Jersey School Boards Association and the

Communications Workers of America, AFL-CIO.

The Appellate Division acknowledged that PERC’s determinations are

ordinarily afforded deference and will be disturbed only if they are “clearly

demonstrated to be arbitrary or capricious.” Ridgefield Park Bd. of Educ., 459

1
PERC noted that the record was unclear as to whether the Association had
requested negotiation of the amount and timing of any recoupment from
employees of underpaid amounts. Ridgefield Park Bd. of Educ., 44 N.J.P.E.R.
¶ 49 at ___ (slip op. at 11). It ordered that if the Association had not
previously sought negotiations on the amount and timing of recoupment, “the
Board shall meet and negotiate with the Association over those issues upon
request.” Id. ¶ 49 at ___ (slip op. at 12).
14 N.J. Super. at 69 (quoting City of Jersey City v. Jersey City Police Officers

Benevolent Ass’n, 154 N.J. 555, 568 (1998)). The court reasoned, however,

that it “'owe[d] no particular deference to PERC’s interpretation of Chapter

[78],’ because despite 'affect[ing] employer/employee relations, PERC is not

charged with administering’” that statute. Ibid. (third alteration in original)

(quoting In re New Brunswick Mun. Emps. Ass’n, 453 N.J. Super. 408, 413

(App. Div. 2018)). The court accordingly reviewed PERC’s interpretation of

Chapter 78 de novo. Ibid.

The Appellate Division recognized that “[t]he unambiguous language of

the first sentence of N.J.S.A. 18A:16-17.2 provides that Chapter 78 Tier 4

contribution rates shall be deemed the status quo in any negotiations after full

implementation of Chapter 78 rates,” and that, in this matter, it was not until

the end of the 2014-2015 school year that “full implementation” of those rates

occurred. Id. at 70. The court acknowledged that “when the parties were

negotiating the 2014-2018 CNA, they were not negotiating 'the next collective

negotiations agreement to be executed after the employees in that unit have

reached full implementation of the premium share[,]’ and the terms on health

care contributions were not subject to collective negotiations.” Id. at 70-71

(quoting N.J.S.A. 18A:16-17.2).

15
The Appellate Division, however, found the parties’ actions to be

“telling,” in that the Board required the Association’s members to pay only

1.5% of their salaries as the 2014-2018 CNA provided until PERC decided

Clementon. Id. at 72. The court dismissed as “shortsighted” PERC’s

suggestion that the Association could have avoided a four-year period of Tier 4

contributions by entering into a one-year agreement followed by a three-year

agreement. Ibid. In the Appellate Division’s view, PERC’s interpretation of

Chapter 78 “create[d] an absurd result” by compelling employees to

“contribute at the Tier 4 level over the entirety of the 2014-2018 CNA” -- or to

adhere to the statutorily imposed rates for a total of seven years -- which

would be contrary to the Legislature’s “clear intent that public employees

make these statutorily imposed increases over the course of four years.” Id. at

71.

The Appellate Division therefore reversed PERC’s determination and

remanded for PERC to implement a remedy that would “refund Association

members for all of their health insurance contributions exceeding 1.5% of their

salaries for the pay periods covering July 1, 2015 through June 30, 2018.” Id.

at 72. It denied the Board’s motions for reconsideration of its decision and for

a stay of its judgment.

16
3.

We granted the Board’s petition for certification. 239 N.J. 393 (2019).

II.

The Board contends that the only question before the Appellate Division

was whether Chapter 78 preempted the provision in the parties’ 2014-2018

CNA that set employee contributions for health care at “1.5% or the minimum

set forth by statute, regulation, or code.” In the Board’s view, the Appellate

Division agreed with the Board’s assertion that Chapter 78 preempted that

language in the parties’ CNA. The Board asserts that the Appellate Division’s

interpretation of the statute’s plain language should have ended the inquiry.

The Board argues that because N.J.A.C. 19:13-1.1 precludes the

resolution of factual issues during a scope-of-negotiations proceeding before

PERC, it did not submit evidence to PERC that would have demonstrated that

the parties never agreed to the 1.5% limitation found by the Appellate

Division. It contends that the Appellate Division improperly considered the

Association’s certification and engaged in factfinding to rule in favor of the

Association, thus usurping the role of PERC and the designated arbitrator.

17
B.

The Association disputes the Board’s contention that the Appellate

Division viewed Chapter 78 to preempt the 2014-2018 CNA. It states that the

Appellate Division declined to find preemption in order to avoid an absurd

result that would have contravened public policy, and that the court properly

construed the statute as the Legislature intended to achieve a rational outcome .

The Association argues that the Appellate Division did not engage in

improper factfinding in its scope-of-negotiations determination, and that the

court properly decided the appeal based on the facts stated in an uncontested

certification that it submitted to the court. It asserts that the remedy sought by

the Board would nullify a negotiated, executed, and implemented CNA

provision, merely because the parties agreed to a single CNA, not two separate

contracts, for the 2014-2018 period.

PERC advised the Court that it took no position on the Board’s petition

for certification. PERC similarly takes no position on the merits of this

appeal.

Amicus curiae New Jersey School Boards Association asserts that

Chapter 78 preempts collective negotiations with respect to employee health

18
benefit contributions for any CNA that is effective prior to the full

implementation of Tier 4 contributions that the statute requires. Amicus

contends that PERC’s decision, which may encourage parties to enter into

shorter-term contracts, does not contravene public policy or destabilize labor

relations.

Amicus curiae Communications Workers of America, AFL-CIO concurs

with the Association that the Appellate Division properly held that PERC’s

decision gave rise to an absurd result. It contends that if the Legislature

intended that employees contribute to their health care costs at Tier 4 levels for

the four years of a CNA, Chapter 78 would have clearly mandated that

outcome.

III.

“PERC has primary jurisdiction to determine in the first instance

whether a matter in dispute is within the scope of collective negotiations.”

New Brunswick Mun. Emps. Ass’n, 453 N.J. Super. at 413 (citing N.J.S.A.

34:13A-5.4(d)). As we have noted,

[t]he judicial role when reviewing an action of an
administrative agency is generally restricted to three
inquiries:

19
(1) whether the agency’s action violates express
or implied legislative policies, that is, did the
agency follow the law; (2) whether the record
contains substantial evidence to support the
findings on which the agency bases its action;
and (3) whether, in applying the legislative policy
to the facts, the agency erred in reaching a
conclusion that could not reasonably have been
made on a showing of the relevant factors.

[Jersey City Police Officers Benevolent Ass’n, 154 N.J.
at 567 (quoting In re Musick, 143 N.J. 206, 216
(1996)).]

Thus, “[i]n the absence of constitutional concerns or countervailing

expressions of legislative intent, we apply a deferential standard of review to

determinations made by PERC.” Ibid.

Nonetheless, “when an agency’s decision is based on the 'agency’s

interpretation of a statute or its determination of a strictly legal issue,’ we are

not bound by the agency’s interpretation.” Saccone v. Bd. of Trs., PFRS, 219 N.J. 369, 380 (2014) (quoting Russo v. Bd. of Trs., PFRS, 206 N.J. 14, 27

(2011)). Instead, we review that determination de novo. Ibid.

In this appeal, we review PERC’s decision that the employees’ health

insurance premium contribution rates for the duration of the parties’ 2014 -

2018 CNA were non-negotiable. See Ridgefield Park Bd. of Educ., 44

N.J.P.E.R. ¶ 49 at ___ (slip op. at 10-11).
20
PERC’s scope-of-negotiations determination is governed by a “time-

honored” standard. Robbinsville Twp. Bd. of Educ. v. Washington Twp.

Educ. Ass’n, 227 N.J. 192, 199 (2016). In negotiations between public

employers and their employees, a subject

is properly negotiable when it satisfies a three-part test:
“(1) the item intimately and directly affects the work
and welfare of public employees; (2) the subject has not
been fully or partially preempted by statute or
regulation; and (3) a negotiated agreement would not
significantly interfere with the determination of
governmental policy.”

[Ibid. (quoting In re Local 195, 88 N.J. 393, 403-04
(1982)).]

See also In re Cty. of Atl., 230 N.J. 237, 253 (2017) (same).

This case implicates the preemption prong of the Local 195 test. In the

preemption inquiry, “the mere existence of legislation relating to a given term

or condition of employment does not automatically preclude negotiations.”

Bethlehem Twp. Bd. of Educ. v. Bethlehem Twp. Educ. Ass’n, 91 N.J. 38, 44

(1982). Instead, “[n]egotiation is preempted only if the regulation fixes a term

and condition of employment 'expressly, specifically and comprehensively.’ ”

Ibid. (quoting Council of N.J. State Coll. Locals, NJSFT-AFT/AFL-CIO v.

State Bd. of Higher Educ., 91 N.J. 18, 30 (1982)). Under the preemption

standard,

21
[t]he legislative provision must “speak in the
imperative and leave nothing to the discretion of the
public employer.” If the legislation, which
encompasses agency regulations, contemplates
discretionary limits or sets a minimum or maximum
term or condition, then negotiation will be confined
within these limits. Thus, the rule established is that
legislation “which expressly set[s] terms and conditions
of employment . . . for public employees may not be
contravened by negotiated agreement.”

[Ibid. (citations omitted).]

Thus, to review PERC’s decision that health insurance premium

contribution rates governing the Board’s employees were non-negotiable, we

determine whether the Legislature intended N.J.S.A. 18A:16-17.2 to preempt

the parties’ negotiations as to that issue during the relevant years.

When a court construes a statute, its “paramount goal” is to discern the

Legislature’s intent. DiProspero v. Penn, 183 N.J. 477, 492 (2005). We “look

first to the statute’s actual language and ascribe to its words their ordinary

meaning.” Kean Fed’n of Teachers v. Morell, 233 N.J. 566, 583 (2018).

“'[T]he best indicator of [the Legislature’s] intent is the statutory language,’

thus it is the first place we look.” Richardson v. Bd. of Trs., PFRS, 192 N.J.
189, 195 (2007) (first alteration in original) (quoting DiProspero, 183 N.J. at

22
492). “If the plain language leads to a clear and unambiguous result, then our

interpretive process is over.” Ibid.

Nonetheless, “not every statute is a model of clarity.” Wilson ex rel

Manzano v. City of Jersey City, 209 N.J. 558, 572 (2012). “Where the

statutory language is ambiguous, we may consider extrinsic materials such as

legislative history, committee reports, and other relevant sources.” Kean

Fed’n of Teachers, 233 N.J. at 583. “Where available, '[t]he official

legislative history and legislative statements serve as valuable interpretive

aid[s] in determining the Legislature’s intent.’” State v. Drury, 190 N.J. 197,

209 (2007) (alterations in original) (quoting State v. McQuaid, 147 N.J. 464,

480 (1997)).

Guided by those principles of statutory construction, we consider

whether the plain language of N.J.S.A. 18A:16-17.2 evinces the Legislature’s

intent to preempt any negotiated provision in the parties’ 2014-2018 CNA

regarding employee contributions to their health care benefits. 2

2
We do not concur with the Board that the Appellate Division conceded that
N.J.S.A. 18A:16-17.2 preempts the health care contribution terms of a
negotiated CNA. Invoking “[t]he unambiguous language of the first sentence
of N.J.S.A. 18A:16-17.2,” the Appellate Division acknowledged that the 2014-
2018 CNA was not the “'next collective negotiations agreement to be executed
23
As the parties agree and the Appellate Division recognized, the

employees in this matter did not reach “full implementation” of the “premium

share set forth in [N.J.S.A. 52:14-17.28c]” until the 2014-2015 school year

concluded. See N.J.S.A. 18A:16-17.2; Ridgefield Park Bd. of Educ., 459 N.J.

Super. at 70 (noting that “full implementation of Chapter 78 did not occur until

the end of the 2014-2015 school year, which was the first year of the 2014-

2018 CNA”). Accordingly, the CNA in effect when the employees reached

“full implementation” of the premium share was the 2014-2018 CNA.

N.J.S.A. 18A:16-17.2’s first sentence addresses “public employer[s] and

employees who are in negotiations for the next collective negotiations

agreement to be executed after the employees in that unit have reached full

implementation of the premium share set forth in [N.J.S.A. 52:14-17.28c].”

(emphases added). Applied here, that statutory language refers not to the

after the employees in that unit have reached full implementation of the
premium share,’” and that under the statute, “the terms on health care
contributions were not subject to collective negotiations.” Ridgefield Park Bd.
of Educ., 459 N.J. Super. at 70-71 (quoting N.J.S.A. 18A:16-17.2). The
appellate court nonetheless declined to construe the statute to preempt the
parties’ CNA on the grounds that a literal interpretation of N.J.S.A. 18A:16-
17.2 would produce an “absurd result,” and would contravene “the clear intent
that public employees make these statutorily imposed increases over the course
of four years.” Id. at 61, 70-71. Having construed N.J.S.A. 18A:16-17.2 as
the Association urged, the Appellate Division held that the statute did not
preempt the 2014-2018 CNA’s health care contribution provisions. Id. at 71-
72.
24
parties’ negotiations for the 2014-2018 CNA, but to their negotiations for its

successor agreement. Thus, notwithstanding L. 2011, c. 78, § 83 -- Chapter

78’s “sunset” provision -- the Board argues that the statute indicates that the

employees’ health insurance premium contribution rate was not negotiable

until the Board and the Association negotiated a successor CNA.

In its final sentence, N.J.S.A. 18A:16-17.2 provides that after “full

implementation,” the employees’ contribution levels “shall become part of the

parties’ collective negotiations and shall then be subject to collective

negotiations in a manner similar to other negotiable items between the parties.”

The Legislature thus made the achieved Tier 4 contribution level the status quo

for purposes of negotiating contributions for the successor contract.

Accordingly, during the negotiations for the next CNA after full

implementation is reached -- here, the negotiations for the agreement that

would succeed the 2014-2018 CNA -- the Tier 4 contribution levels would

constitute the status quo.

In N.J.S.A. 18A:16-17.2, the Legislature did not expressly discuss the

scenario in this case, in which the employees reached “full implementation” of

the premium share with three years remaining in the term of their current

CNA. It implicitly addressed the setting of this case, however, by making the

Tier 4 contribution rate the status quo from which a successor CNA would be

25
negotiated. Moreover, nothing in the statute authorizes an immediate

reduction of employee health care contribution rates to their pre-Chapter 78

levels. To the contrary, the Board submits, N.J.S.A. 18A:16-17.2 provides that

once achieved, Tier 4 contribution levels are to remain in effect unless and

until the parties negotiate lower health insurance premium contribution rates in

the next CNA.

The Board has thus presented a legitimate argument that the plain

language of N.J.S.A. 18A:16-17.2 requires that the employees sustain their

health insurance premium contributions at Tier 4 levels for the entire span of

the 2014-2018 agreement, and that the statutory language resolves the parties’

dispute.

To the extent that N.J.S.A. 18A:16-17.2 leaves any ambiguity as to

legislative intent, the legislative history of Chapter 78 resolves that ambiguity.

It demonstrates that the Legislature viewed public employee health care costs

to present a fiscal crisis and that it acted to provide a long-term solution to that

crisis. The legislative history bolsters the Board’s argument that the

Legislature intended that Tier 4 contribution rates would remain in effect for

the duration of the term of the CNA in effect when the employees reached

“full implementation.” N.J.S.A. 18A:16-17.2.

26
When the Legislature enacted Chapter 78, it addressed state and local

government contributions to employee health benefits that a succession of

governors and legislators viewed to be unsustainable. In his 2005 Executive

Order appointing the Benefits Review Task Force, Governor Richard J. Codey

stated that “continuing increases in employee benefits costs contribute to the

structural deficit that New Jersey faces every year,” and noted that employee

health care costs were expected to increase to twenty percent of the state

budget by 2010. Exec. Order No. 39 (May 25, 2005), 37 N.J.R. 2109(c) (June

20, 2005). In its Report issued later that year, Governor Codey’s Task Force

found that “[h]ealth care changes are the most difficult to address but in light

of the rapid increase in costs, changes are necessary,” and that “while wages

are known and increases prescribed, healthcare costs are unknown, not

prescribed, and annual increases often far exceed the rate of wage increases.”

Report of the Benefits Review Task Force to Acting Gov. Richard J. Codey 4,

27 (Dec. 1, 2005). The Task Force recommended “that all active and retired

employees share in the cost of health care,” with the State’s contribution fixed

at a specific amount. Id. at 27.

The following year, by concurrent resolution, the Legislature appointed

four joint legislative committees to identify methods of addressing “[t]his

State’s high property taxes,” viewed by the public “as regressive, inequitable,

27
burdensome, and a threat to the financial security of individuals and

communities.” Assemb. Con. Res. No. 3, 212th Leg. 2 (July 28, 2006). One

of the committees that the Legislature created, the Joint Legislative Committee

on Public Employee Benefit Reform, reported to the Legislature later that year

that its “investigation of health benefits issues revealed a system plagued by

the skyrocketing costs of health care that have dramatically increased the cost

of health benefits for both current and retired public employees.” Spec. Sess.

J. Leg. Comm., Pub. Emps. Benefits Reform Final Report 57 (2006). The

Joint Legislative Committee commented that “[w]hether some [of the

Committee’s recommendations] are achieved through collective bargaining

rather than through legislation is less significant than ensuring that they are, in

fact, achieved. Collective bargaining notwithstanding, it is clear that the

Legislature needs to attach permanency to a number of the recommended

reforms.” Id. at 2.

In testimony before the Senate Budget and Appropriations Committee in

support of Senate Bill 2937 -- the bill later enacted as Chapter 78 -- its

sponsor, Senate President Stephen M. Sweeney, stressed the need for greater

employee contributions to combat rising health care costs. See Darryl

Isherwood, Observer, Full Text of Sen. Steve Sweeney’s Testimony on

Pension and Benefit Reform (June 16, 2011), https://observer.com/2011/06/

28
full-text-of-sen-steve-sweeneys-testimony-on-pension-and-benefit-reform/.

Stating that “[p]ublic employees need to pay a greater share of their health

costs,” Senate President Sweeney commented that the Legislature “must be

fair to them and their families. But we must also be fair to the taxpayers who

are on the hook. Anyone in this day and age who thinks health care can come

practically free is simply not living in reality.” Ibid.

After Chapter 78 was enacted, Governor Christopher J. Christie issued a

statement that the health care benefit provisions in the statute “will

substantially lower health benefits costs for local governments, including those

at the county, school and municipal levels, representing another major step

forward in providing real, long-term property tax relief.” Press Release,

Office of the Governor, Governor Christie Signs into Law Bold, Bipartisan

Pension and Health Benefits Reform (June 28, 2011).

The gubernatorial and legislative initiatives that led to Chapter 78 and

the legislative history of the statute itself thus confirm the Legislature’s intent.

The Legislature clearly viewed the increasing cost of employee health care to

be among the State’s most serious fiscal challenges, destined to worsen absent

significant reform. The Legislature did not enact Chapter 78 to achieve only a

transient increase in employees’ health insurance premium contributions,

followed by an immediate reversion to pre-statute contribution rates as soon as

29
employees had contributed at the Tier 4 level for a year. Instead, it envisioned

that Chapter 78 would increase employee health insurance premium

contributions over the long term.

In short, the construction of N.J.S.A. 18A:16-17.2 urged by the Board

and adopted by PERC is consonant with the Legislature’s intent, as reflected

by Chapter 78’s stated goals and legislative history.

Finally, we do not share the Appellate Division’s view that N.J.S.A.

18A:16-17.2 should be construed contrary to its plain language because the

statute would otherwise produce an “absurd result.” Ridgefield Park Bd. of

Educ., 459 N.J. Super. at 61, 70-71. To the Appellate Division, the absurd

result was that by virtue of the “timing and length of the successor contract,”

the Association’s members would be required to “contribute at the Tier 4 level

for three additional years,” thus suffering a financial hardship. Id. at 61.

It is clear that N.J.S.A. 18A:16-17.2’s financial impact on school district

employees varied from district to district. If a four-year CNA governing

employees in a particular district went into effect in 2011, the year that

Chapter 78 was enacted, those employees would achieve “full implementation”

in the last year of that contract and could immediately negotiate health

insurance premium contribution rates for the next CNA. N.J.S.A. 18A:16-

30
17.2. The timing was less favorable for employees of the Ridgefield Park

School District, who did not achieve “full implementation” for purposes of

N.J.S.A. 18A:16-17.2 until the first year of their 2014-2018 CNA. The

Association had the option to seek a one-year contract followed by a three-year

contract as did the employees in Clementon Board of Education, but if that

proved impossible, N.J.S.A. 18A:16-17.2 required the Board’s employees pay

at Tier 4 levels until the next CNA took effect.

N.J.S.A. 18A:16-17.2’s impact on employee health benefit contributions

based on the timing of a given CNA is not an “absurd result” warranting a

departure from the statute’s terms. The Legislature has the authority to make

judgments about how best to achieve its objectives, subject to constitutional

constraints. See Taxpayers Ass’n of Weymouth Twp. v. Weymouth Township,

80 N.J. 6, 40 (1976) (rejecting equal protection and due process challenges to a

zoning ordinance regarding senior housing because the disputed age restriction

was “a legislative judgment which ought not be disturbed by the judiciary

unless it exceeds the bounds of reasonable choice”); State League of

Municipalities v. State, 257 N.J. Super. 509, 519 (App. Div. 1992) (holding,

with respect to an equal protection challenge to a statute, that “[t]he

Legislature in addressing an issue must invariably draw lines and make

choices, thereby creating some inequity as to those included or excluded. As

31
long as 'the bounds of reasonable choice,’ are not exceeded, the courts must

defer to the legislative judgment”) (quoting Taxpayers Ass’n of Weymouth

Twp., 80 N.J. at 40); Piscopo v. Lemi Excavating Co., 215 N.J. Super. 149,

152 (App. Div. 1986) (finding that the Legislature’s determination that age

eighteen marked the end of a child’s dependency did “not warrant [the

statute’s] invalidation” even though “the classification [was] in some respect

imperfect or result[ed] in some inequities in practice” because the decision did

not exceed “the bounds of reasonable choice” (quoting Taxpayers Ass’n of

Weymouth Twp., 80 N.J. at 40)).

Here, the Legislature intended to prescribe employee health insurance

contribution rates until the employees achieved full implementation of the

premium share and the parties negotiated a successor CNA. N.J.S.A. 18A:16-

17.2. It clearly understood that different school districts negotiate contracts on

different schedules, and that the statute’s impact would vary from district to

district. Nonetheless, the Legislature envisioned that the transition between

Tier 4 health insurance premium contribution rates set by Chapter 78 and

contribution rates negotiated by school boards and employees would take place

in the negotiations for the next CNA, not at some earlier stage. N.J.S.A.

18A:16-17.2. We do not view the Legislature’s determination to generate an

absurd result, and we decline to nullify its judgment.

32
E.

We concur with PERC’s determination that the health insurance

premium contribution rates paid by the Association’s members were

“preempted by statute” and therefore non-negotiable under the second factor of

the Local 195 test. See Local 195, 88 N.J. at 403-05. We conclude that PERC

properly granted the Board’s request for a restraint of binding arbitration as to

the health insurance premium contribution rates applicable to the Association’s

members.

IV.

The judgment of the Appellate Division is reversed, and the matter is

remanded to PERC for further proceedings in accordance with this decision.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE
PATTERSON’s opinion. JUSTICE ALBIN filed a dissent.

33
In the Matter of
Ridgefield Park Board of Education,

Respondent-Appellant,

and

Ridgefield Park Education Association,

Petitioner-Respondent.

JUSTICE ALBIN, dissenting.

Neither the language nor the legislative history of L. 2011, c. 78

(Chapter 78) mandates the result reached today by the majority, a result that

denies the Ridgefield Park Education Association (Association) the benefit of

its collective negotiation agreement (CNA) with the Ridgefield Park Board of

Education (Board). The majority’s strained interpretation of Chapter 78 -- an

interpretation that the Appellate Division concluded “creates an absurd result”

-- means that teachers and other employees in the school district will see their

salaries substantially reduced to pay for health care costs in clear

contravention of the agreement they reached with the Board. See In re

Ridgefield Park Bd. of Educ., 459 N.J. Super. 57, 71 (App. Div. 2019).

1
Because, in my view, the majority has not read Chapter 78 in a way that

fulfills the probable legislative intent consistent with the bargained for

agreement between the Association and the Board, I respectfully dissent.

The Legislature enacted Chapter 78 to address the fiscal crisis faced by

the State and local governments saddled with rising health care costs. The

objective of the legislation was to require greater health care contributions by

public employees -- a scheme to be implemented over a four-year period -- and

then to allow public employees and local governments to negotiate the level of

public-employee health care contributions with the starting point being the

fourth-year contribution rate under Chapter 78. See N.J.S.A. 18A:16-17.1 and

-17.2. Chapter 78’s sunset provision did not mandate that the fourth-year

contribution rate continue into a fifth, sixth, or seventh year, unless those were

the terms agreed to by an education association and a school board. See

L. 2011, c. 78, § 83.

We are hampered by a limited record, but this much we do know. The

Board and the Association signed a CNA effective July 1, 2011 to June 30,

2014 that required employees to contribute 1.5% of their salary or the statutory

minimum to health care costs for the duration of the agreement. Chapter 78

went into effect shortly before the start of the CNA.

2
By operation of law, Chapter 78 superseded the 2011-2014 CNA’s terms

on the subject of employees’ health care contributions. Over the next four

years, Chapter 78 imposed on public employees the obligation to contribute, in

each succeeding year, a greater percentage of their salaries to pay for health

care coverage. The Tier 1, 2, and 3 contribution rates covered the length of the

three-year 2011-2014 CNA.

As that agreement neared its end, the Board and the Association

negotiated a four-year CNA effective July 1, 2014 to June 30, 2018, requiring

the Board’s employees to contribute 1.5% of their salary or the statutory

minimum for their health care coverage. The Board and the Association knew

that the Tier 4 contribution rate applied to the first-year of the CNA, and the

appropriate deductions were made to the employees’ salaries in accordance

with Chapter 78.1 The Board and Association also knew that Chapter 78 had a

sunset provision and that, after the Tier 4 year, the parties could mutually

agree to health care contributions below the Tier 4 rate.

Had the Board and the Association intended the Tier 4 contribution rate

to govern the length of the four-year contract, the CNA’s language presumably

1
The record reflects that under Tier 4, employees earning from $50,000 to
over $95,000 would contribute anywhere between 20% and 35% of the cost of
their health care benefits for single coverage; between 12% and 30% for
family coverage; and between 15% and 30% of the cost of health care benefits
for member/spouse/partner or parent/children coverage.

3
would have said so. Surely, had the parties intended the Tier 4 contribution

rate, the CNA would not have included the language they put in the contract

-- that employees would contribute 1.5% of their salary or the statutory

minimum for their health care coverage. The best evidence of the

understanding of the parties’ intent is the Board’s actions. In the second year

of the new CNA, the Board deducted not the Tier 4 contribution rate, but the

1.5% of salary rate.

Not until the August 13, 2015 Public Employment Relations

Commission decision in Clementon Board of Education v. Clementon

Education Ass’n, P.E.R.C. No. 2016-10, 42 N.J.P.E.R. ¶ 34, 2 015 N.J. PERC

LEXIS 76 (2015), did the Board have a change of heart and demand that its

employees pay the Tier 4 rates rather than the negotiated rates for the

remainder of the 2014-2018 CNA.

II.

The outcome of this appeal turns on the interpretation of N.J.S.A.

18A:16-17.2. The relevant portion of that statute provides:

4
public employers and public employees shall remain
bound by the provisions of sections 39 and 41 of L.
2011, c. 78 ([ N.J.S.A.] 52:14-17.28c and
[ N.J.S.A.]18:16-17.1), notwithstanding the expiration
of those sections, until the full amount of the
contribution required by section 39 has been
implemented in accordance with the schedule set forth
in section 41.

....

[ N.J.S.A. 18A:16-17.2 (emphasis added).]

For sure, the statute is not a model of clarity, and the Legislature likely

did not contemplate the contractual scenario before us.

One point is clear, however. The Board and the Association went into

their contractual negotiations understanding that Tier 4 had to be implemented

in the first year of the four-year contract and that after that first year the

employees would have “reached full implementation.”

One reasonable interpretation of the statute is that “the next collective

negotiations agreement” refers to the CNA that would begin on July 1, 2018.

But if that is the case, only then would the Tier 4 rate “become part of the

parties’ collective negotiations” and only then would the parties “conduct

negotiations concerning contributions for health care benefits as if the full

5
premium share was included in the prior contract.” See N.J.S.A. 18A:16-17.2.

If that interpretation is correct, nothing in Chapter 78 states that the parties

were not free to negotiate the 2014-2018 CNA without the Tier 4 level as the

starting point of the negotiations.

Nonetheless, we should not presume that the Tier 4 levels did not

“become part of the parties’ collective negotiations” when the Board and the

Association hammered out the terms of the 2014-2018 CNA. There is no

reason not to effectuate the intent of the parties according to the terms of the

CNA. Chapter 78 does not mandate nonnegotiable Tier 4 contribution rates

after employees reach full implementation. Nor does Chapter 78’s legislative

history suggest such an outcome.

Nowhere in Chapter 78 did the Legislature dictate that the negotiating

parties could not agree to a four-year CNA in which, after the employees met

their Tier 4 obligation in the first year of the contract, the employees would be

subject to lesser health care contributions in the three succeeding years. The

Legislature did not require an artificial construct -- compelling the parties to

enter a single-year contract covering the Tier 4 obligation and then negotiate a

new contract.

The majority reads Chapter 78 in a way to extinguish the expectations of

the negotiating parties and impose on the public employees the more onerous

6 Tier 4 obligations for an additional three years beyond the sunset provision.

The majority has construed Chapter 78 not to reach a logical but an inequitable

conclusion.

III.

Had the Association the prescience to foresee how the majority would

interpret Chapter 78, it undoubtedly would have entered a one-year contract

with the Board, during which Tier 4 would have been implemented, and begun

negotiations anew. The wholly unfair and unreasonable result reached in this

case, which strikes down terms in a negotiated agreement, is not consistent

with the Legislature’s probable intent in passing Chapter 78.

I therefore respectfully dissent.

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