FOR IMMEDIATE RELEASE Contact: Teresa Ruiz

January 2, 2008 973-621-4404

Anthony Puglisi

973-621-2542

ESSEX COUNTY EXECUTIVE DIVINCENZO UNVEILS INITIATIVE TO HAVE

NON-UNION EMPLOYEES CONTRIBUTE TO MEDICAL INSURANCE COVERAGE

Payroll Deductions and New Prescription Drug Co-Payments

Are First Step to Offset Health Insurance Premium Increase

Administration Continues Negotiations with 21 Labor Unions to Stabilize Costs

Newark, NJ – Essex County Executive Joseph N. DiVincenzo, Jr. announced that for the first time in Essex County history unclassified and non-union employees will pay a portion of the costs for their medical insurance. The initiative, which also includes increasing prescription drug co-payments, is part of the County Executive’s plan to address rising health care premiums.

“The rising cost of medical insurance and prescription drugs is a major concern for employers and employees in the private and public sectors. Over the last several years, we have been able to keep the cost of our premiums steady, but we cannot absorb this year’s increase. Having our employees contribute to their medical coverage is a necessary step to control costs and stabilize our budget,” DiVincenzo said. “Implementing the health care contributions among our non-union employees sets an example that we hope our labor unions will follow. We are not asking them to do anything we aren’t already doing ourselves,” he added.

There are 114 unclassified and non-union employees among the County’s 3,600 employee workforce. These employees include Department and Division Directors, Constitutional Officers as well as rank and file employees who are not members of any labor union. These employees will pay a percentage of the cost of their health plan, and a sliding scale based on their salary will determine how much they contribute. Employees earning up to $49,999 will pay 10 percent of their health care premium, employees earning between $50,000 and $69,999 will pay 15 percent, and employees earning over $70,000 will pay 20 percent. The initiative is effective immediately and the first time the pre-taxed deduction will be charged is in the January 10th paycheck. Federal and State income taxes are taken out as pre-taxed deductions. Traditionally, all Essex County employees received free medical benefits.

Essex County employees can enroll in a variety of health plans: single coverage, husband/wife coverage, family coverage, and parent and child coverage. For single employees, the bi-weekly, pre-tax deduction ranges from $14.87 to $22.70 for employees paying 10 percent of their medical coverage, $22.31 to $34.05 for employees paying 15 percent of their medical coverage, and $29.75 to $45.40 for employees paying 20 percent of their medical coverage. Deductions for husband/wife coverage, family coverage, and parent and child coverage also vary.

In addition, a three-tier system for prescription drugs was implemented effective January 1st. All unclassified employees will be charged a $10 co-pay for generic drugs, a $25 co-pay for preferred (or name brand) drugs, and a $40 co-pay for non-preferred drugs (these are specific, top tier drugs) when a 30-day supply of drugs is purchased from a traditional pharmacy. A similar three-tier system exists for prescriptions filled through a mail order pharmacy. Employees will be charged a $15 co-pay for generic drugs, $37.50 for legend drugs and $60 for non-formulary drugs when a 90-day supply of drugs is purchased via mail order. Under the old system, Essex employees paid $10 for generic drugs and $25 for legend drugs purchased from a traditional pharmacy and received free prescriptions if they were filled via mail order.

According to a survey conducted by the Essex County Department of Human Resources, 11 other counties require their employees to contribute to the cost of their medical insurance premium and/or prescription drug plans. There is no universal method of charging employees. Some counties have fixed contributions while others base the contribution on a percentage of the health care cost or employee’s salary.

Three months ago, DiVincenzo announced that health insurance premiums paid by Essex County were increasing. To counter the escalating costs, the Executive began negotiations with the County’s 21 labor unions to drastically change the way Essex funds its employee health insurance. Negotiations have been ongoing, but formal agreements have not been reached with any bargaining units. Health benefits are part of the unions’ contract and traditionally are changed only when a new contract is negotiated.

“We can no longer afford to offer our employees free medical coverage. My administration has been meeting regularly with representatives of our 21 labor unions to reach a fair compromise,” the County Executive said. “All of our proposals have included employees paying a reasonable portion of their health care benefits, but the level of health coverage has not been diminished,” he noted.

DiVincenzo noted that while the County has spent upwards of more than $110 million on capital budget projects to revitalize its historic Park System and an overall $30 million project to modernize the Essex County government complex in Newark is underway, funding for these projects have no effect on the County’s operating budget. These projects, and countless other capital improvement projects, are funded almost entirely with grant money from the State or corporate donations, and their use is restricted. For example, the $32.4 million in Green Acres funding that the County has received from the NJ Department of Environmental Protection over the last five years can only be used for open space or park upgrades. A $15.5 million grant from the NJ Department of Transportation can only be used to build the 1,000-car parking deck on 13th Avenue.

The increase in health benefit costs will have a serious impact on Essex County’s financial standing in 2008. The DiVincenzo administration has worked hard in the past five years to eliminate the structural budget deficit and ensure Essex does not spend more than the revenue it collects. Austere budgeting and conservative spending practices have helped Essex build its surplus, raise its bond rating and restore the County’s fiscal health.

Wall Street rating agencies have responded favorably to Essex County’s budgetary practices and upgraded the County’s bond rating six times in the last four and a half years. In March 2007, Moody’s Investors Services upgraded Essex County’s bond rating to A1 with a Stable Financial Outlook from A2 with a Positive Financial Outlook and Fitch Ratings upgraded Essex County’s bond rating to A with a Stable Financial Outlook from A-minus with a Positive Financial Outlook. The rating agencies continually commend Essex County for its hard work to eliminate operating deficits, to create a reserve for emergencies and to find alternative funding to maintain services.

A total of $31 million in spending was cut in 2003 and 2004, the first two years of DiVincenzo’s administration. These savings were achieved by streamlining operations, eliminating unnecessary contracts and positions, cutting expenses and instituting a hiring freeze. He also encouraged agencies affiliated with Essex County to follow his example and reduce their operating budgets.

Millions of dollars in future construction and financing costs were avoided by expediting the completion of major capital projects, such as building the new Essex County Correctional Facility, renovating the Historic Essex County Courthouse, completing the remediation of Riverbank Park and restoring Verona Park. The original $42.5 million debt from the 1995 sale of the Hilltop was retired and excess revenue received already has been used to pay off other existing bond debt.

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