SOUTH JERSEY

N.J. pension funds sue Christie over cut contributions

MICHAEL SYMONS
ASBURY PARK PRESS

Trustees for the boards that oversee New Jersey’s pension funds for public workers sued Gov. Chris Christie Wednesday, seeking to force the state to pay nearly $2.5 billion into the retirement systems.

The move was expected, since the boards for the Public Employees’ Retirement System, Teachers’ Pension and Annuity Fund and Police and Firemen’s Retirement System had voted to retain outside counsel in June and July, shortly after Christie slashed the payments for 2014 and 2015.

The lawsuit seeks to compel an additional $2.46 billion be paid into the pension funds and suggests that otherwise public workers should begin receiving cost-of-living increases, which were suspended in 2011, and be refunded the extra money they’ve paid toward their pensions for the past three years.

Through their attorney, Robert Klausner, the chairmen of the trustee boards called it “a somber day” and said the decision to sue wasn’t made lightly.

“Despite proclamations to the contrary, the governor has usurped the authority of the state Legislature and has shamelessly broken his word by derailing the proper funding of the pension funds, while at the same time demanding participants endure benefit reductions and higher employee contributions,” said Tom Bruno of PERS, Wayne Hall of PFRS and James Joyner of TPAF.

Despite changes to public workers’ benefits made in 2010 and 2011, Christie is advocating additional, yet unspecified changes. A study commission appointed by Christie said in a report issued in October that this year’s tab would have amounted to 20 percent of the state budget, if it was fully funded.

“Gov. Christie has contributed more to the pension fund than any other in our state’s history, and he has been clear that the only way to deal with the massive costs of public employee entitlements is to come together to bring additional bipartisan reforms. If we do nothing, these costs are guaranteed to overwhelm the state budget,” said Kevin Roberts, a spokesman for Christie.

Christie has paid $2.2 billion into the pension funds over his first four years in office, slightly more than the $2.17 billion paid by Gov. Jon Corzine. He is scheduled to make a $681 million payment in June.

A pension reform law signed by Christie in 2010 requires the state to gradually ramp up its contributions to the pension funds over seven years to finally reach the level recommended by actuaries.

Christie reduced the planned 2014 contribution by $887 million after income tax collections fell far short of expectations in the spring, and Superior Court Judge Mary Jacobson upheld the cut. But public worker unions remain in court fighting a cut of $1.57 billion to the budgeted 2015 contribution.

Christie said he is making the normal contribution required in 2014 and 2015 but not making the payments intended to address the unfunded accrued liability built over many years. The lawsuit says the 2011 pension reform law requires both parts of the contribution to be made as a dedicated line item.

The reduced pension payments were cited by two Wall Street rating agencies this summer in downgrading New Jersey’s credit rating for the third time each on Christie’s watch. New accounting rules for measuring the health of pension funds show the state’s net pension liability exceeds $82 billion and project the PERS system would be depleted in 2024. The TPAF and PFRS systems would be depleted in 2027.

“The administration’s failure to make the payment has contributed to the downgrades in the state’s credit ratings and will undermine the reforms designed to restore the funds’ long-term financial health,” said Senate President Stephen M. Sweeney, D-Gloucester.

Pension contributions for workers enrolled in PERS and TPAF have increased from 3 percent of salary to 7.1 percent under and will eventually reach 7.5 percent. They have gone from 8.5 percent of salary to 10 percent in the police and fire pension.