There was a lot of activity yesterday in the New Jersey pension payment case as those seeking to have the ‘full’ payment made filed 1,073 pages of briefs and appendices making their points. After skimming through the material this is what I got out of it:
But an outside observer would rightfully observe the irony that the current Executive, now railing against claimed “fabrications” of right, is the very same Executive who fashioned such a right in the first place. Compounding this irony is an Executive who now seeks to fabricate for himself, whole cloth, an avoiding exception to the very statute championed as a model to mend the pension deficits once and for all.
Accordingly, Chapter 78 put the Retirement Systems on the path to actuarial solvency with unprecedented funding discipline and annually required contributions mandated to be included in all annual appropriations acts “as a dedicated line item.” N.J.S.A. 43:3C-9.5(c)(l). For the first time in their history, the Boards were given the express authority to bring suit to enforce these historic statutory and contract rights. N.J.S.A. 43:3C-9.5(c)(2).
• It is no coincidence that the most poorly funded state retirement systems in the country are in those states where the courts have rejected requiring legally enforceable pension contribution discipline by the state. For example, Illinois is now widely understood to be one of the worst funded state retirement systems in the country along with New Jersey. Alicia H. Munnel, State and Local Pensions: What Now ? at p. 117 (Brookings Institute Press 2012). By holding that there is no right to enforce contribution levels, the Illinois courts laid the groundwork for today’s mounting pension funding difficulties in Illinois. See People ex. rel. Sklodowski v. State, 695 N.E.2d 374 (Ill. 1998).
Amazingly, Defendants argue that contract rights are not impaired because the governmental employees have “reduced expectation interests” because they are public servants.
The pension systems’ unfunded liability has mushroomed to the point where the pension funds will run out of assets over the course of the next 10 to 15 years. Then, the non- forfeitable pension benefits to which retired employees are entitled will have to be paid from the general treasury at a cost of approximately $8 billion a year based on current payments to retirees.
Raising taxes was not the Governor’s only option. For example, Governor Christie did not reduce payments to the holders of contract bonds, notwithstanding the fact that such bonds, as the Petitioners repeatedly emphasize, are subject to appropriations. Instead, the State chose to “prioritize payment of other State contracts above payment of the contractual guarantee the State made with its public employees.”
The state’s reply brief is due this Friday with oral arguments set for Wednesday, May, 6.