Robert D. Klausner, an attorney and author specializing in retirement law, wrote an njspotlight opinion piece criticizing Governor Chris Christie for the pension debt his irresponsibility supposedly foisted on future generations which starts off with some dodgy math:
After Christie is long gone from the State House, taxpayers will have to pay $3 for every $1 he skipped in pension payments.
The only way this 3 for 1 ratio makes sense is if the $1 not put in today would, at 7.9% interest, be paid 15 years from now (1.079^15 = 3.12). Hardly a reasonable presumption though it is Mr. Klausner’s argument from logic that is even more untenable.
In the 2015 case Burgos v. State of New Jersey, the Supreme Court ruled that the state’s current pension obligations must be paid. There is no getting around the bill; it must be paid. Pensions are deferred compensation that has been earned, and no amount of political spin will erase the bill. The justices also ruled that employees have a contractual right to receive their pensions. The reason the Christie administration hailed the decision as a victory is because the court ruled that the constitution’s debt-limitations clause limited the court’s ability to extract full payments immediately. This got Christie off the hook, but not the state. The fact remains that in the long run the debt must be paid.
This may have been true had we not had another court case in 2016 (Berg. v. Christie) that said full benefits (in this case cost-of-living-adjustments on pensions) did not have to be paid.
So this is where we stand legally as to public pensions in New Jersey:
- Burgos: Full pension contributions do not need to be made.
- Berg: Full pension payments do not need to be made.
Flash forward 15 years when that $1 not deposited today on account of Burgos shows an outstanding balance of $3 and ask yourself:
- If there is no requirement to pay $1 today then why would there be a requirement to pay $3 in 15 years?
- If all the pension money is gone (in part due to Burgos) then (on account of Berg) why do benefits in excess of what is politically feasible have to be paid?