COLA Case Hits N.J. Supreme Court

A high-profile pension lawsuit begins on Monday in the halls of the New Jersey Supreme Court.

The suit, brought by state retirees, argues the state unlawfully froze pension cost-of-living adjustments in 2011 as part of a sweeping reform law. As part of the deal, the state promised to stick to a strict pension contribution schedule. But it quickly reneged on its side of the bargain.

More from NJ.com:

Berg v. Christie, or the COLA case as it’s known, again pits public workers against the administration, though this time for allegedly violating their contractual right to cost-of-living increases.

[…]

Public workers will argue before the New Jersey Supreme Court on Monday morning that the state unlawfully froze their increases as part of a 2011 pension reform law that reduced workers’ benefits to save money. The state contends they are not a protected part of the benefits package.

The appellate court in 2014 ruled that retired workers were guaranteed COLAs by contract.

Retirees had lost at the trial court level, where a judge found that, based on a clause that gives lawmakers and the governor discretion over annual state spending, the state couldn’t be forced to pay cost-of-living increases. The three–person appellate panel disagreed, saying that clause was irrelevant, because “pensions are neither funded by appropriations on a pay-as-you-go basis… nor is their payment contingent on the making of a current appropriation.”

[…]

The state’s high court has been asked to determine whether COLAs are part of workers’ nonforfeitable right to pension benefits that lawmakers granted in 1997.

If the court sides with retirees and COLAs are re-instated, the pension system would see its unfunded liabilities jump by over 20 percent, from $40 billion to about $53 billion, according to Moody’s.

Photo by  Lee Haywood via Flickr CC License