Court: New Jersey Must Make Full Contribution to Pension System

A New Jersey Superior Court judge on Monday ruled that Gov. Chris Christie acted outside the law when he cut state pension contributions by more than $2 billion through fiscal year 2015.

Through FY 2015, the state’s scheduled pension contribution was $3.85 billion; but in an effort to divert funds to the general budget, Christie cut the pension payment down to $1.38 billion.

Unions sued him shortly after, alleging a breach of contract.

A judge now says Christie must make the full payments.

The full payments, however, are not included in Christie’s budget proposal. That’s because the state is appealing the ruling.

More from Reuters:

Superior Court Judge Mary Jacobson said New Jersey could not renege on its obligations to teachers, firefighters and police who sued the governor and state legislature, which is controlled by Democrats.

“The court cannot allow the State to ‘simply walk away from its financial obligations,’ especially when those obligations were the State’s own creation,” Jacobson wrote.

While New Jersey’s projected budget shortfall was “staggering,” the statute failed to adequately explain why the cuts were reasonable, the court said.

Christie spokesman Michael Drewniak said the governor would appeal.

“The Governor will continue to work on a practical solution to New Jersey’s pension and health benefits problems while he appeals this decision to a higher court where we are confident the judgment of New Jersey’s elected officials will be vindicated,” Drewniak said in a statement.

Damon Silvers, director of policy and special counsel for the AFL-CIO union, which was one of the plaintiffs, said the decision “reinforces what should be black letter law, pension promises by government to the people who work for government are real contractual obligations that must be honored and must be funded.”

Under new GASB accounting rules, New Jersey’s pension system is 44 percent funded.

Photo by Joe Gratz via Flickr CC License