NJ Supreme Court: No Contractual Right to COLAs

The New Jersey Supreme Court on Thursday sided with Chris Christie and ruled that state employees had no contractual right to cost-of-living adjustments.

Christie in 2011 signed a law that froze pension COLAs for state workers, prompting a lawsuit that ended today.

From Bloomberg:

New Jersey Governor Chris Christie and the Legislature acted legally in suspending cost-of-living adjustments for retired public workers, the state Supreme Court ruled in a case that might have cost taxpayers billions of dollars.

Christie and lawmakers halted COLA payments in 2011 as part of a pension bill that forced hundreds of thousands of employees to pay more into the underfunded system and raised their retirement age.


A group of 26 retired attorneys sued over the COLA suspension, arguing they had a contractual and constitutional right to pension payments and increases pegged to the Consumer Price Index. They cited a 1997 law that established “certain non-forfeitable” contractual rights to a “benefits program” that would not be reduced.


The state is one of many grappling with underfunded pensions. At the end of 2015, state and local government retirement systems had $1.7 trillion less than they will eventually need, up from a $293 billion shortfall eight years earlier, according to Federal Reserve Board figures. New Jersey confronts an $83 billion pension liability that is growing and has led to a record nine credit-rating downgrades since Christie took office.

The Court’s rulings in the last 12 months have not been kind of public workers. Last June, the same court ruled that Christie acted legally when he skipped $1.6 billion worth of pension contributions in defiance of the 2011 law requiring him to make those payments.


Photo by Bob Jagendorf from Manalapan, NJ, USA (NJ Governor Chris Christie) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

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