Top NJ Lawmaker Proposes Constitutional Amendment For Pension Funding

New Jersey Senate President Stephen Sweeney on Monday introduced legislation that would lock the state’s annual pension funding requirement into the state constitution.

The state Supreme Court, in a ruling earlier this year, clarified that the state does not currently have a contractual or constitutional obligation to fund its pension systems.

The new legislation would have to be approved by voters on the November 2016 ballot.

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The 2011 law, the result of a partnership Christie and Sweeney, gave the state seven years to step up to the full payment actuaries recommend to keep the fund solvent. Released from that obligation by the courts, Christie opted for a 10-year ramp up. At $1.3 billion, this year’s payment is about a third of what actuaries recommend.

Sweeney’s proposal resets the clock again, putting a new timeline into the state constitution, with the state making the full actuarial contribution by 2022, one year sooner than Christie’s unofficial payment plan.

The state would be paying about $3 billion by 2018 — nearly as much as the state would have been required to pay this year under the now-fractured 2011 law. Each year the state would have to come up with about $600 million more than the year before, according to Treasury estimates.

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If lawmakers get enough votes for a constitutional amendment, Christie would have no power to stop it from going to the ballot. It would take effect if voters approved it.

Sweeney is also calling for the amendment to force the state to make the contribution into the retirement fund in installments throughout the year. Waiting until year’s end costs the state millions of dollars in investment earnings and has, in the past, made it vulnerable to last-minute cuts.

“This constitutional amendment protects taxpayers by requiring that pension payments be made on a quarterly basis to maximize investment earnings and to protect public employees by guaranteeing the pension benefits they earned,” Sweeney said in a statement.

Christie’s pension commission, who released their report earlier this year, included a constitutional amendment in their recommendations.

Photo by Elektra Grey Photography