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Public-Worker Unions Want U.S. Supreme Court to Rule on NJ Pension Problems

Unions look to take their grievance to the top, but with a steady stream of petitions filed each year, the chance of getting a hearing is slim

U.S. Supreme Court

After taking several months to research case law, lawyers for New Jersey public-worker unions are now asking the U.S. Supreme Court to weigh in on the issue of funding the state’s beleaguered pension system.

More than a dozen unions, including those representing teachers, police officers, and firefighters, have filed a petition with the U.S. Supreme Court that was released publicly yesterday. It seeks a review of the June decision issued by the New Jersey Supreme Court that allowed Gov. Chris Christie’s administration to disobey a key part of a bipartisan reform law that called on the state to increase contributions to the public-employee pension system to help reverse more than a decade of underfunding

The filing of an appeal with the nation’s highest court -- known as a “Writ of Certiorari” in legal terms -- is the latest development in an ongoing saga over pension funding, an issue Christie, a Republican, has tried to make a signature element of his two terms in office. Ironically, his administration has not been able to keep up with all of the promises that were made in the reform law passed in 2011.

Unions representing New Jersey State Police troopers have also filed a petition with the U.S. Supreme Court, according to an NJ Advance Media report. The cases would likely be merged if the justices decide to hear the issue. According to the court's rules, four out of the nine justices must be in agreement to accept the case.

But convincing the justices to take up the pension-funding case is likely a longshot given the huge volume of petitions the court receives each year. Still, union officials say the effort is worth it, given the high stakes in play, including the health of pension funds worth nearly $80 billion that cover roughly 770,000 current and retired public workers.

Hetty Rosenstein, state director of the Communications Workers of America, said bringing the issue to the U.S. Supreme Court is part of a “leave no stone unturned” strategy when it comes to the pension system, which is at least $40 billion in debt as of the most recent state actuarial analysis. “This issue is so important and so critical to the state of New Jersey,” Rosenstein said.

The new legal developments also come as the New Jersey Supreme Court is getting ready to hear another high-profile case involving the pension system, one that will determine whether the state had the authority to suspend annual cost-of-living increases for retirees, which was another component of the 2011 law known as Chapter 78.

The 52-page federal appeal filed yesterday echoes arguments that were made by the union lawyers in May when they appeared before the state Supreme Court. Their contention is that Chapter 78 promised a series of increased state contributions to the pension system as a contractual right of the employees that cannot be breached.

Those pledged contributions are protected by the federal constitution’s contract clause, which the U.S. Supreme Court has a long history of defending, the unions argue.

“The very purpose of the federal Contract Clause is to imbue the judiciary with the responsibility to ensure that the political branches abide by the commitments they are authorized to create by clear and unmistakable language and intent, including the obligation to pay for services rendered,” the new petition says.

But in the majority ruling issued by the state Supreme Court in June. The five justices who endorsed that opinion determined that Christie and the state Legislature didn’t have the standing to grant to state employees the increased pension contributions as a contractual right. Under the state constitution, only voters can authorize such long-term commitments, leaving all other items “subject to appropriation,” the majority opinion said.

That opinion was issued in the wake of Christie’s decision last year to cut more than $2 billion from the state pension payments that were promised as part of Chapter 78 to help close a huge budget shortfall. By reducing the pension payments, Christie – who is now running for the Republican Party’s 2016 presidential nomination – avoided increasing taxes or making drastic cuts elsewhere in the state budget to keep spending in balance, something that’s required by the state constitution. Christie has also rejected efforts by Democrats who control the Legislature to increase taxes to bring in more revenue to fund the promises made in Chapter 78.

And after unions sued in a bid to compel the state to make the larger pension payments, lawyers for the Christie administration went so far as to argue in court that even though the governor signed the reform measure into law, his position was that the state-funding provision of the law was actually unconstitutional.

Christie’s office did not respond to a request for comment on the new court filings yesterday.

Christie praised the state Supreme Court’s ruling in June, even though it undermined a broader reform effort that he once held up as a model for other states struggling with pension-funding problems. And a report released last week by the conservative Manhattan Institute said New Jersey’s benefits reforms remain exemplary despite the state’s underfunding. That’s because of other benefits changes that were not overturned by the courts, including increased contributions from employees, and how deep the state’s funding problems were to begin with, the report’s author said.

But Wendell Steinhauer, president of the New Jersey Education Association, cited the increased employee contributions required under Chapter 78 yesterday in an explanation of the union’s decision to now take the issue to the U.S. Supreme Court.

“We have asked the United States Supreme Court to review this matter because we believe the New Jersey Supreme Court’s ruling was in error,” Steinhauer said. “We believe the contractual rights of our members have been violated by the state’s failures with regard to pension funding.”

“Our members have done everything required of them by the law,” he said. “It is time for the state to be subject to the law as well.”

And Rosenstein said though a restoration of the funds that Christie’s administration shorted the pension system would be welcomed, a bigger goal is the acknowledgment that state employees do in fact have a contractual right to the state pension payments that were promised under Chapter 78.

“That is the key point,” she said.

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