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Op-Ed: Constitutional Amendment Is Only Solution to NJ’s Pension Crisis

Every year for 20 years, the state has made some excuse, but there’s never been a full payment into public-employee payment plan

Wendell Steinhauer
Wendell Steinhauer

New Jersey’s public-pension systems are large and complex, but the principle underlying them is very simple. In exchange for a career of service, the state promises public employees a secure pension. To fund that pension, the state and employees alike make regular contributions. Those contributions are invested to harness the power of the market over many years and create a fund that is able to pay the pension benefits earned by public employees throughout their careers.

When those basic elements — regular contributions by all parties and prudent investment — are in place, defined-benefit public pensions are a cost-effective way to provide secure retirement income. They are less expensive and more reliable than other types of pension plans, such as the 401(k) approach that is prevalent in the private sector. Unfortunately, the state of New Jersey has spent two decades undermining that smart, win-win approach by refusing to uphold its end of the public pension bargain.

Public employees have always done their part, contributing every dollar owed out of every paycheck they earned. They never said “not this month” or “wait until next year” or “we’ll figure it out later.” They just paid what they owed, on time and without fail. That’s not a claim the state can make. Every year for 20 years, there’s been some excuse, but there’s never been a full payment. Not once. As a result, New Jersey is in a deep pension hole. It has incurred a debt that won’t just go away. It must be paid in full. And the longer the state waits to pay it, the more expensive it becomes for everyone.

That’s why NJEA supports a constitutional amendment to require the state to fund its pension obligations responsibly. It’s the least expensive, most responsible way to solve the problem created by a generation of fiscal irresponsibility. Amending the constitution to impose the fiscal discipline that our elected leaders lack is the only solution that will work.

After all, New Jersey has tried every other approach, and this is what we’ve learned:

Promises don’t fund the pension system: We’ve heard promise after promise from politician after politician, but the pension fund is still in critical condition.

Good intentions don’t fund the pension system: We’ve worked with plenty of people who genuinely want to find a permanent solution. But despite their best efforts, the pension system is still in critical condition.

Laws don’t fund the pension system: New Jersey passed a pension-funding law in 2011 that was supposed to fix this problem once and for all. But our governor doesn’t believe that laws apply to him. He’s simply ignored the law he signed, and the pension system is still in critical condition.

Courts don’t fund the pension system: We’ve pursued case after case to enforce the state’s promise and obligation to fund the pension. The courts always point back to the Legislature and the governor, saying it is up to them to do the right thing. But they don’t do the right thing, and the pension system is still in critical condition.

Shifting the blame and the burden to public employees doesn’t fund the pension system That same 2011 law forced our members to pay much higher contributions for greatly reduced pensions. It’s forced them to pay thousands of dollars a year out of pocket for their health insurance. By the governor’s own estimate, that law will cost public employees more than $120 billion over 30 years. But despite the devastating impact that losing more than $4 billion per year has had on public employees, the pension system is still in critical condition.

Remember all of that in the coming months when critics say we don’t need a constitutional amendment. Remember that history when the same politicians who helped create this crisis say they have a plan to fix the crisis, and that we should just trust them to do the right thing, eventually. Remember that when someone says the solution is for public employees to pay more while the state remains unaccountable.

New Jersey can’t afford any more broken promises. We can’t afford any more unenforceable plans. And our members can’t afford to keep bearing the whole burden of fixing a problem they had no part in creating.

We must amend the constitution this November. It’s the only solution that will work. It’s the only solution that’s strong enough to overcome 20 years of political failures and broken promises. It’s the only solution that puts New Jersey on a path toward long-term fiscal responsibility.

We can’t put this off any longer. We must do the right thing now.

Wendell Steinhauer is president of the 200,000-member New Jersey Education Association.

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