A pending ruling by the New Jersey Supreme Court on public-employee pension funding will determine whether the state must make a $2.25 billion payment into the pension system this fiscal year – the most contributed during Gov. Chris Christie’s tenure and a record for the state.
Right now, however, state Department of Treasury records show that former Gov. Jon Corzine holds the state record for making the largest payment into the pension system, which covers the retirements of roughly 773,000 current and retired workers.
That record payment was the $1.05 billion Corzine’s administration put into the pension system at the end of the 2008 fiscal year, before economic problems forced Corzine, a Democrat, to abandon his plan to prop up the chronically underfunded pension system.
Christie, a Republican who took office in early 2010 after unseating Corzine, has also taken up pension reform, attempting to make it a signature issue.
Those escalating payments were meant to bring the state back up to the full amount required by actuaries to help reverse the years of underfunding by Christie and prior governors from both political parties. That underfunding has left the pension system with debt between $40 billion and $83 billion, depending on the accounting standards applied.
Christie initially followed the seven-year payment schedule, including making a $1.03 billion payment in late June 2013 that ranks as New Jersey’s second-largest pension-fund payment ever.
But last year, as the state experienced budget problems, Christie trimmed a planned $1.57 billion state pension contribution down to $696 million. The larger contribution would have set the record, but instead the $696 million ranks fourth on the list.
The payment for this fiscal year — the $2.25 billion required under the seven-year ramp-up – would have set a new record, but Christie reduced the amount to $681 million, saying the state can’t afford to contribute more.
Democrats who control the Legislature attempted to raise taxes on corporations and state residents making more than $1 million last year to fund the larger payment, but Christie rejected their efforts.
Public-worker unions have contested Christie’s pension-payment cuts in court, and a decision from the Supreme Court on whether the state has to stick to the $2.25 billion contribution required under the seven-year payment schedule could come at any time.
Christie, meanwhile, announced last month that he’s planning to take $212 million in unexpected revenues to increase the contribution due to be made before June 30 to $893 million.
The governor has also proposed in the budget he’s put forward for the next fiscal year]to shift the state from the seven-year payment schedule to a 10-year ramp-up to the full funding required by actuaries.
Under that plan, the payment to be made before June 30, 2016, would total $1.3 billion. Though it could set a new record, the contribution would still be far less than the $3.1 billion required under the reform law.
Democrats and union officials say the 10-year payment plan would also push too much of the cost onto future generations. An analysis by NJ Spotlight determined those extra costs would total more than $12 billion through 2043 fiscal year.
Christie, meanwhile, has also proposed a host of new reforms, including freezing the current pension system and moving retirees into a new retirement plan with features of a 401(k). He’s also seeking to offer employees less costly health benefits and use savings from that change to help pay down the current pension system’s debt. So far, Democratic legislative leaders have not embraced any of his proposals.
Here’s a list of the 10 largest state pension contributions, the governor who made them, and the fiscal year in which the funding was deposited into the pension system. (All information comes from the New Jersey Department of Treasury).
1. $1.05 billion – Corzine, FY2008
2. $1.03 billion – Christie, FY2013
3. $1.02 billion – Corzine, FY2007
4. $696 million – Christie, FY2014
5. $484.5 million – Christie, FY2012
6. $286 million – Christie Todd Whitman, FY1999
7. $228 million – Whitman, FY1996
8. $193 million – Whitman, FY1995
9. $165 million – Richard J. Codey, FY2006
10. $106 million – Corzine, FY2009