NEW JERSEY COPS ■ JULY 2014
court has affirmed in such strong terms the contractual
right to a pension, and that COLAs are an integral component of those vested rights.
However, this ruling, in and of itself, did not reverse the
suspension of COLA payments. The Court noted that,
throughout the U.S., even a contractual right can be
breached if the state can demonstrate a compelling need to
reduce, suspend or otherwise modify pension benefits.
That aspect of the case requires further fact-finding at a trial
regarding the state’s reasons for the suspension of the
COLAs, alternatives to that suspension and the existence of
less drastic means to effectuate the state’s interest. As a
result, the case must return to the trial court for additional
fact-finding to address these competing issues.
Nonetheless, the holding in this case is extremely important. It recognizes the contractual right to pensions – both
COLAs and the basic benefit – and concludes that the state
must prove no alternate method exists for breaching or
modifying its contractual promise. We expect significant
discovery, including actuarial analyses, to be required in the
trial court in the next several months.
Almost simultaneously, Assignment Judge Mary Jacobson, a respected trial judge, addressed a related issue we
raised in the case of Berg, State PBA, et als. v. Christie. In
that case, we alleged that Chapter 78 requires that the state
make payments, in increasing one-seventh increments, of
the amounts needed to pay both current and previous liabilities of the pension system. We filed the suit because Gov.
Christie, in the final days of fiscal year 2014, slashed that
year’s mandated pension payments required by Chapter 78,
and announced he intends to do so as well for fiscal year
2015.
While the court decided it would not grant an emergency
injunction to interfere with Christie’s determination to slash
more than $800 million from the 2014 payment becau ͔