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NEW JERSEY COPS ■ FEBRUARY 2015
Court hears argument on pension
On Jan. 15, 2015, Superior Court Judge Mary
Jacobson heard oral argument from this firm
and others regarding the state’s obligation to
make pension payments as provided in Chapter 78. As you know, the NJ State PBA, in conjunction with several other public sector
unions, filed suit against Gov. Christie in
spring 2014 to compel compliance with the
funding requirements of Chapter 78. That
annual contribution is critical to stabilizing the
pension systems and insure their long-term
viability. As we go to press, we expect that
Judge Jacobson will issue her decision quite soon.
This suit was filed by the State PBA and other unions after
Gov. Christie announced that the $1.68 billion pension contribution required by Chapter 78 would be cut to $696 million in
Fiscal Year 2014. Christie also announced he intended to violate
the pension funding law for FY 2015 by contributing only $681
million, rather than the $2.25 billion required. In these two
years alone, therefore, Gov. Christie will shortchange the pension funds by almost $2.5 billion. The focus of the oral
argument was on the funding for current FY 2015 and subsequent budgets.
A key component of Chapter 78 was its creation of a contractual right to compel funding the pension system, in addition to
the existing contractual right to pension benefits. Depending
upon the specific pension system, payment of
pension benefits could cease as early as 2025 if the
actuarially-required payments are not made each
year. Chapter 78 was enacted to ensure that the necessary payments would be made annually and continually, because the contractual right to receive
pension benefits is meaningless if the system is not
funded. While PFRS is in better shape than other
funds because the state contribution is only a portion
of the overall obligation – municipalities have made
their mandated contributions in recent years – the
funding mandate of Chapter 78 is critical to all
systems.
At oral argument, the NJ Attorney General repeatedly argued
that Chapter 78 was “unconstitutional” – even though it was
Christie who proposed the law, signed it, and proclaimed it as
the solution to the State’s