Politics trumps law in pension decision
The disappointing decision of the New Jersey
Supreme Court refusing to enforce the provisions of
Chapter 78, which provide for mandatory pension
contributions by the state, is not just legally incorrect and morally unfair. It is also an abdication of
the court's duty to enforce clear employee rights
because of its fear of the political ramifications that
might ensue. Of course, making decisions without
concern for political consequences is precisely
what courts are created and sworn to do – make
unpopular rulings which, in the long run, uphold the rule of
law. The analysis contained in the Supreme Court’s decision is
an unfortunate example of an abdication of its core judicial
responsibility.
By now you all know the basic facts. After years of underfunding, Chapter 78 was specifically enacted to require that the state
make its required contributions to the pension systems. It created a contract promising that each year the amount to be paid
would be ratcheted up in one-seventh increments, meaning the
full actuarial contribution would not even be made for seven
years. Nonetheless, it was a major improvement to the chronic
lack of virtually any funding. The governor made the first two
annual payments, but since that time has used his line- item
veto to avoid payment of even these limited statutory amounts.
On behalf of the NJ State PBA, we sued the governor for his
breach of the contractual promise contained in the very law he
pushed as the solution to the pension problem.
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NEW JERSEY COPS
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JULY 2015
It bears repeating that this was no ordinary
contract entered into by the state. It was a contract
and promise created by a statute – an extraordinary
action. In fact, because of chronic underfunding of
the pension plans, we worked very hard to ensure that
Chapter 78 contained language that was both crystal
clear and impossible for a court to ignore. Provisions
were inserted to make certain that the contributions
to be made by the state were not just aspirational –
they are an explicit statutory “contract” with each
state employee. Moreover, to avoid technical legal defenses,
Chapter 78 included language that any pension participant or
union could sue the state to enforce that contractual right, and
that the state even waived “sovereign immunity” – its defense
when we previously sought to enforce the contract right in federal court.
Notwithstanding all the foregoing, the court ruled 5-2 that
the legislature – and governor – did not have the legal authority
to “create” such a contract, because provisions of the New
Jersey Constitution known as the Debt Limitation Clause and
the Appropriations Clause prohibit any legislature from requiring a specific monetary payment to be made by future legislatures or the governor without voter approval. In effect, the court
held that the state did not have the authority to enter into this
contract. While it did not declare the statute unconstitutional,
as the governor contended, it effectively declared the component requiring state funding to be legally unenforceable. Of