newjerseynewsroom.com

Pension and health benefits' systems estimated to be underfunded by $120.8 billion

Gov. Chris Christie Monday called for passage of his proposals to change what he describes as New Jersey's out-of-date, antiquated and increasingly expensive public employees' pension and benefits systems.

The governor raised the issue at a public meeting at Chesilhurst Town Hall and said he will continue to push the proposals in an effort to "restore fairness and affordability to the costs that current and future generations of New Jersey taxpayers must bear."

In September, Christie unveiled a sweeping package of proposals to make the state and local employee pension system sustainable for current and future retirees while reducing the government cost to run the systems. Leaders of the Democratic-controlled Legislature have pledged to work with him on making changes this year, but they will also be moving carefully in an effort to avoid the wrath of the politically-powerful public employee unions.

Christie noted the cost of the already expensive pensions and benefits' systems continues to grow and threatens to collapse the pension system and force state and local governments to expend limited budget resources on pension and health benefits.

The governor believes his proposals would fundamentally change the course of the systems and ensure long-term solvency without raising taxes or cutting essential government services.

The current pension system is underfunded by $54 billion and, unless changes are enacted, that number will grow to $183 billion by 2041, even if the taxpayers make all statutorily required pension fund contributions.

The governor says his proposals would reduce total pension underfunding from $183 billion in 2041 without reform to $23 billion in 2041, and increase the aggregate funded ratio from the present level of 66 percent to more than 90 percent in 30 years.

Currently, New Jersey's unfunded liability, or future costs expected in the health benefits system, is $66.8 billion. New Jersey spends $4.3 billion annually on public employee and retiree health care costs.

The cost for operating the health care benefits program for public employees and retirees is slowly sapping New Jersey's budget to the point where it is becoming impossible for state and local government to fund critical priorities and bring rising deficits into line.

Christie argues that without immediate action, costs will increase by more than 40 percent over the next four years. By contrast, the average cost to an active public employee will increase by less than 10 percent over the same period.

The cost of health benefits, as a percent of New Jersey's annual budget, has grown from 4.5 percent in 2001 to more than 9 percent today.

Christie wants to transition the cost-sharing in the system to offering more options for employees to choose from, and switch to a system requiring employees to pay a percentage of their premium rather than a percentage of their salary.

— TOM HESTER SR., NEWJERSEYNEWSROOM.COM