newjerseynewsroom.com

BY BOB HOLT

NEWJERSEYNEWSROOM.COM

The big red elephant sitting in Trenton is up for discussion again. State leaders began to debate again last week how much money to put into New Jersey's failing pension system.

That plan covers 800,000 current and retired state and local government workers and their spouses.

State Senate President Stephen M. Sweeney said that any negotiation with Gov. Chris Christie on his proposed pension reforms must include the $540 million minimum contribution required under a law passed earlier in March.

The March law requires the state to begin to catch up with its required annual pension contributions after largely skipping those for a decade. That means New Jersey is to put in one-seventh of the contribution, estimated at $540 million, in next year's budget.

State Treasurer Andrew Sidamon-Eristoff said over the summer that he expected the state to make that $540 million payment. But Christie later said the treasurer had "gotten ahead of himself" and that any contribution would be subject to the state's budget, which supersedes any state law.

The Courier Post reports New Jersey is officially $46 billion short of the money it will ultimately have to pay to retirees in coming decades. Other estimates peg that number much higher, depending on how well the state's pension fund investments perform.

The pension liability also is accompanied with an unfunded health care liability of some $52 billion.

To make up the pension shortfall, New Jersey should have contributed a minimum of some $3 billion in the current fiscal year. But with revenues falling that contribution was skipped, which means that the next bill gets even larger.

Pewcenterforthestates.org reports New Jersey actually had a $7.5 billion pension surplus in 2000, but years of failing to meet the actuarially required contribution led to an unfunded liability of $34 billion in 2008. This has left the state's pension plans with 73 percent of the assets needed, below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts.

To reduce current pension and health-related costs, Christie in September issued broad reform proposals.

They included:

• Making most workers contribute more for their pensions.
• Eliminating all annual cost-of-living adjustments for retirees.
• Changing the pension pay formula for workers to roll back a 9 percent boost given in 2001.
• For workers to pay 30 percent of their health care premiums.

The Legislature has yet to act on those proposals. Sweeney said the Legislature will take up those measures, but added the state was going to have to chip in.

According to a piece at aolnews.com, from 1998 to 2003 then New Jersey Gov. Christie Todd Whitman held "pension holidays," suspending employee payments into the pension system so workers could spend the money elsewhere. Other states have since followed Whitman's example. Today, New Jersey's public pensions lack billions of dollars in funding, and both public employees and taxpayers may be suffering.