Christie, who signed bipartisan pension reform in 2011, faces a difficult battle over rapidly inflating pension costs. (Courtesy of MCT Campus)

Chris Christie, who signed bipartisan pension reform in 2011, faces a difficult battle over rapidly inflating pension costs. (Courtesy of MCT Campus)

By: Brandon Reno, contributing writer.

A storm is brewing yet again in the state house over the New Jersey public worker pension system. In his annual budget address, Governor Chris Christie delivered his $33.8 billion proposal to critical response from the New Jersey Educators Association, the largest public workers union in the state. Of that $33.8 billion figure, approximately $1.3 billion will be diverted to the state’s public pension program, the largest expenditure for that program in state history.   

The new plan calls for a reorganization of the current plan into a hybrid model that combines both the traditional pension plan with a 401k-like defined contribution plan. State workers would see a reduction in benefits and would assume a larger responsibility of healthcare related costs. Under this reorganization, current employees would not longer be able to accrue further benefits under their current plan, but what they currently have would be protected under law, with the state promising to continue payments. Freezing the current pension plan would result in $2 billion savings per year across local and state governments.  

The reorganization would also see responsibility of overseeing public pensions shifted to the public unions themselves, rather than the state. The Christie administration seeks to lock in the rate of pension contributions from state and local governments for the next 40 years, according to the findings of the New Jersey Pension and Health Benefit Study Commission.  

The proposal was reported by NJ.com as a possible boon to younger employees, who are forecast to receive the smallest amount of benefits under the current plan. Employees with more tenure are expected to lose the most.  

Christie, whose tenure has been marked with budget shortfalls, said, “New Jersey, like the majority of states in America, and like our federal government, faces significant fiscal challenges. I am here today to speak the truth and stand up for our hard working taxpayers.”  

Though that $1.3 billion figure is nearly double the amount paid last fiscal year, it remains far below the amount the state originally agreed to pay in a 2011 pension reform law. The law promised to overcome decades of shorting by previous governors while public workers would pay more towards their pension. Though hailed as a victory for the governor at the time, the state has failed to pay its agreed upon fee twice in the past four years, according to NJ.com.

Two days prior to the address, a NJ Superior Court judge Mary Jacobsen ruled that Christie broke the law by shorting the pension plan, and would now have to make up the lost funds within the confines of this fiscal year’s budget. Christie’s office called the ruling “liberal judicial activism” indicating that they would be appealing the ruling and instead focusing on the findings of a commission set up by the Governor to assess the need for reform. Credit agency Moody’s has said that the ruling would restrict the state’s ability to balance a budget in the future.

Before the address, a report out of Christie’s office said that the state and NJEA were working on “groundbreaking changes” to the state’s pension program, signaling a possible compromise to balance the ever burgeoning program, which the governor said in his address could reach as high as $8 billion per year in 2017. The, NJEA however, did not share Christie’s enthusiasm.    

Shortly after Christie’s address, NJEA President Wendell Steinhauer said, “NJEA is deeply disappointed that Gov. Chris Christie overstated the nature of the understanding we reached with the commission after many months of conversation. We have not agreed to any changes to pensions or health benefits.” 

His response continued, saying, “We have only agreed to continue looking at all solutions that may provide our members with more stable pensions and affordable, high-quality benefits.”

Edward Richardson, the executive director of the NJEA, added to the response by saying, “The intricacies of pension reform policy has not yet been agreed to, but we want to continue working on it.”

The proposed budget will be put to a vote in the state legislature in June.