Every year we don’t properly fund the pension system, the future cost goes up exponentially
Four and a half years ago, the governor and the Legislature passed bipartisan legislation designed to fix the pension system for teachers and state employees, which had developed a $50 billion unfunded liability due to the failure of both Republican and Democratic administrations to make the required pension payments over the previous 14 years.
The plan called for shared sacrifice. Retirees gave up cost-of-living increases, and public employees paid thousands of dollars more out of their salaries every year for pensions and healthcare — all of which would save the pension system $121 billion over a 30-year period.
In return, the law required the state to ramp up from making no contributions the year before to full actuarially required funding of the pension system by 2018. It wasn’t going to be easy, but the $650 million a year annual increase could have been handled through normal growth in state revenues.
Sticking to the plan would have fixed the pension system, stabilized the state’s finances, and ended the cycle of bond downgrades that is ruining the state’s credit.
Gov. Chris Christie’s failure to make the agreed-upon payments will cost New Jersey taxpayers $30 billion more in future pension costs. And while there is plenty of blame to go around, the governor has now underfunded the pension system by $17.5 billion over his first six budgets — twice as much as Democratic governors did in the preceding six years.
Every year we don’t properly fund the pension system, the future cost goes up exponentially.
That’s why I introduced legislation asking voters to approve a constitutional amendment requiring the state to ramp up to full actuarially required funding of the pension system by 2022 — four years later than required under the original law.
We have no choice, and I believe voters will agree when this proposal goes on the ballot in November.
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