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Pension Controversy in Garden State Despite Court Ruling

The New Jersey Supreme Court may have ruled that Gov. Chris Christie (R) can cut $1.57 billion in contributions to the state’s public employee pension system, but that has not spelled an end to the public controversy over the system and how to address its problems.

Debate erupted outside the state house on June 11, two days after the court issued its ruling, reports Members of the New Jersey Education Association and members of Americans for Prosperity gathered to rally concerning different aspects of the matter — NJEA members for the fiscal health of the system, and Americans for Prosperity for its reform.

Earlier this year, Christie proposed adding $1.3 billion to the state pension system; that is less than half the amount the state had agreed to contribute. That is approximately $1.8 billion less than the 2011 pension reform law requires.

Christie also proposed freezing the plan, creating a new pension fund for educators that the NJEA would own, requiring that the state fund its obligations over the next 40 years and calling on the unions to agree to hefty health care cost savings to offset the cost of the pension plan.

And for good measure, the nonpartisan Volker Alliance, which one-time Federal Reserve Board Chairman Paul A. Volcker established, has issued a report critical of New Jersey’s handling of the pension plan and warning that the state is at risk for spending cuts in other areas unless it raises new revenue or cuts pension costs.

New Jersey Supreme Court Justice Jaynee LaVecchia, who wrote the majority opinion in the June 9 ruling, captured not only these discussions, but also the fact that the debate is far from over. “That the state must get its financial house in order is plain. The need is compelling in respect of the state’s ability to honor its compensation commitment to retired,” she wrote. “But this court cannot resolve that need in place of the political branches. They will have to deal with one another to forge a solution to the tenuous financial status of New Jersey’s pension funding in a way that comports with the strictures of our constitution.”