New Jersey Gov. Chris Christie said Tuesday that his proposed budget for the next fiscal year includes a $2.25 billion contribution to the state's public pension system.
“The budget proposes making the largest (annual) pension payment ever at $2.25 billion,” Mr. Christie said in a budget speech delivered to the state Legislature on Tuesday.
The state's contribution to the $76.8 billion New Jersey Pension Fund, Trenton, was $1.68 billion for the fiscal year ending June 30, 2014. The state division of investment, a unit of the state Treasury Department, manages the fund's investments.
In his speech, Mr. Christie warned that investing in the state's future — for education, health care, public safety and other services — are hampered because pension, health and debt obligations will soak up 94% of new spending. “We are in danger of having these costs overwhelm our budget (and) monopolize our resources,” he said.
Mr. Christie said the state must build on entitlement reforms that took effect in 2011. “The reforms we enacted together are going to save New Jersey's state and local governments $122 billion in the 30 years from 2011 to 2041,” he said. “Together, we are cleaning up the mess of the past. But this simply isn't enough.”
Without additional reforms, Mr. Christie said the state pension system will still be underfunded by $52 billion. “With our long-term obligations only set to increase in the coming years, the problem isn't going away by itself,” he said.
However, Mr. Christie didn't offer specific pension proposals in his budget speech.
The pension changes enacted in 2011 included raising the retirement age and years-of-service eligibility for new employees for the two largest employee pension funds in the state pension system, as well as raising all active employee contribution rates at five of the funds. Also, the 2011 pension law eliminated automatic annual payment increases and eliminated all statutory cost-of-living adjustments for all current and future retirees.
According to the latest audited report for the fiscal year ended June 30, 2013, the New Jersey Pension Fund had a funding ratio of 64.5% based on the actuarial valuation as of July 1, 2012. The audit said the pension system had an unfunded actuarial accrued liability of $47.2 billion based on Governmental Accounting Standards Board guidelines.