New Jersey Gov. Chris Christie said his administration is cutting the state's pension payments to $696 million this fiscal year and $681 million next fiscal year.
“That level of spending pays our bills,” Mr. Christie told reporters Tuesday in Trenton. “We will not make the payments that apply to the sins of the past.”
The budget he proposed in February had called for a record pension payment of $2.25 billion for the next fiscal year ending June 30, 2015. Mr. Christie had previously pledged to contribute $1.58 billion to the $76.8 billion New Jersey Pension Fund, Trenton, for the fiscal year ending June 30. The state traditionally makes one contribution to the pension fund in June of the current fiscal year.
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.
The state enacted several pension changes in 2011, including 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.
Robert Steyer contributed to this story.