The trustees of the three largest pension plans in the New Jersey Pension Fund, Trenton, sued the state in an effort to increase the amount of money the state has contributed and will contribute to the $79.1 billion plan.
In effect, the trustees are asking a Mercer County Superior Court judge to reopen a June ruling by the state Supreme Court that upheld Gov. Chris Christie's decision to withhold some payments to the pension system for the fiscal year ended June 30, 2015. Mr. Christie contributed $681 million instead of the promised payment of $2.25 billion.
The trustees' lawsuit, filed July 24, argued the Supreme Court ruling didn't close the door on the trustees' assertion that Mr. Christie violated the law.
The Supreme Court, in a 5-2 decision, rejected the legal arguments by many unions that their pension rights were covered by a section of state law called Chapter 78. This section said, in part, that participants have a “contractual right to the annual required contribution amount” by the state. If the state doesn't make this required amount, it's “an impairment” of the contractual right, the law says.
However, the Supreme Court said that “Chapter 78 does not create a legally enforceable contract that is entitled to constitutional protection.” The state constitution prevents creation of “a legally binding enforceable contract compelling multiyear financial payments in the sizable amounts called for by the statute,” the court said.
“The Supreme Court did not declare Chapter 78 to be unconstitutional,” said the lawsuit filed July 24 by trustees of the Public Employees' Retirement System of New Jersey; Teachers' Pension and Annuity Fund of New Jersey; and Police and Firemen's Retirement System of New Jersey. These plans account for about 97% of total assets in the New Jersey Pension Fund.
“It only held that the enforcement of the contractual promises made were subject to the debt limitation and appropriation clauses of the New Jersey Constitution,” the complaint said. “Nowhere in the majority opinion (by the Supreme Court) is reducing the state's pension liability to a judgment in the same manner as any other contract held to be unconstitutional. … It was only the promise to make the appropriations that was held to be unenforceable by the Supreme Court.”
The trustees' argument was filed as a notice to amend an original complaint that was submitted in December 2014.
This lawsuit is separate from the several lawsuits filed by unions seeking separately to overturn Mr. Christie's withholding of some state funds from the pension system for the fiscal year ended June 30, 2014, the fiscal year ended June 30, 2015, and the fiscal year ending June 30, 2016.
The trustees' suit also is seeking reinstatement of the governor's pension payment cuts for the 2014 fiscal year and proposed cuts for the 2016 fiscal year.