New Jersey Gov. Phil Murphy on Feb. 25 announced a proposed budget for the fiscal year beginning July 1 that includes a $7.2 billion contribution to the state’s pension system, the fifth consecutive year the state is making the full actuarially determined contribution.
The $58.1 billion state budget’s pension contribution reflects a combination of state revenue and proceeds from the state lottery. The state counts on the lottery — a pension system asset — for about $1 billion per year.
For the fiscal year ending June 30, 2025, the total state contribution to the pension system was also $7.2 billion.
The proposed budget, which is Murphy's last because of term limits, must be approved by the state Legislature and signed by the governor by June 30.
“We are the first administration in 25 years to restore full funding for New Jersey’s pension system,” Murphy said in a speech before a joint session of the state Legislature in Trenton.
“For year after year, our state’s leaders abandoned this obligation because, simply put, it was the easy way out,” he said. “We now have to pay a multibillion-dollar annual penalty for the irresponsible decisions made by previous generations.”
If the state had made full pension contributions each year for the past 25 years, the upcoming budget’s amount would have been about $1 billion, Murphy said.
“Because we were stuck with yesterday’s bar tab, it now costs us around $7 billion, every year, to make the full payment into our pension system,” he said. “We are literally paying the price for decades of short-term, sloppy and selfish decision-making. Well, we refuse to pass the buck any longer.”
The pension system contribution will be apportioned between the $70.2 billion New Jersey Pension Fund, Trenton, and the $33 billion New Jersey Police and Firemen's Retirement System, Trenton, whose asset management was spun off from the New Jersey Pension Fund in April 2024. The state treasurer is custodian for both pension systems.
New Jersey Pension Fund assets for teachers, public employees, judges, prison officers and state police are managed by the state division of investment.
For the six months ended Dec. 31, lottery proceeds of $516 million were down 10.9% from the year-earlier period. Total revenue — a combination of general revenue plus state sales tax, income tax and casino revenue — was $18.6 billion, up 2.4% from the year-earlier period.
