N.J. teachers' union may appeal ruling that state can skip pension fund payments

By Lisa Fleisher/Statehouse Bureau
March 04, 2010

TRENTON -- A three-member appellate court panel today said New Jersey is not constitutionally required to pay the millions it owes every year into the fund for teachers’ pensions.

The decision came amid a fight ihere about how to fix the state’s underfunded pension plan — including a proposal that could make full funding a constitutional requirement.

The New Jersey Education Association, which represents more than 200,000 workers in the state’s school systems, is considering appealing the ruling, union spokesman Steve Wollmer said. The union sued in 2003 saying their members’ pensions were at risk because the state did not pay its pension bills in full.

Previous coverage:

• N.J. appeals court rules state may skip teachers' pension fund payments

• Gov. Chris Christie wants part-time state employees out of pension system

• N.J. Assembly is unlikely to vote on pension reform bills before Gov. Christie's budget address

• N.J. public workers union leaders argue against pension ballot question

• N.J. pension fund is underfunded by $46B, as gap continues to grow

• Full Star-Ledger coverage of the N.J. budget

For more than a decade, the state legislatures and governors of both parties have overriden a law requiring full payments. When the state does not pay its bill one year, it makes future bills larger — which could lead to fewer services or higher taxes.

The ruling does not change the union’s opposition to a bill that would ask voters to amend the constitution to require full funding.

"And what if the public votes no?" Wollmer said. "It might give some people reason to say, ‘Oh, the people have spoken. We don’t need a pension system.’"

The unions also object to a provision in the bill that would allow the state to ramp up payments over seven years.

As of last June, New Jersey owed nearly $46 billion more than it had available to pay its $135 billion bill for current and future retirees’ pensions, according to calculations released last week.

Proposed bills would reduce benefits for future workers and require current workers to pay 1.5 percent of their salary toward health care — though some workers already do this.

The bills were discussed in an Assembly hearing today where representatives from various unions and the state’s pension division spoke.

Meanwhile, Assemblyman Joseph Malone (R-Burlington) introduced a bill to freeze the salaries of all public workers for up to three years — and property taxes for a year — to help control costs. He said it would help school boards compensate for a likely loss of state aid in the upcoming state budget — and bolster them against union challenges.

Malone said he had spoken this week for over an hour with a teacher in New Brunswick who said was told she might lose her job. He said this would allow schools to avoid layoffs by skipping raises. But he said he recognized it could go against contracts.

"We’ll find out if it’s legal or not," he said. "I just think things are so bad right now people better start working together."