New Jersey intends to fund its pension system, an official in the state treasury department said, responding to a newspaper report that a bond document indicated there was no assurance payments would be made in future years.
The official said the language has been in official statements for bond offerings going back to at least 2009, when Jon Corzine was governor, and did not indicate any change in the state’s plans.
In 2011, current Gov. Chris Christie and the legislature took steps to roll back pension benefits, including suspending cost-of-living increases for retirees and requiring increased employee contributions. These changes immediately increased the pension’s funded ratio to 65.2% from 56.4%, according to a State Budget Crisis Task Force report on New Jersey.
In addition, New Jersey committed to ramping up its contributions to the pension system over seven years in a set plan. The Christie administration has committed itself to contributing 100% of the actuarially required contribution to its pension system plan in fiscal 2019.
State payments in the first two fiscal years have been according to its seven-year ramp-up plan. Christie’s proposed budget for fiscal 2014 also has the plan’s pension contributions.
Last week the Star-Ledger in Newark noted that the official statement for New Jersey’s April 23 general obligation offering included the sentence, “No assurances can be given as to the level of the state’s pension contributions in future years.”
Christie is still committed to the seven-year ramp up of funding, as evidenced by his proposed budget this year, the official said.
The official statement is “trying to cover every possible eventuality,” the official said.
In the context of an economic emergency a different governor may choose to renege on the seven-year ramp-up, the official said.
Alternately, pension law may change and this may affect New Jersey’s funding levels, he said.
“The language referred to is standard disclosure language that is identical to bond offerings disclosures going back to at least 2009 and the Corzine Administration,” said Michael Drewniak, Christie’s spokesman. “It is because we cannot tie the hands of or commit future legislatures or governors’ actions that we are obligated to include such language. Not only has Gov. Christie already demonstrated his commitment to being the first governor in many years to fully fund the pension plans, but the 2011 bipartisan pension reform legislation also expressly allows the state to be sued if it does not uphold its promise to fully fund the pension according to law.”
The Treasury official said he did not know how the wording originally entered the official statements.