Three public pension funds have sued New Jersey in the parties' latest legal joust, accusing the state of violating a contract by underfunding their plans.
In an amended complaint filed July 24 in Mercer County Superior Court, the boards of trustees of the Public Employees' Retirement System of New Jersey, the Teachers' Pension and Annuity Fund of New Jersey and the Police and Firemen's Retirement System of New Jersey alleged "breach of contract and constructive trust for unpaid contributions owed."
The action comes nearly two months after the state Supreme Court, in Burgos v. new Jersey, upheld Republican Gov. Chris Christie's veto of $1.6 billion of pension contributions from the 2015 budget. Credit analysts said the June 9 ruling provides New Jersey short-term budget flexibility while risking long-term financial burdens.
The July 24 complaint, filed by the pension funds' attorney, Bennet Zurofsky, argued that the state is still liable. "The promise to make the annual required contribution is separate and apart from the promise that the legislature will make the necessary appropriations to satisfy those obligations."
Moody's Investors Service rates New Jersey's general obligation bonds A2. Fitch Ratings and Standard & Poor's rate them A.