Gene Robbins, Packet Media Group
Wearing red shirt and carrying placards, about 200 Somerset County teachers rallied at the offices of two of the county’s state legislative representatives Monday afternoon on the eve of a pivotal Supreme Count decision about funding of the pension system for teachers and public employees.
The teachers wanted to pressure the legislators to find a way to fund their pension system fully. The state, insisting it doesn’t have the money in its budget without devastating other obligations, hasn’t fully funded its share of the pension system for years.
“I’m Steve Beatty, and I’ve made 458 pension payments,” said the county association president. “And to my best count, that’s 454 more than the state has since put in since 1996.”
The rally came on the eve of Tuesday’s announcement by the state Supreme Court on whether it would uphold a lower court ruling that said the state must pay the entire amount promised in this year’s budget when passed last summer.
The decision was the state did not have to make a $1.6 billion payment cut from the 2014-15 fiscal year budget because of a revenue shortfall. There are only three weeks left in the current budget year.
The 5-2 decision of the court, in reversing a lower court ruling, said the pension payment at issue was not a contractual obligation entitled to constitutional protection.
The court said there was a promise made by the legislative and executive branches, and because, morally, the employees’ argument is “unassailable, we conclude that (the law) could not create the type of legally enforceable contract that plaintiffs argue,” according to the decision.
In dissent, Justice Barry Albin and Chief Justice Stuart Rabner say the ruling leaves public workers, who have been contributing more into the system under the law, “holding the bag,” Mr. Albin wrote.
“The decision unfairly requires public workers to uphold their end of the law’s bargain — increased weekly deductions from their paychecks to fund their future pensions — while allowing the state to slip from its binding commitment to make commensurate contributions,” the dissent said.
The state pension system has about $83 billion of unfunded liabilities and was funded at only about 44 percent in fiscal 2014.
“Today’s Supreme Court ruling is a blow to the rule of law in New Jersey,” said NJEA President Wendell Steinhauer in a statement. “It is devastating to all public employees, retirees, taxpayers and families.
“This ruling does nothing to resolve or reduce the state’s pension liabilities. In fact, it affirms our members’ non-forfeitable right to receive their pensions. But it also allows the current administration to push that obligation off onto future taxpayers, with interest,” said the NJEA head.
Assemblyman Jack Ciattarelli stood and watched Monday as Somerset County Education Association members gathered outside his district office at 50 Division St., Somerville.
Mr. Beatty, wielding a megaphone on the sidewalk, said he knew since fourth grade that he wanted to be a teacher. He said he never expected to be paid exorbitantly, but understood one of the benefits would be the deferred compensation.
Public employees faithfully have made their share of pension payments, he said, but the state’s call for “shared sacrifice” has fallen “on us and us alone.
Truly share the sacrifice and fund the pension as promised and is the law.”
Just as governments have passed tax breaks and taken steps to protect companies deemed “too big to fail,” the pension system is equally important, he said. Default would mean an economic disaster for New Jersey, he said, citing figures he said showed every dollar invested by state taxpayers in pension benefits supported $8.82 in total economic activity in the state.
Mr. Ciattarelli, a Republican representing parts of Somerset, Hunterdon, Mercer and Middlesex counties, said in a statement that no one can blame any employee group for advocating funding of their pensions.
An increased tax on people making high six-figure incomes has been suggested by some lawmakers. That would provide only about one-third of the answer, Mr. Ciattarelli said.
“Increasing taxes on one segment of our population when all of us are responsible for the pension crisis is not the answer,” he said.
After the rally in front of his office, Mr. Ciattarelli spoke with some teachers about a wider reform.
He noted pensions for firefighters and municipal and county workers are in good fiscal shape — 80 percent funded, he said. That was because payments come through property taxes via local and county budgets, he said.
Since the state’s funding stream is so volatile — the root of the crisis has been the years of economic decline, he said — it must choose first to fund government operations, schools, health care, programs for the disabled and other items.
Pension payments always have gotten kicked down the road, he said.
He said he would move new hires and more teachers onto the local school budget’s responsibility and exempt those added Social Security and pension expenses from the state’s cap on tax levy increases.
He said he also would eliminate “platinum plans” for health care.
He also would shift the Medicare Part B payment, about $104 a month now, to any teacher whose pension and Social Security payments exceed $50,000 a year. Anyone with less than 20 years in the system also would be “on their own” for Part B, he said.
“We need total reform,” he said. “We can’t rely on the state for full payment.”
He also said all communities should pay at least 25 percent of their total tax responsibility for the cost of schools. He had a list of 15 school districts — mostly urban and considered disadvantaged — where the state picks up almost all of costs.
Changes to the School Funding Reform Act formula, pension funding sources, post-retirement health-care benefits and “shared sacrifice will produce a much-needed solution,” he said in a statement.
