According to Business Insurance, an outline of the state budget, posted on the governor’s Web site, said “it is understood that the deferral of this $3.06 billion payment will lead to a larger unfunded liability and greater costs” in future years. In a speech before the state Legislature, Christie said withholding the pension payment “results from recognizing that our pension system must be reformed before we can or should fund a broken, out-of-control system.”
At the beginning of the month, the state Senate held a hearing on a resolution that would require the state and other public employers to make one-seventh of their pension contribution in the next fiscal year, and to increase the contribution by one-seventh every year until the entire portion is being paid in FY2017 (see NJ Senate Takes on Pension Reform). The resolution ultimately will be decided by voters because it changes the state constitution.
Since 2004, the state has put in about $2.4 billion of the nearly $12 billion required contributions.The New Jersey Division of Pensions and Benefits said last month that the state pension system’s estimated unfunded liabilities climbed to $46 billion for the fiscal year ended June 30, up $12 billion from the previous fiscal year.