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New Jersey’s Pension and Health Benefit Study Commission has issued its final report on reforms it has said are needed to prevent public employee benefits costs from overtaking other budget priorities.
Despite unprecedented levels of funding and the dedication of state lottery revenue to the pension plans, the state’s estimated unfunded liability is now $90 billion, $10 billion more than in 2014, said commission member Tom Healey.
“While some progress has been made, it has not been enough,” Healey said. “The new governor, the legislature, public employees, and the citizens as a whole need to act to effect the comprehensive reform the commission suggests to make these benefits both affordable and secure.”
The commission has recommended that public employee health benefits be reduced and the savings be dedicated to pension payments.
Without more reforms, commission member Tom Byrne said, required pension payments won’t leave much money in the state budget for other priorities.
“We need to do it before the pension system becomes the Pac-Man that ate both the rest of the state budget — in terms of discretionary spending at least — and ate the retirement security of 800,000 New Jerseyans that depend on the pension system,” he said.
The pension funds will run dry in 12 to 14 years without additional reforms, Byrne said.
“There were certain people who wanted a stalemate until now, thinking that they would get a better deal in a new administration,” he said. “The fiscal constraints that exist aren’t going to change, and I think the sooner reality sets in about that the better off we’ll all be.”
The commission’s report is a blueprint for the next administration to consider, said Gov. Chris Christie.
“I hope this is a ‘Nixon goes to China’ situation,” he said. “I hope it’s that a Democratic administration and a Democratic legislature can speak truth to these unions and make them realize there’s no place else for them to go.”