CWA protests Christie's pension grab - 6.12.2014

Members of the CWA protest Governor Christie's pension grab to balance the budget at the Statehouse. Trenton, NJ 6/12/14 (Tony Kurdzuk/The Star-Ledger)

(Tony Kurdzuk/The Star-Ledger)

TRENTON — Trustees of New Jersey's largest pension funds filed a lawsuit today against Gov. Chris Christie for slashing $2.4 billion in pension fund payments he promised to pay as part of a 2011 pension reform deal.

The lawsuit will ask the courts to force Christie to restore the cuts. The board overseeing the Public Employees Retirement System — the largest employee pension fund — voted in June to sue Christie.

"We are saying that money is due to the fund," Tom Bruno, chairman of that fund said today. "It's not something we relish doing, but frankly it's got to be done."

"We have a fiduciary responsibility, and that is to protect the fund, as well as to collect the monies that are due to the fund," Bruno said.

The dispute stems from a 2011 deal Christie brokered with Democratic leadership in the Legislature to put the troubled system back on solid footing.

Christie agreed to increase payments into the system in return for a reform package that raised the retirement age from 62 to 65, eliminated cost-of-living increases for retirees, and required workers to contribute more toward their pensions and health benefits.

But instead of pumping in extra money, Christie grabbed $2.4 billion from pension payments to balance budgets over two years after revenue collections fell far short of projections.

The governor said there was no other choice if the state wanted avoid slashing funding to crucial programs or raising taxes instead.

In a statement, the trustees of the three pension funds — the Public Employees' Retirement System, the Police and Fire Retirement System and the Teachers' Pension and Annuity Fund — involved in the suit said Christie "has shamelessly broken his word by derailing the proper funding of the pension funds, while at the same time demanding participants endure benefit reductions and higher employee contributions."

Employee contributions will increased from 3 percent to 7.5 percent of salary for some workers and from 8.5 percent to 10 percent for others, according to the trustees.

"The funding problems of the pension funds are, to quote the governor himself, the fault of prior administrations. And now, by scrapping his own promises while demanding sacrifices from public workers, the governor has claimed this breach of faith as his and his alone," the trustees said in a release. "The governor's sins of political expedience have now been visited on the active and retired employees and their families, who seek only the deferred compensation earned through a lifetime of loyal service."

A spokesman for Christie did not respond to a request for comment. Christie has previously said he expects to prevail against legal challenges.

"A trial court is not going to shut down the New Jersey government," he said on his monthly radio show in June. "We would proceed to pass a budget and continue to appeal. Listen, you can make this as dramatic as you like but I'm willing to predict to you that this will get solved. And the reason this will get solved is we can't print money. We cannot print money."

Senate President Stephen Sweeney (D-Gloucester), who negotiated that reform package and has bashed Christie for reneging, said in a statement Wednesday that he welcomes the support from the pension fund in "demanding that the governor honor his commitment to the working men and women of New Jersey."

Unions representing public workers also filed suit against Christie in June, saying that grabbing those pension funds violated the state and federal constitutions.

A state Superior Court Judge ruled on June 25 that Christie could use his emergency powers to reduce the size of the payment for the fiscal year that ended June 30 because he had proven he was "backed into a corner" and that there would be "severe and immediate impacts on vulnerable populations" if he had to come up with the money.

Superior Court Judge Mary Jacobson did not rule on whether Christie could slice the payment for the current fiscal year. A hearing is set for Dec. 19 on Christie's motion to dismiss.

The unions' complaint hinges on the state's contractual obligation, while the trustee's suit is essentially a collection action, based on their fiduciary responsibility to collect the funds, Bruno said.

Christie's administration disclosed late last month that the state's unfunded pension liabilities had more than doubled to $83 billion under new accounting rules requiring that calculations be based on lower anticipated investment returns.

New Jersey's assets cover just under a third of its newly projected $122.8 billion in liabilities as of June 30.

It also revealed that the two largest pension plans, Public Employees Retirement System and the Teachers Pension and Annuity Fund could run out of money by the ends of 2024 and 2027, respectively.

A Moody's Investor's Service ranking of pension liabilities as a percentage of total revenue puts New Jersey fourth behind Illinois, Connecticut and Kentucky.

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Samantha Marcus may be reached at smarcus@njadvancemedia.com . Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.