TRENTON — Some 800,000 people, working and retired, are beneficiaries of New Jersey's pension system, a collection of funds going deeper into the red.

It's a system that Gov. Chris Christie, in his State of the State address last week, called "an insatiable beast."

In boom years, New Jersey leaders shortchanged the pension system, and those “sins of the past,” Christie said, “have made the system unaffordable.”

Fully funding the pension system this fiscal year would cost $3.9 billion, but Christie cut the pension payment to just $700 million to balance the budget — a move that landed him in court, battling an attempt by unions to force him to pay more.

Union leaders accuse the governor of going back on his word to have the state make full payments in exchange for higher contributions from workers. It’s a hot issue in Trenton made even bigger with Christie considering a White House run.

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The governor has called for more changes to the system to bring down costs, and over the summer assembled a

bipartisan commission

to issue recommendations.

That commission, which has yet to release its final report, echoed Christie’s call for additional reforms.

Here’s a recap of what’s happening with New Jersey’s pension mess:

What went wrong?

New Jersey’s pension funds were flush at the turn of the 21st century. But since 1996, governors from both parties have been underfunding the system, making payments far below what actuaries recommend.

The state skipped payments altogether from 2001 to 2004, when the annual required contribution called for $2.8 billion. And while the state was taking a pension holiday, it increased benefits for employees.

Every time the state doesn’t make a full payment, it’s like paying only the minimum on your credit card bill while continuing to charge stuff. So while the ultimate cost of pensions grows, partial payments by the state in one year makes the next payment even bigger — and harder for the state to make. It’s multiplied like crazy for the last decade.

The stock market had a hand in it, too. New Jersey lost $20 billion in the dot-com bust between 2000 and 2003, according to the Hall Institute of Public Policy, and was knocked around again by the Great Recession.

Is it true that Christie has contributed more than any other governor?

After skipping a $3.1 billion payment in fiscal year 2011, Christie contributed $484 million in 2012, $1 billion in 2013 and $696 million in 2014 — more than any of his five predecessors. He’s expected to make a $681 million payment this year.

Former Gov. Christie Whitman’s payments totaled roughly $1 billion, while the state contributed $100 million under James E. McGreevey and $2.1 billion under Jon Corzine.

But Christie’s payments are still a fraction of what is needed to keep the pension system from piling up even more debt.

What did the 2011 pension law do?

The Legislature adopted and Christie signed into law a pension reform package to gradually increase the state’s pension contribution over seven years until it reached the full annual required contribution.

Employees had to make concessions too: the law raised the retirement age, suspended cost-of-living increases for retirees, and required workers to contribute more toward their pensions and health benefits.

The contribution rate for workers enrolled in the Public Employees’ Retirement System and Teachers’ Pension and Annuity Fund increased will increase from 5.5 percent to 7.5 percent over seven years.

Police and firemen’s rates increased from 8.5 percent to 10 percent of pay, and state police’s contribution jumped from 7.5 percent to 9 percent. Judicial employees will phase in an additional 9 percent of their salary.

I thought those changes were going to save the system. What happened?

The state got bad news last spring, when tax collections came in much lower than the Christie administration expected, blowing holes in the previous and current fiscal years’ budgets.

Christie reduced the pension payment for the fiscal year that ended June 30 from $1.6 billion to $696 million and the payment for the current fiscal year from $2.25 billion to $681 million.

The remaining payments are enough to cover employees currently receiving benefits, but it doesn’t leave anything for the unfunded liability.

But even before the revenue emergency, Christie was warning that pensions and benefits needed to be revised again because their costs would swallow up a bigger chunk of the state budget each year.

Conceding he needed more help, Christie last summer appointed a commission to come up with recommendations on how to revamp the system. The panel has not yet come up with a final report, which is months late.

The unions have taken Christie to court over both pension cuts, and lost the first round in June. Superior Court Judge Mary Jacobson said the fiscal emergency backed the governor into corner, and making the full pension payment would produce "severe and immediate impacts on vulnerable populations."

Christie's administration challenged the legality of the 2011 pension law during a hearing Thursday, with lawyers calling it unconstitutional and saying Christie doesn't have to pay. Jacobson has not issued a ruling.

How bad is it?

New Jersey faces $37 billion in unfunded pension liabilities, according to a report from Christie's pension commission. Each household would have to write a check for $12,000 to close the gap, the commission said.

An actuarial rule change that assumes less optimistic investment returns doubled the unfunded liability figure to $83 billion, and pushed the dates that two of the largest pension funds will go broke to 2024 and 2027.

The state has $40 billion in assets, covering 32.6 percent of its $122.8 billion in liabilities.

How does that compare to the rest of the country?

New Jersey’s pension shortfall ranks fourth worst in the country, behind Illinois, Connecticut and Kentucky.

Two-thirds of states contributed at least 90 percent of full funding in fiscal year 2013, according to Moody’s. New Jersey contributed 28 percent.

What about unfunded health care benefit liabilities?

Retiree health benefits add another $53 billion in unfunded liabilities.

Those costs consume 8 percent of the state budget, and according to Christie’s commission, could grow to 14 percent of the budget within 10 years.

Part of the problem, the commission says, is that 80 percent of public workers are enrolled in what would be considered a “platinum” plan under the Affordable Care Act.

“The state health programs provide generous benefits with little pricing incentive for employees to select anything but plans with the most comprehensive coverage and highest cost to the state,” the report says.

In addition, the commission noted that beginning in 2018, the federal government will impose a 40 percent excise tax on such plans that would cost the state another $58 million that year and $284 million by 2022.

What about the municipalities?

Local government portions of the pension plans are much better funded than the state’s. Moody’s Investors Service said late last year that these local governments “currently are not affected by the state’s severe pension underfunding problem.”

Local funding for the Public Employees’ Retirement System is 73.9 percent, and it’s 77 percent for the Police and Firemen’s Retirement System — the two state and local government shared plans. The state government portions are funded at 46 percent and 48.6 percent, respectively.

“Cities and counties have historically contributed to PERS and PFRS at much higher rates than the state,” Moody’s said. “These local governments’ annual rates determined contributions., determined by state statute, have ranged from 84 percent to 92 percent of (annual required contribution) in recent years, versus the state’s very low 4 percent to 28 percent."

What’s next?

Trenton waits for Christie’s commission to make its recommendations, and Jacobson’s ruling on whether or not Christie had the right to knock out $1.5 billion from the current budget. With his eyes on the White House, Christie has been taking aim at public employee pension and health benefits. Democrats have said they won’t discuss making workers pay more without guarantees that the state will make full payments, perhaps by changing the state constitution.

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