Christie Wants More Concessions From NJ Unions to Fix Pensions

By Salvador Rizzo • 04/10/17


Gov. Chris Christie


Gov. Chris Christie’s administration is holding meetings with New Jersey public-worker unions on a plan to merge the state lottery with the ailing pension system, and legislation could be introduced early next month, Christie said Monday.

The merger would be complex, since it would involve converting the nearly $1 billion a year state lottery into an asset of the $71 billion pension system.

And the effect would be dramatic. By Christie’s estimates, in one fell swoop, the retirement system would go from a funded ratio of 49 percent to a much healthier 65 percent, providing more stability for the nearly 800,000 workers and retirees who are beneficiaries.

But the devil will be in the details. Christie and the unions may come to an impasse because the governor wants public workers to agree to new concessions as part of the lottery-pension merger.

Leaders for the state’s largest public-sector unions said they won’t agree to any cuts.

“We are not looking to come to the table and negotiate changes to the pension in order to get the state to do what it’s legally required to do, which is fund pensions,” said Steve Baker, spokesman for the New Jersey Education Association.

New Jersey’s pension system is among the largest—and worst-funded—in the nation, with more than $135 billion in unfunded liabilities, according to Bloomberg. Without dramatic reforms, the retirement system is on track to run out of money within the next decade. The pension-funding crisis has been the biggest factor in a historic spate of 11 credit-rating downgrades for New Jersey since Christie took office.

“Without any reforms at all, this would bring the funded status from about 49 percent to over 65 percent,” Christie said Monday, according to an audio recording, speaking only about his proposal to shift the lottery into the pension system. “That will do amazing things for New Jersey’s credit rating, because if you look at all the credit downgrades, the downgrades are all about the pension.”

State Treasurer Ford Scudder and other administration officials have been meeting with Assembly Speaker Vincent Prieto and Senate President Stephen Sweeney, Christie said, and legislation to merge the lottery and pension system should be ready for introduction by the time state lawmakers return to work in May.

“We’re also by the way meeting with the unions,” Christie said. “We’ve met with the CWA, we’ve met with the fire and police unions, and we’re getting their input as well and their reactions, because we’re going to ask them in return for some reforms to make the system more stable as well.”

The goal, Christie said, is to get the funded ratio for the retirement system “even higher” than 65 percent.

“The Christie administration shared some information with us about the lottery,” said Hetty Rosenstein, CWA’s state director. “So far that’s all that happened. There was nothing discussed at all about further pension cuts or health care reform when it comes to the lottery. And no, there won’t be a discussion when it comes to that.”

Patrick Colligan, president of the state Policemen’s Benevolent Association, said the Christie administration provided a “cursory” view of the lottery proposal at a recent meeting.

“We didn’t get into the weeds,” Colligan said. “And they certainly didn’t talk about any reforms to us. And my guys are still suffering from the old reforms.”

In 2011, Christie and lawmakers from both parties passed sweeping pension-reform legislation that increased workers’ retirement ages and froze their cost-of-living adjustments. The plan at first was to get the state to contribute more than $16 billion over a seven-year time frame to the pension system, but Christie backed out of that funding schedule in 2014 amid a budget crisis. And the unions have never really forgiven him for it.

“When he makes a full payment like he said he was going to, and he’s bargaining in good faith, I guess we’ll broach that subject” of further benefit reductions, Colligan said.

Baker said the Christie administration had not met with any NJEA representative about the lottery plan.

“If the state wants to talk about innovative and smart ways to fund the pension…that’s a discussion that we think is worth having,” Baker said, but not if Christie will be “demanding concessions and demanding cuts.”

Currently, the nearly $1 billion a year generated by the state lottery funds homes for disabled veterans, a school for the deaf, programs for senior citizens and other vulnerable populations.

“Shifting the lottery system to the pension fund would raise the question of how New Jersey would replace funding for these critical service areas,” S&P analysts wrote in a report last month.

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