Moody’s Investor Service reported Friday that the “benefit of near-term flexibility” provided by allowing annual pension contribution shortfalls does make it increasingly difficult for the pension to keep up with its costs but does provide flexibility to the State as it navigates its regular budgetary cycle.
Citing the Supreme Court’s finding in Burgos v. State of New Jersey, the investment service also hailed the State’s ability to avoid a five (5 percent) shortfall this budget cycle. However, Moody’s also referenced the opportunity of making a full payment as akin to forcing the State to borrow at a rate of 7.9 percent (The perceived pension return on investment) leading to an ever increasing structural deficit of 10 percent in FY2015 and 9 percent in FY2016.