NJ Appellate Panel Finds State Not Required to Pay Annually Toward Pensions
A New Jersey appellate panel in New Jersey Education Association v. State of New Jersey ruled March 4 that members of the the Teachers’ Pension and Annuity Fund possess no constitutionally protected contract right to the particular level manner or method of state funding of TPAF by statute. Nonetheless the court affirmed that TPAF member are entitled by law to the receipt of vested benefits upon retirement.
The decision came amid a fight in Trenton over how to fix the state’s underfunded pension plan – including a proposal that could make full funding a constitutional requirement.
The NJEA has indicated it is considering appealing the ruling. The union sued in 2003 saying their members’ pensions were at risk because the state did not pay its pension bills in full.
For more than a decade the state legislatures and governors of both parties have overriden a law requiring full payments. When the state does not pay its bill one year it makes future bills larger – which could lead to fewer services or higher taxes.
As of last June New Jersey owed nearly $46 billion more than it had available to pay its $135 billion bill for current and future retirees’ pensions according to calculations released last week.