No Health Benefits Changes Expected In Gov’s Upcoming Pension Proposal

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The Governor indicated earlier this week that additional changes to health benefits are not expected as part of the proposal he plans to present on pension changes.

In early April, Christie discussed his plan to transfer the state’s lottery system to the ailing pension funds.  Christie told reporters his administration had been meeting with labor leaders about the lottery idea.  But, leaders of several public employee unions were surprised to hear about the plan and immediately condemned it as another potential encroachment on the benefits afforded current and former public workers.

Those benefits took a hit under the pension reform legislation signed in 2011 which was championed as a solution to the chronic underfunding of the system.  But within a few years, lawmakers — facing a large budget deficit — went back on their commitment to ramp up the state’s annual payments to the funds, significantly scaling back their contribution to the plan to address the pension issue.

Since then, Christie has called for more cuts in health benefits and other changes that remain unpalatable to the democratic lawmakers who control both houses of the Legislature. A pension study commission he created identified changes that could save the state more than $2 billion a year.

New Jersey has faced a record 11 credit downgrades under Christie. All five of the state’s active pension funds are projected to reach insolvency in coming decades, according to Moody’s Investors Service.

The governor’s proposed budget for the next fiscal year includes a $2.5 billion payment to the funds — just half of what experts say the system needs to become healthy again. He has said his lottery proposal could move the state significantly closer to having a stable pension system, reducing the unfunded liability by some $13 billion.

Labor leaders said they are still waiting to hear more details on that idea and are unsure what other “efficiencies” the governor is seeking.