Judge Orders New Jersey to Pay Pension Contribution

A Superior Court judge in New Jersey concluded that New Jersey’s failure to make contributions into its pension systems was a substantial impairment of public employees’ constitutionally protected contract rights.

The court ordered the state to pay approximately $1.57 billion to the pension funds, which was previously approved in a fiscal year 2015 budget by the legislature, but removed by Governor Chris Christie.

The state already cut its pension fund payment for last fiscal year, a move which was approved by the courts as necessary under the Contract Clause of the State and Federal Constitutions due to the severe unanticipated revenue shortfall that arose at the end of FY 2014. Acting Attorney General of New Jersey John J. Hoffman argued the 2011 pension reform that Governor Christie signed into law violated the state’s constitution by mandating certain contribution amounts by the state. Hoffman said the contractual right in the pension reform violates the debt limitation and appropriation clauses of the state’s constitution and detracts the governor’s constitutional veto power.

The court noted that state employees have continued to make increased contributions to the pension funds mandated by the reform.

The court also decided plaintiffs in the case were due attorneys’ fees from the state. The court’s decision is here.