by Nicholas Huba of the Atlantic City Press
With the New Jersey pension system possibly heading for insolvency, a state commission has suggested that towns and counties help bridge the growing funding gap.
Local officials, who say they made their state-mandated contribution to the pension system while the state ignored its payments, don’t want anything to do with that recommendation.
“Money was squandered,” said Gerald M. Thornton, director of the Cape May County Board of Chosen Freeholders. “We can’t allow these pensions plans to be merged. We have followed the rules and made the contributions that we are scheduled to and now they want to combine them.”
Meanwhile, the state’s unfunded pension liability, $37 billion in 2013, ballooned to more than $83 billion in 2014, the state Pension and Health Benefit Study Commission said in a February report.
There are about 800,000 total beneficiaries, including active and retired members and their families in the pension system, according to the state Department of Treasury.
The state pension system covers teachers, state police and state employees, while the local pension system covers local law-enforcement employees and municipal and county employees.
Thornton doesn’t blame Republican Gov. Chris Christie or Democratic Senate President Stephen Sweeney for the state’s current pension mess.
“Regardless of political party, they (Democrats and Republicans) are both to blame,” Thornton said. “If this was a private pension system that was handled like this, the feds would be investigating it. It’s just shameful.”
In Cape May County, $6.2 million of its $142.2 million budget goes toward pension payments, according to county budget records.
Any plan that the state introduces worries Dave Davidson Jr., who retired from the Atlantic City Police Department in July 2012. Davidson is covered under the local police and firefighters pension system.
“There are promises that are not being kept,” said Davidson, 54. “I’m concerned for future generations who may not have a pension.”
In Atlantic County, about $11.8 million of its $201 million budget is dedicated to pension payments, said Gerald DelRosso, Atlantic County administrator.
Cumberland County devotes $5.8 million of its $110.9 million budget toward pension payments, while Ocean County contributes $17.3 million of its $408 million budget toward pension obligations.
DelRosso said the county opposes any plan that combines state and local pension funds.
Both the state League of Municipalities and the Association of Counties have voiced their opposition to the plan.
John G. Donnadio, executive director of the New Jersey Association of Counties, said the local pension system is funded at more than 70 percent, while the state pension system is closer to 50 percent.
Local and state officials differ on what went wrong. Local officials say the state stopped fully paying what it should, while state officials say the expansion of benefits has driven up costs.
“The state granted these benefits that it could afford only under optimistic assumptions,” the report from the commission states. “When reality fell short of those assumptions, the State — for years at a time — failed to fund the resulting liabilities or effectively reform the programs creating them.”
Christopher J. Santarelli, deputy director of communications for the state Department of Treasury, said the report’s recommendations need to be adopted by the Legislature in order for a restructuring of the pension system to become law.
The commission warns that a lack of changes to the system could impact all state taxpayers.
“This is not just a concern for public employees, as it affects the state’s credit rating and costs taxpayers millions of dollars in higher interest rates on government borrowing,” the commission’s report states. “If the citizens of this state take one message away from this report, it is that given the gravity of this crisis, no part of the status quo is acceptable.”
“The original system was set up fairly and they went and broke it,” Egg Harbor Township Mayor James “Sonny” McCullough said. “It’s the not the firefighters, the teachers, not the cops, or the board or local governments. It’s the state that has messed everything up.”
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