by Wendell Steinhauer, NJEA President
This op-ed column appeared in the Star-Ledger on Sunday, June 8, 2014.
Our governor — a former federal prosecutor — intends to break the law.
And it’s a law he bragged about signing.
First, some history. In 2009, then-candidate Chris Christie told New Jersey teachers in an “open letter” that “I will protect your pensions. Nothing about your pension is going to change when I am governor.”
Barely 18 months later, Gov. Christie signed Chapter 78 of the Acts of 2011, making deep cuts in the pensions of current and future retirees, raising the teacher retirement age to 65, and increasing teachers’ annual personal pension contributions by 36 percent.
So much for promises.
In return, however, Chapter 78 required the state to begin a seven-year schedule of increasing payments into the state pension funds (from one-seventh of the actuarially required contribution in the first year to the full contribution in 2018).
Christie immediately touted this bipartisan legislation as a centerpiece of his re-election campaign.
We all agree New Jersey’s public employee pension funds are terribly underfunded, and we know why. Since 1996, while the state contributed only $2.3 billion into their pension fund, teachers contributed more than $9 billion. For 10 years — 1996-2005 — the state didn’t contribute one penny. That failure of governors and legislators from both parties caused the pension funds’ unfunded liability — money owed to future retirees — to explode to $54 billion.
That’s why, for teachers and other public employees, Chapter 78’s higher contributions were a bitter pill to swallow. Pensions are not some gift or free “benefit”; they are deferred compensation. Those pension funds contain billions of their hard-earned dollars, and the health of the pension system is their retirement lifeline.
Teachers took some solace when Christie boasted that he saved their pensions — provided he made his legally required contributions. But after two years of payments, Christie says he can afford to pay only $696 million of this year’s $1.7 billion payment — and only $681 million of next year’s $2.5 billion payment.
State budgets are about choices, and for Christie, new revenue is off the table. He stubbornly refuses to institute the millionaires’ tax on the wealthy, who, unlike the sinking middle class, have done quite well in recent years. Instead of investing in middle-class priorities, he has given away $2.1 billion in corporate tax credits that yielded few new jobs. My personal favorite: $261 million to the now-bankrupt Revel Casino in Atlantic City.
Maybe that’s why New Jersey ranks 48th among the 50 states in private-sector job growth since 2010.
If Christie fails to make the full required pension contribution, the New Jersey Education Association will sue him for violating Chapter 78, which says that contribution is a contractual right of all members of the pension funds. The law specifically says each member has the right to sue the state in this instance — as do the various boards of trustees of those funds.
Christie’s threat isn’t just illegal; it’s cruel. Three-quarters of school employees are women, many of them single heads of households. They haven’t become wealthy serving in public education, and those who retired are living on modest pensions, after devoting their working lives to educating New Jersey’s children.
In 1919, NJEA’s first female president, Elizabeth Allen, was horrified to learn that female teachers — most of them unmarried — often retired in abject poverty. Allen was proud to see legislation signed into law creating the Teachers’ Pension and Annuity Fund, which made membership in the fund mandatory for teachers — and which required the state to make annual contributions.
Now, Christie is threatening to turn back the clock on this generation of school employees by starving the funds and endangering their pensions.
For a century, New Jersey educators have paid every penny required into the pension fund. In 2011, Christie signed a law requiring the state to do the same, and now he is breaking it. That’s why NJEA will sue him, if that’s what it takes to allow school employees to retire with dignity and make him live up to his legal obligations.