In accordance with an article published on NJ.Com this past week, New Jersey’s low-end credit rating could fall again if the state Supreme Court rules that retired public workers are entitled to yearly increases (COLA) in their pensions, according to Moody’s Investors Service.

A lawsuit challenging one of Governor Christie’s pension-reform laws is pending at the high court, specifically over a section that froze pensioners’ yearly cost-of-living adjustments. The court is expected to hear oral argument at its new term, which begins next month.  Analysts at Moody’s issued a rare warning on Monday that New Jersey’s A2 credit rating, one of the lowest among the 50 states, could go down again if Christie received “an unfavorable court decision in the pension litigation regarding COLAs,” Moody’s said.

This year, the Supreme Court ruled 5-2 that another section of the law – committing billions of dollars over seven years to replenish the pension system – had no legal force. The decision effectively freed Christie from having to find billions of dollars he had promised for the pension system in 2011, and marked a defeat for the state’s public workers and retirees.

On Tuesday, another agency, Fitch Ratings, said that court ruling would ease some of the state’s budget woes in the short term even as it left the pension system “more exposed to future under-funding.”

Fitch, in a review of school construction borrowing, did not upgrade New Jersey’s bonds from their “A” rating, but it did revise the state’s financial outlook from negative to stable, noting several improvements. Christie had seen the state’s credit rating downgraded three times each by Fitch, Moody’s and Standard & Poor’s under his watch.  Fitch analysts said Tuesday that Christie had become more conservative and accurate in predicting economic growth, what they called a welcome departure from the trend of missed forecasts and billion-dollar budget holes that had “plagued the state” earlier in his governorship.

Democrats and labor unions say they have ruled out working with Christie, who is running for the Republican presidential nomination, because he backtracked on his plan to replenish the pension system.

The state pension funds face $40 billion in unfunded liabilities, according to state actuaries, a figure that grows each time the state skips or slashes its yearly contribution to workers’ retirement accounts. More than 770,000 public workers and retirees are beneficiaries of the pension system, which experts say is on track to go broke in a decade.

Lawyers involved in the new round of pension litigation say that whatever the Supreme Court rules, it will have a dramatic effect on the state’s finances. When Christie signed the law freezing pension benefits in 2011, the move was expected to save tens of billions of dollars in pension costs over two to three decades.

A group of retired government lawyers and labor unions is arguing before the Supreme Court that the move was illegal because pensioners had been promised the yearly increases by another law enacted in 1997.  A state appeals court agreed in a decision issued last year, although it stopped short of ordering Christie to resume the pension increases. Whatever happens next is up to the Supreme Court. The justices could order Christie to resume the payments, dismiss the case or ask for more hearings at the trial level.

It is unclear how many retirees would be affected by the court’s ruling. The appeals court said only those workers who were on the job or began their careers from 1997 to 2010 and went on to serve long enough to collect a pension would qualify, but the court also speculated that a larger class of retirees could be covered.

A credit rating downgrade is a signal to investors that the state’sbonds have become riskier. Typically, a downgrade leads lenders to raise borrowing costs when the state seeks funds for school or road projects. But the effect on the state has been tamped down because the Federal Reserve has kept interest rates at near zero in recent years.

This is yet another Chapter in the Christie Administration’s saga to reduce established employee benefits and retiree benefits.  We will keep you posted as this story develops.

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Photo of Frank M. Crivelli Frank M. Crivelli

Frank M. Crivelli’s practice revolves around the representation of over eighty-five (85) labor unions in various capacities, the majority of which bargain for law enforcement entities. He is proud to be called on a daily basis to provide counsel to over 12,000 state…

Frank M. Crivelli’s practice revolves around the representation of over eighty-five (85) labor unions in various capacities, the majority of which bargain for law enforcement entities. He is proud to be called on a daily basis to provide counsel to over 12,000 state, county and local law enforcement officers, firefighters and EMS workers.

Mr. Crivelli specializes his individual practice in collective negotiations.  Over the past twenty (20) years, Mr. Crivelli has negotiated well over one hundred (100) collective bargaining agreements for various state, county, municipal and private organizations and has resolved over thirty-five (35) labor agreements that have reached impasse through compulsory interest arbitration.  Mr. Crivelli routinely litigates matters in front of the New Jersey State Public Employment Relations Commission, the New Jersey Office of Administrative Law, third party neutrals for mediation, grievance and interest arbitration, the Superior Court of New Jersey and the United States District Court for the District of New Jersey.

Mr. Crivelli founded and created the New Jersey Public Safety Officers Law Blog ( approximately fifteen (15) years ago where he and members of his firm routinely publish blog posts regarding legal issues related to the employment of New Jersey Public Safety Officers.  The blog now contains over six hundred (600) articles and is reviewed and relied upon by thousands of public employees.  Mr. Crivelli has also published books and manuals pertaining to New Jersey Public Employee Disability Pension Appeals and the New Jersey Worker’s Compensation System. Currently, he is drafting a publication on how to Prepare and Negotiate a Collective Bargaining Agreement.  He lectures annually at the New Jersey State PBA Collective Bargaining Seminar, the National Association of Police Organization’s Legal Seminar, the New Jersey Public Employment Relations Commission Seminar on Public Employment Labor Law, the United States Marine Corps’ Commander’s Media Training Symposium and to Union Executive Boards and General Membership bodies on various labor related topics.

Prior to entering private practice, Mr. Crivelli joined the United States Marine Corps where he served as a Judge Advocate with the Legal Services Support Section of the First Force Services Support Group in Camp Pendleton, California.  While serving in the Marine Corps, Mr. Crivelli defended and prosecuted hundreds of Special and General Court Martial cases and administrative separation matters.  In addition to his trial duties, Mr. Crivelli was also charged with the responsibility of training various Marine and Naval combat command elements on the interpretation and implementation of the rules of engagement for various military conflicts that were ongoing throughout the world at that time. After leaving active duty, Mr. Crivelli remained in the Marine Corps Reserves where he was promoted to the rank of Major before leaving the service.

For the past fifteen (15) years, Mr. Crivelli has been certified as a Civil Trial Attorney by the Supreme Court for the State of New Jersey, a certification which less than two percent (2%) of the attorneys in New Jersey have achieved.  He is a graduate of Washington College (B.A.), the City University of New York School of Law (J.D.), the United States Naval Justice School, and the Harvard Law School Program on Negotiation.