The new budget adds $700 million to what the state will be contributing to the retirement plans for teachers, judges and other government workers during the 2019 fiscal year. This will push the total state pension contribution to a record high of $3.2 billion. It’s also nearly 10 percent of the entire state budget, which now totals $37.4 billion.
Despite the planned record spending on the pension system, the state still has a large hole to fill. New Jersey’s worker-retirement funds are routinely rated as being in the worst shape of any in the nation. This is due, in part, to its history of prior New Jersey governors and Legislatures ignoring the payments that were recommended by actuaries who closely study the pension system.
New Jersey is now trying to boost its pension contribution incrementally each year until the gap is filled so as to ensure the pension system remains solvent. This year’s record contribution will equal about 60 percent of the payment that the state should be making, which means Murphy will have to secure billions more for the pension system over the next few years if he wants to stick to the schedule that will eventually get the state up to the full funding of its pension obligation.
Murphy’s predecessor, former Gov. Chris Christie, had pressed lawmakers to reduce pension-funding costs by changing worker benefits, and even by moving some employees into a different and cheaper retirement system that would more closely resemble the 401(k) plans that are now popular in the private sector. However, the Democrats who control both houses of the Legislature resisted those more drastic changes.
The pension contribution is set to increase to about four billion dollars next year. Such an increase may force Murphy to consider making some benefits changes, increase taxes or find the founds that were previously earmarked for other sources. In this instance, no matter where the money has been derived from one can not countenance the fact that more funds were allocated from the 2019 fiscal year state budget that went towards funding public employees pensions than any other year in recent history.