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Tue April 1, 2014
Despite Action, Gov. Christie Warns Again Of Pension Crisis
Originally published on Tue April 1, 2014 6:23 am
STEVE INSKEEP, HOST:
Bad planning plus a tough economy left many states struggling to pay retirement and health benefits to public workers. New Jersey was behind on its payments for years before Governor Chris Christie pushed public pension reform in 2011. Now the governor is calling for another round of reform, saying the system is still broken. Here's Jessica Gould of member station WNYC.
JESSICA GOULD, BYLINE: In his budget address, Governor Christie called public employee pensions and health benefits entitlements that are eating up nearly all the new spending in the state and he said it's time for reform. Again.
(SOUNDBITE OF SPEECH)
GOVERNOR CHRIS CHRISTIE: This is the challenge we are currently facing, even though we've confronted this challenge before.
GOULD: For decades, Republicans and Democrats alike opted to pay only a portion of what they owed to the pension system or nothing at all. When Christie took office, state and local governments owed about $50 billion to the fund. He skipped a payment too. Then he teamed up with the Senate president, a Democrat and former ironworker, to push reforms.
They came up with a compromise, promising to pay more into the system - bit by bit over time. In return they'd bump up the retirement age, get rid of cost of living adjustments, and require workers to pay more for their health and retirement benefits.
ASSEMBLYWOMAN CELESTE RILEY: The hallways were jam-packed with public employee union members, people that you knew, that were - you know, you just can't vote for that, Celeste. You know, that's very difficult.
GOULD: Assemblywoman Celeste Riley is a South Jersey Democrat. She also happens to be a public school teacher. She supported the reforms three years ago, which meant significant cuts to workers' paychecks, including her own. And she took a lot of flak for it. But when the pension bill finally passed, leaders from both parties called it a triumph of bipartisanship and fiscal responsibility. Which is why Riley was surprised to hear Christie call for more changes just a month ago.
RILEY: I thought we already fixed this. We have a plan in place. Let's finish it and move forward.
GOULD: Drew University Associate Professor Patrick McGuinn says workers' concessions did help. And so did the fact that, for the first time in years, the state started making payments. But he says easing in those payments slowly means New Jersey's debt is still growing.
PATRICK MCGUINN: If you're going to make a commitment to a pension benefit, you've got to actually fund it, and you've got to fund it every year, and you've got to fund it fully.
GOULD: He says New Jersey would have been better off making broader changes, maybe switching to a version of a 401(k), like some other states.
MCGUINN: For a variety of different reasons, there are some who have really cast a doubt on the quote-unquote success of the pension reforms in New Jersey. And that's even assuming that the state actually continues to make these payments.
GOULD: Already there are hints it might not. Christie says he's making the full pension payment required by the reforms, the biggest in New Jersey's history. But the state is changing how it calculates those contributions, putting millions less into the fund this year than it originally said it would.
Meanwhile, the bill is going to keep growing in coming years and the governor is already talking about all the things the state can't do because it has to cover those costs.
(SOUNDBITE OF SPEECH)
CHRISTIE: The reality is that the aggressive reforms we enacted together have only done one thing. They've bought us time to act again.
GOULD: Democrats who sided with Christie last time say enough is enough. Workers have made concessions; now the governor has to grow the economy so the state can afford its pension payments and other priorities. Critics say he's just trying to distract from the scandals that have enveloped his administration. And so far Christie hasn't said how he plans to solve the problem. For New Jersey and states across the country, that adds up a trillion dollar question. For NPR News, I'm Jessica Gould in New York.
INSKEEP: This is NPR News. Transcript provided by NPR, Copyright NPR.