Pension Payment Deferral is not the Answer to NJ’s Budgetary Woes

The New Jersey Association of School Administrators (NJASA) agrees with Governor Jon Corzine’s commitment to get our state through this national economic crisis, as expressed in his State of the State message. NJASA does not agree with his proposal for school districts and local governments to elect to defer pension payments to public employee pension funds.

Once again, an administration is using the pension system as a vehicle to control run-away state expenses. This type of political maneuvering, initiated by the Whitman administration (1994-2001) and continued by her successors, does not establish a business-like approach to the funding of the retirement systems. The balance remaining in the pension fund is now less than half of the funding needed to meet the obligation to pay retirees over time.

Yes, we are in one of the worst financial cycles since the 1930s, with New Jersey facing a 12-year high unemployment rate of 6.1%. Times are tight and tough decisions are needed and fiscal responsibility is a must, but to make a suggestion that requires the absence of pension payments for public employees is a step in the wrong direction. NJASA was pleased in December when a legislative initiative that called for a similar pension deferment was pulled from the voting agenda in the State Senate due to lack of support from both sides of the aisle.

Public employees have and will continue to meet their obligations to the retirement systems every payday. It would be helpful if their partner in pension funding, the State of New Jersey, met its obligations.

Any short-term “solution” that involves deferring public employee pension payments is a short-sighted gamble and this is not the time to be gambling with other people’s money.