Bloomberg News

New Jersey Union Sues State Over Pension Contributions

June 22, 2011

(Updates with union member comment in ninth paragraph.)

June 22 (Bloomberg) -- The Communications Workers of America Local 1033 sued New Jersey today, claiming Governor Chris Christie seeks to illegally require government employees to pay more for pensions.

The governor, a first-term Republican, is trying to “unlawfully shift” to union members the “cumulative costs of the state’s chronic failure to fund required contributions” to pension plans, according to a complaint filed in federal court in Trenton, New Jersey.

Christie’s proposal, which would also raise the retirement age to 65 from 62 and freeze cost-of-living adjustments, is scheduled to go before the Assembly tomorrow. The Senate approved it June 20 by a vote of 24-15. One provision, not addressed in the CWA lawsuit, would require employees to pay more for health insurance.

Thousands of teachers, government workers and firefighters have protested outside the state Capitol against the plan.

Local 1033, which represents 7,000 members in the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund, claims the pension benefits payable under those plans are promises made by the state.

‘Contributing Factor’

Christie said today that his decision to skip a contribution to the state pension system, which had a deficit of $53.9 billion as of June 2010, was due to the economic recession. He said it was the “most responsible” choice to make. He also said that skipped payments by previous governors and his administration was a “contributing factor” to the problems.

“Every governor who came before me, and now me, has to bear some responsibility,” said Christie, 48, at a town-hall meeting in Fair Lawn. “I don’t shrink for a moment from what I’ve done.”

The local claims that skipping pension payments violates a U.S. constitutional provision saying that no state shall pass any “law impairing the obligation of contracts,” and that it runs afoul of a similar provision in the New Jersey constitution. The union also says that the indefinite suspension of cost-of-living increases would violate the U.S. and state constitutions.

“This was a methodical process of starving the proverbial beast,” Anthony Miskowski of Somerset, one of nine CWA members who joined the suit, said at a news conference at the local’s headquarters in Trenton. “Well, the beast did not die. The beast only grew to be angry, and now the beast is in the position to gobble up the budget of the state of New Jersey.”

Missed Payments

Christie has said the overhaul is needed to shrink the pension deficit. The state hasn’t made contributions for most of the past decade, and skipped a $3 billion payment last year. The government will make a $759 million contribution to the plan once lawmakers approve the benefits overhaul, Treasurer Andrew Sidamon-Eristoff said last month.

Democrats including Senate Majority Leader Barbara Buono, Senate Budget Committee Chairman Paul Sarlo and Assembly Majority Leader Joseph Cryan oppose the measure, saying it would gut collective-bargaining rights. Buono and Sarlo voted against it.

The case is CWA Local 1033 v. State of New Jersey, U.S. District Court, District of New Jersey (Trenton).

--Editors: David E. Rovella, Charles Carter

at +1-609-278-3175 or tdopp@bloomberg.net.

To contact the reporters on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Terrence Dopp in Trenton, New Jersey,

-- With assistance from Elise Young in Trenton. To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Mark Tannenbaum at mtannen@bloomberg.net.


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