NJ court writes hypocrisy into pension law. Retired workers face “pauperization.”

The NJ Supreme Court: A "staggering loss of public trust."
The NJ Supreme Court: A “staggering loss of public trust.”

The most distressing feature of Tuesday’s state Supreme Court ruling on pensions is its breathtakingly cruel hypocrisy. The majority,  in an opinion written by Associate Justice Jaynee LaVecchia, reassures public employment retirees that it is not taking away their pensions but, at the same time, it all but prevents the state from funding those same pensions. Funding those pensions, in the words of the dissenting opinion, is now “optional.”

But there is more to find despicable in the majority’s decision that the state Constitution’s rarely used Debt Limitation Clause–a nearly 200-year-old provision aimed at preventing land speculation by government–prevents enforcement of the law requiring full funding of public employee pensions. The court trivializes the very real financial hardship that will be imposed on public workers now that Gov. Chris Christie and the Legislature can ignore the need to fund pensions. LaVecchia sarcastically dismissed the consequences of the ruling  as a “list of horribles” imagined by an “emotional” dissent written by Associate Justice Barry Albin.

It’s clear that LaVecchia and the four other jurists who voted for her ruling have very little idea of what it is like to live as a public pensioner–and even less sympathy. Four of the five were appointed by Republican governors, three by Christie himself who, in his wrecking of the court to twist it to his own ambitions, managed to fire its only African-American member. The fifth vote came from a Superior Court judge on temporary assignment to the state’s highest court.

Let’s be honest about this decision:  As in most important court cases, there was no objective search for a mythical right answer stripped of politics. The issues were so technical and so susceptible to varying interpretations that the court majority could easily have found a way to vote on the side of working people who need their pensions by upholding the law.

But, instead, it ruled for the benefit of others who consider cutting taxes the primary role of political leaders.

Clearly, the majority–the Republican-appointed majority–sided with the more affluent. It’s been a bad season for the poor and working class for the last 30 years. The grand march toward Gilded Age inequality moves on with a boost from New Jersey’s highest court.

The saccharin–and patently false– concern for workers found in this decision is maddening. In the very first paragraph of the ruling, LaVecchia wrote:

“The individual members of the public pension systems, by their public service, earned this delayed part of their compensation….That those men and women must be paid their pension benefits when due is not in question in this matter.”

Sorry, but given the rest of the ruling, those words are utter nonsense. By its very decision, the court gives Christie and the Legislature a free hand not to fund the pensions–who will raise taxes on the rich now?– and takes away the employees’ remedy to force their hand. How in the world can the pensions be funded?

Or, as Associate Justice Albin wrote in his dissent, “The majority has not explained how they will be paid when the pension fund is empty.”

The 68-page majority decision digs a deep grave for the law that required Christie and the Legislature to fund the pensions. Paragraph after paragraph concedes the law constituted a contract–not a hard thing to do considering the words “contract”  and “contractual” appear incessantly in the language of the statute.

This is from the second paragraph of the decision. The court majority noted that the law–called Chapter 78–“introduced contractual terms in connection with the State’s payment of its annual required contribution to the various pension funds. The contractual terminology creates an expectation that the State would contribute timely, annually scheduled, required payments to the pension funds, thereby addressing the alarming current unfunded accrued liability and restoring the various funds to fiscally sound levels.”

Clearly–and the court concedes this–the law was intended as a contract and both the Legislature and Christie meant it to be enforced as a contract. The workers would contribute more and, in return,  the state would fund its share and the retirees would receive the pensions they worked for. Sounds like a contract–and, of course, both the state and federal constitutions forbid government interference with contracts.

But–and here is the con game the majority relied on to shaft public workers–the court unearthed the musty old Debt Limitation Clause to rule that:

“Although plaintiffs correctly assert that a promise was made by the legislative and executive branches when enacting Chapter 78, and morally their argument is unassailable, we conclude that Chapter 78 could not create the type of legally enforceable contract that plaintiffs argue…is entitled to protection under the Contracts Clauses of either the State or Federal Constitutions. The Debt Limitation Clause of the State Constitution interdicts the creation, in this manner, of a legally binding enforceable contract compelling multi-year financial payments in the sizable amounts called for by Chapter 78.”

Got that? The position taken by unions and others who demanded that Christie fund the pensions–as the law required him to do–was “morally unassailable.” Which means, of course, that–in this case at least–morality has nothing to do with the law. Why can’t we have decisions that are both morally and legally unassailable?

So what is the “Debt Limitation Clause”? It’s a clause in the state constitution that prevents the Legislature from committing to annual funding of large expenditures into the future without a public referendum. But that is a simplification. Most of the 109 pages of majority and minority ruling are  devoted to discourses about this arcane bit of law. Clearly, two interpretations are possible–because LaVecchia provided one that helped Christie and Albin provided one that helped the workers.

Christie had a majority on the court. He wins.

So what does it all mean? It means Christie and the Legislature might, but need not– under the New Jersey Constitution–fund pensions fully. It’s laughable to imagine a public referendum on public employee pensions. Many in the private sector already have seen their pensions disappear and this would give them the chance to knock down their fellow men and women. The politics of envy, a specialty of Chris Christie. Remember how he called teachers “selfish” because they wanted a raise?

Will current retirees suffer reductions? Impossible to tell now because no one knows what the Legislature will do. But Albin clearly believes the majority opinion will lead to a disaster for men and women working in the public sector. He says the pension crisis is on a “trajectory” that will leave the fund “insolvent.”

Albin wrote that the ruling means “the political branches cannot be compelled to fund the pension system. The dismal logic of the majority’s decision is that the political branches, in accordance with the State Constitution, can let the pension fund run dry and leave public service workers pauperized in their retirement.”

Perhaps the most sickening words of the majority decision came in a passage in which LaVecchia seems to be trying to express some sympathy for those who may very well be “pauperized” by her decision and that of her four colleagues on the court.  She wrote: “The loss of public trust due to the broken promises made though (sic) Chapter 78’s enactment is staggering. ”

But so is the loss of public trust in what had been one of the finest state supreme courts in the nation. It, like everything else Christie touches, has been turned to lead and put to the service of his ambitions.

The decision was a tragedy. For public workers. For the court. For those who seek the morally unassailable.

 

 

 

 

24 comments
  1. Prior to this ruling, retirees had the option of withdrawing their contributions and the State’s matching contributions in a lump sum in lieu of collecting the pension. In the likely event the well runs dry, retirees would forfeit the portion of the fund they had contributed. I would suggest that all public employees place calls to the appropriate offices to demand that payments to the pension no longer be deducted from their pay checks. Why should we continue to throw our hard earned money into a black hole?

  2. Last night, a teacher friend of mine wondered if the ruling also meant that those who had borrowed against their state pension were no longer obligated to pay back the loan.
    What’s good for the goose…

  3. The legalistic mystification of the majority decision is stunning. That one of the majority is a “temp” on the Supreme Court is by itself mind boggling. Imagine if a judge from a federal circuit sat in on a major US Supreme Court decision. Would anyone consider a decision under such circumstances legitimate? Bob, can you explain how this is even possible in New Jersey?

  4. Why are public employees being held to their end of the deal, i.e., increased pension contributions, but the State doesn’t have to uphold its end if the deal? Shouldn’t public employees get a refund of their extra contributions? Isn’t it basic contract law that a contract unenforceable against one party is unenforceable against all parties?

  5. Christie is the worst governor (in the past 70 plus years) for education, for teachers, for unions and for public workers in general. So the contract with public employees is so much garbage, according to this recent ruling, from a GOP dominated court. Current retirees already have had their pensions cut with the elimination of the COLA but that is not enough for the right wing GOPers and Christie. They want to blow up public pensions completely and replace them with phony baloney 401Ks that nobody could live on or more likely replace defined benefit pensions with defined benefit nothings. Zilch, zero , zip. And if a GOPer is elected president, look for him to put the final knife in the back of Social Security, Medicare, Medicaid, the ACA and anything that helps ordinary Americans. This will all be done in the name of “reform” and fiscal responsibility which are bogus terms used by GOPers as a cover for their real goal of further enriching the already wealthy and pauperizing ordinary working Americans. Bush tried to privatize Social Security in 2005 but failed, we may not be so fortunate with the next GOP president.

  6. Well, welcome to the corporate world folks! Where that great “experiment” called the 401(k) was introduced and pensions eliminated, thereby making retirement planning a self-directed and risky (relies on stock market) endeavor for those of us in the private sector. To think that a State worker could work for only 25 years, retire at 48 years of age, and enjoy a pension for another 30+ years is complete stupidity. It is impossible to fund such a plan with the minimal contributions required of State employees. Matching funds from the taxpayers and even pension fund investment performance can not make up the difference, hence the taxpayer is required to fund the difference. You don’t see private sector employees retiring in their 40’s now do you? Man Up and admit that the public pension scheme is another Ponzi creation, and now that it is about to come crumbling down all the takers are getting anxious.

    Bob Braun: I’m not sure your facts are right but I will let others respond. I do know teachers cannot retire at 48. I’m also not sure why you think corporate abuses in the private sector excuse those in the public sector. I’ve written about education for more than 50 years and I can say that, for most of that time, private sector workers mocked those in the public sector because they settled for such low salaries just so they could get good benefits, including a pension. It is only since the downward rush to inequality that private sector employees have awakened and now see just how badly they have been screwed (and I know, buddy, because I’m there, too). It seems to me the answer should be joining with other workers–public and private–to reverse the economic slaughter of all workers. As a first step, read Thomas Mackell’s “When Good Pensions Go Away.” The people who hurt you are not public employees; they are your employers. Christie exploits the kind of resentment you have expressed to divide. But, in a few short decades, we will all be eating dog food.

  7. Adding insult to injury, my school’s HR department sent out an email today to staff and faculty stating that as of July 1st our pension contributions will increase from 6.92 to 7.06 in accordance with Chapter 78 (until they reach 7.5 in 2018). That’s the same chapter that the NJ Supreme Court just invalidated for Christie. It is time for the NJEA to bring a lawsuit to demand that every increase in pension contributions on the part of teachers paid since the law was enacted should be reimbursed since the other party in the contract did not respect his/their obligations. Seriously, this needs to be pursued through any and all avenues…we should get our money back paid in good faith on a bogus contract!

  8. I guess Mr. Common Sense does not realize that a pension is deferred compensation, it’s not some gift. He does not understand the source of the problem; the defined benefit pension is not the problem, the problem is that the state had not properly funded the pensions for over 20 years. It used that money to balance the budget and to give very big tax breaks to the millionaires, billionaires and the big corporations. The pension fund(s) were fully funded in 1994 and then subsequent governors used the money that should have gone into the pension fund to balance the budget and give tax breaks to the wealthy. Teachers can’t retire at 48 and if they do retire early, then their pension will take a big hit and be reduced. The teacher pensions are paltry and no where as generous as those of superintendents, principals, judges, district attorneys and other high governmental officials. I believe but I am not sure that police and firefighters might be able to retire at 48 but they risk life and limb at their jobs; these are physically demanding jobs that can end in death or permanent disability. Over the past 20 years, the teachers alone have put about 11 billion dollars into their pension fund. The pension payment is deducted from each and every paycheck of the public employees and deposited into the pension funds. I can only guess, with all these thousands of public employees, that tens of millions or hundreds of millions of dollar$$ are being deposited into the pension funds every month? According to the financial journalist, David Cay Johnston, teachers and public employees fully fund their pensions 100%, again, it’s called deferred compensation.

    1. You are so correct! The media and Christie have failed to remind the public of this fact!!! The fund is hurting not because of the pensioners, but because the cities, towns and counties of the state were allowed to
      ‘defer’ their payments to the fund…..apparently ‘defer’ meant ‘don’t ever pay back’!!!! Let’s calculate how much money was essentially taken from the pension fund by these entities not holding up their side of the contract. It is absolutely sickening to know that the people who do such important jobs for relatively little pay have become the ‘bad guys’

  9. This decision is disgraceful to the hard working public employees of New Jersey. An absolute outrage. Teachers, policeman, etc…need to strike in a show of solidarity. Christie paid astronomical fees to his crony investors with our money. Where is the justice? Inequality is growing wider and deeper with no end in sight. Truly sickening for so many hardworking families.

    1. Unfortunatly police and fire fighter have a no strike clause.

      1. This is true, Michael. The state also had a clause requiring it to make their pension contributions. Who broke their word first? We are forced to abide by the law and the state isn’t? I retired with 25 years on Newark F.D. I would hate to see it more than anyone. Our options are running out and the state is forcing our hand.

  10. Its time for teachers to stop contributing to the pension system and start their own retirement accounts. At this point, current teachers are paying for current pension collectors–and the state will never fully fund its due share. To continue to collect pension contributions from teachers is criminal, when the lawmakers and judges fully know the fund will be run into to the ground by the time today’s contributors are able to collect – if indeed they don’t get fired and go into insurance sales or the like. What is good for NJ is good for the current teachers. Time to say NO and take matters into their own hands.

  11. This isn’t a “legal” decision; it’s a political opinion that carries the force of law–just like HobbyLobby/Conestoga (religious rights for business entities); Citizen’sUnited/McCutcheon (political speech rights for business entities), Heller (editing the 2nd Amendment as per a NRA talking point); Bush v Gore; i’d even thrown in Dred Scott (ignoring the merits of the case in order to ‘solve’ a broader political question).

    The majority decision begs a very obvious question: when has the funding of the pension system (or any other long-term trust fund/capital account) ever been put to the voters as per the Debt Limitation Clause? I honestly don’t know, but presume that 1) if it had been, it must have passed; and what is the expiration date of approval, if any? Or 2) it never was put to the voters and was therefore “unconstitutional” from day one–except the majority went out of its way to uphold the constitutionality of Chapter 78. In which case, how do they justify making it binding on one party (unions) but “unenforceable” on the other (the ‘state’).

    Am i wrong to suggest that what the court really did was render null and void 200+ years of “settled” contract law in NJ?
    Bob Braun: AN astute observation. You certainly are not wrong.

  12. Perfectly stated:

    “The politics of envy, a specialty of Chris Christie.”

    And that is why the corporations and 1% Oligarchs LOVE him.

    A sick politics and ugly legacy.

  13. The Court set the path for the destruction of all public obligations under the NJ Constitution:

    1) thorough and efficient education; 2) affordable housing; 3) environmental quality; and 4) equal protection

    This is a grave blow, designed to cap tax increases and attempts to redistribute resources and opportunity more equitably.

  14. Can you imagine this guy becoming President? UGH!

  15. Why not de-fund the pensions?
    When the petition system was created we were in a bull market.
    It was a good thought and I agree that people should get out what they put into it PLUS INTEREST; but we are in a time where gov. employees should not have such a huge advantage over public sector workers with our tax dollars.

    1. Then let’s start with our legislators!!! They have the best pension and health care system in place and WE pay for that!!! We would ALL love to retire as well as they do!!!

  16. to common sense
    You have none. Teachers aside because I can’t speak for them. would you want a 65 year old police officer responding to you being assaulted ? Or a 65 year old fire fighter coming to your house for a fire ? Those Jobs are some of the most stressful, physically demanding in the world. Truth be told most police officers don’t live long past 65 if they make it there at all. walk a mile in their shoes
    I worked in the private sector. Now I work with the bravest people in this country. While you run the other way we go towards the danger. Most of us do it because we love it and you can bet your damn dollar that I should have a pension for putting my life on the line.

    1. Thank u John…..people dont understand….yes i can sit behind a desk or push papers until I’m 65 years old…..but what we do….everyday…….. law enforcement deserves to retire after 25…..like you said most of us dont live long after retirement if we make it there at all….and its sad that people…..the same people who need us the moat are fighting the hardest against us…..with that said….next time your in danger or need a cop or fireman……..Call Gov. Christie……not 911….

  17. Teachers have their fair share of physical threats, too. I once had a state champion wrestler threaten to kick my a– if I didn’t let him go the restroom. Our vice principal also had his shoulder ripped to shreds while breaking up a fight. I also had a student who was trying to steal a football from practice drag me from his car; he was suspended for one game. If we stick up for ourselves, our livelihood hangs in the balance. It’s true. A parent called in the other day and demanded that a teacher be fired for uttering “sh-t” under his/her breath at his/her own desk. The public and media love watching teachers burn for some reason.

    And we work in the summer. The only ones who take off are the wives of rich husbands who often have jobs in the private sector. It’s true. Ask any dad who’s a teacher what he does with his time off June-August.

    But the mental anguish faced by teachers is what makes it tough to teach late in our careers. We lose hope and patience from the lack of public support and let go. Great educators are deprived the chance to make a difference because of the parents of the children we’re trying to teach. Talk about a vicious cycle. Warning: This upcoming crop of Americans are doomed. Lifeless. Basic. Dumb. Illiterate children. They will be so easy for the elite to continue to conquer. Sad.

    Therefore, teachers earn their pensions hand-in-hand with all other public employees. Collectively, we are the good left in this world. Fight with us, not against us. Unite. Work together. Otherwise, this country that we love and honor will only fall. What will have then if we don’t have each other?

    1. This same Court can order the State to pay for Abbott Districts, no contract issue there, but pay public pension debt? No don’t have to. Christie is a proven liar, and worse. Egotistical bully.

      Bob Braun: Good point.

  18. The ExonMobil suit has/had a potential for 9 billion dollars in settlement fines. Did no one think to use that to fund the pension plans instead of bargaining it down to 225 million? Oh, wait that would mean that Christie actually cares about those living on their pensions.

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