Pension Fund Shortfall Cries Out for Permanent Fix

March 20, 2008

Contact: Bill Murray / (609) 292-5199
Senator Kevin J. O'Toole

Pension Fund Shortfall Cries Out for Permanent Fix

State Inaction Causes Deficit To Jump To $26.8 Billion

Senator Kevin O’Toole (R-40), a member of the Senate Budget and Appropriations Committee, issued the following statement regarding published reports that the State’s three largest pension funds have a $26.8 billion unfunded liability:

“It looks like our communities will pay even more this year for the past six years of Democratic mismanagement. At the same time that Governor Corzine cuts municipal aid, cities will be asked to make up for poor stewardship of pension funds. Published accounts suggest our towns will get a bill of $1.2 billion for funding pensions this year.

“Our pension systems have lost ground they may never make up in the investment markets. In the last year alone, pension funds for teachers, public employees, and police and firefighters fell another $2.5 billion behind what will be needed to pay future retirees. The combined shortfall now stands at $26.8 billion, equivalent to 81% of the entire state budget.

“Two years ago the Governor stood before a joint session of the Legislature and called for ‘action, action, action.’ In response, four bipartisan committees met throughout the summer of 2006 and issued numerous recommendations to reduce property taxes and fund our pensions.

“If the administration adopted all of the 41 separate recommendations contained in the report issued by the Joint Legislative Committee on Public Employees Benefits Reform our current increases in unfunded pension liabilities would have been sharply curtailed. Many of these recommendations were ignored.

“This year, 12 separate pieces of legislation that would implement these recommendations have been re-introduced with bipartisan support. I hope that the Speaker, the Senate President and the Governor act now before we fall farther behind.”