NJ Supreme Court Reverses Superior Court Pen/Ben Decision

UPDATE to post: Read it: Decision in full is now posted on the jump page.

ALERT: In a a reversal of the Superior Court decision, the New Jersey Supreme Court today turned the resolution of pension funding back to the governor and legislature – back to square 1. Below are excerpts from its 5 to 2 decision:

“Chapter 78 cannot constitutionally create a legally binding, enforceable obligation on the State to annually appropriate funds. The Legislature and Governor were without power, acting without voter approval, to transgress the Debt Limitation Clause and the corresponding Appropriations and other budget clauses of the State Constitution …Those words, no matter their clarity, could not create an enforceable contract of the type asserted.

The Legislature’s strong expression of intent remains clear in Chapter 78, but it does not bind future legislatures or governors in a manner that strips discretionary functions concerning appropriations … Because of the importance of maintaining the soundness of the pension funds, the loss of public trust due to the broken promises made through Chapter 78’s enactment is staggering.

That the State must get its financial house in order is plain. The need is compelling in respect of the State’s ability to honor its compensation commitment to retired employees. But the Court cannot resolve that need in place of the political branches. They will have to deal with one another to forge a solution to the tenuous financial status of New Jersey’s pension funding in a way that comports with the strictures of our Constitution … The responsibility for the budget process remains squarely with the Legislature and Executive, the branches accountable to the voters through the electoral process. This is not an occasion for the Judiciary to act on the other branches’ behalf.”  

Chief Justice Rabner and Justice Albin dissented on the ruling.

Commentary will follow in another diary.

Burgos v. State of New Jersey (pension case)
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Comments (3)

  1. marshwren

    if this ruling impacts on the provisions that the unions agreed to (higher payments; loss of COLA)?  Are they still law, or does that money have to be refunded?

    I’m not a lawyer and am not going to plod through 114 pages of legalese to look for it.


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