North Carolina’s state employees have many people to thank for the good job done regarding their pensions. Treasurer Janet Cowell manages the state’s pension fund and as reported by Morningstar, a renowned independent global investment research firm, NC is the third strongest funded state pension system in the country. The report ranked North Carolina third with a 93.9 percent funded pension, as compared to the national median which is 68.4 percent funded.
So why is NC so lucky? Other states’ legislatures have used pension contributions to fill budget gaps over the years. A great example of this bad budgeting technique is Governor Christie in New Jersey.
Last year he signed an executive order to reduce the scheduled pension fund payment from $1.6 billion to $696 million. Overall, New Jersey’s pensions were supposed to receive a payment of $2.43 billion over two years, and Gov. Christie used this money to fill a hole in the budget instead of raising taxes or cutting spending.
And the saga continues….. Now the courts are involved. This Monday, a judge reversed Governor Christie’s pension contribution cut. Superior Court Judge Mary Jacobson’s ruling will complicate the budget proposal Christie is to outline in a speech today to the New Jersey Legislature. According to the judge, the court’s decision would require the state to put an additional $1.57 billion into the pension funds in the current budget and make a roughly $3 billion payment in the new budget.
Bloomberg – “Because the state will now make nearly 70 percent less than the statutorily required $2.25 billion payment,” the expectations of workers have been “substantially impaired,” the judge ruled.
The 2015 appropriations act doesn’t satisfy the contractual right of workers to “state contributions into the public pension systems and directs the state executive defendants to work with the Legislature to satisfy this constitutional obligation,” Jacobson ruled.
