The slow-moving legal slugfest between the state and unions over pensions continues to play out with a knockout and a new round. First up: the TKO second death of Burgos vs. the State of New Jersey.
Burgos is the lawsuit launched in fiscal year 2014 to force the Christie administration to restore state pension funding as agreed upon in the 2011 pension agreement, known as Title 78.
The suit was submitted by New Jersey State Police Fraternal Association president Chris Burgos and joined by the board representing the NJEA, CWA, and several other unions.
The catalyst was the Christie administration decision in 2014 to cut agreed-upon pension contributions, citing lower than expected revenues, and divert $2.5 billion from the scheduled pension payments to balance the state’s budget.
The union members, who continued to uphold their agreed upon side of the deal, argued that Title 78 was a binding contract and needed to be enforced.
The Christie administration countered by claiming that the agreement it created could not upheld because it violated the New Jersey State Constitution’s laws on appropriation and debt.
The suit advanced to the New Jersey Supreme Court in June, 2015, with the court agreeing with the administration and calling the contract unenforceable.
In September, 2015, attorneys representing Burgos filed a petition to the U.S. Supreme Court to review the case.
Their argument included past U.S. Supreme Court rulings, questions regarding the state Supreme Court’s review of the Federal Contract Clause, and the potential failure of the state Supreme Court to enforce the state constitution’s recognition of the “unmistakable contractual commitments.”
The U.S. Supreme Court decision to decline hearing the appeal hit the news on February 29, effectively giving a technical-victory to the lower court.
NJEA President Wendell Steiner responded with the statement: “The court’s decision does not reduce or eliminate the state’s pension obligations. We still need a solution to the problem the state has created for itself.”
Burgos’ attorney, Lauren Sandy, of Loccke, Correia & Bukosky, put the situation in more dire terms when she told Supreme Court Press, “Without the intervention by the U.S. Supreme Court, I fear that public employees will have no recourse for contractual and statutory violations which have effectively abrogated all of their rights.”
The new round saw Berg v. State of New Jersey in the New Jersey Supreme Court on March 14. The suit claims the state wrongly restricted public sector retirees’ cost-of-living adjustments (COLA).
It was launched by 26 retired government attorneys and members of several state labor unions — including NJEA, CWA, and New Jersey Policemen’s Benevolent Association — and takes its name from Richard W. Berg, a former Division of Criminal Justice employee.
The suit was a reaction to the Christie administration’s freezing of COLA as part of Title 78.
Plaintiffs say such actions violate “the non-forfeitable right statute (that) clearly encompasses and protects both base pension and COLA benefits” earned by the pensioners and outlined in a 1997 statue.
Their claim was supported in 2014 by a state Appellate Court decision that paved the way to the Supreme Court.
The Christie administration is asking the state Supreme Court to overturn the lower court’s decision, using similar arguments based on the state constitution used to overturn a lower court’s decision in support of Burgos
No matter how one looks at it, the court has a few problematic choices. If it agrees with the plaintiffs, the decision will raise the state’s current unfunded pension liability from $89 billion to about $102 billion, according to Moody’s Investor Service.
The other choice, as New Jersey Law Journal reports, is “the court will have to determine if the COLA portion of Christie’s landmark 2011 pension reform statute known as Chapter 78 — which guaranteed that the state would fully fund financially troubled pension plans in exchange for an increase in contributions from public-sector workers and a COLA freeze — is enforceable,” potentially opening up a problem for the June, 2015, ruling against Chapter 78.
Assistant State Attorney General Jean Reilly, who also represented the Christie Administration in Burgos, told the court “the stakes are so high” and a ruling in the plaintiffs’ favor would have “drastic limitations on the power of the state.”
She argued that the 1997 statute should be interpreted to mean retires have a right only to their base pensions.
Plaintiff Charles Ouslander, a former deputy attorney general, countered Reilly and told the court the 1997 statutes were “clear and specific” and COLAs are “legally enforceable rights that all public employees have.”
No date for an opinion to declare the winner of this law vs. law case has been scheduled, but opinions and more state Supreme Court information can be found at www.judiciary.state.nj.us/opinions.
Yet with an administration distracted on supporting a rich presidential candidate (and potentially getting a new job) and the ever expanding pension problem roosting at home, there is a clear loser: the taxpayers of New Jersey.
