The NJ Supreme Court has voted unanimously to hear the case on the constitutionality of suspending COLA increases for pensions. (COLA=Cost of Living Allowances).
COLA increases were suspended in 2011 in order to save the state $80 billion dollars.
Pension increases were expected to remain frozen for all retired public workers until the pension funds returned to sound fiscal footing, which was considered to be funded at a level of 80 percent and was at first expected to take two to three decades starting in 2011.
In recent years, however, New Jersey’s economic growth failed to match Christie’s rosy forecasts and the governor began to cut yearly budget contributions to the struggling pension system, undermining one of the central beams of his plan to replenish the pension system.
The state pension funds – which have 773,000 beneficiaries – are facing $40 billion in unfunded liabilities, according to state actuaries. The system is funded at a level of 51 percent and may run dry within a decade, financial analysts say.
If the Supreme Court rules in favor of COLA benefits the demise of state aid will come even sooner and more severely than I or anyone else anticipates.
We are doomed.