The public pension hole grew by an astounding $ 5.5 billion by the end of 2011 after going down from $53.9 billion to $36. billion with the pension reform of last year. At the core of the reasons is the failure of the Christie administration to make a full contribution. In fact, the government has not even contributed the minimal amount which it had agreed to in the reform law. That is how the governor balances the budgets. It is the same irresponsible policy of his democratic predecessors.
The reduction of the deficit in 2011 was achieved totally on the backs of the workers after years of government un-funding. Public employees always contributed as the money is a payroll deduction.
What occurs with failing to fund the system is that the deficit poses a negative accrual just as a contribution creates a positive one. Money that is not there fails to earn any interest but both the principal and the interest were parts of the formula to keep the fund solvent and the finances of the state sound. The deficit compounds.
The carelessness of the governor was exemplified just a few days ago when he refused to sign a law removing from the public pension system those political beneficiaries who are not public workers and should have never been part of the system.
Fully funding the public pension systems is fundamental for the fiscal health of New Jersey. The governor is acting in the style of Louis XV: Apres-moi le deluge – After me the flood.