By Cristina Kumka
Staff Writer | April 29
If it were a credit card payment, New Jersey and Englewood would be late, racking up fees with each passing month and year.
The bill for the state’s public employee pension system is growing at an alarming rate and local officials have expressed their distaste with having to carry more and more of the weight.
The city’s cost structure is growing at a rate of about 6 percent each year and taxpayers continue to pay more for those services each year.
According to interim City Manager Robert Casey, one factor contributing most to the increasing cost - public pensions.
Pensions are the retirement packages of public employees. The city contributes money to the retirement savings of most of its more than 300 public employees, with the most funding going to police and fire personnel.
"People should understand we have little or no control over some of these costs," Councilman Scott Reddin said at a recent city budget meeting.
Reddin has openly expressed his criticism of rising pension costs and of state-appointed mediators who continue to rule in favor of police and fire contracts that call for greater pay raises each time those contracts are renewed.
The more the employee gets paid, the more their pension will be and the city is paying the growing tab.
But public employees said people should consider something else — that local officials can’t blame them for the rising cost of funding their pensions and retirements.
The employees said lawmakers should have taken control of the system years ago and paid the bill on time.
"The state allowed municipalities to make zero contributions to the pension fund for four years while public employees continued to make their share of contributions without fail," said Dierdre Glenn Paul, Englewood resident and teacher union representative.
"Now, the bill has come due."
That bill totals an estimated $25 billion statewide. When paid, it will cover the cost of unfunded public pension liabilities for police officers, firefighters, teachers and other state employees, Gov. Jon Corzine said in his state of the state address this year and at a Jan. 14 community forum.
The state will make a payment of $1.1 billion this year toward the bill, Corzine said.
Englewood officials plan to contribute $4.5 million. That’s 40 percent more than last year.
According to the city’s finance Director Howard Feinstein, Englewood has to contribute 100 percent of their obligation to the police and fire pension system this year after years of paying less.
The city is also obligated to pay 80 percent of their total obligation to a system for other public employees.
Why are the obligations more now than ever before?
For example, the Police and Firemen’s Retirement System or PFRS, one of many public pension trust funds, is funded by state, county, local government and individual employee contributions.
When police, firemen and other public employees retire at the age of 60 or 65, their pensions are their income. Depending on how many years they work, employees can receive upwards of 70 percent of their annual salaries in pensions.
For about the last 10 years beginning in 1997, state officials have made limited contributions to PFRS, in an initial effort to balance the state budget, borrowing from the fund.
Trust funds were raided and pension liabilities went unfunded, according to Corzine.
In an effort to make it up to employees, state officials gave some public workers salary increases, compounding the growing debt.
And counties and municipalities were given a break during the same time, not obligated to fund the pensions of their public employees for four years, according to Paul.
Now the time has come to pay the bill. Corzine says he has a plan but municipalities have to help.
"We’ve signed contracts for pensions to help retirees when we didn’t have the money or any identifiable ways to pay for them. Now we really need to solve the problem," Corzine said earlier this year.
The state is gradually contributing an increased percentage of money to pension plans each year.
The retirement age for new state employees was raised from 55 to 60.
The pension contributions made by state employees increased.
And state financiers continue their efforts to invest money from the pension funds into hedge funds, commercial real estate and private investments in hopes of gaining ground.
Corzine, Englewood officials and public employees do agree on one thing. The growing cost of pensions is not their doing. They attribute it to years of neglect.
The $25 billion pension debt needs to be addressed now, Corzine said, because it’s affecting how the state runs.
The debt is "crowding out" other contributions the state should be making to health care, property tax relief, and senior services to name a few, he said.
Thomas P. Canzanella, former president of the Professional Firefighters Association of New Jersey, offered a solution.
"How about everyone pay into the system like they're supposed to, and then we'll come back in a couple of years and see what type of shape it's in?" Canzanella said in an article posted on the association’s Web site.
