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NJ Spotlight - Supreme Court Hears Oral Arguments about Payments to Public-Worker Pensions…Justice Albin asks state attorney if administration’s approach to pension contributions is ‘some sort of bait and switch’
John Reitmeyer | May 7, 2015
It was just four years ago that Gov. Chris Christie and Democrats in the Legislature struck a deal on a bipartisan plan to address years of underfunding the public-employee pension system. The legislation mandated increased contributions into the system from both from the state and its workers. Christie hailed it as his signature achievement, ,one that he could translate to Washington to break gridlock.
But yesterday the Christie administration’s own lawyers were before the state Supreme Court arguing that the law -- or at least the section that applies to the state payments it seemingly required -- does not stand up to constitutional muster.
The validity of that about face by the administration is at the heart of the legal question the seven Supreme Court justices will now have to answer after listening yesterday to roughly three hours of oral arguments made by the state’s lawyer and those representing more than a dozen public-worker unions who are seeking to see all components of the 2011 reform law enforced. The justices did not indicate yesterday when a ruling may be issued.
The unions maintain the reform law referred to repeatedly in court as Chapter 78 created a contract protected by the federal constitution and that it must be honored except under very limited circumstances. But the administration’s lawyer argued that under New Jersey’s constitution only obligations approved by voters are mandatory, and that everything is “subject to appropriation.”
The justices heard the arguments yesterday as the state fiscal year is reaching its final weeks, and their ruling will have far-reaching implications for the budget, the pension system, and overall state finances. Christie, a Republican, is also in the midst of exploring a run for U.S. president in 2016, and their decision could also have a big impact on his political aspirations given reform of the pension system has been something the governor has attempted to sell as a key part of his record.
The case also serves in some ways as a test of Christie’s aggressive approach to the very makeup of the high court, having feuded with Democrats since taking office in early 2010 over nominations to a bench that he’s termed as too “activist” in the past. But now three of the seven justices are Christie nominees, and Chief Justice Stuart Rabner was renominated by the governor as well.
The importance of the case was also reinforced by those who were in attendance yesterday for the lengthy arguments, including acting Attorney General John Hoffman, Christie’s chief counsel Christopher Porrino, and Senate President Stephen Sweeney (D-Gloucester).
Citing an “unexpected slow recovery” from the last economic recession and an “unprecedented two-year revenue shortfall,” assistant Attorney General Jean Reilly said the state simply didn’t have the full $2.25 billion that the reform law seemingly committed it to contributing during the current fiscal year, which ends June 30. Instead, Christie enacted a budget devoting $681 million to the pension system, which covers the retirements of roughly 773,000 current and retired employees.
Another $200 million may now be added to that payment because tax collections seem to be on course to beat this year’s modest projections.
“No one is walking away from the state’s obligation to the pension system,” she argued.
But Reilly was peppered with questions from the justices, including Barry Albin, who asked if the state’s decision to not live up to its commitment while still requiring the employees to pay more is effectively “some sort of bait and switch.”
He also asked why legislative attorneys and Christie’s chief counsel didn’t raise the constitutionality question before lawmakers and the governor approved the measure four years ago. “No one figured it out?” asked Albin, who at times cited relevant case law going back to 1810 as he questioned the attorneys.
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And Chief Justice Stuart Rabner asked Reilly to explain how one part of the reform law could be found unconstitutional without striking down the entire law. He also asked if that type of split outcome is what lawmakers really intended when they voted for the reform bill on a bipartisan basis.
“The statute has interrelated means to shore up the pension system,” Rabner said. “Would the Legislature have wanted the legislation to survive if the state’s obligation fell apart?”
But Reilly maintained those two prongs of the law are “severable” because state appropriations are regulated by the state constitution, whereas the employee contributions are not. Asked by Justice Lee Solomon if a cure then could have been to put the bill’s provisions before voters to approve, Reilly responded “yes.”
The lawyers representing the unions, meanwhile, pressed the case on federal constitutional grounds, saying the obligation to the employees to pay their pensions was created long before the 2011 law was passed and that it is the court’s responsibility to enforce the state’s contract with each worker and retiree by shoring up the pension system.
Chapter 78 was “specifically designed to put the state’s fiscal house in order,” said Steven Weissman, the attorney for the state chapters of the Communications Workers of America and the AFL-CIO unions. “These funds are going to go bankrupt if Chapter 78 contributions are not made.”
But several justices seemed concerned that if they found the matter was one of enforcing a contract on federal constitutional grounds, then that could also mean they would have to get involved in determining the proper remedy. And if that were the case, it could mean the issue would come before them every year that the state didn’t live up to its obligations under Chapter 78, which requires a series increasing payments over a seven-year term.
For example, the amount the state is supposed to be paying under the law during the fiscal year that begins July 1 is $3.1 billion, but Christie has proposed making a $1.3 billion contribution, saying the state can afford to pay no more and that more reforms are necessary, including moving employees into a new retirement system with features of a 401(k).
“Is that an appropriate role for a court?,” asked Justice Anne Patterson. “How can that be squared with separation of powers?”
She asked a similar question of Robert Klausner, the attorney for the state retirement systems’ respective boards of trustees.
“I think you could avoid that problem,” Klausner responded. The lower-court ruling that landed the case before the Supreme Court on appeal from the Christie administration only ordered the governor and lawmakers to come up with the balance of the required state contribution -- about $1.6 billion -- not a specific remedy.
“It is for you to set the path and the standard,” Klausner said, adding the policymakers would still have to determine how to do it.
Asked after the hearing ended if the Legislature would have passed the law in 2011 with only the increased employee contributions, Sweeney was adamant that the intent was to create a “contractual right” for the employees to the stepped-up state contributions as well.
“The legislative intent was clear,” he said. “We never ever intended for only the employees to pay and the government to not pay.”
And he said the Christie administration’s position that a key component of the law that was signed by the governor is now unconstitutional is both “comical” and “tragic” at the same time.
“It’s tragic because we’re dealing with people’s lives,” Sweeney said.
NJ Spotlight - Teachers Union Leadership Change Comes at Critical Time for Newark Schools…Del Grosso to end 20-year tenure at helm as contract talks loom and controversy continues over Anderson’s ‘One Newark’ reforms
John Mooney | May 7, 2015
For the first time in 20 years, Joseph Del Grosso won’t be running for reelection as president of the Newark Teachers Union.
Marking the end of two decades of union leadership in the state’s largest school district, Del Grosso will step down as leader of the vocal and influential union at a time when the city’s schools are still in turmoil over state-appointed superintendent Cami Anderson’s “One Newark” reorganization initiative.
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The union, with Del Grosso at the helm, has been among the reorganization’s harshest critics.
The district is also facing a new round of contract negotiations with its teachers union, the first contract talks since Anderson and Del Grosso reached a landmark agreement in 2012 that provided for the state’s first large-scale use of performance bonuses for teachers. Del Grosso has since been critical of Anderson’s implementation of the new contract, saying she did not live up to its promises.
His decision to not seek reelection wasn’t a big surprise, as he had hinted for several months that he might step down and has not been in good health for longer than that. Repeated efforts to contact him over the last two days were unsuccessful.
Still, Anderson is not likely to see any greater support from any of Del Grosso’s likely successors.
The three candidates certified by the union on Tuesday are:
- John Abeigon, the NTU’s director of organization and a close ally of Del Grosso;
- Michael Dixon, the union’s elected secretary-treasurer; and
- Branden Rippey, a leader of a dissident faction of the union, who says the NTU has been too easy on Anderson.
The union vote is taking place by mail-in ballot, starting May 26. Ballots will be opened and counted on June 23.
Abeigon, who has been the union’s de facto spokesman for several months, said last night that he wanted to continue on the same path as Del Grosso and the union’s former executive director, Pietro Petino, who died in 2011.
“I am a staunch unionist, which I got from Pietro, and also have the political side, which I got from Joe,” Abeigon said.
Still, Abeigon acknowledged changing times for labor unions.
“They all came in from the anti-war movement, while my generation is different, a social media generation and all its challenges it brings in organizing,” he said.
And while he may be the frontrunner to assume the union’s top post, Abeigon said the union has divisions that need to be bridged.
“I have never taken any election for granted,” he said.
Rippey, a social studies teacher at Science Park High School, lost to Del Grosso by just nine votes in the last election. Nonetheless, the “New Visions” slate allied with Rippey won control of the union’s executive board, and he is expected to be a formidable challenger to Abeigon and Dixon.
“What’s at stake: the Newark public schools, the teaching profession, and the union itself,” Rippey said last night, following a debate with Dixon. “The (New Visions-led) caucus has been the only group that has stood up consistently in their defense.”
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Del Grosso, an elementary school teacher, was first elected in 1995 in the midst of the state’s takeover of the Newark schools. Del Grosso himself was a dissident voice when he toppled longtime president Carole Graves on a platform that the NTU leaders were not listening enough to the union’s members.
Del Grosso had risen to prominence among the rank-and-file more than 20 years earlier, when he was among nearly a dozen NTU members jailed during the 1971 teachers strike.
"Carole was a great leader for a long time," Del Grosso told the New York Times in 1995. "But in the end, she had a fatal attraction to management."
From his early days as the NTU’s president to his final years, Del Grosso always relished the images he hung in his office depicting his role in that 1971 strike.
"They are there to remind me which side I am on," Del Grosso said.
