New Jersey Judges Avoid Pension Cost Increase, Court Says

New Jersey’s judges don’t have to pay 9 percent more toward their pensions under a law requiring increased retirement contributions from state workers, the state’s highest court concluded.

The New Jersey Supreme Court ruled today that the 2011 law requiring public employees such as teachers, firefighters and police to pay more for their pensions violates the state’s constitution by improperly reducing judges’ salaries.

The pension law “serves a legitimate public policy goal, but that goal, as applied to justices and judges, must be achieved through constitutional means,” the court said in a 3-2 ruling in Trenton.

New Jersey Governor Chris Christie, who pushed for pension changes as part of an effort to fix the state’s finances, vowed last year to seek an amendment to the state’s constitution that would subject judges to a public-pension overhaul if the courts found they were exempt.

The governor said today that the ruling was “an example of a liberal, activist Supreme Court run amok,” and the state shouldn’t have “a special class of people who do not have to pay their fair share.”

State Senate President Steve Sweeney, the highest-ranking Democrat in New Jersey, said the ruling was a disappointment. The public-pension changes instituted by New Jersey last year will save taxpayers $121 billion over 30 years, according to the governor’s office.

‘Poor Health’

Today’s ruling “will not be the final word on this issue,” Sweeney said in a statement. “The pension system of our judges can go bankrupt just as easily as any, and perhaps even more easily given its current poor health.”

Assembly Speaker Sheila Oliver, the Democratic leader in the New Jersey Legislature’s lower house, didn’t immediately return a phone call for comment.

“Judges should not be insulated from economic reality by a dubious claim that paying their fair share for the richest benefits in state government is an impediment to judicial independence,” Senate Republican Leader Tom Kean Jr. said in an e-mailed statement.

New Jersey’s pension-system funding deficit of $53.9 billion in 2010 fell to $36.3 billion in 2011 after Christie signed bills increasing employee contributions to benefits, raising the retirement age for new workers and freezing cost-of-living adjustments.

Unfunded Liability

The unfunded liability rose again in June 2011, to $41.8 billion, after the governor skipped a $3 billion payment. The budget Christie signed for the fiscal year that began July 1 includes a $1.03 billion pension contribution.

The challenge to the increased contributions for judicial pensions came from Hudson County Superior Court Judge Paul DePascale, who sued over the laws enacted at Christie’s urging. The measures require increased contributions from almost 500,000 state workers.

The New Jersey State Bar Association, a group representing the state’s lawyers, filed a brief with the state’s highest court arguing judicial independence required judges be held exempt from such salary reductions.

Mercer County Superior Court Judge Linda Feinberg ruled in October 2011 that requiring judges to pay more for their pensions violates constitutional provisions barring the reduction of judicial salaries.

She rejected New Jersey’s claims that requiring additional health and pension contributions didn’t amount to a pay cut for the state’s 432 judges. Feinberg stepped down as a judge in May.

Unfair Exemption

Lawyers for Christie argued that it’s unfair to exempt judges from the statute requiring public workers to pay more for their benefits.

The average New Jersey judge will collect pension payments of more than $2 million while paying about $59,000 into the system during a career, Christie has said.

In its divided ruling, the court held that New Jersey’s constitution has provisions barring lawmakers from cutting judges’ pay to preserve judicial independence. Reducing pension benefits amounted to such a cut, the three-judge majority concluded.

“The United States Supreme Court has never signaled that even an indirect reduction in a judge’s salary during the term of appointment would be tolerable under the Federal Constitution,” the majority wrote in their 36-page decision.

Dissenting Opinion

As a result of the increase in pension contributions, judges currently serving would face a pay cut of at least $17,000 each, the majority said. Most New Jersey judges earn $165,000 a year, according to the state government website.

Two justices dissented from that constitutional interpretation, saying the prohibition on reducing judicial salaries didn’t extend to contributions to pensions or health- care plans.

The law “cannot be viewed as an attack on judicial independence, by intent or in effect,” Justice Anne Patterson wrote in her dissent.

While both sides found the benefits law “was a laudable policy, the majority was unwilling to have its interpretation of the language trumped by the policy,” Peter Verniero, a former New Jersey attorney general who now practices law in Newark, said in a telephone interview.

The case is DePascale v. State of New Jersey, 069401, New Jersey Supreme Court (Trenton).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net; Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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