New Jersey’s Public Employees’ Retirement System (PERS) has hired a Florida law firm to sue Governor Chris Christie over his plans to cut payments to state pension funds by more than $2.5 billion over the next two years.
Robert Klausner of Klausner, Kaufman, Jensen & Levinson will act on behalf of PERS as it seeks to overturn the governor’s decision to cut contributions in order to plug the state’s $694 million budget deficit.
At a meeting on June 30 Klausner was confirmed as the attorney of choice after a selection process by PERS trustees. He will “handle litigation against Governor Christie’s proposal to disregard the mandated pension payment”, according to the meeting minutes.
Separately, New Jersey’s Police and Firemen’s Retirement System (PFRS) is also seeking legal counsel to challenge the payment cuts.
Governor Christie’s office has already drafted a 103-page defence document, stating that New Jersey is “at the brink of fiscal disaster… with only a small pool of unspent funds remaining”.
In the defence’s document John Hoffman, acting attorney for the state, said: “The state has carefully crafted a remedy that preserves essential services for the state’s most vulnerable populations, makes spending cuts across fifteen departments, and maintains a balanced budget in conformity with constitutional mandate.”
The defence claimed that, should the court find in favour of the pensions and order New Jersey to meet its payments, it would be “an impermissible trespass by the judiciary intot he essential functions of the executive branch”.
At the start of this year State Senate President Stephen Sweeney told the Star-Ledger newspaper he was prepared to shut down government in New Jersey if Governor Christie did not make payments as promised into the state’s $78 billion pension system, which includes PERS, PFRS, and several other public sector workers’ schemes.
This was followed in March by warnings over New Jersey’s municipal debt rating from credit rating agencies Moody’s and Fitch, linked to the pension payment cuts. Moody’s said the “one-time fixes” being used by the state “indicate above-average financial weakness”. Standard & Poor’s echoed this warning last month.
Related content: NJ Governor Pulls $2.5B in Pension Funding for Budget Hole & SEC Hits Out at Underfunded Public Pensions