NJ's Christie strikes tentative teachers' pension deal
By Luciana Lopez Trenton, NJ (Reuters) - New Jersey Governor Chris Christie struck a deal with the state's teachers on a "road map" for pension reform while warning of a dire future if other unions do not make similar commitments to cut the cost of workers' retirement benefits. The tentative agreement between Christie, a Republican weighing a bid for the White House in 2016, and the New Jersey Education Association marked a dramatic turn in a long-bitter relationship. "If we do not reform, next year we would be asked to spend nearly $8 billion on pension and health benefits," said Christie, in his annual budget address on Tuesday afternoon in Trenton, the state capital. "Health costs alone consume nearly 10 percent of the budget." Rating agency Moody's has estimated that the U.S. public pension gap has tripled to at least $2 trillion in less than a decade - hurt by the 2008-9 crisis. Christie and the teachers' union have had an acrimonious relationship since he was elected in 2009, repeatedly clashing over his efforts to curtail benefits and overhaul tenure rules. The deal provided a glimmer of good news for Christie's 2016 ambitions, which has suffered from a defection of donors to rivals like Jeb Bush and other setbacks. Under proposals by a commission of pensions experts on the state's website on Tuesday, the union's existing pension plan would be frozen and replaced by a new one. Christie said he hoped other unions would follow suit. "Given the gravity of this crisis, no part of the status quo is acceptable," said the authors of the report. "The situation is not only getting worse, but it is also fast approaching the point at which it will be beyond remedy." The union said it would work in good faith at arriving at a solution but had not agreed on details. "Some of what will be proposed is not feasible, and some of it unfairly burdens public employees and retirees," it said in a statement, adding that while parts were worth exploring, it did not expect to agree to other aspects of the report. The teachers’ pension fund has a market value of $27 billion and is 57 percent funded, according to a 2014 report by the commission of pension experts. It has a projected depletion date - when it is projected to be unable to cover payments, of 2027. The tentative pact comes a day after a state court judge dealt Christie a setback. He ruled that his plan to cut $1.6 billion of contributions to the state retirement system violated its constitution. The cuts were one of the lynchpins in his effort to close a $2.7 billion budget gap projected through fiscal 2015. (Reporting by Luciana Lopez; Writing by Megan Davies; Editing by Dan Grebler and Christian Plumb)
